Perverse incentives

By Zaldy Dandan – Variety Editor

 

A ‘low-tech’ constitutional provision needs an upgrade

THE recent brouhaha over the firing of two cabinet officials by an acting governor gone rogue should prompt us to rethink the constitutional provision relating to the designation of an acting governor whenever the governor is not physically present in the CNMI.

Devised in 1976, the rule was designed for an era in which communication channels were far less dependable. Today, the governor can track CNMI developments in real time from anywhere. Modern technology also allows him to sign or veto legislation electronically.

The “acting governor” provision, to be sure, has practical uses, allowing someone other than the governor to perform official acts, including politically volatile decisions such as firing certain appointees or approving or rejecting controversial legislation.

Mischief may arise, however, when the acting governor — usually the lieutenant governor — does not see eye to eye with the governor. Since the first CNMI administration in 1978, governors and lieutenant governors have not always gotten along, even when elected on the same ticket. For a recent example, consider the 2022 election.

At times, the result has been confusion — as in 1996, when the Republican Senate vice president, serving as acting governor, vetoed a bill that the administration said had already been signed into law by the Democratic governor before he left the islands.

To avoid future disruption — and consternation — lawmakers should introduce a legislative initiative to amend the Constitution and bring it into line with the high-tech realities of the 21st century.

 

Can the CNMI afford it?

HOUSE Bill 24-15, the government labor union measure, aims to promote “overall operational efficiency” within government. If that is indeed the goal, its proponents should instead pursue the abolition or consolidation of redundant government entities, as recommended by the 2020 Fiscal Response Summit.

This bill, however, is likely to make government employment more costly for the islands’ already struggling taxpayers. Once organized into unions, government employees will inevitably seek greater job security and regular pay increases, regardless of the state of the economy or the government’s ability to generate revenue.

Given that the CNMI government has long been the primary employer of voters, the measure may prove “irresistible” to lawmakers seeking reelection and to other candidates running for office this year.

Politics, once again, will trump fiscal sanity.

 

What it is

 AS economists have noted, unions in the private sector are bound by financial realities. In contrast, public-sector unions face fewer financial restraints, often at taxpayers’ expense.

In the private sector, if a union demands wages that exceed productivity, the firm goes bankrupt or loses market share to leaner competitors. This creates a natural “ceiling” for negotiations.

In the public sector, there is no “exit” option. Government services — like police or fire — are typically monopolies. When costs rise due to union demands, the “firm” doesn’t fail; it simply raises taxes or increases the deficit. The consumer — the taxpayer — is forced to pay for a service they cannot opt out of, regardless of its quality or cost.

Then there is the “both sides of the table” problem. In private-sector negotiations, management and labor have opposing interests regarding the bottom line. In the CNMI, government employees make up the largest bloc of voters. Public unions will “negotiate” with the very politicians who need their votes.

So the union negotiates for higher pay and less accountability, while the politician negotiates for union support and campaign contributions. The private-sector taxpayers are not at the table but will be forced to pick up the tab.

Freedom of association, to be sure, is a core tenet of a free society. But it’s a different story when an association uses the coercive power of government as a mechanism for rent-seeking.

Zaldy Dandan is the recipient of the NMI Society of Professional Journalists’ Best in Editorial Writing Award and the NMI Humanities Award for Outstanding Contributions to Journalism. His four books are available on amazon.com/.

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