The fragility of our island economy is best demonstrated today by the closure of businesses that no longer could afford the prohibitive cost of utilities here. This was preceded by large and midsize businesses taking an exodus from the floodgates of investment. They brought with them billions of dollars in investment funds that once were recycled in the local economy.
Dazed and completely drained by the effects of the quick exodus of exogenous investments from the islands, the elected elite was derailed off their wits by the apocalyptic disaster destined to ruin everything in the islands like flesh eating bacteria.
It isn’t a case of ignorance, but the obvious lack of leadership to guard our economic foundation and pillars from disintegrating. Perhaps its dangerous sway was taken as just another earthquake the hits the islands daily. It isn’t!
Our negligence to act promptly is what Joshua Cooper Ramo, author of the book The Age of the Unthinkable calls "hysteresis." Scientist use it to determine how long a certain system could withstand disturbance before it breaks down so fundamentally that it can’t easily return to the way it once was, according to Ramo. (Mr. Ramo is managing director of Kissinger Associates, one of the world’s leading geostrategic advisory firms and former foreign editor and assistant editor of Time magazine.)
The one issue that has suffered from hysteresis is the exodus of external investments. It’s unthinkable how layer after layer of elected elite from both sides of the political spectrum royally failed to nurture what we already had so we turn them into lasting partnerships. Slowly and quietly they left the CNMI, after which most everything went nose-diving.
This bad tidings has adversely affected other investors who have done legwork to finalize plans and secure investment funds. They must have completed their plans but failed to get the money required from financing institutions to commence construction. Money institutions must have been nervous about all the uncertainties fanned by investors taking an exodus from the islands thus the cancellation of investment loans. Would the NMI ever recover?
Moving into social security
The decision by the administration to transition active employees into the U.S. Social Security Administration is the better option into a retirement program than anything else.
It frees the CNMI from having to defray the costly requirement of a pension program it could no longer afford. It grants it the opportunity to finance other basic services like health, education, and public safety, among others.
Indeed, the already convoluted issue coupled with transition brings with it the excess baggage most active employees won’t understand, given their angst for being denied what’s theirs. But the move takes the larger issue in terms of what’s best for the greater majority. And the concerns of members are trumped by the needs of the greater majority of the local populace.
Cities and state governments are grappling with the concern of how to pay for pension liabilities that have saddled their coffers with trillions of dollars beyond their means to pay. Debts have piled up in similar fashion like the CNMI. Piling trillions of dollars in deficit coming from an unsustainable and unaffordable pension program is pandemic.
Some have extended the retirement age to 62 while shaving off the entire package per member. It also includes cutting off abuses such as overtime factored into increasing pension benefits when it should have been premised on base salary. Others have seen fit to impose some 16 percent in additional income tax to defray a woefully costly pension program.
Here at home we’ve seen proposals that include the sale of public land to scaffold the needs of the pension program. While the intention may be good, it brings into focus: Why just the pension program? What about the needs of public health, education, public safety, and other basic services?
The transition into the social security program should alleviate any further mindless grappling with a pension fund we can no longer afford. We messed it up and now can’t figure out how to remove the rogue elephant from the room. Other pension packages are available under social security for active members that pay higher benefits than the normal program. It’s up to you to explore this for your own benefit.
Perhaps inexperience and nearly a decade of economic abundance have blurred our vision in what’s known as the laws of unintended consequences. The pension program is good but nobody had the guts to really buckle down to figure out its destiny: Stay solvent or insolvent. The latter is the penultimate trophy we’ve secured for ourselves in our constant bouts with hysteresis. Today, there’s no single elixir to resolve the mess unless major reforms are undertaken.
I strongly recommend, however, that active members explore moving into social security. The program may be suffocating from trillions of dollars in debt, but Uncle Sam has the wherewithal to right a wrong to ensure the program stays solvent over the long haul. I am already in my sunset years with an understanding and appreciation of the importance of finding something at the end of a dark tunnel to pay for basic needs. A small sum is better than zero sum!
The bad times deepening beyond our wildest imaginings bring us closer to reality check of the dire need to live within our means. Though the immediate future looks bleak, there’s still a ray of hope that we shall see brighter days after dark.
Proponents of Article 12 feel it’s perfectly fine to breath contempt against non-indigenous taxpayers in the expenditure of their contributions. I see, so it’s okay to spend their money while denying them "equal protection" under the NMI Constitution to which contradictory provisions are superseded by the U.S. Constitution, the law of the land? Something’s wrong with this adolescent mindset, right?
Active Fund members may take exception with my recommendation. But take a critical look at your future needs to live out rainy days or sunset years. You owe it to your spouse and children for some semblance of maintenance. You’d have something to defray the cost of basic needs and Medicare benefits. Must leave something behind for your loved ones. To do otherwise would be selfish.
Delrosario is a regular contributor to the Saipan Tribune's Opinion Section