JAPAN created a vibrant economy in the NMI and the rest of the Micronesian islands that were formerly under the German flag (the Marshalls, Palau, the present-day FSM). “At first,” says historian Francis X. Hezel, SJ, “the Japanese Imperial Treasury supplied almost the entire administrative costs for the [islands], but by 1933 [they] were completely self-supporting and by 1936 they were producing a surplus revenue of 1 million yen [about 322 million in today’s U.S. dollars] annually.” (My italics.) The NMI then had an even smaller local workforce than it has now. So Japan brought in thousands of workers from mainland Japan, Okinawa and Korea.
“Economic prosperity was the one positive recollection of the Japanese period,” says historian Mark R. Peattie in his outstanding book, “Nan’yō: The Rise and Fall of the Japanese in Micronesia, 1885-1945.”
World War II, however, obliterated the islands’ economy. And during the subsequent U.S. administration — under the U.S. Navy and then the Trust Territory government — the public sector became the NMI’s “main industry.”
In an article published by Marianas Variety in 1979, when the NMI was already a U.S. commonwealth, Father Hezel wrote:
“[G]enuine economic development depends on motivation just as much as on money. People — especially those who dwell in a ‘tropical paradise’ — must have a very good reason for breaking their backs in a factory or field five days a week. A personal income, even a substantial one, is not a strong enough motive to induce the majority of people to take up this kind of work, as commercial farming experiments in past years have repeatedly shown us. Most Micronesians can live reasonably comfortable lives — either off the land or off a kinfolk’s government salary — without recourse to this demanding work. For that matter, the governments too will be able to do nicely without their people's productive efforts; they will have no reason to pressure them into taking on work that is not to their liking. A certain number of Micronesians will enter the service industries, of course, even as they do now. Restaurants, retail stores and bars will continue to be the most attractive commercial outlets for talented entrepreneurs as long as there are numerous government salaries to be spent. But productive industries will be generally ignored; those few that are begun will languish and die after a short time.
“One does not create a service economy, especially one fueled by a large government payroll, and then expect to turn it around into a productive economy by mere fiat or more dollars….”
In the 1980s and early 1990s, the self-governing CNMI used the economic tools provided by its Covenant with the U.S. to create a more dynamic economy. Appearing before a U.S. House subcommittee in 1992, then-Gov. Larry Deleon Guerrero reminded U.S. lawmakers that “Saipan was one of the last major battlefields of World War II to enter reconstruction phase. This did not occur until the early [1980s].”
In 1970, he added, “Saipan International Airport was a tin shack that accommodated one flight daily. There were two hotels on the island, the 56-room Royal Taga…and a 10-room, plywood bungalow known as the Hafadai…. [T]here were only 3 or 4 restaurants…. In those days there was no tourist industry and no economy.”
As of 1992, Governor Deleon Guerrero said, the CNMI was “an economic success story….” He added, “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 for the Northern Marianas,” he said, “is in sight. We have a booming tourist industry. This industry, and the garment factories as well, 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.”
Today, what Father Hezel calls “mere fiat,” that is, government decrees, and “more dollars,” preferably from the feds, are the supposed “solutions” to the CNMI’s economic malaise. Well.
The study of history, the late great Paul Johnson once wrote, is “a powerful antidote to contemporary arrogance.” But it seems that not a lot of policymakers study history.
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