Planet Money cover image

Planet Money

The billion dollar war behind U.S. rum

Mar 15, 2024
Explore the intriguing rivalry between Puerto Rico and the U.S. Virgin Islands over the lucrative rum industry. Discover how a congressional tax scheme turned local economies into battlegrounds for brand dominance, particularly around Captain Morgan's controversial move. Uncover the economic implications of rum subsidies and how both territories scramble to secure federal funds. The episode dives deep into cultural identities intertwined with rum production, revealing the unintended consequences of competition in the spirit world.
23:25

Podcast summary created with Snipd AI

Quick takeaways

  • The rum tax program created fierce competition between Puerto Rico and the US Virgin Islands, leading to the 'rum wars' and benefiting big liquor companies.
  • Congress's failure to renew parts of the rum tax program has jeopardized the financial stability of Puerto Rico and the US Virgin Islands, potentially causing an economic crisis.

Deep dives

Rum as the Economic Center

The rum industry plays a significant role in the economy of the US Virgin Islands and Puerto Rico due to a federal tax arrangement that directs most of the tax money from rum sales to the producing territories. This setup has led to fierce competition between the two territories, with the Virgin Islands successfully luring Captain Morgan from Puerto Rico in 2008 through a controversial deal that involved substantial subsidies and financial incentives.

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