WASHINGTON, D.C. — The U.S. Territory of Puerto Rico is currently engulfed in a debt crisis that has some politicians on Capitol Hill calling for a bailout. However, Congressman Gary Palmer has a much different idea about how to best help the Puerto Ricans: free them from the crony capitalism that holds them back.
“We do need to act, but in a way that frees Puerto Rico from economy stifling regulations to the maximum extent possible to allow them to rebuild their economy,” Palmer said.
His proposal, which he packaged into an amendment to the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), would exempt the island from the Jones Act.
The Jones Act, which is formally known as the Merchant Marine Act of 1920, requires vessels transporting goods within the United States to be U.S.-built, U.S.-owned, and at least 75 percent U.S.-crewed. According to a report at The Daily Signal:
The intent of the coastwise laws, including the Jones Act, was to protect U.S. shipping interests. The coastwise laws are highly protectionist provisions that are intended to create a ‘coastwise monopoly’ in order to protect and develop the American merchant marine, shipbuilding, etc.
“The Jones Act exemption helps Puerto Rico, a U.S. territory with limited access to cheaper transportation such as trains or trucks, by reducing prices for goods transported by water,” Palmer said. “Two Puerto Rican economists found that from 1991-2010, the Jones Act cost Puerto Rican residents $16.4 billion. For example a vehicle costs $6,000 more in Puerto Rico than on the mainland, and food is twice as expensive as in Florida.”
Palmer’s assessment is one that has the backing of many economic heavy hitters. Studies by the World Economic Forum and the Federal Reserve Bank of New York have concluded that the Jones Act severely hinders economic development in Puerto Rico.
Exemption from the Jones Act has been a solution that has worked well for U.S. territories in the past. In 1992, the U.S. Virgin Islands were exempted and today shipping costs from the mainland are nearly half that of Puerto Rico.
Jones Act exemption would also lower the energy and manufacturing costs on the island. Puerto Rico’s power companies would be able to replace more expensive foreign-sourced oil with cheaper, cleaner, U.S.-sourced natural gas. Additionally, manufacturers in Puerto Rico would no longer be at a cost disadvantage to competitors Asia and other Latin American countries when shipping goods to the U.S.
“Relief from the Jones Act would allow the cost of living in Puerto Rico to decline, allowing residents to stretch their wages further than before,” Palmer said in a press release. “If Congress wants to help Puerto Rico we must provide them with opportunities to better their economy and lower their cost of living, not bail them out without any forward thinking solutions.”
In other words, Palmer is saying that competition works. He believes it is time for Puerto Rico to give that idea a try, instead of the cronyist policies that have clearly failed.
(h/t The Daily Signal)