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Puerto Rico is desperately poor. GDP per capita is a poor measure of income inequality. 45% of Puerto Ricans live below the poverty line. Italy's economy is lit

Puerto Rico is desperately poor. GDP per capita is a poor measure of income inequality. 45% of Puerto Ricans live below the poverty line. Italy's economy is literally 20x the size of Puerto Rico. If Puerto Rico was a state, it would be the poorest state in the U.S. It's unemployment rate is double the United States. Hurricane Maria has caused $140 billion of damages to a country with a GDP of $100 million. What would the U.S. look like if it had a natural disaster that cost $20 trillion in damages? It sounds like you need to make a visit and drive around. Some parts of the island still don't have power, even today.

JumpCrisscross 7y ago
OP’s point is the wealth is there. It’s just not being allocated to basic services or debt repayment. The reason seems to be corruption. The debate is around the balance between intrinsic and extrinsic corruption, with good arguments on both sides. Puerto Rico isn’t poor. But it is in a crisis. That discrepancy contains the problem and solutions.
- unexpected 7y ago
  the wealth is not there - that's the point I'm making. Hurricane Maria cost $140 billion. Puerto Rico's GDP is $100 billion. They need to repay $75 billion in bonds, and they have $50 billion in unfunded pension liabilities. Using GDP per capita (which is the wealth per person) is a very poor measure for the overall size of the economy. This is akin to saying a SV silicon valley engineer who makes $250k a year should be able to pay his $2 million mortgage when he all of a sudden gets hit with $300k in medical expenses because he got hit by a bus while riding his scooter without a helmet - fuck it, he's wealthy. He just needs to budget better.
  - JumpCrisscross 7y ago
    > Puerto Rico's GDP is $100 billion. They need to repay $75 billion in bonds, and they have $50 billion in unfunded pension liabilities. This is not a great ratio. But it’s not unmanageable. The GDP per capita implies there are tax raises and service cuts somewhere which would be feasible, alongside cutting debt and liabilities. Much of the population being in poverty is an inequality, not resource scarcity, argument.
    - unexpected 7y ago
      ...and this is where Puerto Rico's status comes into picture. PR's tax rate at the highest level is 33%. If you want to go higher, wealthy Puerto Ricans just decamp to Florida (no state income taxes!) and fly in as needed. The corporate tax base has also dwindled. Still, PR has raised taxes - across the board, but due to the wealthy's ability to decamp, these tax increases are disproportionately felt by the middle and lower classes. Additionally, the costs of goods and services is much higher than in the states. GDP per capita doesn't measure purchase power parity, and your dollars in PR don't go nearly as far as they do in the USA. Energy costs, water costs, shipping costs, are all much higher in other countries, and legislation (such as the Jones Act) that helps mainland USA hurts PR. PR is trapped, and has a perpetual brain drain of people escaping. It has a negative population growth of -2% a year (in a heavily Catholic country), and GDP growth has been negative for 13 years in a row. More austerity measures are not going to help the situation.
      - rayiner 7y ago
        Puerto Rico’s GDP per capita, adjusted for purchasing power parity, is comparable to Spain, Italy, New Zealand, and South Korea: https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?most_recent_value_desc=true https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?most_... Puerto Rico’s PPP GDP per capita has been stagnant since 2006 or so, but that’s true of Italy and Spain as well. (Italy has done worse over the last 15 years than Puerto Rico.) Its not a great situation, but doesn’t justify treating it like some developing nation.
rayiner 7y ago
We’re not measuring income inequality. It’s the government that owes the money, not individual Puerto Rican’s, and GDP measures the tax base the government can tap for paying back that money. (The fact that Italy’s GDP is 20x bigger is also irrelevant. Italy also had 20x more people that the government must provide services for.) As to the damages—a lot of the $100 billion in damages is lost income which is already reflected in lower GDP. Other parts are covered by insurance. Tens of billions more will be covered by Congressional aid.

JumpCrisscross 7y ago

OP’s point is the wealth is there. It’s just not being allocated to basic services or debt repayment. The reason seems to be corruption. The debate is around the balance between intrinsic and extrinsic corruption, with good arguments on both sides. Puerto Rico isn’t poor. But it is in a crisis. That discrepancy contains the problem and solutions.

unexpected 7y ago
the wealth is not there - that's the point I'm making. Hurricane Maria cost $140 billion. Puerto Rico's GDP is $100 billion. They need to repay $75 billion in bonds, and they have $50 billion in unfunded pension liabilities. Using GDP per capita (which is the wealth per person) is a very poor measure for the overall size of the economy. This is akin to saying a SV silicon valley engineer who makes $250k a year should be able to pay his $2 million mortgage when he all of a sudden gets hit with $300k in medical expenses because he got hit by a bus while riding his scooter without a helmet - fuck it, he's wealthy. He just needs to budget better.
- JumpCrisscross 7y ago
  > Puerto Rico's GDP is $100 billion. They need to repay $75 billion in bonds, and they have $50 billion in unfunded pension liabilities. This is not a great ratio. But it’s not unmanageable. The GDP per capita implies there are tax raises and service cuts somewhere which would be feasible, alongside cutting debt and liabilities. Much of the population being in poverty is an inequality, not resource scarcity, argument.
  - unexpected 7y ago
    ...and this is where Puerto Rico's status comes into picture. PR's tax rate at the highest level is 33%. If you want to go higher, wealthy Puerto Ricans just decamp to Florida (no state income taxes!) and fly in as needed. The corporate tax base has also dwindled. Still, PR has raised taxes - across the board, but due to the wealthy's ability to decamp, these tax increases are disproportionately felt by the middle and lower classes. Additionally, the costs of goods and services is much higher than in the states. GDP per capita doesn't measure purchase power parity, and your dollars in PR don't go nearly as far as they do in the USA. Energy costs, water costs, shipping costs, are all much higher in other countries, and legislation (such as the Jones Act) that helps mainland USA hurts PR. PR is trapped, and has a perpetual brain drain of people escaping. It has a negative population growth of -2% a year (in a heavily Catholic country), and GDP growth has been negative for 13 years in a row. More austerity measures are not going to help the situation.
    - rayiner 7y ago
      Puerto Rico’s GDP per capita, adjusted for purchasing power parity, is comparable to Spain, Italy, New Zealand, and South Korea: https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?most_recent_value_desc=true https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?most_... Puerto Rico’s PPP GDP per capita has been stagnant since 2006 or so, but that’s true of Italy and Spain as well. (Italy has done worse over the last 15 years than Puerto Rico.) Its not a great situation, but doesn’t justify treating it like some developing nation.

rayiner 7y ago

We’re not measuring income inequality. It’s the government that owes the money, not individual Puerto Rican’s, and GDP measures the tax base the government can tap for paying back that money. (The fact that Italy’s GDP is 20x bigger is also irrelevant. Italy also had 20x more people that the government must provide services for.) As to the damages—a lot of the $100 billion in damages is lost income which is already reflected in lower GDP. Other parts are covered by insurance. Tens of billions more will be covered by Congressional aid.