Poor Puerto Rico

If you've been following the sad story of Puerto Rico which, these days, isn't at all "rico," Fortune has an update on its status. The most recent event was the U.S. Supreme Court invalidating 5-2 an attempt by the island's government to give itself bankruptcy protection.

Meanwhile a bill is wending its way through Congress to begin a solution:

The 1952 Commonwealth Constitution did not emancipate the island from the federal Constitution’s territorial clause in Article 4. The same article that gives Congress the last word on the island’s status is also the source of congressional authority over Puerto Rico’s bankruptcy laws.

Budgetary retribution is expected to come in the form of a federally appointed control board empowered to bypass the budgetary powers of the island’s elected governor and legislature.

Today, the majority of all Puerto Ricans live on the U.S. mainland, not the home island.

The imposition of even higher taxes, continued cutbacks in Commonwealth government services, and other fiscally painful measures likely taken up by the federal control board will only inflame the conditions promoting this mass migration. And as more Puerto Ricans leave, the island’s tax base continues to shrink, making it all the harder for the Commonwealth to repay its debt.

Apparently, individual Puerto Ricans can walk away from the island's debts, leaving whoever remains responsible. Thought experiment: what if nobody is left behind? Do the creditors then take ownership of the island?

As we have written, ideally PR would become Hawaii East, a vacation paradise for East Coasters, with condos for sale, time shares, etc. The government's problem has been too many poor citizens who require its assistance in the form of jobs, etc. If most emigrate to the mainland, perhaps government expenses will drop to a level where tourism earnings will cover it.

Getting from here to there will not be easy or fun. It will have to get worse before it gets better.