Why the CNMI government is big

March 16, 2018

   Saipan — In 1965, the U.S. government hired Robert A. Nathan Associates to conduct “the first systematic economic survey” of the former Japanese mandated islands in the Pacific. These were the Marshalls, Palau, Ponape (Pohnpei), Truk (Chuuk), Yap and the NMI. They were then administered by the U.S. through the Trust Territory government whose capital was Saipan.

 

   At the time, Nathan Associates was one of Washington, D.C.’s “most highly regarded consulting firms, with major clients and assignments around the world.” Its economic report about the TT was prepared by a team of three U.S. economists who submitted it to the TT high commissioner in Dec. 1966.

 

   Anyone who wants to understand Northern Marianas history should read the Nathan report. But for many people today, NMI history started and ended with the garment industry and Jack Abramoff.

 

  Clearly written yet detailed and thorough, the Nathan report suggested an economic development plan based on several assumptions, among which:

 

 • There will be a steadily increasing population and labor force.

 • There will be relatively free access to the outside capital, management and labor resources necessary for economic expansion.

 

   “Realistic economic development planning,” the report stated, “must begin with the conditions which actually exist, not with the conditions which one might wish for or like to assume. Neither geography nor history has been good to [the islands] from the point of view of building economic development potential.”

 

  Not surprisingly, “many conditions, which in modern economies are so ‘natural’ that they are implicitly assumed, do not exist in the Trust Territory. The ‘mental re-orientation’ necessary to think and plan intelligently…is not easy for the outsider to achieve. Careful and thoughtful study of the evolution and present patterns of economic and related conditions and institutions is essential.”

  During the Japanese administration, the report stated, “many agricultural, fisheries, manufacturing and processing industries were established with Japanese capital and management, and with imported Japanese, Okinawan and some Korean labor.” The islanders “benefited considerably. They enjoyed wider varieties of goods and services, greater sources of income, and greater opportunities to develop abilities, and to get jobs than they ever experienced before or, in many instances, since.”

 

  But the American invasion of the NMI wiped out the islands’ vibrant economy. After World War II, the new economy that emerged in the NMI had only one “major industry”: government — specifically U.S. government entities.

 

  Under the direct U.S. administration of the islands, the Nathan report said, “the levels of economic activity, economic opportunity and incomes of [islanders], excluding their subsistence farming and fishing activities were determined by (1) the amounts of income paid to [those] employed on the [TT] government payroll, (2) the responding effect of the money paid to…employees of the government, (3) the amounts of goods and services provided…directly by the government, (4) the supplementary money incomes derived from the sale of copra, scrap metal, trochus shells and a few handicraft items.”

 

  During the 1951-1962 period, many islanders “were employed in [government] positions for which they did not qualify, and neither funds nor personnel were available to provide the necessary training or supervision to enable them to learn to do the assigned jobs. Productivity and performance on many programs were low, and costs…high. Short-run palliatives were provided to lessen the discomforting effects of economic and other problems.”

 

  In 1962, the budget ceiling of the TT government was increased from $6.5 million to $15 million which was further increased to $17.5 million in 1963. The result was “a new surge of government…. The three-fold increase in the budget was generally used for doing about three times as much of the same kinds of things, in the same general ways in which they had been done during the previous decade” of U.S. rule.

 

  By 1965, the Nathan report said, the impact on the islands of “foreign products, techniques, education, religion and social, political and economic ideas has been profound. Most [islanders] see foreigners as people who have access to unlimited quantities of goods. They do not know what stroke of good fortune has given the foreigners this great economic power, but they want similar opportunities.”

 

  Islanders “have come to depend on outsiders to provide basic infrastructure (such as harbors, roads, water, sewage, electric power and other facilities) and to provide public services (such as education, medical and healthcare). [M]odern public facilities and services, when provided, have almost always been provided by foreigners.”

 

  In 1978, the Washington Post reported that “31 years of American trusteeship in Micronesia has created a society dependent on government jobs and benefits, island welfare states whose people are so inundated with free handouts that they are abandoning even those elemental enterprises — fishing and farming — that they had developed before the Americans came. ‘We’ve smothered them,’ agrees a veteran U.S. administrator with the Trust Territory government, ‘and it will take them a long time to come out from under this blanket.’”

 

 

Zaldy Dandan is the editor of Marianas Variety, the NMI’s oldest newspaper.

 

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