PUERTO RICO WHICH OF COURSE IS
NOT A US STATE BUT A TERRITORY, IS EXPECTED TO CLOSE UP TO 184
OF ITS PUBLIC SCHOOLS NEXT YEAR.
THIS HAS TO DO WITH ITS ECONOMIC
CRISIS AND ITS INABILITY TO PAY BACK MORE THAN $70 BILLION IN
LOANS.
TO GIVE YOU MORE DETAILS, LET'S GO
TO THE GRAPHICS.
THERE ARE MULTIPLE REASONS FOR WHY THE ECONOMY IN PUERTO RICO
FELL APART.
EVEN THOUGH IT IS CONSIDERED A US TERRITORY, IT
DOESN'T HAVE THE SAME PROTECTIONS THAT US CITIZENS
HAVE.
THE PEOPLE IN PUERTO RICO ARE CONSIDERED US CITIZENS, BUT
AGAIN THEY DON'T HAVE PROTECTIONS LIKE CHAPTER 9
BANKRUPTCY.
LET'S MOVE ON TO SOME OTHER DETAILS.
SO LET'S GET
INTO THE DETAILS OF WHY EVERYTHING IS FALLING APART AND
PUERTO RICO.
HE GOES BACK TO THE MID-1990S AND SOME OF THE
ECONOMIC BEHAVIOR THAT OCCURRED IN THE 1980S.
IN THE 1980S A LOT
OF CORPORATIONS IN THE US WERE LIKE LET'S GO TO PUERTO RICO.
THEY DON'T HAVE TO PAY THE SAME AMOUNT OF TAXES AS THEY WOULD IN
MAINLAND US.
SO THEY WENT THERE AND OF COURSE THAT CREATED JOBS.
HE CREATED A HUGE TAX HAVEN FOR THESE CORPORATIONS.
AND THE
ECONOMY BECAME VERY RELIANT ON THESE CORPORATIONS.
THEN IN THE
90S, THE GOVERNMENT DECIDED THEY WERE NOT GOING TO DO THAT
ANYMORE.
ALL THESE PHARMACEUTICALS TAKING ADVANTAGE
OF NO FEDERAL TAXES AND PUERTO RICO WILL NO LONGER HAVE THAT
PRIVILEGE.
ONCE THE TAX CODE CHANGED OPERATIONS WERE LIKE
LET'S GO BACK TO THE US.
SO WHAT DID THAT DO?
TOOK A LOT OF
OPPORTUNITY AND BUSINESSES OUT OF PUERTO RICO.
ALL OF A SUDDEN
THE STRUGGLE BEGINS THERE.
>> FIRST OF ALL MY FAVORITE PART SO FAR WAS WHEN THE CORPORATE
EXECUTIVES WERE LIKE LET'S GO TO PUERTO RICO.
THAT TAX LOOPHOLES
SHOULD'VE NEVER EXISTED IN THE FIRST PLACE.
HERE'S AN IDEA,
DON'T CREATE A TAX LOOPHOLE.
WHEN THEY LEAPFROGGED TO
DIFFERENT PLACES IT LEAVES DEVASTATION BEHIND.
THE OTHER
PROBLEM WAS WHAT YOU MENTIONED EARLIER THAT PUERTO RICO HAS
THIS UNFAIR RULE THAT WERE PUT UPON IT BY CONGRESS ABOUT HOW
THE RULES ARE DIFFERENT FOR THEIR BANKRUPTCY THAN THEY WOULD
BE FOR ANY OTHER JURISDICTION IN THE US.
THEY HAVE NO LEVERAGE TO
NEGOTIATE WITH CREDITORS.
AND CREDITORS THINK I DON'T CARE
ABOUT YOUR KIDS.
WHEN YOU MAKE A LOAN ñ THIS IS HOW CAPITALISM
WORKS ñ YOU ARE NOT OWED A LOAN.
THE REASON THAT THEY GET AN
INTEREST RATE AND THEY GET MONEY IS BECAUSE THEY KNOW THEY ARE
TAKING A CERTAIN LEVEL OF RISK.
AND THEY KNOW SOMETIMES THAT
RISK DOESN'T WORK OUT, THAT'S WHY THEY ARE GETTING PAID FOR
TAKING THAT RISK.
WHEN IT DOESN'T WORK OUT YOU DON'T GET
100% BACK.
YOU GET SOME PERCENTAGE BACK DEPENDING ON HOW
THAT LOAN WORKED OUT.
SO A LOT OF TIMES YOU GET A HAIRCUT,
SOMETIMES IT WILL BE SMALL SOMETIMES IT WILL BE A GIGANTIC
ONE.
IF YOU SAY I DON'T WANT RISK, THEN YOU SHOULDN'T GET ANY
INTEREST.
CAPITALISM WORKS BASED ON RISK.
WHAT THEY WANT IS THE
MONEY, BUT NO RISK.
IF PUERTO RICO TURNED OUT TO BE A BAD
LOAN, AND I THOUGHT THEY WOULD KEEP GOING BUT IT TURNS OUT THEY
DIDN'T THEN I WANT TO JUST SOCIALIZE THE COST.
SO NOW YOUR
KIDS DON'T GO TO SCHOOL BECAUSE I MADE A BAD LOAN.
I DON'T
BELIEVE IN CAPITALISM, I THINK YOU SHOULD SUFFER THE
CONSEQUENCES.
THAT IS NOT CAPITALISM.
SO NOW THEY ARE
CRUSHING PUERTO RICO TO TRY AND GET BACK IN UNNATURAL AMOUNTS OF
THE LOAN BACK.
NO ONE IS GUARANTEED A PROFIT IN
CAPITALISM, AND THAT IS WHAT THEY ARE PROMISING.
>> RIGHT.
KEEP IN MIND, IT IS FRUSTRATING BECAUSE SINCE IT IS
CONSIDERED A US TERRITORY IT STILL MUST ABIDE BY US TRADE
POLICIES.
THAT IS ALSO NEGATIVELY IMPACTING ITS
ECONOMY.
FOR INSTANCE, WHEN THEY WANT TO EXPORT THINGS THEY HAVE
TO USE US SHIPS IN ORDER TO DO IT.
THAT ACTUALLY ENDS UP BEING
MORE EXPENSIVE AND BECOMES LESS COMPETITIVE COMPARED TO OTHER
CARIBBEAN COUNTRIES THAT CAN DO IT ON THE CHEAP.
THERE ARE ALL
SORTS OF FACTORS PLAYING A ROLE AND THE US HAS A HAND IN IT.
IF
WERE GOING TO CONSIDER IT A US TERRITORY I FIND IT INTERESTING
THEY ARE NOT ABLE TO TAKE ADVANTAGE OF THE SAME BANKRUPTCY
PROTECTIONS WE HAVE IN THE MAINLAND.
WE WILL SEE HOW THIS
PLAYS OUT.
SO FAR PEOPLE ARE LEAVING PUERTO RICO FOR THE
UNITED STATES.
>>YOU KNOW WHAT WILL HAPPEN AFTER THAT?
CONSERVATIVES WILL
COMPLAIN ABOUT PUERTO RICO CITIZENS BEING HERE.
BUT YOU RIGGED THE RULES AGAINST THEM.
THEY CAN'T EVEN SEND THEIR
KIDS TO SCHOOL.
DON'T BE SURPRISED WHEN CONSEQUENCES FALL
FROM THAT.
WE ARE NOT ASKING FOR TOO MUCH WHEN WE SAY IF THEY ARE
PART OF THE US IN ANY WAY, SHAPE, OR FORM, THEY SHOULD AT
LEAST HAVE THE SAME RULES AS US AND
THEY SHOULD BE FAIR.