[styled_box title=”The New Yorker” class=”sb_orange”]
The New Yorker has James Surowiecki commenting on Puerto Rico’s situation, and its, ahem, problem. As if there was just one.
Puerto Rico’s difficulties are rooted, in part, in its earlier success. Its path to industrialization was paved with corporate tax breaks. The most important one was Section 936 of the U.S. tax code. (Puerto Rico is a U.S. territory.) This went into effect in 1976, and exempted the profits earned by American companies from federal taxes. Mauro Guillén, a management professor at Wharton and an expert in emerging markets, told me, “Puerto Rico became, by a wide margin, the most attractive locale in the world for American companies to operate in.” Between 1970 and 1980, manufacturing’s share of the G.N.P. nearly doubled, as firms, especially pharmaceutical companies, opened plants across the island. (I lived there for four years starting in the late seventies, when my dad ran a plant for Loctite.) At one point, Guillén says, more than half the drugs sold in the U.S. were manufactured in Puerto Rico.
Those were the good days…