US welfare benefits to Puerto Rico traps them under colonial governance that triggers inequality

American colonialism has had a considerable influence on economic inequality in Puerto Rico. The structural imbalances caused by a colonial economy that was focused on the profit maximization of transnational corporations created a permanent unemployment crisis in Puerto Rico. The incapacity to create enough jobs due to following an FDI-led economic model has contributed to fluctuating inequality levels. In every decade since Operation Bootstrap, unemployment has been one of the most critical issues in the local economy. Although some sectors of Puerto Rican society have substantially benefited from the postwar colonial economy, the working class’s living conditions have been declining for decades. Yet, US federal transfers to Puerto Rico have helped to keep the poverty level in Puerto Rico above regional averages. The US policy of incorporating sectors of the population into the colonial project by providing some material benefits, which began with the end of Spanish colonialism, became part of the colonial governance dynamics in Puerto Rico. The main legacies of American colonialism are an economy of increasing yields from FDI, chronic unemployment, decreasing wages, and increasing social transfers. All these factors have impacted Puerto Rico’s inequality dynamics. It is likely that the debt crisis will worsen inequality. The Fiscal Control Board’s austerity adjustment will be a crucial determinant of inequality dynamics in the following years. Therefore, even though the postwar economic model is virtually over, the colonial relationship with the United States is still a determining factor in Puerto Rico’s inequality dynamics.