A reflection on business leadership and economic strategy

First of a two-part series

In a Babauta-Torres administration, Juan S. Torres and I will focus squarely on being fiscally responsible, turning our economy around, getting citizens back to work and setting the foundation for a healthier, stronger, and sustainable future of this great U.S. commonwealth democracy!

Like most citizens and fellow Americans in the Commonwealth, the Babauta-Torres leadership is deeply troubled by our economic wreck and the sluggish economic recovery and the troubling effects on families, businesses, and the community. Opportunity, especially for the young high school and college graduates, older Americans and the underrepresented disadvantaged population, is on a slippery decline. Underemployment has become the CNMI’s new norm, with long food stamp lines and long affordable housing waiting list the last time we checked.

The effects of underemployment are not only economic, they are also social and psychological. Real work is an important part of how we define ourselves in life. Meaningful work benefits both us and others. Those who lack real jobs often end up depressed, addicted or aggressive. No wonder the haystack of cold cases at DPS, vandalism, absenteeism at school, among many manifestations of a deteriorating social fabric in our community.

Today, opportunities for such work are not what they should be. We need a different approach, focused LESS on the gridlock politics and more on basic foundational principles and values.

Principled business
First, we need to encourage principled entrepreneurship. Companies should earn profits by creating value for customers and acting with integrity, the opposite of today’s rampant cronyism, fly-by-night enterprises, and fast buck.

Businesses in America, for instance, focus on getting subsidies and mandates from government rather than creating value for customers. According to George Mason University’s Mercatus Center, such favors cost us more than $11,000 per person in lost GDP every year, a $3.6 trillion economic hit.

Compounding the problem are destructive regulations affecting whether and how business invests and employees work. Federal rules cost America an estimated $1.86 trillion per year, calculated the Competitive Enterprise Institute. Isn’t it revealing how our developer’s fees or cumbersome permitting process are costing businesses in frustration index and dollars too?

We have seen and hear all too often how punitive permitting for large projects creates years of delay, increasing uncertainty and cost. Sometimes projects are canceled and jobs with them. Meanwhile, 30 percent of U.S. employees need government licenses to work. We need a system that rewards those who create real and added value, not impede them.

Second, we should eliminate the artificial cost of hiring. For example, federal government policies, such as Obamacare, have given businesses a powerful incentive to hire two part-time people to do one full-time job. This trend was reflected in June’s employment data, which included the loss of half a million full-time jobs.

In 2007, 4.4 million Americans worked part-time jobs because they could not find full-time work and hundreds more in the CNMI. That number now stands at 7.5 million, up 275,000 in June. “The existence of such a large pool of ‘partly unemployed’ workers,” Federal Reserve Chair Janet Yellen said, “is a sign that labor conditions are worse than indicated by the unemployment rate.” Not much is different in the present economic environment in the CNMI. The problem is we can not ascertain this, as our Department of Commerce does not normally generate this data or information.

Skills and values
Third, we need to guide many more people into developing skills and values that will enable them to reach their potential. Everyone knows education increases a person’s ability to create value. But the willingness to work, an essential for success, often has to be taught, too.

In our earlier days on the island, our parents would have us spend our free time doing chores or working at not too pleasant jobs. Most Americans understand that taking a job and sticking with it, no matter how unpleasant or low-paying, is a vital step toward the American dream. We are in for more trouble if young people don’t find that all-important first job, which is critical to beginning their climb up the ladder.

Finally, we need greater incentives to work. Costly programs, such as paying able-bodied people not to work, are addictive disincentives. By undermining people’s will to work, our government has created a culture of dependency and hopelessness. This is most unfair to vulnerable citizens who suffer even as we say they are receiving “benefits.”

Juan S. Torres and I agree with Dr. Martin Luther King. There are no dead end jobs. Every job deserves our best. “If a man is called to be a street sweeper,” King said, “he should sweep streets so well that all the hosts of heaven and earth will pause to say, ‘Here lived a great street sweeper who did his job well.’”

Our government’s decades-long, top-down approach to job creation has failed. Its policies have made our problems worse, leaving tens of millions chronically un- or underemployed, millions of whom have given up ever finding meaningful work.

In doing so, our government has not only thwarted real job creation, it also has reduced the supply and quality of goods and services that make people’s lives better and undermined the culture required to sustain a free society.

When it comes to creating opportunities for all, we can do much better.

It’s time to let people seek opportunities that best suit their talents, for businesses to forsake cronyism and for government to get out of the way.

To be continued tomorrow.

By JUAN NEKAI BABAUTA & JUAN SABLAN TORRES
Special to the Saipan Tribune