Brain drain, job strain

China’s economic boom is rooted partially in cheap labor, but the other side of the story is that China has the brains to parley cheap labor into economic productivity. China is famous for that now.

The CNMI, now disreputable in international business circles, should heed the lesson.

Labor, on its own, is useless. That lame old Marxist theory that labor has intrinsic value may have been good for rabble rousing the masses, but it wasn’t real economics, just a new superstition for the industrial age.

In order for labor to have value, it has to be combined with capital and management. Even a lone, freelance fisherman needs a pole or a spear gun; there’s your capital. When I was a kid, the first job I wanted was to be a mower of lawns. But until I found a guy with a lawn mower to lend me (thank you, Mr. Davis, wherever you are…), I was out of luck. Capital, baby. Without it, the sweat from your brow is worthless.

As for management, the Commonwealth is learning the hard way that alienating the business community creates brain drain; these fleeing managers were the people that employed the magical capital/labor combination to create wealth and jobs.

It was the management expertise of the garment industry, the hoteliers, the retailers, the restaurateurs, the tour agents, the airlines, and so on, that employed the CNMI’s affordable labor to make the CNMI a viable economy. Well, a formerly viable economy, but you can’t blame that on management; that’s politics.

You won’t see “management” listed as a basic economic factor of production in your average textbook, it’s my homespun take on things, but sometimes, home-rolled is the best. Management is simply applied intelligence, and intelligence separates the winners from the losers in economic evolution. As the world gets ever more high-tech, the gap between the smart places and the not-so-smart ones will probably increase. The Marxists and their United Nations fellow socialist travelers will lament this fact, but they’ll lament anything that isn’t global slavery.

A place that is hostile to management (generally educated professionals) is also hostile to economic growth. You can draw your own conclusions about the CNMI in this regard. Some would say that the ruling junta’s Third World policies have run off many smart professionals and competent managers.

And on the capital side of things, no reputable investors will touch this place. It’s mostly scammers that are attracted to this shady venue now, waiting for the next La Fiasco type of intrigue. Thank the junta for that, too.

People remark to me all the time that it isn’t “logical” that so many people in the Commonwealth are willing to work, but can’t find decent jobs. Well, yes, it’s entirely logical if you understand economics. By running off managers, and by running off capital, the CNMI has put itself in a position where labor is worth less with each passing day…

…contrast that with, say, China, where labor is getting more valuable all the time. China is getting smarter, better educated, and more sophisticated all the time.

Meanwhile, the CNMI has regressed and can’t figure out how to deliver electricity in accordance with 1930’s standards. Asia is enjoying the dawning of its golden century; they’re building semiconductors, while we’re swimming in our own sewage.

Some places learn.

Some places don’t.

The upcoming election will tell us which category the Commonwealth falls in.

(Ed Stephens Jr. is an economist and columnist for the Saipan Tribune. E-mail him at Ed4Saipan@yahoo.com.)