Wealth_Extraction_Governmental_Servitude

Wealth_Extraction_Governmental_Servitude - Wealth...

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1 3 6 NEW POLITICS A FTER TEN YEARS OF ECONOMIC contrac- tion, many of the citizens of Puerto Rico find themselves watching the secular decompo- sition of a reality that in its heyday was painted by many as one of relative socio-economic welfare. The latest economic downturn of the island, which predated the so-called global “great recession” by two years, has confirmed that the current colonial economy could not achieve certain objectives of the economically more advanced economies. When compared to its own historical record and that of the United States, the per- formance of the economy of Puerto Rico is not an example of socio-economic convergence or of a process leading to “developed capitalism”: • Economic growth capacity is declining. Compared with the so-called golden period of 1947-1973, when growth averaged 6 per- cent per year, average growth was 1.6 percent per year after the first oil shock during fiscal years 1976-2014. From 2000 to present, the average annual rate is -0.5 percent, and with the onset of the current crisis in 2006, average economic growth is down to -1.5 percent per year. Preliminary forecasts for growth in fiscal years 2015, 2016, and 2017 are negative. The Wealth Extraction, Governmental Servitude, and Social Disintegration in Colonial Puerto Rico A RGEO T. Q UIÑONES -P ÉREZ AND I AN J. S EDA -I RIZARRY length and depth of the downturn are those of a depression and not a simple cycle. • Job creation capacity has declined dra- matically. Even during the golden years, full employment was never attained. Unemploy- ment of 10.3 percent during 1969-1970 was the lowest yearly average from 1947 to date. Currently, the participation rate is around 40 percent, more than 20 percentage points lower than in the United States. Unemployment hovers around 12 percent, while the U.S. state with the highest unemployment rate, West Virginia, experiences 7 percent unemploy- ment. The Puerto Rican employment rate stands at 36 percent. • Median household income, in 2013 infl ation- adjusted dollars, was 37 percent of U.S. median household income ($19,183 versus $52,250). Per capita income in Puerto Rico is not quite half that of Mississippi, the poorest state. Around 46 percent of the population lives in poverty, compared to about 15 percent of the United States. Puerto Rico is second to none of the 50 states regarding inequality of income distribution. The island’s Gini index (a measure of income inequality) was 0.547 in 2013, higher than those of Washington DC (0.532) and New York (0.510). The U.S. average is 0.481. • Emigration to the United States is reaching record levels. Between 2010 and 2014, the av- erage number of people leaving the island each year was 53,020. For the period between April 2014 and March 2015, the number reached 86,654. (During the first massive waves of emigration in the 1950s, the yearly average was 47,400.) Combined with lower birth rates, this A RGEO T. Q UIÑONES -P ÉREZ is a professor in the Depart- ment of Economics at the University of Puerto Rico, Río Piedras.
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