Bad government co-existing in a frail economy is no coincidence

Michael San Nicolas

By Michael San Nicolas

The function of government is to govern. To set the framework for public policies and execute the delivery of public services as expected by the community that, in a democracy, elects them to do the job.

As a matter of practice, price stability and employment are impacted at the macro level by both monetary policy and fiscal policy, with the former addressed by the Federal Reserve and the latter by Federal and Local Governments.

Strictly speaking, the Federal Reserve has only two mandates: maintain price stability and maximize employement, so it will use its tools to influence the money supply whenever there are imbalances in either of these. Today, because jobs at the macro level (all across the U.S.) are plentiful by historical standards while inflation (higher prices) is up, the Federal Reserve is elevating interest rates to bring prices back down as it sees little risk to the employment picture.

The Federal Reserve will continue making monetary policy decisions based on the bigger picture and not on the situations facing individual communities like ours here on Guam.

For us, the greatest level of control we have to address these areas is in the fiscal policy of our Local Government: how we spend, where we spend, and why we spend.

First, we must capitalize on maximizing opportunities we have right in front of us. Over the past 4 years we have secured $2.7 Billion Dollars in federal monies for covid relief and recovery, and on top of that have improved the governments fiscal position by $110 million dollars every year with EITC reimbursements, Medicaid match enhancements, and Medicaid Eligibility for COFA Migrants.

Right upfront we can see that these dollars should have immediately and tangibly resulted in improved healthcare on Guam. Every dollar in savings and every new dollar in match from improved Medicaid circumstances should have been reinvested directly into our healthcare system. Instead we have the same old stories of unpaid vendors hitting our headlines.

Not only will our community benefit from a properly funded healthcare operation, but it will have direct economic benefits, helping us to keep our people here who otherwise would have left for better healthcare elsewhere, and attracting businesses and entrepreneurs who would love to work in paradise as long as their healthcare needs are met. For GMH to continue to have facility problems and vendor debt after all these monetary improvements only proves that the current state of healthcare on Guam is intentional and by design.

Fix it and you will see just how economically impactful quality healthcare really is.

These monies also could fix our schools, enhancing technology accessibility permanently for our students, aligning this with a purposeful technology learning path that initiates in pre-k and culminates in high tech degrees and certifications. These will create a tech savvy workforce to attract high tech players like Microsoft, Google, Meta, and Amazon expanding their reach into Southeast Asia, or stimulate high-tech entrepreneurship on Guam with our own people developing and bringing to market their own concepts.

At the very least, for goodness sake, get the facilities to pass health inspections.

With the $4 million we secured for the Fisherman’s Co-op and the additional $4 million we secured for the Livestock Co-op over two years ago we should already have those facilities close to completion, creating construction jobs but more excitingly growing our food source sustainability and laying the foundation for lower food prices for our people.

There is no reason why we aren’t milking our own damn cows commercially here.

And if tourism really is so important, all of these dollars are fiscal policy opportunities to actually repair all of our public bathrooms, create jobs cleaning or welcoming our visitors, and improve our destination and visitor experience by just doing the basics.

Let’s have the smartest parks in the world by showcasing the historical ingenuity of a flushing toilet.

Looking beyond the short term money and more at the long term function of government we need to plainly acknowledge that the O.O.G (only on Guam) mentality is crippling our ability to flourish economically.

When it takes two years to get a building permit you throw sensible business planning out the window, screw up cost projections on buildouts and financing, and turn off foreign investment (international and those from outside the U.S.).

This delay in and of itself disrupts construction labor force planning, slows the flow of funds into the construction industry, slows job creation, and slows competition in whatever new industry was going to manifest from the project.

Power fluctuations? Yea we aren’t gonna get investment in high tech too excited about that, no one wants a multi-billion dollar system fried or its functions interrupted. Nor are we gonna help mom and pop with the high cost of living when their appliances keep breaking.

And of course there is Public Transportation. Billions available in federal grants, so many opportunities for public-private partnerships, and many improved local funding streams all could have come together to finally make this work.

It doesn’t work. And as a result our people have to make car payments and afford gas, if they want to be able to get to work or run basic errands. Young people literally working just to afford to get to work, old people needing to work if they want to visit their grandkids, sick people needing to work to pay and get to dialysis. A broken public transportation system directly impacts the quality of life for our people, and is a direct corrolary to job opportunities and economic growth.

These snowball effects on our economy can easily be applied throughout our government in any areas that are too slow for no good reason, inconsistent for no good reason, or just plain broken – for no good reason.

In the end, when they turn off investment and dissuade competition, they directly impact the prices our people pay by creating barriers to entry into our market and monopolies by proxy. They stymie job growth. They make us get passed over as an option into the Southeast Asian Market from the U.S, and vice versa. They frustrate our people, make them waste gas, time, and resources following up, or make them unwilling or give up on starting new enterprises altogether.

Ultimately, it would be prudent to do a full review of the entire regulatory process on Guam and identify areas to de-regulate, areas to modernize, areas to partner with the private sector, and areas to enhance, that would positively impact timelines, consistency, and reliability.

I can dive even deeper into government policy – how we need to deploy anti-trust policy and reign in gas companies charging us $5.50 a gallon when the price at the source and all cost inputs do not justify that; we need to meaningfully lower the cost of gas for our people. How we need to consider tiered property taxes for foreign homeownership as a disincentive to all of our housing inventory getting scooped up at prices our local people cannot afford. How we need to consider a foreign transaction sales tax and get rid of the GRT, relieving our people of tax burdens at the cash register, and directly lowering the cost of everything especially food.

And so much more.

But before we even dive into the new stuff, we have a Chamorro Land Trust list since 1995 with over 10 thousand families waiting 28 years and counting, just for the government to get land surveying done so they can have land to build their home on. If we had just gotten that done in a remotely reasonable amount of time we would have thousands of existing homeowners TODAY with hundreds of thousands in equity, and that much more relief in housing supply imbalances keeping prices and rents high and forcing people to leave home.

So, to answer your question Kandit:

Is it the government’s job to get people work opportunity and to lower prices? What role does the government play in bettering the economy?

Yes. It is but one part of its job. And really it’s the part that should more or less take care of itself if government was just doing its job.

I think the more important question is, what do the people want?

Because they are the ones that elect this government.

– Michael F.Q. San Nicolas is Guam’s former congressman and before that, he served in the Guam Legislature and as a banker. He is a resident of Dededo, and originally is from Talofofo.

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