This ain’t rocket science

Will the Commonwealth shoot itself in the foot yet again, and fail to react to the garment industry’s woes? The garment sector has long been a target of increasing taxes and seemingly punitive labor policies. It will, then, be interesting to see if the Commonwealth has become so bloated on the blood of the garment industry that, parasite style, the CNMI’s money-hungry government decides to kill the host.

The truth behind the truth is that as a large employer, the garment sector has always inspired the ire of certain socialists, who don’t want anyone but their government offices to be in positions to dispense jobs. He who controls the jobs, controls the people. Such is the reality of a patronage economy… and the Commonwealth sure didn’t invent that gig. Look at the happy things it did for Eastern Europe, the U.S.S.R., and Latin America, where entire generations have been doomed to beg government officers for meager jobs.

It is a road to serfdom, but if that’s the path the people of the Commonwealth want, then I’d be the last one to try and stop them.

So if the Commonwealth doesn’t want the private sector around, then maybe the private sector should heed the message and leave the islands. And the non-garment business sector had better realize that if the garment industry can’t get its user fees reduced, and if it consequently vanishes, the voters of the Commonwealth aren’t going to jump up and down with some economic epiphany and start singing hymns of praise to free markets and Adam Smith.

No, the electorate will go on a hunting expedition for more tax revenue. As the size of the economic pie shrinks, the calls to increase the government’s share will increase. Talk about a graveyard spiral…do you want to get caught in that trap?

I don’t see any rocket science here. There is simply no economic harm in lowering the garment user fees from 3.7 percent to 2.7 percent, as has been wisely proposed by House Bill 14-325. The only reason that anyone would oppose the measure is if they oppose the business sector at large. Believe me, there are government officials who regard all businesses as their rivals for power and job-creation. And there are a number of retirees, some from the mainland, who want to lord over Saipan as their personal edens, and who want to keep things as undeveloped as possible; a sleepy, economically poor backwater is their preferred playground.

Since I don’t follow politics, I have no idea how likely it is that the Commonwealth will reduce the burden on the garment sector. It is, however, possible that the CNMI has grown morbidly obese on the government gravy, and simply can’t understand free market realities. Paradoxically, it is Uncle Sam’s generosity that has exacerbated the problem, since the easy money from Uncle Sugar usually papers over the consequences of local economic mismanagement.

I think some business operators have been operating in full-blown denial, and haven’t considered the anti-business tsunami that can start when times get tough.

If the CNMI government is so big and bloated that it can’t pare back the garment user fee, then how do you think it will treat you when its belly starts to growl? It doesn’t take an economist, or a rocket scientist, to puzzle that one out.

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