Puerto Rico’s 21st Century Great Depression: Causes and Policy Implications
By Ricardo R. Fuentes-Ramírez, PhD
This article highlights the importance of class processes in the ongoing economic crisis in Puerto Rico and assesses trends in productivity and worker compensation across industrial sectors. Puerto Rico’s worker compensation and productivity have both decreased since the 1980s in most industrial sectors, with compensation falling faster than productivity. The primary deviation from this pattern is finance, insurance and real estate (“FIRE”). Even though productivity has risen in this sector, worker compensation has dropped. The discussion suggests FIRE is the sector where most rent-seeking takes place, and where many have already been effective in obtaining an upward distribution of income. The government should focus on taxing industries such as these, while developing an industrial policy program aimed at strengthening industries with higher potential impact in the economy. The article also argues this should be combined with policies aimed at strengthening the labor movement.
Key Words: Puerto Rico, Economic Development, Class Analysis
JEL classifications: O54, O20, B50