Puerto Rico was already in an economic death spiral. Hurricane Maria adds energy to that vortex.
Pharmaceutical companies were attracted to Puerto Rico at first by tax incentives for US-based drug manufacturers. But those incentives expired long ago. Taxes are sure to go up as the island struggles to pay pensions it can’t afford and recover from the storm. At the same time, skilled tax-paying labor is shrinking due to out-migration.
I don’t think that pharmaceutical production levels will be restored to pre-hurricane levels. This will further reduce tax revenues, making the pension crisis worse.
All of this was foreseeable. Much of this was preventable. It was no surprise that a big hurricane would hit Puerto Rico. We knew it was coming even if we didn’t know when it would arrive. We also knew that the island’s demographic and political problems would result in a pension crisis.
Puerto Rico is not unique in this. It’s just ahead of the curve. Most American states are headed for the same demographic cliff. California, Illinois, New Jersey, and Kentucky are leading the charge.
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