Economic freedom enables nations to raise their standards of living, health, knowledge, multicultural harmony, entrepreneurship, competitiveness, social progress and democracy. The top three leading nations in economic freedom are Singapore, Switzerland and Ireland. All are examples of growth and wealth creation. The worst are Venezuela, Cuba and North Korea, ranked 174th, 175th and 176th respectively, with impoverished populations and limited freedoms.
The Puerto Rico Institute for Economic Liberty recently invited Chilean economist Axel Kaiser, who compared the 50 U.S. states and Puerto Rico in economic freedom scores. Our island ranked 51st, with 2.6, the lowest level.
Economic freedom is affected by property rights, permits, professional licenses, price controls, laws that hinder investment, and a tax system with a sales tax of 11.5%, personal taxes at 33%, and corporate taxes at 37.5%.
Axel Kaiser stated that "if Puerto Rico were independent from the United States, it would be a catastrophe. That is what the data say, what I say may sound harsh, but I read the data and things are very bad," writes Francisco Rodríguez Castro (Nahira Montcourt).
Kaiser stated that "if Puerto Rico were independent from the United States, it would be a catastrophe. That's what the data says, what I say may sound harsh, but I read the data and things are very bad".
Following Kaiser's remarks, it is necessary to ask how Puerto Rico can improve its Index of Economic Freedom? Our Island has to strengthen property rights, creating transparent and secure laws and regulations. In addition, we must improve government integrity, increase transparency in public contracting processes and encourage the reporting of corruption. On the other hand, it is critical to make a total tax reform by lowering personal and corporate tax rates.
It is also necessary to create a fiscal responsibility law to limit government spending and limit the ability to borrow. There is an urgent need to prioritize essential public services and eliminate most permitting and streamline requirements by creating an automatic permitting process and significantly eliminate unnecessary permits.
Changes must include eliminating necessity and convenience and distribution laws. Likewise, it is pertinent to eliminate most occupational licenses, price controls for ground transportation and allow the market to regulate prices.
On the other hand, at this time it is vital to invest in vocational training programs to address the specific needs of the industry. The recipe for change has to leverage Science, Technology, Engineering and Mathematics education.
The transformation must include the creation of a large support network for start-ups and entrepreneurs through incubators and accelerators across the island. Therefore, a long-term country plan with a focus on economic development with specific goals and terms must be legislated. By effectively implementing the actions broken down here, we will be able to increase the Index of Economic Freedom.
And what prevents politicians from embracing economic freedom? For nations with a high Index of Economic Freedom, their per capita is $63,588. Puerto Rico's is $22,419 or 183.6% less. Those countries have less poverty, calculated at an average of 6%. In Puerto Rico it is 44.5%, equivalent to 641% more and a GDP of 2.6%.
Economic freedom liberates human potential, giving people the power to make their own decisions, controlling their destinies.
This opinion article was originally published in Spanish in El Nuevo Dia.