I was cleaning out my correspondence file and ran across a letter
written while I was off island from a long departed friend, Joe Screen,
former vice president of J. C. Tenorio Enterprises. Those of you who were
on Saipan in the seventies and early eighties will remember Joe very well.
He was one of the most irrepressible men I have ever known. In those days
everyone knew Joe and if you, as a reader, were not around at that time -
you missed something. The letter from Joe was dated December 12, 1981 in
which he remarked that he thought the Commonwealth’s economy had a ”black
hand over it.” By that he meant that the economy had not developed the way
everyone had expected since becoming associated with the American political
family four years earlier in January 1978. For me the date of that letter
provides an important benchmark in the economic evolution of the Northern
Marianas’ economy. It is a date from which I measure the growth of the
economy, and like the “Jabberwocky” bird who flew backwards looking at
where he has been - rather than forward to see where he is going, 1981 will
be my point of departure for this essay. While no one has a crystal ball to
divine the future, a knowledge of history can be helpful in defining what
the  years ahead may be like. Peering through the looking glass to employ a
favorite postulate, the “Generalized Iceberg Theorem” which states, “seven
eighths of everything can’t be seen.”  Let’s try to look at a fraction of
what possibly might  not be seen should the U. S. Government impose federal
immigration laws within the Northern Marianas. Tax generating businesses
could possibly be severely constrained due to the shortage of nonresident
employees; business revenues could decline and some firms may be forced to
close; the market for leasing land could constrict. This would be  followed
by a reduction in tax collections which in turn would require a reduction
in government provided services and, of course, government payrolls. The
CNMI’s economy could shrink to some level equivalent to that of the early
eighties - a point selected for this essay -  and this could require an
increase in federal budget support for schools, the hospital, etc. While
the federal executive branch would be responsible for administrating the U.
S. immigration law and possibly the minimum wage law, this action will
quite possibly result in an increased requirement on the part of the U. S.
Congress to provide an increase in expenditures in the islands to
compensate for the lost revenue. It’s the “Jabberwocky effect”, looking
backwards rather than forward.
     While any change in the economy may not be sudden or as drastic as the
following figures present - there will be change. In examining “selected”
economic indicators as they existed in the early eighties as compared with
those of the most current data one finds that in 1995 the total reported
business gross revenue was $2 billion - 260 million. In the early 80’s it
was $244.4 million - a difference of 825 percent; wages paid in 1980
totaled $78.2 million as compared with $464.8 million in 1995 - a
difference of 494 percent; some 15 years ago bank deposits were $104.2
million, in 1995 they were $425 million - a difference of 308 percent; the
gross island product in 1980 was estimated at $105 million. The most recent
GIP estimate now indicates it at $584 million - a difference of 422
percent. In 1980 there were 3,093 nonresident workers, by 1996 there were
28,826, an increase of 832 percent.
    The loss of the Commonwealth’s control over immigration will cause the
financial balloon to deflate to a level below the current level causing a
reverse multiplier effect throughout the economy. The volume of imports
could decline at a time when the interest on the port authority’s  bond
financing is fixed, this could result in an increase in import duties to
meet their serial payments which in turn will push up the cost of living.
It hasn’t happened yet - but it could.
     A lot of money has been placed at risk in the islands based on laws
and regulations that prevailed at the time. My own estimate is about one
half billion dollars in foreign investment has been spent in the islands
over the past ten years. Such investment is risk capital. Nothing in
business is certain and one enters the venture (perhaps adventure is a
better word) and takes the risk that the endeavor will be a success and
that the investor will be rewarded.  The reward for taking the risk is the
profit earned.  The money which is put at risk is itself a product of
thrift, prudence, planning, management and in some cases sacrifice.  It is
extremely rare for such money to flow into areas where these traits are not
respected. From 1986 to the present, a period when such investment was
being considered for the CNMI you can bet that all the laws and regulations
in place at that time were scrutinized and found to be an incentive for
taking the business risk. In my judgment such investment was made because
of the confidence inspired by the American Flag and it was made under the
impression that the area was safe from any drastic change in the rules. To
inform investors that the rules are now subject to change, at least as far
as the ability to recruit workers is concerned, not only jeopardizes such
investment but could call into question the investment reputation of both
the Commonwealth and the United States and send the signal that the rules
for doing business in the CNMI can change as a result of action taken by
the federal government ten thousand miles away in Washington, D. C.
     I challenge anyone visiting Washington, D. C. to hail a taxi that is
not operated by an individual other than a person from Ghana, Afghanistan
or from some other nation who has entered the United States in recent
years. It is doubtful that you can visit a single hospital in the United
States that does not have Filipino staff on the payroll. The point being
that if Congress has recognized that the mainland requires such skilled and
unskilled persons and has permitted their entry, then it should be
appreciated that the Commonwealth’s economy is similarly dependent.
   Turning briefly to the subject of minimum wage, some in the community
point out that several major hotels in the Northern Marianas have expanded
their facilities three times since their original investment. These
observers reason that these hotels are so profitable they must have been
able to amortize their initial investment in a relative short time and
advance the opinion that since Guam and Hawaii pay the U. S. minimum wage -
why can’t hotels in the CNMI do the same?
      Both Hawaii and Guam have a large population base including, among
others, retired military personnel and citizens of the Federated States of
Micronesia and the Republic of Palau who selected these islands as their
first choice as employment locations and, unlike military personnel whose
relocating expenses are paid by the military, islanders very often pay
their own cost of relocating. This is not the case for nonresident workers
in the Commonwealth who have their transportation recruitment expense paid
by the employer. Additionally, many foreign investors in Guam and Hawaii
own the hotel and land in fee simple with the result that their investment
appreciates in value as the future unfolds there-by enhancing their initial
investment. In the CNMI the opposite is true as the major hotels do not own
the land having, in some cases only leased it for 55 years with the result
that the value of their assets decline as the lease term is eroded until
the end of the lease period arrives at which point they are left with no
residual value and can only walk away when the property reverts to the
original land owner.
     As a poor ol’ country boy injecting a little levity in an otherwise
serious issue, to state that  the matter of federal immigration and minimum
wage is complicated is an understatement. I have yet to see any problem,
however complicated, which, when looked at the right way, did not become
still more complicated. There is nothing so simple that it cannot be made
difficult as pointed out by Mr. Dallin Oaks, President of Brigham Young
University and President of the American Association of Presidents of
Independent Colleges and Universities. He wrote an essay which appeared in
the March 17, 1978 issue of the Congressional Record in which he listed
three hypotheses derived from his research: (1) - The public is easily
fooled by government claims; (2) - An uninformed lawmaker is more likely to
produce a complicated law than a simple one; (3) - Bad or complicated law
tends to drive out good judgment.

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