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Which future will it be?


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POSTED: Sunday, April 05, 2009

“;It's tough to make predictions,”; Yogi Berra once said, “;especially about the future.”; Although the venerable Yankee catcher had a point, given current socio-economic trends, it is possible to make some educated guesses about where our state is headed.

To do so we need to look past the current malaise. As President Obama recently said, we'll pull through eventually and our national economy will bounce back.”;

But what about Hawaii?

Will the Aloha State be headed down a different road?

Will tourism be as vital to our economy as in years past?

What kinds of jobs will be available to high school and college grads?

 

BANANA RUST BELT?

A rather apocalyptic scenario for Hawaii is what University of Hawaii workforce-scholar Mike Rota refers to as the “;Caribbean Island Scenario.”;

This vision is characterized by the disappearance of a middle class and increasing disparity been haves and have-nots more akin to a third world country.

Is this already happening?

The evidence is troubling.

A recent study by the Washington, DC based Center on Budget and Policy Priorities said that nationally, between the late 1990s and the mid-2000s, incomes of the families at the bottom in terms of income distribution declined, and the incomes of those in the middle stagnated.

In contrast, the incomes of the richest fifth of families climbed over the past decade.

The middle class is already squeezed in Hawaii and the possibility of its further erosion is a stark possibility.

How about another scary statistic?

The US Census Bureau projects a decline in Hawaii's population aged 35 to 54 by the year 2020. Given that people in this age group are some of the most productive in our economy, their absence does not bode well for our economic future.

“;The loss of productive workers in their prime earning years,”; says Rota, “;could also lead to a declining tax-revenue stream, not only from reduced corporate profitability, but also from one of the largest income-tax-paying portions of our population.”;

 

POLYNESIAN SINGAPORE

A more optimistic vision for Hawaii is that of a self-sustaining, sparkling “;city on a hill”; under-girded by growth in life sciences, information technology, alternative energy, digital media and scientific research.

Like Singapore, which depends on its highly educated populous instead of natural resources, Hawaii could create high-value-added goods and services such as software, pharmaceuticals, nanotechnology and other products.*

In this vision:

» Technological innovation in Hawaii and elsewhere has helped lower the cost of energy dramatically.

» Hawaii's brain drain has been reversed, as many of our kamaaina are able to come home to jobs that pay well and jobs that allow them to buy a home.

» New housing is built to accommodate these workers using private sources, helping to lower the cost of housing for all.

» High-tech business parks and bioscience lab construction spur a boom in the construction industry.

» Increased tax revenues allow increases in government spending on education, medical care for the needy, visitor industry promotion, government worker compensation, housing, and other desired social goals.

Can we make the Singapore vision a reality?

We can if we grow the higher paying high-tech and life science industries in Hawaii.

Not many realize how important this sector already is here.

According to a recent report by noted mainland economic research group C2ER, this sector is Hawaii's fastest growing and is now equal in size at $5 billion annually in direct and indirect impact to the accommodations industry, and nearly equal to the construction industry.

It employs more than 30,000 people — using a very strict definition for a high-tech company or organization — with an average wage in 2007 of $68,000, and represents approximately 8 percent of our economy. (See “;Innovation and Technology in Hawaii: An Economic and Workforce Profile”; at http://www.hiscitech.org.)

To make the Singapore vision a reality, we must nurture the high tech/life science sector in Hawaii. All else will follow.

The tax incentives from Act 221 are a great start, but we should also find ways to attract additional capital to Hawaii from both venture capital and federal government sources.

It's impossible to know what Hawaii will look like in a quarter century. And we may end up with some combination of our preferred and feared futures. The only thing certain is that decisions we make today will push us toward one of these outcomes.

Which one will it be?

———

David G. Watumull is chief executive of Cardax Pharmaceuticals, a biotech company based in Aiea specializing in therapies for cardiovascular disease, hepatitis, macular degeneration and many cancers.