Monday, January 5, 2009

The free market economy of the USA relies on labor and business to drive it. Anyone in theory is free to start a company and see if it makes money for them. You might have an idea and believe others will buy your product or services, and that price they pay will be more than the product or services overall costs. Now of course the idea of a business is to make as much money as possible. If someone was giving away money would you take it? As a business owner you want to keep costs down and revenue up. Part of the cost of running a business is labor costs. If you could get five workers to work for a dollar an hour or one worker to work for 5 dollars and hour you would chose to have the five workers- unless the one could produce more than the 5. It's in a business owners interest to have very low labor costs. Now as a worker you would still take the money if someone is giving it away? If you have a job offer that pays 5 dollars an hour and one that offers 1 dollar an hour which would you chose? You would take the 5 dollar an hour unless the work is very hard or dangerous. Here is the key to the situation on Saipan- business owners want cheap labor, and they have it. Why would they give it up? They will not. Everything is subject to the laws of supply and demand- if there is alot of demand, then the price of an item goes up- if the supply is low and the demand is high, the price goes way up. If the supply is great, then the price goes down. If the supply is great and the demand is low then the price goes way down. Saipan's labor is limited by the amount of foreign workers- which is for all practical purposes unlimited. This means the wages of laborers is going to be low. This only benefits the business owners- not the laborers. It's not all good, because low wages means the workers have less money to spend on goods and services. Japan has high labor costs compared to Saipan, but that means the workers have money to spend- and that is good. Saipan will never improve it's economy in the long run with low labor wages. It creates a two tiered system that we see now- the owners and the workers. US citizens that get a job with the government sit a bit outside this system as the government is not subject to the laws in the short run. In the long run government cannot be the solution to this problem. The solution is to balance the amount of labor with the amount of business. Removing the cheap labor and and stopping the reliance on the government to provide a living for US citizens is the only long tern solution that will work. Why would a young man on Saipan learn a trade as a mechanic, carpenter, boat captain or fisherman when the wages of those trades is well below that it takes to raise a family on the island? You'd have to be raised in and used to third world conditions to realistically want a job like that- and that is why cheap labor is available. As letter writers in the past have shown- understanding this can be outside their grasp. However- understanding this is key to improving the lives of both the workers and owners. The CNMI will do just fine without the cheap labor in the long run. Will it take some time to wean the business owners from this? Yes. Will business owners and the politicians that depend on them try to stop this? Yes. Will it cause some pain in the transition? Yes. Will it remove the two tiered system that creates so many issues? Yes. Will is allow young citizens of the CNMI to thrive and build a life on the islands? Yes. Will the guest workers dislike this? Yes. Will it help the natives to retain control of their homeland, culture and language? Yes. Will it be easy? No. It must be done or the future of the islands will continue spiral downwards.

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