Predictions or Propaganda?

November 11, 2008

The Marianas Variety states that Malcolm D. McPhee & Associates and Dick Conway, economic and development researchers from Washington State, wrote a doom and gloom report for Fitial and the federalization fighters to back their theory that the CNMI's economy would crash under federal system of labor and immigration. The report was submitted to the Governor and Secretary of Interior in October.

This reminds me of a similar report that Abramoff-CNMI team heralded a decade before, the 1996 report by the Hay Group.  It was commissioned by lobbyist Jack Abramoff and former Governor Froilan Tenorio to squash the implementation of the federal minimum wage to the CNMI.  That piece of propaganda was written under a sole source contract with the CNMI government and they were paid $178,000.00 to write the report. The CNMI government, Abramoff and his soldiers in the US Congress then promoted ”the findings” like it was an independent research study. Billing records show that Abramoff team consulted with Hay group officials dozens of times in 1996. So in addition to paying $178,000 for the report, CNMI taxpayers paid out tens of thousands of dollars to the lobbying firm that arranged the deal and proofed the report.  

The American taxpayers got stuck with the bill for this report too. The Department of Interior's Office of Insular Affairs footed the bill giving the CNMI government the funds to conduct an "independent economic study."  A June 2008 Saipan Tribune article related that a $50,000  grant from the OIA was to be combined with a $75,000 grant previously released to fund the economic "study." 

The firm's recommendations are absolutely predictable.  They were paid $125,000 to prepare a report to support the Fitial federalization fighters claims and propaganda.  Of course, they hit the bull's eye.  Their recommendations align perfectly with the lawsuit and the propaganda of the Fitial federalization fighters. What a coincidence! 

Can any economist truly predict what economic impact federalization will have on the CNMI when the policies and regulations for immigration and labor have not even been formulated? They do not even know what the federal program will look like, but the are advocating for the dysfunctional local control of immigration and labor to remain!  

The CNMI economy has been on a serious downward slide for years. The demise of the garment industry and falling revenue are already realities, and federalization is not scheduled to take place until June 2009.  If the CNMI is not already in a depression as some have claimed, then a depression could hit even before federalization goes into effect.  Right now the economy of the world is depressed, and this may have a greater impact on tourism and the CNMI economy than federalization will.  

I have not read the report but the paper quotes phrases from it:
Under the best of circumstances, business revenue and employment in the visitor industry will likely decline by 20 percent between 2010 and 2015.

Short of spending tens of millions of dollars to shore up education, healthcare, and other government functions, there is little that can be done to improve the local economy, the report stated.

Federalization, it added, will drive up production cost and cap the supply of labor in the CNMI economy — this will preclude any meaningful economic development in the future.

In contrast, the report stated, the return of reasonable local control over immigration and the minimum wage will allow the visitor industry to expand, making up for some of the jobs lost during the downturn of the apparel industry.

Labor mobility is just as essential to economic development and growth as is the mobility of capital, goods and services, and technology, the report stated.

“It might be said that the quicker way to ruin a small isolated island economy and prevent any real chance of recovery is to cut off its supply of labor,” the report added.
This appears to be another, "Tell me what you want to hear, and I'll write a report to support your arguments," scenario.

The controversial January 2008 Department of Labor report was based in part on interviews with Dick Conway and reports prepared by  Malcolm D. McPhee & Associates.  (see the bibliography.)


chamberonomics and obamanomics said...

I could have saved the NMI 125k by telling the Gov our economy is in a flat spin and will certainly worsen. Federalization hasn't started yet and will have little effect, although positive, on our current situation.

For all the BS our bloated Congress spews, you would think they would occasionally DO SOMETHING TO EARN THEIR PAY.

If they can't think of anything I will try to help them since I live here.

Lets see...

The US will soon offer an economic stimulus by lowering interest rates, perhaps as low as 0% which will not help us at all unless we learn to change.

Land value is based on supply and demand and the primary factors on that is the cost of, and availability of money. Although we will likely miss the boat again, the Congress could provide much needed economic development here by changing the land laws to allow a 99 year lease. Banks will never loan money on our 55 year leases or the poorly thought out plan to increases leases to 75 years. US banks consider a 99 year lease as a fee simple for mortgage purposes. This would allow buyers to capitalize on low interests rates, which would drive property values up and create a world of economic development for our crippled economy.

Instead learning to change with a rapidly changing world we seem to cling to failed policies of the past.

KAP said...

This isn't the first time the Administration has leaked parts of a report favorable to its views while claiming it couldn't release the actual report out of 'courtesy'.

You've been spun.

I'd like to have a copy of the report itself to see the facts and assumptions used to draw those conclusions. No luck so far.

wendy said...

I am going to get it and I can send you a copy.

Anonymous said...

The officials at OIA should have their heads examined for funding this propaganda. Your readers aren't the only ones who've been "spun."