Economic freedom and prosperity in Puerto Rico

Economic freedom, the right to earn an honest living free from burdensome and unnecessary government intrusion, is an inalienable right of citizens. The U.S. Declaration of Independence recognizes that there are three unalienable rights given to all human beings by their Creator: life, liberty and the pursuit of happiness; and goes further to say that governments must protect these rights. The Bill of Rights of the Constitution of Puerto Rico stipulates in Section 16 that "The right of every worker to freely choose his occupation and to give it up..."

In 1996, the Fraser Institute of Canada published for the first time the Economic Freedom of the World report, to classify the countries of the world according to their degree of economic freedom. To the same end, in 2002 it began publishing the regional Economic Freedom of North America report; and this year, thanks to the efforts of the Institute for Economic Liberty, Puerto Rico was included in it for the first time.

Economic Freedom of North America examines government spending - general government consumption expenditures, transfers and subsidies, insurance and retirement payments; taxes - income and payroll taxes, top income tax rate, property and other income taxes, and sales taxes; and regulations - minimum income, government employees as a percentage of state employment, and union density.

Analyzing data from 2016 to 2020, the results place Puerto Rico at the bottom of the U.S. subnational index, with a score of 2.04. The lowest-ranked states are New York, at 50th, with 4.25, and California, at 49th, with 4.59; while Florida appears in first place with 7.94. This means that Puerto Rico is not even half of the least economically free state.

These results should not surprise anyone, since economic freedom is directly associated with prosperity, which is the least we have had in Puerto Rico in recent decades. The high level of government interference, day by day, in our economic freedom is evident in permits, occupational licenses, taxes, labor laws, and price fixing, among others. The result of this is minimal entrepreneurial activity and private investment, one of the highest negative economic growth rates in the world in the last decade; and the highest poverty levels, the highest net out-migration, the greatest economic inequality and the lowest per capita income of any U.S. state.

It has been demonstrated that the more economic freedom, the more entrepreneurship, the more socioeconomic development and the more and better opportunities; in addition, there is more well-being for individuals, with better institutions, health and public education systems, better infrastructure, and better management of the environment. We hope that this report will serve as a metric and stimulus to eliminate existing barriers and base Puerto Rico's development on the economic freedom of Puerto Ricans.

This piece was published originally in Spanish in El Vocero.

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