IN November 2008, Variety informed its readers that more than 4,000 local residents had already moved to the states because of the economic crisis. This was according to a federally funded report conducted by Malcolm D. McPhee & Associates and Dick Conway on the economic impact of federalization on the CNMI.
Variety likewise quoted two Rota senators who noted the “heavy exodus” of island residents. The then-Saipan mayor, for his part, said about four local families were leaving each week. Variety also interviewed several local residents who were holding yard sales — they had decided to settle down in the states. “We’re moving out by January next week,” a family in Koblerville said. Another resident said they would join their relatives who were already in the states.
According to the McPhee report, “In light of the lack of jobs, a decline in the standard of living, a deteriorating public sector, and the right to move freely to the states, which offer much higher paying jobs, it would be surprising if a substantial number of U.S qualified residents did not leave the CNMI.” The report said “with no ability to expand its workforce, the [CNMI] economy will ultimately stagnate.
A former House speaker told Variety that the exodus would continue “if we do nothing to counter this problem.”
At the time, the CNMI had already lost its other industry, garment manufacturing, and arrivals from its main tourism market, Japan, had dropped since JAL ended its CNMI flight service in 2005.
Around the same time, Micronesian scholar and author Francis X. Hezel, S.J. published an article on the economies of the FSM and the Marshalls. He quoted a U.S. official as stating that direct U.S. financial aid to the two island nations “has created a ‘lotus-eating society’ in which there is no incentive to grow a private sector.” U.S. funds were “poorly spent, if not wasted outright, and the attempt to promote economic self-reliance [was] a failed enterprise.”
Hezel said the “first economic assistance package under the Compact of Free Association provided over $1.5 billion [worth $2.87 billion today] to the FSM since 1986… Of that $1.5 billion, over $890 million [worth about $2.5 billion today], was spent on the day-to-day operation of the FSM State and National governments…. The use of Compact funding did not achieve the social gains or as much economic growth as all had expected in 1986. After 17 years of Compact assistance, levels of academic achievement and health care, the effectiveness of government services, the condition of the schools and hospitals, roads and ports, water and sewer, and even electrical services are not what the FSM’s founders or any of us present today had hoped.”
Hazel said every economic report on the FSM and the Marshals had arrived at the same diagnosis of their economic ills:
• Poorly developed private sector, compared to bloated government sector, which is large not only in terms of employees, but also a salary scale that is disproportionate to both the private sector and the output of work by employees.
• Inhospitable environment for investment, stemming from absence of secure land tenure, unnecessarily difficult procedures for obtaining foreign investment licenses, and lack of transparency and impartiality in government.
• Heavy dependence on overseas aid, accompanied by reduced urgency to generate internal economic growth.
Eighteen years later in the CNMI, the newly elected governor would announce a new policy premised on “direct aid [from the U.S.] to replace the economic loss that we have experienced as a result of the CNMI’s pivot away from China.”
Apparently, the CNMI’s top officials have given up on economic development and efforts to reduce reliance on Uncle Sam, which were among the top goals of the Commonwealth’s founding fathers when they negotiated the drafting of the Covenant with the U.S.
The CNMI today is a far cry from the CNMI in the 1990s. Back then CNMI leaders could proudly report to the U.S. Congress the undeniable progress the Commonwealth was making. “We are an economic success story in insular areas,” Gov. Larry Guerrero told U.S. lawmakers in 1992. “We reduced the size of government relative to private sector. We decreased our burden on the Federal Treasury. We have dramatically increased local revenue and just as dramatically reduced our reliance on…federal taxpayers. Economic self-sufficiency in the Northern Marianas is in sight. We have a booming tourist industry.” However, he added, presciently, “this industry, and the garment factories…will collapse under the weight of mainland wage and immigration policy. Don’t send us back to a coconut economy. Don’t make us a federal welfare state again.”
Three years later, his successor, Gov. Lang Tenorio, told the U.S. House Republicans who wanted to federalize local immigration and minimum wage: “I’ll make a deal with you…. [L]eave us with control of our immigration, taxation and minimum wage — not so we can continue with business as usual, but so we can institute the reforms that both of us want at the Commonwealth level rather than from Washington…. In return, we’ll leave you with $27 million [worth about $55.6 million today] you can use to cut federal taxes or reduce the deficit — not to mention the millions you will save by not adding our costs to the federal [Immigration and Naturalization Service] budget.”
Governor Lang was just getting started. He also said that the U.S. wasn’t helping the CNMI government by giving it money. “We have grown up and with adulthood, the handouts end,” he said. “You will actually be helping us by taking them away. In fact, federal subsidies do us more harm than good because it perpetuates our dependence on the federal government and it comes with too many strings attached.”
Imagine that. An insular area official telling Uncle Sam to keep his money.
Today, apparently, perpetuating, if not deepening, the islands’ dependence on the feds is the goal.
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