A love-love-love-love-hate thing.

Yes, this is another Peter Schiff inspired column. I wasn’t planning on doing two in a row, but I want to discuss this.

He’s dead-on in 4 of the 5 points he’s making. His treatment of The Jones Act, though, is pure cognitive dissonance, borne of Peter’s ideological fanaticism for “free trade.” What’s especially striking is the way that his criticisms of the Jones Act directly contradict his logic on the other four points.

He writes:

“Since a large percentage of the finished goods used by Puerto Ricans are imported, the result is much higher consumer prices and fewer private sector jobs.”

First let’s just establish the basics: The fact of Puerto Rico’s importing “a large percentage” (I shouldn’t be surprised if it were greater than half) of her consumer goods is a huge contributing factor to her current woes. A nation that insists in relying on foreign production for most of what it consumes is forced to eventually become either a military empire or a charity case, and Puerto Rico hasn’t the immediate potential to be a great military empire. If we applied Peter’s own reasoning from his other points to the Jones Act we’d conclude that it’s one of the few things keeping Puerto Rico afloat.

To take his first point: The problem with exempting the taxes on revenue from Puerto Rican bonds isn’t that, by golly, the rich need to be paying a higher share. Such an interpretation would be eyebrow-raising to anybody familiar with Peter’s outlook. The problem is rather that the exemption applies only to government debt, giving public lenders a structural advantage over private ones, and diverting the limited pool of available capital into government coffers and away from private industrial borrowers. How can we at the same time both acknowledge the destructive impact of laws which hamper domestic industry’s ability to compete against the capital-gobbling Puerto Rican politicians and condemn laws which enhance domestic industry’s ability to compete with the Chinese? Puerto Rican politicians, craven and putrid as they are, are at least likely to spend the money they’re lining their pockets with right there in Puerto Rico. They certainly won’t be using it to update the equipment in some factory on the other side of the world in Red China, unless indirectly through purchasing the goods that factory’s churning out, with whose prices domestic goods just can’t compete.

I don’t want to belabor this, but let’s take just one more example: Consider Peter’s (very well-reasoned) critique of Puerto Rican “welfare” (such a gross euphemism). His logic’s hard to refute: If the average Puerto Rican can live comfortably just collecting from the state, then the phenomenon of tremendous Puerto Rican laziness that Peter documents is no great wonder. But how much more comfortably could that average dole-collecting Puerto Rican couch potato be living had he even easier access to cheap foreign goods? Shouldn’t it be reasonable to suppose that the increased cost of living created by the Jones Act is one of the things spurring the productivity of what few Puerto Ricans are showing any?

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