Entrepreneurs: The economy’s essential ingredient

By WILLIAM H. STEWART
Special to the Saipan Tribune

Last of a two-part series

Somehow, as the future unfolds, more young people must be encouraged to enter into business and participate in the growth and success of tourism oriented enterprises particularly the small endeavors where large amounts of risk capital are not required.

For those young islanders who are ambitious but do not choose to enter a profession or acquire a marketable trade skill they must somehow be encouraged to acquire a degree of entrepreneurial proficiency or at least be exposed to the self satisfaction and reward of owning one’s own business. I don’t know how to motivate people to achieve this—but professional educators do know—and they must be given the tools, support and encouragement. I can only recognized the need to do so.

The great American entrepreneur and philanthropist, Andrew Carnegie once remarked: “Look out for the boy or girl who has to plunge into work direct from the common school and who begins by sweeping out the office. He or she is the dark horse you had better watch.” This was Carnegie’s acknowledgement to keep your eye on those that usually “start running when they wake up” as they have the principal ingredients for success, namely, determination, drive and ambition.

When one owns a piece of the action, one takes far more interest in maintaining the health of the business and the environment in which it operates—you want to make both better by serving their customers and the community. To do so, these people wake up running every day to better fulfill that need and, of course, to make money.

Having advanced the observations in this two-part series, and at the risk of appearing self-serving, (which I hope I’m not so perceived), I would like to suggest that in times of economic difficulty such as we now experience, those agencies within the executive and legislative branch directly concerned with development and nonresident worker issues employ more economists or business people as advisors and fewer attorneys in an attempt to seek a workable, successful solution.

In my judgment, many in the legal profession, a line of work which relies more often than not on historical legal precedent rather than creative thinking and economic problem solving, are not always best suited for recommending a workable resolution to the issues effecting the economy. The drafting of laws designed to influence economic policies are much too important to be left entirely up to lawyers and legislators, many of whom have never had to employ nonresident workers other than perhaps office staff or had to meet a manufacturing or service-oriented payroll on time or do anything other than produce a legal argument or appear in court. In my opinion this is not the profession to rely solely upon in times of economic difficulties. This is not to imply that legal advice is not needed—it is—but should be supplemented with that of entrepreneurship and economics found only in the private sector. Many of the laws, particularly federal laws and some local legislation, presumed to influence economics are written in such a convoluted swamp of mystic prose within a quagmire of legalese that without law books, much often remains unclear even to best educated or literate and serve to complicate and confuse rather that inform and guide. If many of these laws appear as such to one who can comprehend English, imagine the dilemma of the foreign investor who cannot.

There is a simple test to be applied in support of the above and it is the following. I believe that very often when an issue relative to a great many provisions within our laws are before a jury to support a decision, that no attorney would rely entirely and exclusively upon a verbatim quote of most of our laws as written without any additional explanation as to what was read to the jurors. Very few would want to take the chance that the jurors might not understand what was cited without additional verbal guidance as to what the law intended.

Which raises in my mind the question: For whom are most laws written—the legal fraternity or the population at large? Having been less than diplomatic regarding the legal profession—make no mistake about it—when United States citizenship was conferred upon the people of the Commonwealth and when the American flag went up, it was a signal to all investors, domestic and foreign alike, that many major United States’ laws prevailed which is the absolute bedrock of stability upon which confidence rests and which creates the investment atmosphere permitting individuals and businesses to prosper and grow.

The American judicial system and its highly developed system of commercial law is a system proven to be acceptable to those who have not been previously acquainted with its jurisdiction. United States courts have inspired confidence in the international business community with a system of contractual law based on rules which are well known and respected throughout the free world. The courts are certain and not arbitrary in the application of a legal system that provides one of the most essential ingredients for creating business confidence and that is the absence of arbitrary power and the knowledge that unconstitutional change (as relates to the United States Constitution) will not occur.

I have also noticed among some in the business community with whom I associate that in the past a great deal of cynicism was leveled at several agencies of the government and the legislative branch. So much that I suspect that the various agencies involved in the issue and some of the lawmakers were largely unaware of this censure since many of those who were disgruntled within the business community were loath to be openly candid about the matter for fear of reprisal in one subtle form or another. Result—they suffered in silence. This is not healthy for all concerned. For those administrators in the executive and the several lawmakers in the legislative branch not to know the above is one thing— not to know that they don’t know is quite another. It’s two different levels of deficiency.

Among some who have served in the legislature in the past, there appeared to be little recognition of what investment capital really is—and from what it is derived. Investment capital is risk, venture money. Nothing in business is certain and one enters a venture (perhaps adventure is a better word) and takes the risk that the endeavor will be successful and that the investor will be rewarded. The reward for taking the risk is the profit earned. The money which is put at risk is itself a product of thrift, prudence, planning, management and in some cases sacrifice. It is extremely rare for such money to flow into areas where these traits are not respected. It is quite another matter, however, in an area which has yet to establish its long-term record of stability in dealing in a positive way with foreign investment, with the result that a degree of uncertainty is likely to be present.

If some of our lawmakers don’t begin to appreciate the economic elements required to engender a suitable “business climate” for increased investment, and make such investment safe, secure and welcome, I envision there will be fewer businesses left to provide the means for future employment and increased tax revenues. Because of the Asian crisis, if we are not careful, the only thing left for the vultures to pick over will be the stripped bones of an economy trying to survive.

Both branches of government must realize that they are partners in business and should strive to protect business interests—not harass it with legislation piled on legislation and regulations modified by amendments and changed with changes that are then changed time and again. This sends a signal that the place is unstable.

Business should also realize that it is not a one-way street and that they have certain obligations which, when not met voluntarily, will have to be adhered to by mandatory regulatory requirements. Businesses do not operate in the Commonwealth within a laissez faire environment. Everyone knows that selfish opportunists, avarice and unbridled greed often precipitate abuses of one kind or another, either leveled at the worker, the consumer, the environment or the tax code.

The events of the mid-’80s that resulted in the development of the tourism sector and which still distort many landowner’s vision of the future was a freak occurrence—the intensity of investment that Saipan experienced in those days is not likely to happen again. Future investment will come—but it will be much slower and much more discriminating in the analysis of both the profit potential and the laws and regulations that are in place to assist that effort as well as those in place to thwart the process. As I have mentioned in previous essays, the Commonwealth is not the end of the rainbow, foreign investment does not have to come here. There are many other locales where it is more than welcome and this is particularly true as the economies of southeast Asia and elsewhere offer lucrative incentives to increase foreign investment. And don’t think that the island’s geographic proximity to Asia will always remain as a destination advantage. High speed aircraft are already on the drawing boards to negate that advantage by shortening travel time to other competing areas. If an attractive welcome mat is not rolled out, future investors will simply bypass the Commonwealth.

Editor’s note: The author has been an observer of the local economy for almost 35 years and arrived at a time when there was only 55 licensed businesses with total assets of less than $2 million. He is the author of the books Business Reference and Investment Guide To The CNMI, Investment Opportunities In The Commonwealth, a Business Information Map and has written more than 200 essays on economic and social issues in the islands and has recorded the economic history of the Northern Marianas from the pre-war period to the present. His insight is based upon the universal truth: “You can observe a lot just by watching.”