Blog: How a Puerto Rican State Will Benefit the U.S.
March 3, 2021 update, in light of recently proposed Puerto Rico Statehood Admission Act: I wrote the following back in 2017, when PR had just completed, yet another, plebiscite in consideration of its status. While I could adjust many of the arguments to better incorporate today's economic and political environment, the gist of the thesis remains the same: Puerto Rico, AND the rest of the U.S., will be better off if Puerto Rico becomes a state.
June 20, 2017
Last week, Puerto Rico's U.S. citizens overwhelmingly chose to become the 51st state of the union. Despite a vote-suppressing boycott campaign, 97 percent of those who participated in the historic plebiscite chose statehood over the status quo and independence (2021 update: here are the results from the 2020 status referendum). While the results seem to signal movement towards the integration, economic parity, and social equality that statehood advocates have desired for decades, some worry that adding a Puerto Rican star to the American flag (notice the 51 star flag above?) will only benefit the new state. They couldn’t be more wrong.
Despite being subject to federal law since 1898 and conferred American citizenship 100 years ago, some still think Puerto Rico will never be American enough to contribute equally to our 241-year experiment. The tens of thousands of Puerto Ricans who have put their lives on the line in every American war over the last 120 years, and the families who have supported them, might disagree.
There are few greater displays of affection for one’s country than volunteering to sacrifice your blood, sweat, and tears. Volunteering for active duty service in the American military at a rate greater than the U.S. average (and being drafted along with everyone else), Puerto Ricans went abroad during WWI, fought the “axis of evil” alongside both of my grandfathers in WWII, won the Congressional Gold Medal for heroics in Korea, were drafted to an unpopular war with my uncles and father in Vietnam, and continue to volunteer for service through the present, earning nine Medals of Honor in the process.
I personally know how valuable their contribution is to our country today, having served alongside a Puerto Rican Army unit during my short stint in Kandahar. Not only did they volunteer to go to the worst place on Earth, but they served honorably during one of the deadliest times of this current war, while working some of the most difficult jobs the military has to offer. Anyone who questions whether they have given more to this country than they have received in return should ask themselves whether they would be willing to do the same.
While most believe that statehood will benefit Puerto Rico’s development, few realize the economic contributions it will return to the country as its newest member. Under its current status as a territory with limited autonomy, high levels of economic and political risk continue to constrain investment and the island's ability to contribute to its own well-being. The recently formed fiscal oversight board (created by Congress’ PROMESA Act of 2016) in combination with the policies of one of the nation’s most fiscally conservative governors will inevitably lead to fewer economic risks (2021 update: This sentence may not have aged well; The FOMB created by PROMESA hasn't fully kept its "promise" of restoring fiscal order and stability).
However, Puerto Rico’s uncertain political future still creates uneasiness in the eyes of investors. Neither the status quo – which led to its recent fiscal crises – nor independence (will it be more like Singapore or the next Cuba?) will evoke confidence that investors demand. If Puerto Rico is allowed to become a state, political certainty will lead to an investment boom with implications for the entire U.S. economy. With a growing economy, fewer transfer payments will flow from the Federal Government to Puerto Rico, while individual and corporate contributors will be less likely to leave the island for greener pastures on the mainland.
As investors gain new confidence in Puerto Rico’s future, the stifled economy will be able to remove a burden that has been building for decades, allowing the island to reach its full economic potential. Even under the recent conditions of high debt combined with a shrinking economy, estimates suggest that corporate and individual taxpayers in the new state will contribute $6-10 billion more to the U.S. Treasury’s bottom line (2021 update: the estimates in this sentence will rely a great deal on the direction of future tax implications, incentives, etc., but the spirit of the claim that PR will be a net contributor remains valid). Further considering the market dynamism of an improved economic climate, and it is easy to see how many more billions of dollars of profits, individual income, and taxpayer revenue can be produced. Combine increases in corporate and individual entrepreneur investment with Puerto Rico’s positive trade balance, the expectation of rapid growth in an already productive tourism sector (imagine a state as beautiful as Hawaii, but takes only one-fifth the time to get there from the East Coast), and an opportunity for improved intrastate commerce (sorry Miami, Puerto Rico is poised to take over as the gateway to the Americas), and the new state’s economic productivity will be a welcome addition to the U.S. economy.
There are few principles more American than the right of self-determination, as expressed in our founding documents, codified in international law, and defended throughout the world by our men and women in uniform. In a time when What can you do for me? seems to dominate popular ideology, Puerto Ricans are making the unusual appeal to become a fully integrated, equal, and contributing member of the union. If Congress – and the rest of the country – can get past the politics of adding another state, the admission of number 51 won’t just be the fair and just thing to do, but will also be the best option for the entire country.
Justin Vélez-Hagan, Ph.D., is an economic policy researcher and analyst, founder of the National Puerto Rican Chamber of Commerce, and author of the books The Common Sense behind Basic Economics (2015) and The Paradox of Fiscal Austerity (2020). @JVelezHagan