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Jewish World Review Oct. 16, 2001 / 29 Tishrei, 5762

Doug Bandow

Doug Bandow
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First, do no harm -- THE first rule of politics should be "do no harm." But Congress is now engaged in an orgy of economic meddling in the name of national security. At risk is the economy of the Commonwealth of Northern Marianna Islands (CNMI). CNMI is America's most distant territory -- closer to Moscow than to Washington, D.C. Long a "trust territory" administered by the United States, CNMI is now a commonwealth whose residents have American citizenship.

While a trust territory, CNMI was an economic backwater. Most foreign investment and even visitors were barred. Former Gov. Froilan Tenorio complained that U.S. policy "attempted to keep our people uncontaminated by the modern world and dependent on federal handouts."

In 1970, most roads were unpaved and most homes lacked running water. Average incomes were below the poverty line. There were only 55 licensed businesses on the islands.

In the 1980s, CNMI dropped the ban on foreign investment. The islands supplemented their own small worker pool by allowing companies to hire guest workers. And the Commonwealth cut capital gains, excise, and income taxes, as well as import duties.

The result was stunning economic growth. CNMI saw new businesses form, unemployment fall, and personal income rise. Today, the Commonwealth has the second highest per capita GNP, after Guam, in Micronesia.

Success has not been without controversy. Competing in a region where wages average under a dollar an hour, CNMI is not subject to the U.S. minimum. Moreover, some temporary workers have been abused by unscrupulous employers.

Unfortunately, critics in Washington have responded by attempting to end CNMI's relative autonomy. The Clinton administration pushed to impose U.S. wage regulations on CNMI and bar its use of guest workers.

In the lead was Allen Stayman, a Democratic partisan who headed up the Office of Insular Affairs at the Interior Department. Working for Stayman was David North, who organized against congressional supporters of CNMI.

Reported Earl Devaney, the Department's Inspector General: "Mr. North repeatedly engaged in partisan political activity in an effort to lobby support for legislative change to CNMI labor, immigration and enforcement laws, expending appropriated funds in the form of his salary, OIA resources, supplies and equipment."

Moreover, "Mr. North improperly used his government position to obtain personal information about individuals doing business in the CNMI and then improperly provided that information to a source outside of the government," in violation of the law.

Some Republicans have joined the anti-CNMI campaign. Sen. Frank Murkowski (R-Alaska) is advancing S.507, which would seize control of the islands' immigration system. And, with Congress preparing to take up proposals to increase the minimum wage -- the Democrats want to include a hike in any "economic stimulus" package -- CNMI may face a fresh assault from that quarter.

Federal control would do little good but much harm. Although visa abuses by terrorists have captured public attention, there is no leakage of CNMI guest workers to America; the U.S. Customs Service found no problems connected to the islands.

Moreover, the Commonwealth's economy is already suffering because of the impact of the Asian economic crisis on tourism; America's slump will exacerbate the problem. Yet a recent General Accounting Office report explained that "The economy of the CNMI could not have grown to its current size and complexity without access to imported labor."

The GAO went on to warn of severe damage if guest workers were barred: "the economy would be sent into a catastrophic contraction" with the collapse of export industries. As a result, "the standard of living of the U.S. citizens residing there would suffer tremendously."

Nor would the proposed rules help those they are supposed to help. Unfortunately, some employers have abused nonresident employees. But raising the minimum would not make enterprises live up to their promises. Moreover, the Occupational Safety and Health Administration acknowledges that

CNMI has improved its protection of vulnerable foreign workers. The solution is to do even better.

In contrast, to bar guest workers would "protect" them by foreclosing their best opportunity. A higher minimum would close businesses unable to match the lower rates paid elsewhere in the region. Business can't pay more without a better-skilled, more productive work force. Alas, Washington can't deliver that.

CNMI should do more to deregulate its economy and shrink government spending. It should also vigilantly ensure that employers live up to their contracts with their workers.

However, the islands have grasped the essentials of development: open markets and foreign investment. New federal controls would shut off the economic growth that offers those at the bottom the most hope.

Fighting terrorism is no excuse for economic meddling: Washington should respect the Commonwealth's independent policies, which have allowed the islands to rise above the poverty evident elsewhere throughout Micronesia.

JWR contributor Doug Bandow is a senior fellow at the Cato Institute. Comment by clicking here.


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© 2000, Copley News Service