The economic news from faraway America is grim. Unemployment in the U.S. territory of American Samoa now sits at around thirty percent. More trouble is on the horizon.
In a bid to save jobs at the StarKist tuna cannery, the Territory’s big employer, American Samoa had asked to be exempted from the minimum wage increase to $7.25 an hour. Congress rejected that plea. StarKist predictably responded with a fresh round of layoffs, and the company is likely to follow Chicken of the Sea to Thailand and other places in Asia where cannery workers earn as little as 75 cents an hour.
Congress is not indifferent to the lot of the American Samoans, of course, so it has proposed $18 million in new spending for the tiny, remote island territory of 65,000 people . An editorial in the Wall Street Journal the other day observed, with some justice, that this “taxpayer handout” amounts to foolishly attempting “to undo the damage Congress’s economic illiteracy has caused.” The editorial then went on to blame the Democrats, the unions, and the minimum wage for the layoffs and all the Territory’s economic woes. Apparently even the South Pacific cannot escape the socialist scourge.
Of course, that’s not the whole story. First, the $18 million set aside in the new spending bill was already being given away, to StarKist. Or, more precisely, StarKist would have already been entitled to that amount – up to $18 million dollars — in “30A” tax credits for 2010 if it had operated “at a profit” in American Samoa. In the language of the proposed legislation, this “economic development tax credit” was intended to reward StarKist for “the corporation’s employment and capital investment in American Samoa.”
The proposal now is to channel that same $18 million in credit directly to the American Samoan Government “for purposes of economic development.”
“Development” is a tricky word in this context — everybody’s doing it — and it’s hard to imagine that $18 million can buy the kind of development American Samoa needs. The Territory is still recovering from last year’s 8.0 magnitude earthquake and tsunami, which wreaked havoc all over the island.
We might get a better fix on the word if we were able to specify what will be entailed in the program of “economic development” to which the $18 million will be dedicated. The answer seems to be pretty straightforward: keeping StarKist in American Samoa. Last month, Eni Faleomavaega, the non-voting House Delegate from American Samoa, worked with Carl Levin of Michigan and Max Baucus of Montana “to convert the 30A tax credit in a way that will provide a direct payment” to the American Samoan Government. The Territory’s government would, in turn, use the money “to help StarKist until we can put a more long-term solution in place.” There go those Democrats and their anti-business agenda again.
As a headline in the Samoa News put it, StarKist would get the $18 million as an inducement to stay, “in lieu of” its tax credit, even though it was operating at a loss. One reader of that paper asked its editors to “please explain to your readers what lieu means– not all our folks know the word.” Of course, to explain the word is to reveal the sleight of hand it is meant to cover up. But Samoa is in a tough spot. “Without help,” Faleomavaega said, without exaggeration, “StarKist will be forced to close its operations in American Samoa and, if this happens, the Territory’s economy, which is barely hanging by a thread, will collapse.”
The fight over the minimum wage has put Faleomavaega in a tough spot, too, and that’s probably why he is now taking a more conciliatory position than ever before toward StarKist. Just a few years ago, in May of 2007, Faleomavaega penned an angry letter to Richard Wolford, President and CEO of Del Monte, StarKist’s parent company, in which he railed against “corporate greed” and “hypocrisy,” and noted that Wolford’s own compensation amounted to “over 400 times more per year than the average cannery worker in American Samoa.”
According to my calculations, you have approximately 3,000 employees and an increase of $0.50 per hour equates to about a $3,000,000 increase per year for StarKist and Chicken of the Sea. Considering that you do not pay health care benefits to our cannery workers which in itself is un-American, and also given that after 20 years of dedicated service you only pay out $160 a month in pensions to Samoan men and women who stand on their feet and clean ﬁsh for 8 hours a day, I believe your wisest course of action is to join with me in supporting a one-time increase of $0.50 per hour.
Faleomavaega ended his letter by taking issue with Del Monte’s notion of “responsibility” – which the company defines as “an economic, legal, and moral responsibility to maximize the return it gives to its investors or shareholders” – and reminded them of other obligations: “I believe higher laws should guide our actions and that we have a moral responsibility to do unto others as we would have them do unto us.”
I leave it for others to decide whether securing $18 million on behalf of a multinational corporation that is probably going to pull stakes anyway amounts to following the golden rule. The real question in American Samoa is whether that $18 million transfer amounts to development, at least in any meaningful sense of the word.
I have my doubts, unless by “economic development” Faleomavaega and associates merely mean saving jobs – or making a desperate bid to save jobs — at the StarKist cannery. That would seem to be the very antithesis of sustainable development, and though it may be politically advantageous for Faleomavaega in the short term, it does little for Samoa’s long-term prospects.
Worse, the proposed arrangement will launder the StarKist payoff through the American Samoan government. Corruption, as one CNN report put it, is “endemic” in American Samoa, which receives about $250 million in federal funding every year. Governor Togiola Tulafono has been accused of bribery; so have sundry government officials. In early 2007, one year before the quake and tsunami hit, Department of Homeland Security inspectors found that millions in disaster-preparedness had been diverted to other uses – flat screen televisions, expensive leather chairs, trips to Las Vegas, and miscellaneous entertainments. In response, our government temporarily froze all federal funding to the island. (That freeze did not and could not last. In the wake of the 2009 tsunami, President Obama declared an emergency and directed federal aid to the Territory.)
There has been some speculation that corruption made the natural disaster much worse than it could have been. The Homeland Security funds squandered by government officials in American Samoa were intended to pay for an early-warning system, which included thirty towers with thirty sirens that could have been activated with the push of a button in the event of a disaster. None had been put in place when inspectors arrived in 2007; Governor Tulafono claimed there was “never a plan for a system.” So disaster struck, and nobody was able to sound the alarm.
No surprise, then, that there are no viable economic recovery plans in place should StarKist decide to pull out of American Samoa. The Territory has relied on a mix of corporate interests and federal assistance for too long, counting on help from greater powers without making any long-term plans of its own. Maybe that’s what makes this remote island territory quintessentially, and uncannily, American.