Monday, October 31, 2005

Aitalafu (credit) Reform

A friend asked me what I thought about aitalafu. His family recently opened up a store and complained that the practice would hurt his business. I both agreed and disagreed with him.

I agree that the custom of borrowing in Am. Samoa as it works today hurts small businesses. It’s common for customers, especially family, to take a long time to pay for goods they put on the aitalafu books. Meanwhile, storeowners still have to pay their bills on time lest they face late fees. In addition, businesses may miss opportunities because they don’t have the money still owed to them from people who have borrowed long ago.

Paying on time is extremely important. No worker ever suggests to his employer, "Please boss, pay me the day after payday." A dollar is worth more today then it will tomorrow for everybody. Why? Because you might not live to tomorrow to spend it.

However, you might be willing to forgo that dollar today if someone promises to pay you an interest rate. Your employer may say, "Please, if I pay you a couple of days after payday, I’ll give you an extra $100." You might consider it, right? You would be mad, though, if your employer instead says, "I’ll pay you a couple of days after payday. End of story."

That’s exactly what we’re telling storeowners when we aitalafu and don’t agree to pay an interest rate. Here is where businesses can start to reform the practice of aitalafu. Requiring interest on aitalafu is not only right, but also serves as an incentive for borrowers to pay back ASAP as the debt grows larger.

Stores can also share information on their customers with one another in an effort to assist each other to collect what is rightfully due them. One store might check with the other village store to see if a particular person pays on time. Businesses may even agree amongst each other to require patrons to pay off debts owed to each other before allowing them to aitalafu.

This can be done in the age of the computer, internet, excel and email. Demand for these things and people to operate them goes up thus spurring investment and creating more jobs.

Businesses cooperating to reform the way we do aitalafu will encourage responsibility among consumers, increase small business viability, attract more investment and entrepreneurship, and add more jobs to the economy.

Nevertheless, such measures of reform must always be voluntary as they are barriers to entry. Many may not be able to afford to do anything I’ve suggested above and shut them out of the market. Some of these suggestions may go against their personal beliefs. People may lack the initiative to try, or they like aitalafu just the way it is. The only moral incentives for storeowners to follow these suggestions are the better business and higher profits resulting from reform in the aitalafu tradition.

Thursday, October 13, 2005

Salvation in Entrepreneurship and Self-Ownership

A possible departure of the canneries or a decline in federal funds is worrisome for the people of American Samoa. Our very standard of living would be at stake.

For either of the above to happen would force us to face the pains of reform. The ASG may have to eliminate many free or low cost services to reflect the lost of revenue. Public schools, LBJ, the golf course, the new ASG airplane, ASTCA, ASPA and others may see significant cuts in the event the worse occurs.

However, the demand for these things will not go away. The private sector, ordinary people like you and me trying to do business, would have to step up to the plate.

But why should we?

Why should Samoans at home and abroad and people in general come to the rescue when the government dictates how much we should pay our workers? With minimum wage laws, it’s either pay your workers this rate or don’t pay them at all. Therefore, many of us choose the latter by not opening up shop.

Why should we come to the rescue when we have to face discriminatory licensing requirements? Are they supposed to ensure quality? Nope. They’re there to limit competition and hold prices artificially high.

Why should we come to the rescue only to succeed and later have the government take what they did not help us to create and use it to compete against us? An ASG airplane, ASTCA, Rainmaker Hotel, KVZK-TV, public schools and the list goes on.

Why should we come to the rescue when the government would most likely scorn us for wanting to make a profit? A profit that would entice others to also come to the rescue, increase supply, and lower prices.

Why should we come to the rescue when government can tell us how much our property is worth, whether it be gas, food, beer, hardware supplies, medicines or even, the shirts on our backs? It’s either we charge below this price or this interest rate, or we don’t provide goods or loans at all. As a result, many of us choose the latter, again, by not opening up shop.

There are people all over the world and here at home waiting to rescue us. The question remains:

Will we let them?

Friday, October 07, 2005

No Thanks, NPS

The ASG lost $50,000 in funding from Land and Water Conservation Fund (LWCF) grant program, which is administered by Department of Interior's National Park Service (NPS). According to Samoa News, the reason the NPS disapproved the appropriation is because the ASG “grant application was incomplete and there hasn't been a resolution to the McDonald's lease for portion of Utulei Beach Park.”

Togiola's administration wants to hand a part of the Utulei Beach Park, public land administered by the local government, to McDonalds, a private enterprise. The NPS opposes such action, and continually threatened to withhold funds in an attempt to prevent any privatization of the public park. A public park often neglected and polluted by a government and population that have no incentive to keep it clean. The NPS finally made good on its promise.

The only moral way to curb pollution in the territory is by giving people the right incentives to do so, instead of thumping each other over the head with bottle bills and taxes. Let McDonalds go forth and make a profit by enticing customers to clean, friendly and inviting restaurant in what was once a filthy location.

At the same time, we can tell the federal government to butt out of our affairs by not taking any more of their money. With less federal money comes more sovereignty.

Tuesday, October 04, 2005

A Great Opportunity

The ASG has an opportunity to cut taxes and government spending at the same time with the tax exemptions sought by South Pacific Express, Samu's United General Contractors, T & T Inc., Manulele Aviation, Amerika Samoa Bank Inc., and ANZ Finance American Samoa.

If these companies should avoid the yoke of the Tax Office, then it is only fair to the rest of us that these companies and their employees not benefit from the LBJ, public schools and other government services. Have them pay for medical insurance, their own education and other services to offset the reduction in revenues resulting from any tax exemption.

Of course, the ASG should not compromise on taxation for police and court services. Nevertheless, the taxes these companies pay in other areas of the economy more than covers their share of burden for the cost of the police and courts. The police and courts are now a small part of the big government picture.

The more these companies provide for their own, the less the ASG should be taking from them. If these businesses provide for their own security services then the ASG should give them tax credits for doing so. Other ideas include giving the airlines responsibility for the maintenance of airports with the ASG only playing a supervisory role. Prices for travel tickets would reflect the maintenance costs. Since consumers would then pay for the costs of airport maintenance, they too should be able to get tax credits from a government no longer paying the bills.

The ASG should use these companies to expand our industries and expound upon the possibilities by making them directly pay for the things we usually depend on government to provide, granted they receive tax exemptions.

This is a great opportunity to take a small step away from dependency. Less reliance on the local government will translate into less dependence on federal largess.