"Chain of revenue generation." You betcha'

Saipan Tribune Publisher John Rosario, Jr. used the phrase “chain of revenue generation” to describe the garment industry’s contributions to our economy. I like the phrase so much I’m going to steal it (JR isn’t looking, is he?).

The garment industry, by my estimates, is now the biggest industry in the CNMI. We all know the story about tourism’s problems. Tourism is going to get even tougher next year as Japan’s economy continues to sag. You’ve been told by some that the Russian market will save tourism. You’ve been told that the European market will save tourism. You’ve been told that we can say “ecotourism” three times, clicking our heels, and that the Wizard will send down a million granola chomping backpackers who will spend so much money that we’ll be rolling in the clover and Guam will turn green with envy.

Of course, it wasn’t me that told you any of the foregoing things. They’re all bunk.

Which brings us to the fact that wishful thinking isn’t going to save tourism. Without a well- targeted and effective promotional campaign, we’ll just have to float with the tide and take what we can get. In our current situation, tourism will turn the corner when Japan turns the corner. Period.

We all have seen, as a counterpoint to this sort of rudderless tourism condition, that the garment industry here has silently chugged along, selling its wares to the healthy mainland market, without making a hoot and a fuss about it. Quiet competence in marketing and manufacturing. And, linked to this, of course, the “chain of revenue generation” that is tied to the care, maintenance, and feeding of the factories.

Of course, all industries pull a chain of revenue generation. The technical term in econ-speak is the “multiplier effect.” The multiplier is basically the number of dollars that overall economic output increases for every one dollar of spending in whatever category is being looked at.

You can’t mention the multiplier effect with economists without ordering a six-pack and hunkering down for a long discussion of the exact magnitude of the multiplier for any given industry. That’s a whole can of worms that has all sorts of creepy crawly issues to it.

Ideally, of course, both our tourism and garment manufacturing realms would be enjoying economic Happy Hour. Until then, however, much of the chain of economic activity is being pulled by, say, a lady buying a sweater at Saks Fifth Avenue, which was shipped from a Saipan shipping office, which was made in a Saipan factory, which was supplied by some Saipan vendors, who paid employees who buy food from Saipan stores, who paid taxes that pay the salary of local government workers, who spend a very large percentage of that money locally, and so on, and so on.

Tourism, of course, has a chain of revenue generation as well, and that’s why we’ve seen so many businesses hit so hard when the chain went slack.

In essence, the chain phrase is easier to picture than the fuzzy-sounding multiplier. Either way it’s an important economic concept, especially now, when we need to better understand the underpinnings of our economy.