0:00

NPR. In January,

0:03

Puerto Rican

0:06

musician Bad Funny

0:09

released a new

0:11

album, and this

0:14

album was

0:16

distinctly Puerto

0:18

Rican. It

0:21

sampled salsa

0:23

rhythms from

0:25

the Puerto

0:27

Rican. It was

0:30

also full of messages

0:32

ruining what was being

0:35

lost on the island, in

0:37

large part due to

0:40

economic forces. They want

0:42

to take my river

0:44

and my beach too.

0:46

They want to take

0:48

my river and my beach

0:51

too. They want my neighborhood

0:53

and your kids to

0:56

leave. What Bad Bunny

0:58

is beating his drum about is

1:00

part of a long history of

1:03

political leaders trying to turn Puerto

1:05

Rico into a tax haven. This

1:07

is the indicator from Planet Money

1:09

by Indarian Woods. And I'm Waylon

1:11

Wang. Many countries try to boost

1:13

their economies by attracting wealthy people.

1:16

President Trump recently announced a gold

1:18

card visa for people willing to

1:20

pony up five million dollars. On

1:23

today's show, we're looking at how

1:25

Puerto Rico tried to escape a

1:27

grinding recession through tax breaks to

1:30

newcomers, and what Puerto Rico's experience

1:32

can tell us about whether this

1:34

approach works. Support for NPR and

1:36

the following message come from Indeed.

1:39

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card issued by Goldman Sachs Bank, USA,

2:38

Salt Lake City Branch, terms and more

2:40

at applecard.com. Roughly

6:05

2,300 people took advantage of

6:07

Act 22 in the years

6:09

before the pandemic. This included

6:12

American boxer and influencer Logan

6:14

Paul. Leader cryptocurrency entrepreneur Brock

6:16

Pierce also joined. After several

6:18

years, the department that administers the

6:20

scheme commissioned a report to measure

6:22

the economic benefits. One of the

6:25

authors was Jose Carapayo, a professor

6:27

of economics at the University of

6:29

Puerto Rico. They didn't like it

6:31

because I think they were expecting

6:33

me to defend the Act 22

6:36

as it is and I said

6:38

no. And I found that Act

6:40

22 is creating a very low

6:42

number of jobs. The unemployment

6:45

rate did decline significantly during this

6:47

time. It's now 5.5% But according

6:49

to Jose's report published in 2021,

6:52

only a small share of those

6:54

jobs created could be attributed to

6:56

Act 22, and that's about 6,000

6:59

jobs. Now 6,000, it compares against

7:01

an island of 3.2 million people.

7:03

We brought these lackluster findings to

7:06

the former governor of Puerto Rico,

7:08

Luis Fortuno. The paper you sent

7:10

me concludes seven years after

7:12

the enactment of these acts.

7:14

We still observe modest results.

7:17

Is that disappointing to read? So

7:19

it is not a humrun and I

7:21

never expected it to be a humrun.

7:23

It's just one of many measures that

7:25

have been taken. I never thought this

7:27

was going to be a civil republic.

7:30

Never sold it that way. Just thought

7:32

it was one of many measures that

7:34

was going to help us retain people,

7:36

bringing people, new people, to the

7:38

island and generate new economic activity.

7:41

So it's worth considering Act 22 is

7:43

almost a symbolic center of a

7:45

package of changes that are affecting

7:47

Puerto Rico. The most contentious effect

7:49

is the cost of housing. At

7:52

the same time as Act 22,

7:54

the Fortuno administration was also encouraging

7:56

banking and tourism through lower tax

7:58

rates. There was also a... global

8:00

tourism boom in the 2010s

8:02

with backlash from Barcelona to

8:04

the beaches of Thailand. And

8:06

the rise of Airbnb meant

8:08

that properties near attractions like

8:10

the colorful streets of Old

8:13

San Juan spiked in value.

8:15

Long-time renters in those neighborhoods

8:17

ended up as collateral damage.

8:19

That said, there is no

8:21

robust economic analysis teasing out

8:23

the specific effect of Act

8:25

22 on housing prices in

8:27

Puerto Rico. Prices have gone

8:29

up everywhere. Go to Florida,

8:31

go to Texas, go to

8:33

New York, everywhere. So that

8:35

is a result of something

8:38

else, but not in this

8:40

neighborhood, as a result of

8:42

Act 22. The growth in

8:44

rental prices in Puerto Rico

8:46

is comparable with the US

8:48

as a whole, which also

8:50

faces a housing shortage. That

8:52

said, the anecdotes of displacement

8:54

on the island are widespread.

8:56

Louise Valentin, the journalist, says

8:58

he experienced this when he

9:00

was trying to buy a

9:03

house for his young family.

9:05

real estate people here on

9:07

the island would pick up

9:09

the phone and if we

9:11

don't speak English or if

9:13

you don't have cash they

9:15

would not do business with

9:17

you right like they don't

9:19

they don't want to hear

9:21

it. Given that the the

9:23

island is 95% Spanish speaking

9:25

so that really speaks to

9:28

something there. That's crazy right

9:30

and that's why I think

9:32

that that album really resonates

9:34

with Puerto Ricans because they

9:36

feel you know that I

9:38

get it. Luis Fortuno, the

9:40

former governor, now lives in

9:42

Washington DC, but he says

9:44

he visits the island every

9:46

month. He has little patience

9:48

for Bad Bunny's critiques of

9:50

the island's newcomers. He lives

9:52

in a mansion in LA.

9:55

And come on, give me

9:57

a break. You know, if

9:59

you're going to get involved

10:01

in the island, move down

10:03

there and get involved. To

10:05

be fair, Bad Bunny will

10:07

do a 21 show residency

10:09

in Puerto Rico this summer.

10:11

But back to whether or

10:13

not Act 22 is the

10:15

villain or hero, it's clear.

10:17

that Puerto Rico's economic policies

10:20

aren't perfect. The island's population

10:22

declined throughout the 2010s as

10:24

many young Puerto Ricans decided

10:26

to take up opportunities elsewhere.

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