Economics 101

Economics is a Social Studies course in the current PSS-CNMI curriculum matrix for both the 8th and the 12th grade in high school. Being a member of the learning community assigned to think through the whole K-12 Social Studies curricula, I peeked at the state of text materials on the course.

Current textbooks assume and begin with the validity of the population disaster scenario of the Anglican cleric Thomas Robert Malthus, who, writing at the turn of the 1800s, pointed out that population growth generally preceded expansion of the population’s resources, in particular the primary resource of food. The increase of population is geometrical while the increase in food supply is arithmetical. Population growth will always increase faster than the production of food, and in due time, Charles Darwin will see, the natural process of selection will determine the survival of the fittest.

Scarcity of resources has since become the bedrock of the science of political economy, dousing the earlier optimism of Adam Smith’s projection on the well-being of the masses if vested authority did not interfere with the “invisible hand” of the marketplace, and incurring the ire of Marx and Engels in that this seeming incontrovertible truth was used to justify the maintenance and preservation of the European imperial social status quo.

The point here is that we teach our children Economics from the perspective of scarcity, loading the dice to such inevitable results as “Looking after No. 1,” aiming to be at the top of the social pyramid as a life goal, and blessing greed and avarice as the consequent motivating factor in the acquisition of wealth.

In an earlier series of articles on China prior to the Beijing Olympics, I made the observation that China’s industrialization program, at best, aimed for a trickle down economics where at least 20 percent of the affected population benefit from any investment effort, and government equalizes benefits with services for the remaining 80 percent. In our current free enterprise system in the United States, 1 percent of the population owns the combined assets of 80 percent of us. Finances and exchange mechanisms are what pass for economics in school learning. Time to broaden the perspective.

What if we look at Economics from the perspective, say, of the Jesuit Chardin who admonished earlier that “the task before us now, if we would not perish, is to shake off our ancient prejudices and rebuild the earth”; were we to educate our young to the workings of the new global economy, we might need to recreate our images of society, its processes and how we name them. The economic process would be one of them.

Let me suggest that to be a conscious social human being in the 21st century, as it was in previous ones, is to be inexorably involved in issues of survival and sustenance (economic); of ordering and organizing society to overcome chaos (political); and of education, family and community, and the celebration of life and death (cultural). These three are major processes based on three basic drives found in all humans and all societies: the drive to survive (economic), the drive to be in community (political), and the drive for meaning and significance (cultural).

The economic process is foundational to social life, that-without-which there can be no decision-making (political) and no consciousness (cultural). Economics seriously take what materially simply is. This involves resources, production and distribution.

An insignificant diehard few keeps claiming the adequacy of the previous manufacturing base of the local economy in the now lamented demise of the garment industry. If we assess the industry on its use of resources, we would include natural inputs like land (leased), water (pumped out swiftly that the water table has since become irreversibly saline), fuel oil (imported); human resources of required skills and abilities (imported since the local population was bereft of experience and training in both the operational and managerial requirements of the industry); and technological resources of machinery, tools, computer mapping and designs (all imported as well).

Production transforms resources into usable form, mobilizes material, tools, personnel and systems necessary to generate goods and services. In the garment factories, every step of production was foreign. Even human forces necessary to staff security of plants and maintenance of workers’ health, nutrition and sanitation, and the actual garment production required contracted foreign workers. Ditto for every step in the distribution process from factory inventory to final delivery of product to the retail outlets. Minimal benefit in the process accrued to the local economy.

Were the collected fees sufficient to provide for the municipal support and services necessary to sustain the industry? Part of the impetus to federalize labor and immigration laws was the fact that the liabilities presented by the industry from the hiring of personal to their treatment in the Commonwealth had become not only a national embarrassment, it had also gone out of local control. One thing we know, the industry’s revenues created a bloated public bureaucracy that became the domain of the local electoral process which lately received from its own ranks revelation of widespread practices of what are referred to elsewhere as nepotism and corruption. (We will deal with PolSci for Beginners in tomorrow’s reflections.)

At the Sabalu market this week were our two entrepreneurship gurus, Walt and Tony, whose reflections in this paper have pushed for local self-sufficiency (economic), self-reliance (political) and self-confidence (cultural). To their relentless efforts, let me add this picture of island economy.

My daughter sent me $50 celebration gift. I spent a good portion of it at Sabalu market, most of which will circulate into local hands for a while. Here are four guiding principles in viewing the island’s economic process: 1) Bring in the money. Daughter’s gift, and investment on a new casino are the same. We bring in value that was not here before. 2) Retain the money. Deposit it in a local account that can locally circulate through savings’ interests and loans. If investment account is elsewhere, it does not benefit the local economy. 3) Circulate the money as rapidly and widely as possible. This is hard since tools, personnel, materials, and operational systems are sourced elsewhere. Even the food chain for human forces extends all the way to Oakland, California and Baltimore, Maryland! This is where supporting local products and services are critical. 4) Relate to the larger regional and global economy by finding ways to get the money to return. For the visitors’ industry, returning customers is crucial; evidently, the experience must be worth the cost of visiting and coming back for seconds.

So, for budding economists, here is the mantra: Bring in the money, retain it locally, circulate it rapidly, widely and as long as possible, and then relate it to the larger economy in a manner that will find its way back. Getting hold of this process has consequences to local politics and culture.

Malthus was writing about population growth, not food supply. The Sabalu market and the other promotion of other locally produced goods, particularly food supply, is an area where we can retain, circulate and manage moneys that are locally invested from elsewhere. If Walt keeps extolling the virtues of malunggay (add amargoso [bitter melon] there, too, Walt!) we might even get our school children tending school gardens again. How about it, PSS?