Cargo cult

The timing, I’ve noticed since first seeing Saipan in 1994, is impeccable, like good jokes in a British farce. Whenever the CNMI economy hits a serious problem, the econocrats huddle together like a wart cluster, dreaming up pie-in-the-sky ideas and rain-dances that are hilarious, but somehow discussed with straight faces.

The first time I witnessed this phenomenon all those years ago, it was quaint. The second time, befuddling. By the 10th time I realized that the econocrats are the modern cargo cult messiahs, selling nonexistent solutions with mumbo-jumbo incantations and bureaucratic bloviations that are remarkably the same over the course of a decade.

Maybe it’s better to light one candle than to curse the darkness, but it’s funnier to sit around in the dark while we tell the world that we’ll soon be “diversifying” from tourism to integrated circuit manufacturing just as soon as we figure out how to generate electricity.

But as much as I love humor, and love Saipan, I’m a quantitative guy, not a dreamer. My clients have always demanded genuine forecasts and meaningful analysis, not mumbo-jumbo. Consequently, in 1997-1998 I advised most clients to cut their exposure to the CNMI economy. A very good call it was. The details are boring but on a broader note, it was obvious that the econocrat approach to economic mismanagement was a chronic disease here in the Commonwealth.

My colleagues on both sides of the Pacific have asked me why the Commonwealth actually flaunts this economic learning disability and even seems to dress it up and parade it. I suspect it’s a holdover from the old days when bureaucrats managed the islands. Saipan never made the conceptual leap from that stage. If you think that bureaucrats can “plan” your economy, then you’ll wind up with a failed economy, closed businesses, corrosive corruption, decaying infrastructure, and an exodus of the educated talent.

And, once again casting a glance in the rear view mirror, we can’t blame the “Asian crisis” rooted in 1997’s currency woes for anything. Asia’s financial woes were a great opportunity for the CNMI to crank up its competitive posture and steal as much market share as possible from Guam. Anyone with genuine private sector experience in competitive industries knows that’s how it’s done. To say that Guam outsmarted the CNMI would be the understatement of the year.

Somehow, though, the CNMI remains the luckiest place on the planet. The quiet competence of the garment industry has saved, saved again, and somehow continues to save the Commonwealth from what would otherwise be a very ugly day of economic reckoning, as tourism suffers, the government has its hands in some mighty intriguing financial scandals, and the very backbone of modern infrastructure–electricity–is in full blown crisis.

But the garment industry can’t single-handedly save everything, and the economy here is going to continue to slide…not because of Asia, not because of the United States, not because of fuel prices, not because of sun spots or Elvis or interest rates or even disco, bad hair days or UFOs… but because of the Commonwealth itself. This is where your econocrats got you.

There are actually opportunities in the economic slide, and if the CUC pulls the plug on our electricity, the next full turn in economic decay and mismanagement will be complete. Real estate will then go from weak to weaker; many current homeowners will find themselves falling down into the rental class, so I expect land-lording to become an industry with some juicy potential. For savvy players with deep pockets, there are going to be some nice distress sales coming soon.

As for the normal wage slave folks, well, they’ll continue to find that every year is financially more difficult than the year before, since fleeing capital will reduce the productivity of local labor. Money will be harder to make, and prices, due to the contraction in shipping economies of scale (among other factors) will probably continue to climb.

Which means, basically, that some of the rich are going to get richer, but the middle class and poor are sure going to get poorer. Sure, the econocrat cargo cult will still sing for its money and conjure up messianic images of Saipan becoming the Harvard of the Pacific or the Hewlett-Packard of the tropics, but many of you will be too busy contemplating bankruptcy to enjoy the entertainment value of that long-running circus.

So here’s the basic deal in one tight sentence: If the CNMI can’t sell sand and sunshine to the Japanese, then it lacks the competence to compete in the global economy. Period. That is the most basic and useful index of the CNMI’s overall future. After all, if a place can’t use its natural blessings to its advantage, then dreaming up unnatural advantages is just a joke…and the joke, dear residents, is going to be on you.

(Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. Ed4Saipan@yahoo.com)