Editorials
Wednesday, September 2, 1998

Financial turmoil
could affect Hawaii

IT'S too soon to tell whether the wild gyrations of the stock market and other aspects of the current world financial turmoil will injure Hawaii very much, but they aren't likely to help. Tourism remains the state's economic lifeline, and people don't take pleasure trips if they are hurting economically.

The concern about the markets both on Wall Street and in foreign financial capitals ought to dispel the notion that whatever is wrong with Hawaii's economy can be fixed in the state Capitol. This state is subject, perhaps more than most, to world economic trends. Unless we go back to a self-contained, subsistence economy as in pre-Western contact Hawaii, we always will be.

Of course, candidates for political office, especially the governor's seat, in these hard economic times all claim to have the formula to restore prosperity if only we would elect them. These claims should be taken with several grains of salt.

Still, the state government's policies can sometimes make a difference. It would be just as foolish to do nothing as to overestimate the impact of changes at this level.

The goal should be to make Hawaii more attractive to investors by reducing taxes on business and eliminating onerous and unnecessary regulations and programs. Reducing taxes isn't easy, because the state must maintain essential services while balancing its budget.

The politicians like to talk about tax cuts but not about how they would pay for them. Frank Fasi's solution -- a massive increase in the hotel room tax -- would be a disaster.

Cutting regulations and programs is tough -- as proponents of privatization have found -- because it runs counter to decades of big government, anti-business thinking in the dominant Democratic Party, and because the public employee unions are very powerful.

The question in this election campaign is not which candidate wants to improve the economy -- they all say they will. It's which candidate has the most realistic program and the will to fight for change.

Clinton in Russia

PRESIDENT Clinton's words of encouragement to Russians to stay the course toward a market economy in the midst of financial crisis may have encouraged a few to rekindle their hope. However, many Russians realize that reform efforts have fallen seriously off course.

Clinton arrived in Moscow following the ejection of economic reformers from the Kremlin and the last-minute rejection of an agreement between Russia's tycoons and Communists to run the show. The two sides appeared ready to back-pedal on reforms, re-nationalizing important parts of the economy, but the Communists didn't trust President Boris Yeltsin's promise to give up power.

Clinton urged Russians to institute a fair tax system, avoid inflation by refusing to print new money and bail out the banks, reject "special bail-outs for the privileged few at the expense of the whole nation" and treat creditors equitably. That is sound advice, but its adherence will come only through financial pressure from the West.

Clinton accurately referred to "vacuums" created during the economic transition into which some Russians "moved with an intent to exploit their fellow citizens, to enrich themselves without regard to fairness or safety or the future." Russia's status as the most corrupt major economy in the world -- not market reform -- is to blame for its economic crisis.

Russian tycoons -- often likened to America's robber barons of the last century -- provided the financing for Yeltsin's presidential campaign two years ago. They support Yeltsin's choice of onetime Soviet manager Viktor Chernomyrdin to resume the post of prime minister from which he was fired five months ago. They plan to bankroll Chernomyrdin's candidacy to succeed Yeltsin, regardless of his dismal showing in the polls, and support him through the media they control.

Regardless of how the stalemate over Chernomyrdin's nomination ends, Russia's oligarchy is becoming entrenched. It will take more than words of encouragement to the populace to put Russia back on the road to political and economic reform.

Crime in Hawaii

HAWAII'S economy is stagnant but crime is down, and that's good news for everybody but the criminals. Not only did 1997 show a 9 percent drop from 1996; over the past two years the category of most serious crimes, including murder, forcible rape, aggravated assault, robbery, burglary, motor vehicle theft, larceny-theft and arson, has exhibited a 17 percent drop from a 15-year peak reached in 1995. Oahu saw an 11 percent decrease last year and Honolulu Police Chief Lee Donohue added that crime here is down an additional 7 percent in the first half of 1998.

The biggest drop was in larceny-thefts, which regularly account for about 70 percent of Hawaii offenses. They have dropped 18 percent -- or 11,000 offenses -- since 1995. Murder, rape and aggravated assault increased in 1997, but they are a small part of the overall crime numbers.

The reasons for the downturn are varied, but Chief Donohue credited a strategy of identifying problem areas, such as purse-snatching and crimes against tourists, and creating task forces to deal with them. Donohue also noted the role of neighborhood security watches, and the efforts of state Public Safety Director Keith Kaneshiro "to keep people who are convicted locked up."

If there is a tendency for economic hard times to generate more crime, it isn't evident in these numbers. Effective police work, community support, plus a willingness of judges to send convicted criminals to prison for long terms, may not be the perfect formula for fighting crime, but it seems to be working here. Now to build another prison.

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Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor