HISTORY teaches us that poverty is the default state of humanity. In his outstanding book published in 1973, “The Conquest of Poverty,” Henry Hazlitt noted that “ancient writers have left us few specific accounts of” poverty because they “took it for granted. Poverty was the normal lot.”
In ancient Greece and Rome, “houses had no chimneys, and rooms, heated in cold weather by a fire on a hearth or a fire-pan in the center of the room, were filled with smoke whenever a fire was started, and consequently walls, ceiling, and furniture were blackened and more or less covered by soot at all times; where light was supplied by smoky oil lamps which, like the houses in which they were used, had no chimneys; and where eye trouble as a result of all this smoke was general. Greek dwellings had no heat in winter, no adequate sanitary arrangements, and no washing facilities. Above all there was hunger and famine, so chronic that only the worst examples were recorded.”
Conditions in the Middle Ages were no better, Hazlitt added. “The dwellings of medieval laborers were hovels — the walls made of a few boards cemented with mud and leaves. Rushes and reeds or heather made the thatch for the roof. Inside the houses there was a single room, or in some cases two rooms, not plastered and without floor, ceiling, chimney, fireplace or bed, and here the owner, his family and his animals lived and died. There was no sewage for the houses, no drainage, except surface drainage for the streets, no water supply beyond that provided by the town pump, and no knowledge of the simplest forms of sanitation. ‘Rye and oats furnished the bread and drink of the great body of the people of Europe…. Precariousness of livelihood, alternations between feasting and starvation, droughts, scarcities, famines, crime, violence, murrains, scurvy, leprosy, typhoid diseases, wars, pestilences and plagues’ — made part of medieval life to a degree with which we are wholly unacquainted in the Western world of the present day. And, ever-recurring, there was famine…. Recurrent starvation runs through the whole of human history. The Encyclopedia Britannica lists thirty-one major famines from ancient times down to I960.”
And then, in the Western world at least, the Industrial Revolution happened, which resulted in an astonishing rate of economic growth and progress. By 1939, the last year of the Great Depression, historian E. Parmalee Prentice wrote that humanity “has been rescued from a world of want so quickly that the sons do not know how their fathers lived…. Men who never knew want such as that in which the world lived during many by-gone centuries, are unable to value at its true worth such abundance as now exists, and are unhappy because it is not greater.”
In the case of the NMI, the islands first experienced economic prosperity during the Japanese administration. Japan transformed these and other Micronesian islands into jurisdictions that did not require handouts from the Japanese government, and whose people enjoyed comfortable standards of living thanks to a thriving economy.
After World War II and under direct American rule, government became the primary “industry” of the islands. The local economy, which was almost completely dependent on U.S. funds, barely existed. The roads were bad. Sanitation was a major concern. Indoor plumbing was a dream for most households. Public health and public education were subpar and inadequate. Houses were mostly tin shacks. People sought refuge in a cave whenever there was a strong typhoon. There were not a lot of commodities sold in stores. There were a few stores. A modern communication system was a luxury. The airport was an open-air tin shack. There were very few automobiles, and they were mostly second hand, rusted pick-ups.
It was only after the NMI became a self-governing Commonwealth that the local economy began to show signs of life. In 1992, the governor of the 14-year-old CNMI appeared before the U.S. Congress to talk about these islands’ economic success story. “We reduced the size of government relative to private sector,” Gov. Larry Guerrero said. “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 for the Northern Marianas is in sight.” Three years later, his successor, Gov. Lang Tenorio told the U.S. Congress that the U.S. wasn’t helping the CNMI 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.”
The 1997 Asian currency crisis was the first major global event to disrupt the CNMI economy. The tourism industry struggled further due to the 9/11 terrorist attacks, SARS, avian flu and the JAL pullout. Following the liberalization of international trade rules in 2005, the islands’ only other industry, garment manufacturing, eventually shut down. And then in 2008, amid the U.S. military buildup discussion, Congress passed legislation that ended local control over minimum wage and immigration, citing the need “to ensure that effective border control procedures are implemented and observed, and that national security and homeland security issues are properly addressed….”
Without the economic tools provided by the Covenant, the CNMI economy teetered on the brink.
But then, a new tourism market — China — finally took off, and a major investor set up shop on Saipan. The local economy was back on track. The Retirement Fund was saved. Once again, tourist arrivals — and the CNMI government’s budget — increased annually. Then Yutu happened. Worse, Covid-19 happened.
In 2023, without consulting the public, the new administration chose to turn its back on a major tourism market — China — and instead beg for more U.S. handouts. In the Legislature, the administration’s allies pushed to impose tax hikes on already struggling taxpayers. To paraphrase a former CPA board chair, the CNMI leadership chose the path to total economic collapse.
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