A tale of two jurisdictions
THE words “Puerto Rico,” “best practices,” and “territory economic opportunities” are seldom strung together in a sentence, except when one is being ironic. But according to the administration’s latest newsletter, the CNMI Department of Commerce participated in an “Economic Recovery Corps Retreat” in Puerto Rico to “explore best practices” and gather “insights” that will strengthen the “CNMI’s economic strategies,” which is a phrase that, under this administration, carries as much depth as a soundbite.
In any case, perhaps CNMI Commerce learned a thing or two about the massive problems Puerto Rico is facing, and has been facing, for many years now. These include its staggering public debt, economic contraction, high inflation rates, rising construction costs, high energy costs, a struggling education system, a declining and aging population, the mass exodus of Puerto Ricans to the U.S., political instability, ongoing corruption investigations, among other unpleasantries.
And perhaps next time, someone will propose that CNMI officials look into the economic miracle that was Hong Kong. To quote PJ O’Rourke, Hong Kong was a conflict-ridden, grossly overpopulated place with no resources whatsoever. It has “no forests, mines or oil wells, no large-scale agriculture, and definitely no places to park. Hong Kong even has to import water.”
And yet it got rich. Writing in 1998, O’Rourke noted that Hong Kong — which is smaller than New York City — “doesn’t have import or export duties, or restrictions on investments coming in, or limits on profits going out. There’s no capital-gains tax, no interest tax, no sales tax, and no tax breaks for…companies that can’t make it on their own…. Hong Kong’s government runs a permanent budget surplus…. The people of Hong Kong have not been paylings of the state.” Hong Kong, according to Newsweek, had “no export subsidies, no tariffs, no personal taxes higher than 15%, [and] red tape so thin a one-page form can launch a company.” In 1995, Hong Kong was described by libertarian think tanks as “the freest nation in the world.” Hong Kong’s average individual wealth was greater than that of Japan or Germany (which, at the time, had the world’s second and third largest economies).
Hong Kong was fortunate to be led by officials who “strictly limited bureaucratic influence in the economy.” One of them, John Cowperthwaite, said: “I did very little. All I did was to try to prevent some of the things that might undo it,” referring to economic progress. O’Rourke said Cowperthwaite “spoke words that should be engraved over the portals of every legislature worldwide; no, tattooed on the legislators’ faces: ‘[I]n the long run the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government, and certainly the harm is likely to be counteracted faster.’ ”
When businesses make a mistake, they pay for it — literally. When the government makes a mistake, taxpayers — including businesses — pay for it.
What they said back then, and what they are saying now
THE administration’s pronouncements regarding ARPA funds remind us of the movie “Rashomon,” which was about one incident presented through multiple conflicting testimonies.
In early 2023, the administration declared that the ARPA funds had been “overcommitted” and/or “depleted.” “There is no ARPA fund,” the governor was quoted as saying. “If there was ARPA, we will not be in this situation,” he added.
Major policy decisions were then made based on that “finding.” According to the administration and its legislative allies, the CNMI could have avoided austerity measures if only the ARPA funds were not “squandered” by their political opponents. During the early-voting period last year, just a few days before Election Day, the administration announced it was restoring the 80-hour work period of executive branch employees, thanks supposedly to “spending control” and “enhanced tax enforcement.”
It was only after the CNMI Senate questioned his directive after the election that the governor revealed the actual funding source of the work-hour restoration: ARPA funds. And, oh by the way, the government had also incurred a $30 million loan.
Last week, the governor admitted that ARPA funds allowed the government to “survive and meet its obligations.” The funds were no longer “depleted”; they were “recovered.” Okay.
About two years ago, the administration said it would issue a detailed report on the CNMI’s ARPA expenditures. We’re still waiting.
