Opinion | Morgan Liddick: Look to the Caribbean to see America’s future | SummitDaily.com

Opinion | Morgan Liddick: Look to the Caribbean to see America’s future

Morgan Liddick lives in Summit County. His column appears in every Tuesday in the Summit Daily News.
btrollinger@summitdaily.com |

Yes, travel broadens one’s horizons. The broadening in question was a week spent traveling among some of the islands in the Caribbean, including a U.S. unorganized territory and a member of the U.S. Commonwealth.

Yes, the U.S. has territories, one of which is the U.S. Virgin Islands, bought from Denmark in 1916. The same rules that governed the old northwest before our Constitutional Convention governs them today. And yes, we have a modest commonwealth, which includes Puerto Rico, our bankrupt tropical paradise. Both of these, though having slightly different relationships with the United States, are similar enough to each other and to us to be useful in examining the effects of systemic long-term public debt, entitlements and enormous government workforces. We better pay attention, because results we now see there are what we will see here soon if we do not alter the way we think.

Both Puerto Rico and the U.S. Virgin Islands became deeply indebted largely by ignoring deficits and by funneling large sums to nonprofits, social welfare programs and government workers, both current and retired. In his 2017 address on the budget, Virgin Islands governor Kenneth Mapp was forthright in his admission that “…this budget is about creating work,” troubling in a territory where the largest employer by far is the government. He assured retirees their pensions would not be reduced, and current employees that their recently granted raises would not be rescinded, never mind the government’s ability to pay. Hence public debt that now approaches 45.9 percent of GDP and $19,000 per capita — the last being the highest of any U.S. state or territory, including Illinois and Puerto Rico.

The latter is no prize either, with a per capita debt of around $12,000 and a debt/GDP ratio of more than 92 percent. Leading the charge over the debt cliff were public corporations and services, inflexibility on government salaries and unfunded pension liabilities. Part of the problem is that Puerto Rico’s economic situation has been worsening since 2006, when preferential tax treatments given to U.S. corporations operating in Puerto Rico were rescinded; the commonwealth’s GDP has declined dramatically since then, although the government has not curbed spending. In 2016, when it appeared Puerto Rico could no longer meet its obligations, Congress passed the PROMESA act, allowing San Juan to declare bankruptcy to restructure its public debt. That triggered a stampede away from government paper not only there, but elsewhere, including the Virgin Islands — pushing both governments further into economic quicksand.

Puerto Rico’s bankruptcy has not only impacted the island’s economy; a general air of decline and trepidation seems to have infected the capital. Old San Juan, a popular destination for tourists who provide more than 10 percent of the commonwealth’s income, has seen a marked rise in shuttered storefronts, tagged mailboxes, broken water meters, collapsed sidewalks, broken windows and gutted buildings. Touts swarm anyone looking vaguely touristic with offers of anything one might imagine at the cheapest price possible. Think Istanbul’s Grand Bazaar on a Thursday evening. But high-end shops are closing their doors as rising sales taxes make other Caribbean venues far more attractive. Security personnel are ubiquitous and conspicuous. There is a new down-at-the-heels feeling.

In the cruise port, the former arrival terminal is now only sporadically used — more modern ships are too large for the facility, which appears not to have been upgraded since it was built. An awful crunch occurs when a ship terminates or originates there. A much longer open-air pier for day visits by larger vessels has been built, but … both our ship and another 4,000-passenger behemoth stirred up a huge amount of slit with thrusters, maneuvering on and off the dock. This area will probably have to be dredged soon, and from the look of things, there’s not going to be money to do that. What happens to Puerto Rico’s tourism sector when it is struck from cruise lines’ Caribbean itinerary is a real — and really unpleasant — question.

All of this screams from the rafters that debt used to cover ongoing operating expenses will bankrupt a government stupid enough, or vicious enough, to cling to that reed for long. And when that government sinks, it will take much of the economy with it, dealing terrible damage to the people least equipped for it. Want to see our future? Look at the Caribbean. One can go there easily, for a good, long, up-close view.

Tropical rum drinks might help when the nausea of recognition hits. Lots of them.

Morgan Liddick writes a weekly column for the Summit Daily.

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