Innovation will counter legislators' gloomy scenario
I WAS surprised -- no, I was shocked last week when I saw the House Democratic leadership on TV glumly warning about "delayed welfare checks, delayed housing projects and long lines" at state service counters. Where did that come from?
They are forgetting the fact that during the state's worst recessions of the 1990s, welfare checks were never delayed. They've set aside the fact that before this gloomy assertion the newspapers reported on new housing projects in Mililani, Kapolei and Waianae. They ignore the fact that with the state collecting $150 million more in revenues in fiscal 2007 than 2006, there is ample money to keep state services at the same level, if not increase them.
The legislators were thinking with the perspective of the "bad old days" -- the decade-long stagnation of the 1990s. They are working under the fear of the boom-and-bust cycles of the past. So what is different now?
For starters, Hawaii's economy is healthy, growing at inflation-adjusted 2.7 percent in 2006, and expected to grow 2.6 percent in 2007. For the first five months of 2007, jobs grew by 2.2 percent. Unemployment for this period was 2.3 percent, still among the lowest rates in the nation. Personal income in the state increased 6.1 percent for the first quarter of 2007. General excise tax collections, a broad measure of economic activity, increased 8.5 percent in fiscal year 2007.
As the result of four years of extremely strong growth, prices have risen and we have a tight labor market. These factors will work to slow our rate of growth. But we will still have healthy growth, unless we become pessimistic and stop investing and spending. That might happen if we again think in doom-and-gloom terms of the past. We've been there before, but we now have reason to be optimistic.
WHAT IS really different now, and why we have even more reason to be optimistic, is that the state is now launched on the path toward an innovation economy. Innovation is more than invention -- and Hawaii has great potential for invention in ocean sciences, aerospace, energy and creative media, to mention a few.
Innovation is the process by which new or better ideas enter our economy and improve what is produced, how it is produced, creates new products and devises better ways of accomplishing tasks.
By enabling our economy to grow without depleting Hawaii's scarce natural resources, innovation will lead to sustainability.
By supporting the growth of our new science and technology sectors, innovation will lead to economic diversification.
By enabling us to be more productive across all sectors of the economy, innovation will lead to higher wages and standard of living.
By equipping us with adaptability, creativity and problem-solving skills, innovation will enable us to have resilience, to adjust to rapidly changing global events. Innovation will smooth out the historical boom-and-bust cycles of Hawaii's past.
Fundamentally, innovation is based on a belief in Hawaii's people -- its human capital -- and makes that human capital even more valuable.
THE HAWAII Innovation Initiative has been recognized as a model by prominent national organizations, including the National Science Foundation, the National Governors Association and NASA. All have recently cited Hawaii's innovation economy strategy as the model for the nation to compete in the new global economy.
This gives us great confidence that our innovation strategy is the best way to increase our standard of living for all of Hawaii's people.
Hawaii's best days lie ahead. Not only because our economy is healthy, but because we now have an innovation strategy to build on that health and to enhance that vitality.
I would hope that state legislative leaders take a more forward-looking approach when speaking about an economy that is on the right path -- unless, of course, their wish is to return to the old days.
Theodore E. Liu is the director of the state Department of Business, Economic Development & Tourism.