Free Market in Puerto Rico 2022

Introduction

The free market is an economic system based on supply and demand, without or with minimal government intervention (Chappelow, 2019, cited in Roby, 2019; Huynh & Hoang, 2022), in which the free movement of capital is allowed and people can access the market to buy and sell goods and services; consequently, prices, wages, and profits are determined by market activity and free competition between private companies. In this system, “the individual is free to pursue his personal ends and desires” (Hayek, 1944/2006, p. 76); and it is considered that, as they act in their own interest, an economy will grow and function efficiently.

The free-market system operates under four main pillars: (a) “Individual liberty,” the freedom of individuals to exercise rights considered to be outside the control of government and make choices for the satisfaction of their desires; (b) “Rule of law,” the supremacy of law, equal protection before the law, and impartial application of the law allowing the coexistence of individuals within a society; (c) “Property rights,” the individual possibility to acquire and own property for personal and commercial use; and (d) “Limited government,” the circumscription of state power to the constitution and the law to prevent arbitrary action. Financial freedom, fiscal freedom, investment freedom, labor freedom, and freedom from corruption are also important in the operation of these pillars.¹

Although free-market ideas have existed in Puerto Rico for centuries,² knowledge of the principles of this economic system and affinity with them on the Island had not been investigated. Faced with this situation, the Instituto de Libertad Económica (ILE) tasked itself with carrying out a study that would: (a) encourage stakeholders and those in public policy decision-making positions with regard to the economic development of the Island to learn about and take into account the opinion of the population; and (b) lay the foundations for other possible research, as well as for measuring variations in the valuation of those ideas, over time.

Highlights

Among the survey results, the following are worth highlighting:

• Respondents have a negative perception about the direction of Puerto Rico’s economy.
• The sample expresses that people need economic liberty to trade and cooperate with each other and indicates that economic liberty is fundamental to development and progress.
• Participants broadly support the free-market system and believe that it does not have the weight it should in the Puerto Rican economy.
• Almost the entire sample affirms that people should be free to make decisions in pursuit of their own well-being; and a similar number states that they should be able to earn a living honestly in whatever they wish, without obstacles on the part of government.
• Those who answered the questionnaire mostly believe in individual responsibility and one’s own efforts to satisfy desires and achieve personal aspirations.
• The survey reveals that it is not possible to feel satisfied with the current state of the principles of economic liberty and the free market in Puerto Rico and there is room for improvement.

Objectives

The general objective of this study was to assess the knowledge of the main principles of economic liberty and the free market, and the affinity with them in Puerto Rico. The specific objectives of the research were:

1. To construct and administer a questionnaire based on principles of economic liberty and the free market;

2. To quantify the degree of affinity of participants with the topics included in the questionnaire;

3. To create a ranking of principles of economic liberty and the free market according to their importance to participants, and about the functioning of those principles in Puerto Rico.

Methodology

To achieve the objectives indicated, a descriptive, cross-sectional, exploratory study was conducted. The data collection technique selected was an online survey, because of its ability to reach a large number of potential respondents;³ the accuracy of the data collection it provides (Fleming & Bowden, 2009); ⁴ the convenience of access and response for participants (Callegaro et al., 2015); and the opportunity to collect and corroborate data up until the last moment. A non-probabilistic sample was used by availability and the inclusion criteria were to reside or own a property or business in Puerto Rico.

The first part of the questionnaire consisted of the sociodemographic data of the participants (age, housing, education, work status, type of work schedule, type of organization in which they work, years they have worked, and type of stakeholder). The second part of the instrument was the dimensions of the investigation (current situation, economic liberty, free market and individual liberty, rule of law, property rights, limited government, challenges of free market, moral agency, social welfare, and meritocracy). Finally, several principles of economic liberty and the free market were included to measure their importance and functioning and build a ranking.

The items and methodology of the survey were submitted to peer reviewers and revised according to their observations. The questionnaire consisted of 8 profile elements and 25 multiple choice closed questions or assertions and was administered using Google Forms. In this survey management software, it was available all the time from the first week of January to the first week of April 2022. The instrument was divulged and participation was promoted through newspapers, radio programs, e-mails, as well as ILE’s website and social networks Facebook and LinkedIn.

The desired number of responses was 500 and 550 were received, representing 110% participation.⁵ The information collected was assigned a code for data entry and counting. Google Forms groups the response frequency of each of the options; however, a descriptive analysis was performed using Excel to corroborate the Google Forms summary. Lastly, all the responses were organized into figures and tables taking the data directly from the latter program; therefore, all the figures and tables included in this report are of our own elaboration with the data collected in the survey.

Analytical Summary of the Results

See the results of the survey here.

Conclusions and Recommendations

The study achieved the general objective of assessing the knowledge of the main principles of economic liberty and the free market and the affinity with them in Puerto Rico. The constructed and administered questionnaire served to obtain the data with which it was possible to quantify the degree of affinity of the participants with the topics included. Finally, the created ranking enabled us to see the importance of these principles for respondents and their opinion on how good or bad they function in Puerto Rico.

Those who were part of the sample have a diversity similar to that of the general population in several sociodemographic aspects. Respondents (a) have a mostly negative perception about the direction of the economy of the Island; (b) broadly support and value economic liberty and free-market system; (c) consider that the latter does not have the weight it should in Puerto Rico; and (d) negatively rate the functioning of the government as far as transparency, efficiency, and social responsibility.

Based on the results, the following recommendations are made:

• Publish the results of the survey and the validated instrument so that they can be discussed and used.
• Carry out new research on specific survey issues to broaden the knowledge and perspectives of the topics, as well as similar research in other jurisdictions in collaboration with local institutions.
• Explore techniques and identify opportunities to educate on topics such as the relationship between individual freedom and responsibility, and the consequences of delegating the latter to government in a free-market system.
• Periodically repeat this research to measure and analyze variations in the knowledge and valuation of the principles.
• Expand sociodemographic data to, among other things, include the municipality or region of the participants.

Notes

1. It is possible to measure the degree of freedom in the markets of an economy based on areas such as size of government, legal system and property rights, sound money, freedom of trade internationally, and regulation. According to an analysis of these five broad areas, the 10 places in the world that enjoy the most freedom today are, in this order: (1) Hong Kong, (2) Singapore, (3) Switzerland, (4) New Zealand, (5) Denmark, (6) Australia, (7) United States of America, (8) Estonia, (9) Mauritius, and (10) Ireland (Gwartney et al., 2022).

2. This appears in primary sources such as the Revista de Agricultura, Industria y Comercio [Journal of Agriculture, Industry and Commerce], published in the late 19th century, and a Memorial de la Cámara de Comercio de Ponce [Brief of the Ponce Chamber of Commerce], from the early 20th century. In the Revista, for example, there is praise for the inhibition of the government of everything that is not of the particular domain, offering the guarantees for business to take place and avoiding unnecessary interventions (Álvarez Curbelo, 2001, pp. 207-208). The Memorial, for its part, states that “as a general principle, we are openly opposed to government intervention in matters of public enterprises, such as the docks. In these, even less, we believe in governmental effectiveness or action, and we see it rather as a delay in the face of the increasingly pressing needs of business life” (Armstrong, 1906, Día 6).

3. Numerous works such as Jansen et al. (2007) highlight this quality of online surveys.

4. Fleming and Bowden (2009) assert that online surveys can be automatically inserted into spreadsheets, databases, or statistical packages, not only saving time and money, but reducing human error in data entry and encryption. In addition, data can be collected continuously, regardless of the day of the week and time of day, and without geographical limitation.

5. The margin of error in the survey is 4% based on the population standard deviation, sample size, and confidence interval applied (Fink, 2015).

This is a summary of the study Free Market in Puerto Rico 2022. The full report of the survey results including the cited references can be viewed and downloaded for free here.