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Talk Story

BY JOHN FLANAGAN

Tuesday, May 28, 2002


The economic case
for candidate Case


LAST WEEK, I heard University of Hawaii economist Sumner La Croix describe how to fix Japan's economy. A few days later, I talked with Ed Case, who's running for governor, about fixing Hawaii's economy.

The big difference: While La Croix is a spectator, Case could get into the game.

Government has two possible economic development roles, Case says. It can remove common obstacles that all businesses face and let them grow on their own, or it can throw incentives at industries it wants to encourage.

Lately, the Legislature has taken the second approach, passing tax breaks for high-tech firms and a Ko Olina aquarium complex. Case calls it: "Give a tax credit here and a tax credit there, and pretty soon you'll have a good economy."

He opposed the Ko Olina credit. "Either you don't need it because you're going to (build) it anyway," he says, "or you can't survive without it." Neither situation is good.

Meanwhile, he said, "we write agriculture off, but if you go out to the neighbor islands, you'll see agriculture is doing pretty good, and we haven't particularly helped (it) with tax credits."

To Case, "the role of government is to try to assure an overall business climate," and too little has been done to remove obstacles like taxation and fees, regulations, anti-business government attitudes, poorly performing public schools, crumbling physical infrastructures and societal rifts.

Poor public schools hurt two ways: They don't produce a quality work force, and they are disincentives to companies considering moving families here or wanting to recruit.

"The governor gets to talk a lot," Case says. He'd use the "bully pulpit" to lead a discussion about how to improve public schools, which hasn't been done since Ben Cayetano led an education task force as lieutenant governor.

Case says Hawaiian issues constitute a rift that must be resolved. Autonomy is possible, he says, although "the population of Hawaii is not as fully supportive of state-funded native Hawaiian programs as it used to be."

He'd spin off the Office of Hawaiian Affairs from state government and give Hawaiians the structure, resources and responsibility to decide many things for themselves.

BEFORE TAXES and fees can be relaxed, "we have to get over the first hurdle, which is to bring the cost of government under control." However, "we can do a lot of work on regulations," he said. "We've just started to scratch the surface."

"Good regulations protect public health and safety," Case says, "but we have a lot of regulation that is simply protectionist."

For example, there's no threat of a ground transportation monopoly, Case says. "It's an open market. Plenty of people want to come into it. Those that are 'ins' like it the way it is. It's the reverse of the oil situation. ... Government should take regulation away."

The state shouldn't control whether a new business can enter the market or set rates. He'd let competitive market forces do the job.

"I don't think we should be regulating shipping of cargo or passengers," he says. He'd push to eliminate the federal Jones Act, which sends one-week Hawaiian cruises on four-day round trips to Fanning Island. "It's bad for our economy -- bad for the neighbor islands, especially."

CASE SAYS he and Andy Anderson agree that Hawaii's gasoline market was broken, that there was "no reasonable expectation that it would self-correct" and government intervention was necessary. However, he feels a price cap was less intrusive than Anderson's proposal that the state sell gasoline.

"It's a difference in philosophy. I don't generally believe that government can run a business better than the private sector can," Case said. "I want to start with the minimal amount of intervention that will accomplish the purpose."





John Flanagan is the Star-Bulletin's contributing editor.
He can be reached at: jflanagan@starbulletin.com
.



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