The true crisis in Puerto Rico is neither economic nor humanitarian. This is a crisis of leadership. Policymakers, both locally and nationally, have failed to provide a bold vision for a world-class economy, and they have stubbornly refused to implement a proven model that would lead to that. We face the opportunity to mirror best practices of global economic leaders like Hong Kong, or allow left-wing populism to drag us further into the Venezuelan-flavored abyss.

Hong Kong didnt become an economic powerhouse and global financial center by pure happenstance. Despite not possessing any significant natural resources, Hong Kong achieved tremendous prosperity in the latter half of the 20th century. How? Its political leaders implemented a truly universal recipe for success strong private property rights, world-class rule of law and a complete aversion to governmental economic meddling. When the territory became the foremost model for laissez faire economics, prosperity rapidly ensued.

Prosperity and human flourishing are the predictable byproducts of economic freedom. Its time for Puerto Rico to use that knowledge for our own benefit. The hands-off policies of free enterprise are too morally compelling to ignore. Consider that, according to the Cato Institute, the poorest 10 percent of residents in the nations with the most economic freedom enjoy an average income that is double that of their counterparts in the least-free nations. It is time for the people of Puerto Rico to reap the benefits of economic freedom.

The alternative is a slow slide into economic catastrophe. The unfolding crisis in Venezuela again demonstrates the failures of socialism. Central planning, nationalization of industry and insecure property rights have turned what was once the wealthiest nation in South America into a failing state at a social breaking point. Indeed, the socialist model championed by our Latin American peers is the very genesis of Puerto Ricos current problems. It is a model we have tried, and it is a model that has failed us. Puerto Rico must not become another socialist banana republic.

How can Puerto Rico go from being an incipient Venezuela to becoming the Hong Kong of the Caribbean? Action is required at both the federal and local levels. In Puerto Rico, we must stop pretending Band-Aids are a solution and take tough actions that will free us, economically and emotionally, from government dependence. To overcome the stain of failing to make good on constitutionally protected government bonds, we must re-establish our credibility in world markets. This begins with sweeping local tax reform to make Puerto Ricos taxes among the simplest and lowest in the world. We need a drastic downsizing of government, liquidation of the thousands of government-owned properties, from restaurants to empty lots to industrial warehouses, and privatization of government-owned corporations, beginning with the electric power authority.

Some challenges for Puerto Rico can only be dealt with in Washington. Federal policymakers must be sensitive to the differing geographic and economic realities between our Caribbean island and the U.S. mainland. We dont need bailouts, handouts or dependency. We just need policies that allow us to compete at our fullest potential. Saddling Puerto Rico with federal laws that do not recognize the uniqueness of our situation guarantees permanent economic disadvantage. First among these is the Jones Act. Nearly every study of Puerto Ricos economy from the Krueger study to the General Accounting Office findings calls for Jones Act relief. Whether this is a complete exemption, or relief from the shipbuilding and international relay requirements, federal action would be a significant boost to our economy. A minimum wage exemption would allow us to compete regionally. Finally, as tax reform is undertaken in Washington, a return to something similar to the Code 936 law that helped create a booming manufacturing industry in Puerto Rico and brought prosperity throughout the island is in order.

Milligan is the executive vice president of the Puerto Rico-based nonpartisan think tank Fundacin Libertad and resides in San Juan. Blom is the Washington, D.C., director for Fundacin Libertad and resides in Virginia.

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OPINION: Let Puerto Rico reap the benefits of economic freedom - The Hill (blog)