Tuesday, April 26, 2011

Uncle Sam's Catch-22

As perplexing as this may sound, keep in mind that Puerto Rico's unemployment rate is over 16%, the local government is contemplating a guest-worker program to bring in people from nearby Haiti and the Dominican Republican to harvest coffee. Picking coffee beans isn't rocket science, but it seems like very few people want to roll up their sleeves and labor under the sun. Many attribute this kind of mentality to the culture in which Uncle Sam has helped create, one in which people would rather live on government assistance (on the island, it's colloquially known as "cupones") than earn a paycheck. An estimated six out of ten families are beneficiaries of the Nutrition Assistance for Puerto Rico (PAN) program, and less than half of the people on the island work. Officially, the labor participation rate hovers at around 40%. However, for those of you who live on the island, you're probably aware of the existence of a sizeable underground economy.

Nevertheless, in some of the most impoverished towns on the island, such as Comerío, the unemployment rate is at a whopping 22.8% and 60% of the residents are recipients of PAN. While some criticize such entitlement programs in creating more harm than good, others believe it has helped improved the lives of many low-income families. According to the 2006 U.S Census, 45.6% of the island's population lived below the poverty level. This statistic is quite mind-boggling, especially while taking a stroll at Plaza Las Américas and seeing all those luxury cars on the street.

While the 2011 federal budget calls for cuts in some programs designed to help the neediest, it will not affect PAN, which Puerto Rico expects to receive $2 billion this year. The Times Magazine columnist Fareed Zakaria, who is also host of CNN's Global Public Square, was invited to the island by the Center for the New Economy to talk about his perspective on the island's economy. During his speech, he spoke for Puerto Rico's desperate need to abandon the "politics of dependence" on federal funds. The island must begin the process of transformation and focus on creating wealth, and stop looking towards the U.S federal government as a "money machine," said Zakaria. Furthermore, Puerto Ricans must not wait for politicians to begin this transformation. Indeed, nobody could have said it better.

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