Virgin Capital

Race, Gender, and Financialization in the US Virgin Islands

Tami Navarro

• Publisher: SUNY Press
• Year: 2021
• ISBN:
  9781438486048
• Topic: Ciencias sociales
• Subtopic: Antropología cultural y social

Virgin Capital examines the cultural impact and historical significance of the Economic Development Commission (EDC) in the United States Virgin Islands. A tax holiday program, the EDC encourages financial services companies to relocate to these American-owned islands in exchange for an exemption from 90% of income taxes, and to stimulate the economy by hiring local workers and donating to local charitable causes. As a result of this program, the largest and poorest of these islands—St. Croix—has played host to primarily US financial firms and their white managers, leading to reinvigorated anxieties around the costs of racial capitalism and a feared return to the racial and gender order that ruled the islands during slavery. Drawing on fieldwork conducted during the boom years leading up to the 2008–2009 financial crisis, Virgin Capital provides ethnographic insight into the continuing relations of coloniality at work in the quintessentially "modern" industry of financial services and neoliberal "development" regimes, with their grounding in hierarchies of race, gender, class, and geopolitical positioning.

Chapter 1

Introduction

At the outset of fieldwork, the question of methodology loomed large in my mind. My central concern was how to get at the complexity of the Economic Development Commission (EDC) program on St. Croix. In 2007, everywhere I went on the island, this tax holiday program seemed to be all anyone could talk about. There was excitement and optimism around St. Croix’s economic future, but there was just as much suspicion and fear surrounding the program and the mainland Americans it had brought to this US territory. How would I construct a methodology that would bring together both the anxiety and anticipation of the EDC program: Would I conduct focus groups? Engage in the “deep hanging out” offered by Clifford Geertz? As these questions swirled in my mind, I dedicated myself to perfunctory tasks: checking the mail was ideal because it afforded me an opportunity to interact with people and, vitally, offered the illusion that I was busy—a person with somewhere to be and something to do, when I was, decidedly, not.

As I walked into the post office one Wednesday afternoon and stood in line to buy stamps, I heard shouting. Although yelling was not in itself unusual, as customers often loudly grumbled about the long wait time or inefficient service, this was different. This was an argument, a shouting match really, between two customers: a middle-aged white woman and a Black man from St. Kitts in his sixties. They were debating the skyrocketing cost of real estate and property taxes on St. Croix. The woman, Karen, insisted that these increases were the fault of the EDC program in general and of “that Stanford man” in particular (Allen Stanford was a billionaire who had recently relocated his considerable business operations to St. Croix—and had been in the process of purchasing large tracts of land across the island since his arrival). The man with whom Karen was arguing, however, insisted that these developments were the fault of unmotivated locals, arguing that it “is we, is we! If we don’t buy, we can’t get vex.” In this debate, Karen was squarely in the camp of St. Croix residents who were critical of this program and its wealthy beneficiaries. Her interlocutor, however, articulated a competing position, that Virgin Islanders were not merely victims of global capital and its handlers, but rather that they had a part to play in negotiating the terms of its impact on the island.

After witnessing this exchange, I approached Karen outside of the post office and asked to talk with her about her views on the EDC program. As we walked to a nearby café to escape the scorching summer heat, she told me that, having lived in the Virgin Islands for over twenty years, she was concerned about the rising cost of land on St. Croix (in part, as a result of the astronomical sums being paid by wealthy white families brought to the island by the EDC program), and she told me about her plans to organize a “march for peace” that she hoped would diffuse what she saw as increasing racial tensions on the island as a result of the EDC. This march, she felt, was needed, as the arrival of wealthy white Americans on the island had reinvigorated long-standing anxieties related to race, wealth, and belonging.

The Program

In 2001, the government of the United States Virgin Islands (USVI) established the Economic Development Commission (EDC), a development initiative that closely linked the economic fate of this eighty-four-square mile island to financial developments on Wall Street.1 Virgin Capital addresses the effects of this tax exemption program operating in the US Virgin Islands and engages primarily with its operation on the largest of these islands, St. Croix. The EDC program encourages financial services companies to relocate to the American-owned US Virgin Islands in exchange for generous tax holiday policies, including an exemption from 90 percent of US federal income taxes. While in operation, these companies are expected to stimulate the local economy by hiring local workers and donating to local charitable causes. This program, rooted in attracting American capital to the USVI, marks the emergence of St. Croix as a node in global financial circuits.

However, the inception of this program and the attendant arrival of a number of primarily American financial firms and their Anglo managers brought long-standing racial tensions to the fore and deepened social and economic stratification in this US territory. When I arrived to conduct my fieldwork on St. Croix, the EDC program had been in operation for just over five years, a period of time during which the initiative was dogged by much suspicion, stemming from an understanding that the emergent EDC community, comprised of these recently arrived financial managers and their families, was at best snobbish, and at worst racist.

The suspicion surrounding the EDC program had much to do with the history of racialized wealth accumulation in the Caribbean. This history, including slavery and colonialism, when combined with the unevenness of contemporary neoliberal development, of which the EDC is an instance, came together on St. Croix to produce anxiety about the program’s legitimacy. The behavior of EDC beneficiaries also figured prominently in its overall reception: so closely linked are these representatives with the program that they are known in the Crucian community as “EDC people”—a shorthand for wealthy, white, and more often than not, only selectively interested in engaging with the local community. Patterns of residential insularity that saw EDC people purchasing homes on the East End of the island and selective hiring preferences that favored upper-middle-class Crucian women in their twenties and thirties shored up this assessment. These hiring preferences were of great concern in the community, as they deepened existing divisions of class and color in ways that were uncomfortably reminiscent of the race and color hierarchies of slavery and colonialism.

Despite these critiques, EDC companies and EDC people had a tremendous impact on the island, as sources of revenue, potential employers, and topics of streetcorner critique. In its Annual Report, the local governing body charged with regulating this program argued that it “has resulted in the expansion and growth in the financial services industry in the Territory. The creation of high paying jobs for college graduates from the Virgin Islands has partially reversed the flight of intellectual capital to the United States mainland” (Economic Development Authority 2004: 1). This classification of EDC jobs as “high paying” is central to the ambivalence with which the program was received on St. Croix: part of the assumption of lucrative EDC employment is based in fact, as compensation of EDC employees averaged $66,000, nearly double the average income in the USVI.2 Yet, despite this potential for economic advancement, there were many on St. Croix—like Karen—who pointed to a darker side of this program, citing economic marginalization, increased stratification, and reinvigorated tensions around race and belonging.

The history of the Economic Development Commission program in the US Virgin Islands is one of evolution. While its sister islands of St. Thomas and St. John have both fared well economically,3 St. Croix has struggled for decades with finding ways to stimulate the local economy because tourism, the economic development avenue pursued by many Caribbean countries since the mid-twentieth century, has not been a significant growth industry. Given these disparate economic realities across the USVI, the government turned to courting US capital through the EDC program in the hopes of stimulating growth on St. Croix. This move is not unusual for the region: since the mid-twentieth century, many Caribbean territories have pursued development through industrialization-by-invitation programs. The 1948 implementation of Operation Bootstrap in Puerto Rico stands as a pioneering example; yet countries like Jamaica, Trinidad, Haiti, and the Dominican Republic have also attempted these types of schemes. Typically, these projects have provoked resentments among sectors of the “host” societies as managerial staff, mostly foreigners and local elites, maintain exclusive social enclaves that are classed and racialized (Douglass 1992; Maurer 1997).

During the 1970s and 1980s the local government of the USVI similarly pursued economic growth through the Industrialization Development Commission (IDC)—the precursor to the EDC—with the primary beneficiaries being working-class Crucians who were able to find employment within the aluminum and watchmaking industries on St. Croix. In the late 1990s, the program began to focus on companies making use of light, flexible labor, in keeping with the paradigm shift that was taking place in the Caribbean as a whole during that decade.4 This broader shift impacted development attempts in the USVI, with the IDC accepting small numbers of benefit applications from technology and financial companies, most often financial management and investment firms. It was not until the early 2000s that it was formalized, with the IDC being renamed the Economic Development Commission (EDC), focused on attracting primarily American financial management companies to the island, thereby solidifying the US Virgin Islands’ entrance into the global competition for development dollars through finance. The new EDC program, however, has been seen as abandoning the working class. In part, this is because it is directed toward financial services and not industrial production, favoring Crucians from backgrounds of relative mobility and privilege.

The EDC program, much like its industrial predecessor, focuses on attracting businesses to the US Virgin Islands by offering tax incentives, perhaps the most enticing of which is the 90 percent waiver on income tax. These islands are hardly the first to offer such incentives, as tax holidays have been offered by a number of countries in the region in an attempt to stimulate their economies. For instance, the Cayman Islands have long been viewed by investors as receptive to their needs, and there is a growing banking sector in the nearby British Virgin Islands. While the USVI fits into this broader pattern of economic development, its status as an English-speaking American territory in the Caribbean makes it uniquely attractive to US-based businesses. Much like neighboring Puerto Rico, the USVI relies heavily upon its political relationship with—that is, its status as a possession of—the United States for the success of the EDC program. While the status of the USVI and Puerto Rico as territories of the US has made various economic development initiatives possible, it is this very status that has contributed to the gutting of local economies such as agriculture, often leading to intense outmigration.5

A widespread move toward independence in the Caribbean in the 1960s and 1970s followed Operation Bootstrap, and while the 1970s was a period during which many Caribbean islands turned toward increasingly autonomous development plans (largely as a result of frustration with the outcomes of development programs implemented after independence from Britain across the region during the 1960s), the USVI continued to rely on its political relationship with the US. As has been amply demonstrated by scholars in and beyond the region, the development strategies pursued during the immediate postcolonial period did not substantially diverge from those that had been followed before independence and did not fundamentally alter the colonial social and economic hierarchies that characterized the region. During the 1970s, however, with the increasing interest in the nonaligned movement, with Black power movements gaining speed in many Caribbean countries, and with democratic socialist policies being pursued in Jamaica, a sea change was occurring in the formerly British West Indies. Nevertheless, the US Virgin Islands continued to root its hopes for economic development in its status as an American territory. As the global focus changed post-1970s from heavy industry to a regime characterized as more flexible, scholars grappled with what these increasingly global processes might mean for a new world order. In the 1990s, some theorists analyzing those processes through the lens of globalization began to argue that their electronic (or virtual) nature would result in greater global integration, with formerly remote areas incorporated through these circulations. At that time, Arjun Appadurai’s (1990) theory of global flows (or “scapes”) traveling at “blinding speeds” captured the hope of that optimistic moment, hope that has largely been dashed in the intervening years by the persistence of inequitable power dynamics and—as it relates to the USVI—the continued unfolding of the project of US empire.

For both theorists and residents of the Caribbean, the move toward lighter industry was seen, at least initially, as an attractive alternative to the service-sector jobs provided by tourism, as the local population anticipated training in new skills, and because the financial services companies were to walk with a lighter footprint on the islands. This desire to move away from a tourism-centered approach to economic well-being was informed by objections to both the lower wages generally paid in the hospitality sector (for instance, jobs in this sector in the USVI included a starting salary of $16,350 in 2016)6 as well as more general critiques of the ways in which this industry trades upon and extends the history of Black service and white leisure in the region (see, for instance, Cohen 2010; Gmelch 2003; Kincaid 1988; Nixon 2015; Sheller 2003) and extends the project of US empire (Gonzalez 2013; Aikau and Gonzalez 2019). Given the reproduction of these problematic dynamics in this industry, the USVI turned to economic development in the form of the EDC program. Yet, EDCs have produced many of the same effects as tourism in relation to racialization and gender, including the feminization of labor and the continued dependence on foreign capital resulting in racialized hierarchies that recall earlier processes in the region. Further, the economic and social vacuum created by the too-numerous EDC companies that continue to leave the island quickly and under suspicion is much the same as that created when “runaway shops,” noted by Helen Safa (1981), or tourist markets move elsewhere.

Unlike the earlier IDC, the newer EDC program has been seen as solidifying preexisting hierarchies of privilege rooted in race, class, and color. In part, this is because it is directed toward financial services and not industrial production and, as a result, the program typically hires Crucians who have received their tertiary educations in the United States. This hiring preference on the part of EDC employers has contributed to an entrenchment of status hierarchies that are rooted in education and the ability to migrate, which are themselves tethered to local color and class expectations. It has also tended to solidify biases that position the attainment of education on the US mainland as superior to that which could be obtained locally. Finally, the program has reorganized the ways opportunities are gendered because EDC employers tend to hire significantly more young women than men. Beyond the notion of “EDC people” (an identity tied directly to one’s relationship to this tax incentive program—and, thus, capital), these hiring preferences have contributed to the creation of a new social category on St. Croix, the “EDC girl,” a subject expected to dress, act, and dispose of her generous salary conspicuously on items such as clothing, cars, and vacations—spending patterns that often frustrate the parents these women now outearn. This emergent identity is central to my analysis, as it demonstrates the fraught relationships between gender, race, color, capital, and processes of subject formation in the current moment. Like other banking sectors across the region, the EDC focuses on capital management as the driver of economic development, an emphasis that creates space for my analysis of the ways in which the financial services model has similar effects vis-à-vis long-term development in the Caribbean as tourism, the very model it was intended to replace.

Virgin Capital examines the impact of the EDC program not only by revisiting the debates among policymakers, program beneficiaries, and Virgin Islands residents about the program over time, but also by paying attention to the ways in which my informants invoked histories of racialized violence. For instance, Crucians’ claims about EDC beneficiaries’ desired return to the social order of slavery or the invocation, by Black residents, of earlier episodes of race-based violence (including a 1970s murder of a group of white golfers at a St. Croix golf club) serve as moments in which Crucians’ theorization of the EDC as an extension of the project of racial capitalism is on display. What is more, this exploration of the raced, classed, gendered, and generational effects of the EDC program on St. Croix allows me to parse the social and cultural effects of new relationships between states, state functions (Trouillot 2001), and markets within territories that are often overlooked, not only within scholarship but also in relation to the global development mandates and opportunities whose terms are set by independent nation-states and multilateral institutions.

Housing capital in the Caribbean has long been viewed as suspicious (an assessment based on the assumption that such investments are intended to evade US tax requirements), and advocates of the EDC program are adamant that it is an attempt by the local government of the US Virgin Islands to build on its American status and provide an opportunity at legitimate banking and financial management in the Caribbean. Arriving from the US mainland and sometimes employing the requisite number of Virgin Islands residents, the managers of many of these companies have long been viewed ambivalently on the island because they are seen both as potential sources of generous income and as social pariahs intent on recolonizing St. Croix in the model of plantation slavery. This connection was so clear to my informants that a common response I received to questions about the EDC program and EDC people was, “Slave days over!”7 I learned, over the course of fieldwork, that this response was rooted in these interviewees’ positioning of this economic development program in the long history of racial capitalism and their assessment that it was but the most recent iteration of this project. Rather than viewing selective hiring preferences and housing purchases in solely economic terms, these Virgin Islands residents counted such practices as evidence that EDC beneficiaries desired to return to the social and economic model of slavery. This rendering of an economic program as an attempt to return to “slave days” on St. Croix points to the ways in which these financial transfers, and the grounded, local practices that make them possible, are racialized and tied to long histories of racialization. What is more, the effects of this development program are not entirely new for many Virgin Islanders, as this equation of the EDC with “slave days” names the continuities between this program and exploitative historical processes in the region. While advocates of the EDC program herald its singularity, Crucians remai...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Acknowledgments
• 1 Introduction
• 2 Into the Field: Navigating Self-Reflexivity at “Home”
• 3 Spectral Time: Tracing Racial Capitalism in the USVI from Plantation Slavery to the Economic Development Commission
• 4 The End of an Era: The Shuttering of Stanford Financial
• 5 Putting Race to Work: Racialization and Economic Opportunity
• 6 Easy Money and Respectable Girls: Gender Ideology and Neoliberal Development
• Conclusion
• Notes
• References
• Index
• Back Cover