Daily Archives: 04/09/2005

Last Week’s Economic Conference

I meant to talk about this sooner, but I got sidetracked.

Last week the governor held the Guam Economic Development Conference, where he announced the newest five year plan. Hmmm, never a good thing when your economic conference starts taking plays from the communist playbook.

At the conference Governor Camacho unveiled his grand scheme to get the derailed island economy back on its feet. It seemed to sound like the big idea was getting more military infrastructure spending on Guam, requesting more money from Federal coffers be spent on Guam, and hoping to base more naval ships on Guam. Sense a trend here? Gimme, gimme, gimme. Great plan.

The governor trotted out some high-priced consultant that spent less than a week on Guam and pronounced it ‘G-G-G-G-G-G-Great!!’ According to Charles Santangelo, Guam would make a great place for American expatriates interested in doing business in Asia, but wary of actually living in Asia (you know – squat toilets), because Guam is just like America. Uh, dude? We are America.

He had some good things to say though, like how the island is a hub for trans-oceanic cables between Asia and North America. Too bad that won’t translate into very many jobs. And the weak American dollar will probably spur an increase in tourism in the short haul, until the rising cost of fuel makes quick jaunts to Guam unaffordable for most middle class Japanese looking to relax for a few days.

Anyway, one of the papers presented at the conference was grounded in reality and present both the good and the bad. Of course the PDN – Propaganda Daily News – made very little mention of anything negative at the conference. Thankfully, there’s a real newspaper that actually covers island news instead of the party line, the Marianas Variety. Regrettably, their website lacks any archiving, permalinks, or coherent site management. But I am willing to retype the article in question for my faithful visitors.

Where Has Guam’s Middle Class Gone?
By Gerardo R. Partido
Variety News Staff

Dr. Roseann Jones, a professor of economics at the University of Guam, yesterday warned that government and private sector leaders should also be mindful of the island’s middle class when formulating policy for the economy.

Speaking during the 2005 Guam Economic Development Conference, Jones said fewer economic opportunities of Guam and the deteriorating quality of island life in the past has driven many of the island’s best talents to the mainland.

This, Jones pointed out, has a resulted in a domino effect with island businesses also suffering due to declining consumers.

“Where has Guam’s middle class gone?” Jones asked rhetorically in her talk entitled “The Migration of Guam’s Middle Class.”

“They have watched their jobs go away and their home values go away,” the economist said.

Jones recounted going to a supermarket once and finding the store very low on inventory. She asked the clerk whether business was suffering because low inventory is always a sign of poor consumer demand and low spending power.

The clerk answered that the store was making a lot of money from food stamps but Jones said this was the wrong way to go.

During the early 1990s, Jones said the island had 42,000 people in the workforce. In the late ’90s, this figure increased to 75,000 but there was very high unemployment.

Currently, Jones said the workforce has come down to 60,000 because of the migration of Guam’s middle class.

Fortunately, Jones said the next phase for the island’s economy is growth with more military investments coming in and tourism on the upswing.

However, Jones qualified that her optimism was “cautious.”

“Will we have the capacity to staff the new businesses that will emerge from the economic upturn,” the professor asked.

She said the economy is now on the edge of a leap forward but the government and the private sector must ensure that the population stays on island.

“We must work hard to make the people like to live here,” she said.

She added that by growing the consumer base, island businesses would have more customers and be less dependent on the fickle tourism industry.

Mostly she pointed out the fragility of the island’s economy, the lack of a sold economic base and the lack of a coordinated response by the government in times of trouble. Stating the obvious I guess.

So I guess I should say that the economy is starting to pick up on Guam, it has to after the nadir of 9/11 and typhoons. Too bad the rapidly spiraling cost of fuel will crush any economic recovery in its infancy. Gasoline, electricity, airfares, shipping costs – everything is going to be affected negatively by the prohibitive cost of fuel.

In a way, Guam is a precursor to what will happen worldwide as the increasing scarcity of fuel drives prices up around the world. Once again, islands serve as a canary in a coal mine, warning the rest of the world about what is to come.