In the year 1841, people across countless sleepy villages in Ireland were participating in the most advanced census that had ever been conducted in European history.
The whole of Ireland was still under the control of the United Kingdom at that point, and parliament had passed the “Population Act” the year prior to modernize their national statistics.
According to the data collected, Ireland’s population in 1841 was approximately 8.25 million.
That was the high water mark.
Just four years later, Ireland was plagued by the Great Famine (also known as the Potato Famine), in which over 1 million people died.
Another 2 million left Ireland, never to return. They made new lives for themselves in Boston, London, and New York.
The next several decades in Ireland gave rise to a deeply socialist movement known as the Land War, aimed primarily at seizing and redistributing private property.
This compelled even more people to flee.
By 1926, Ireland’s population was less than HALF of what it had been in 1841.
But the misfortune didn’t stop.
Ireland was hit hard by the Great Depression. And they tried to fix it by resorting to onerous taxes and tariffs, costly trade wars, and debilitating regulation.
The Irish economy continued to stagnate for decades, falling farther and farther behind the rest of Europe, even at a time when other European nations were themselves devastated by war.
It wasn’t until the 1980s, nearly a century and a half after the Great Famine, that the Irish government took a different approach
They began aggressively deregulating business and cutting taxes, including an experiment with a 10% corporate tax rate on manufacturing enterprises.
The efforts started working; multinationals began moving in to take advantage of the educated, English-speaking workforce and the low tax rates.
Within a decade, Ireland was one of the fastest growing economies on the planet. And the government doubled down on its pro-business initiatives by enshrining a 12.5% corporate tax rate, one of the lowest in the developed world.
It’s no coincidence that Ireland boasts one of the healthiest economies in Europe– a rare bright spot on a continent plagued by perpetual debt crises and radical socialism.
Ireland is a fantastic case study of how low taxes and economic freedom can help drive prosperity for everyone.
And I intend to tell this exact story to the Governor of Puerto Rico when I see him at a private function this coming weekend.
Puerto Rico is in a similar position right now; it’s not exactly the Great Famine of 1845… but a decade+ long economic depression has completely devastated this island.
When people come here to visit and see all the blight on the island, they always ask me, “Wow, did the hurricanes do that?”
“No. Ten years of economic stagnation did that. The hurricanes just finished it off.”
Like Ireland in the 19th century, Puerto Rico has lost a lot of its population– nearly 20% in the last decade. And most of those people are probably not coming back.
They’ve resettled in places like New York, Florida, etc. where the wages are higher and the jobs are plentiful.
Back here in Puerto Rico, the unemployment rate is still hovering around 10%. And well-paying professional jobs are difficult to find.
Even more than 18-months after the hurricanes ravaged the island, electricity here is still unreliable (and the power company is bankrupt).
The roads are in terrible condition. And the government has had to trim a number of programs and basic services.
In the midst of all these challenges, I find it remarkable that they followed in Ireland’s footsteps and passed some incredibly ambitious tax legislation to attract productive individuals and businesses.
We’ve talked about these tax incentives several times before; individuals can live in Puerto Rico and pay 0% tax on their investment income, while certain businesses can qualify for a 4% corporate tax rate.
(The individual incentive primarily benefits US citizens; foreigners who want to take advantage would have to go through US immigration, since Puerto Rico is a US territory. But ANYONE can benefit from the corporate tax incentive.)
Again, this is simply astonishing.
Most politicians would have gone down the road of higher taxes and more socialism. Soak the rich and chase them out.
But instead they decided to roll out the red carpet, hoping that the incentives will create jobs and prosperity.
So far it’s working, and I’m seeing it first hand.
The unemployment rate is slowly coming down and economic growth is finally picking up steam.
Don’t get me wrong, there’s a LONG way to go and an absolutely absurd amount of regulations they need to cut in order to truly streamline doing business here.
Hiring and firing employees in Puerto Rico, for example, is a lengthy process, and I still can’t make heads or tails of the paperwork.
And there are so many various government agencies involved in doing business here, each of which has its own separate reporting requirements.
But as they continue to unwind that bureaucracy, Puerto Rico has the potential to emerge as one of the most compelling places in the world to do business: direct access to the US market, without any of the tax consequences.
At the moment there’s also an incredible amount of opportunity here.
For example, a general contractor with experienced crews can make an absolute fortune in Puerto Rico given the demand for new construction, from low-income housing to custom luxury homes.
Bottom line: I think the worst is over for Puerto Rico. The government here has been doing the right things to get the economy moving again… and it’s working. So I want to strongly recommend that you keep this place on your radar.