I thought Canada was the 51st state? On 6/7/06, Gruss Gott <[EMAIL PROTECTED]> wrote: > > Trouble on Welfare Island > May 25th 2006 | AGUADILLA AND SAN JUAN > From The Economist print edition > Abridged by Gruss > > Puerto Rico has been a United States territory for more than a > century, and its people have been citizens since 1917. The island is > distinguished by its poverty and joblessness, which are far worse than > in any of the 50 states. The territory's economy, moreover, has fallen > further behind the national one over the past three decades. Bad > government�not just locally, but also federally�is largely to blame. > > Half the working-age men in Puerto Rico do not work. Puerto Rico's > annual income per person was around $12,000 in 2004, less than half > that of Mississippi, the poorest state. More than 48% of the island's > people live below the federally defined poverty line. That poverty > rate is nearly four times the national average, and more than twice as > high as in poor states such as Kentucky, Louisiana, Mississippi and > West Virginia. > > Puerto Rico ought to be doing much better, because being part of the > United States gives it many advantages over other low-income > economies. Most important may be America's legal system. These > guarantees tend to attract outside capital, spur local investment and > let commerce and innovation flourish > > The island can also trade freely with the giant mainland economy. And > its workers can migrate to and from the 50 states at will, gaining > skills, creating business connections and making money. > > In some ways, generous United States taxpayers have also been useful. > To help the territory catch up, they have paid for infrastructure and > a huge leap in education levels. The average length of schooling in > Puerto Rico rose from 3.7 years in 1950 to 11 years in 2000. > > With these advantages, Puerto Rico grew impressively in the decades > after the second world war, even outperforming Asian "tigers" such as > South Korea, Taiwan and Singapore (which has roughly Puerto Rico's > population). Since the 1970s, however, Puerto Rico has been outpaced > badly by the Asian tigers and Ireland, another place to which it is > often compared. It has also diverged from the United States, losing > ground even to lowly Mississippi. > > Many things have gone wrong. Most important, however, is that the > United States government assumed too big a role in the Puerto Rican > economy, and its largesse enabled the commonwealth's government to do > the same. Two federal intrusions stand out: an oversized welfare > state, and misguided rules on business investment. > > Federal transfer payments to Puerto Rico rose sharply in the 1970s. > Some programmes have been modified since then, but transfers still > make up more than 20% of the island's personal income. These federal > handouts reflect the sensibilities of a wealthy country. So by Puerto > Rican economic standards, they are huge. And the more a man or woman > earns through paid work, the more they decrease. > > Puerto Ricans are eligible for federal disability payments, for > example, through Social Security and federal disability allowances are > much higher than the United States average as a share of wages and > pension income. Unsurprisingly, therefore, one in six working-age men > in Puerto Rico are claiming disability benefits. > > Many families do not view the federal handouts as temporary. Neither > does Ra�l Vega, who owns a consumer-finance outfit in Aguadilla. His > firm treats the benefits as income when deciding whether to lend > people money for new televisions. > > As Aguadilla's Mayor walked through town hall recently, he boasted > about each employee's university or graduate-school credentials as he > introduced them. The trouble, he says, is that "All they want to do is > find security only. They have no ambition...Everybody wants to work > for the government." > > Manuel Reyes, of the Puerto Rico Manufacturers Association, also sees > little hope that the government's role will shrink. "There is no light > at the end of the tunnel," he says, "because we are still in denial." > >
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