ECONOMISTS helped prepare and draft the CNMI’s latest economic report — “Marianas Economic Roadmap” — which is why it offers sensible observations and sage advice such as the following:
“The challenges facing the CNMI are significant and well-documented — structural weaknesses in economic governance, labor constraints, an overreliance on tourism, high costs of doing business and external dependencies [that] limit the Commonwealth’s economic flexibility. However, this study does not present these realities as insurmountable obstacles, but rather as conditions that require strategic, incremental and pragmatic action. Policymakers and stakeholders must recognize that progress comes through continuous adaptation and investment, not through unattainable reforms that fail to account for the unique economic realities of the CNMI.
“While some may argue that bold and immediate shifts are necessary to secure the Commonwealth’s future, such perspectives often overlook the complexities of economic development.
“No single policy, industry or investment should be counted on to singlehandedly reshape the CNMI’s economy.”
Exactly.
But some CNMI officials seem to believe otherwise. Based on their public pronouncements, they appear quite certain that more federally funded projects, programs, and initiatives will do the trick — that soliciting and obtaining additional federal handouts, to be distributed by economically oblivious but politically savvy government officials, will “transform” the local economy. It will, but not in a good way. After more than three decades of stagnation under direct U.S. rule during the Trust Territory era, the CNMI finally achieved economic growth beginning in the late 1980s and continuing through the mid-1990s. Yet if some of its current officials are to be believed, the CNMI should now revert to what it once was: an abject dependent of federal politicians.
This reminds me of what a British member of parliament once said about his political opponent: “What you [see here]…is something unique in natural history. The first ever metamorphosis from a butterfly back into a slug.”
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The 344-page Marianas Economic Roadmap includes a preliminary report that provides useful data for policy makers and even ordinary citizens.
The report, for example, points out that the CNMI tourism sector “is somewhat of a misnomer.” Why? Because tourism is “pervasive across all sectors. There are few businesses that are not impacted by tourism arrivals and expenditures in the CNMI.”
When you say “tourism” in the CNMI you are essentially referring to the local economy. Hence, to claim that we can be “less dependent” on it is like saying we can reduce our reliance…on the economy. This is a warmed-over, leftist-flavored, pseudo-utopianism. In short, economic illiteracy.
As the roadmap’s preliminary report noted, “Economic multipliers in tourism spending play a crucial role in assessing the impact of tourism on a local economy. When tourists spend money on various services such as hotels, restaurants, attractions and transportation, this spending generates additional economic activity beyond the initial expenditures. This is because the money spent by tourists is then re-spent by businesses and their employees in the local economy, creating a cascading effect.”
In the CNMI, “reducing dependence” on tourism would result in a tsunami of business closures and the emptying of nearly all hotels, restaurants, and other commercial buildings. This would be followed by an exodus of truly biblical proportions.
You cannot neglect tourism in any plan to revive the local economy. Government officials and politicians who say otherwise should be put out to pasture.
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The preliminary report also shared data that “provides somewhat of a contrast to a prevailing thought that economic spending, either through government expenditure or employment, is a primary driver of economic activity in the CNMI.” Instead, the numbers show that “the private sector has a pronounced role in both [the] overall growth and decline” of the local economy. However, it is also “more vulnerable to economic volatility than the public sector.”
And why is the public sector “less vulnerable to economic volatility”? Simple. It is funded by other people’s money, which is then spent by “generous” politicians on voters.
Consider this government, for example. Economic indicators are down, and businesses are downsizing, shutting down, implementing pay cuts, or shedding jobs. And yet the CNMI government intends to spend more in the next fiscal year while contemplating what tax and/or fee hikes it could impose on businesses and consumers.
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