After years of excessive government spending, inefficient and corrupt state-run enterprises, and a tax and regulatory structure that stifles business development and economic growth, it is clear that precisely what Puerto Rico needs is a strong cocktail of free market economic and financial reforms. Congress will soon take up this debate, and on one side, the government of the Commonwealth, the Barack Obama Administration and many liberal or progressive Democrats in Congress support some form of bailout and bankruptcy for Puerto Rico, while many Republicans and conservative groups see reform as key to a prosperous future, and solving the current crisis, for the Commonwealth of Puerto Rico.
Wealthy investor and far-left political activist George Soros has weighed on this issue as well, siding firmly with his support for bailout and bankruptcy for Puerto Rico. Mr. Soros tweeted, “In debt-ridden Puerto Rico, cuts to vital services are affecting many of the most vulnerable there.”
The article linked via the tweet by Mr. Soros is published by Open Society Foundations, which he created and bankrolls, titled “The Human Cost of Puerto Rico’s Limbo.” The article describes how terrible day-to-day life in the Commonwealth is and only bankruptcy and bailout it claims can do anything to remedy the problems. Mr. Soros is well known to support a very progressive and far left view that see government as the only just solution to move problems. In this instance, Soros and those on his side of this debate believe the only solution to the crisis in Puerto Rico comes from bailing out their failing economy and allowing the government and it’s many corrupt and inefficient state-run enterprises access to Chapter 9 bankruptcy.
The son of Mr. Soros, Alexander Soros, agrees with this prescription. In an op-ed he wrote for the Miami Herald last year, the younger Soros has called for the kind of bailout and bankruptcy applied in the U.S. city of Detroit. While it’s quite appropriate to make the comparison, it wouldn’t be expected that the younger Soros would discuss the problems of the U.S. city of Detroit in connection to the crisis in Puerto Rico. The city of Detroit was once the most prosperous city in America, and only after more than 60 years of corrupt liberal Democrats running the city, has it been decimated economically. Decades of taxes, over-regulation and political corruption have driven out almost every last successful business that once called Detroit home. What Detroit needs, just like Puerto Rico, is strong economic growth that can only come about with strong governmental and financial reforms that will enable prosperity.
Another group funded by George Soros, The Center for a New Economy, also supports bankruptcy for Puerto Rico. Their report supporting bankruptcy lists no fewer than 18 government entities that have done their share to rack up the Commonwealth’s $70 billion in public debt. Part of the problem is having such a high degree of their economy (mis)managed by their numerous, gigantic state-run enterprises. Corruption and cronyism services to function as a hidden tax and almost makes economic growth and prosperity nearly impossible. Puerto Rico is unlikely to experience economic prosperity without reforming, and likely privatizing, most of their inefficient and corrupt state-run enterprises.
Giving them a bailout and access to Chapter 9 bankruptcy will not address the root causes of the crisis in Puerto Rico, nor will those measures solve the current problems the Commonwealth is facing as a result of decades of financial mismanagement and excessive government spending. The free market economic has historically been the only way to economic prosperity, a large and growing middle class, and opportunity for all. If Puerto Rico is going to have a bright future economically, the only way is to reform their government and financial system to allow the kind of economic growth that will benefit all their citizens. Free market reforms are the key to Puerto Rico’s future, not bailouts and bankruptcy.