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Case’s success
stirs call for
reforms in Hawaii

For too many isle entrepreneurs,
the state is 'not where they are
going to shake things up'

By Rick Daysog
Star-Bulletin

The blockbuster merger between the world's largest entertainment conglomerate and an Internet company co-founded by a former isle resident may be the feel-good local business story of the year.

But one influential political commentator believes that the Steve Case story should serve as a wake-up call for much needed political and economic reforms in Hawaii.

John Fund, member of the editorial board of the Wall Street Journal and online columnist for MSNBC, believes that Case is just one in a long line of isle entrepreneurs who left Hawaii to pursue better opportunities on the mainland.

The 41-year-old Case, whose America Online Inc. agreed Monday to merge with Time Warner Inc. in a $166 billion deal, may prefer to live in the isles but has found it to be a tough place to do business and that's why he chose to set up his company elsewhere, said Fund.

"Too many people have followed the Steve Case example. They love this place, but this is not where they are going to shake things up," said Fund, keynote speaker of the 24th annual Small Business Hawaii Conference at the Ala Moana Hotel yesterday.

"This is not where they are going to change the world."

Fund believes that the entrenched local bureaucrats are a big part of Hawaii's so-called brain drain problem. They have stifled innovation and have made it difficult to do business here, he said.

That problem is apparent in Hawaii's centralized educational system, Fund said.

While Hawaii doesn't lack good students and teachers, the bureaucracy at the Department of Education hampers progress, he said. That, in turn, has made it difficult to attract people and jobs to Hawaii.

"The educational bureaucracy, otherwise known as the blob, runs things in this state, and they run things not primarily for the benefit of the students but for the benefit of the blob," he said.

But Fund conceded that Hawaii has made made much progress recently. Gov. Ben Cayetano's narrow, 5,000-vote re-election victory over Republican challenger Linda Lingle in November 1998 shows that the isle's political climate is ripe for change after decades of political dominance by the Democratic party.

While the Republicans may have lost Washington Place, voters sent a strong message that change is needed, he said.

"There were enough people angry here last November to shake things up," Fund said.

"I think you're on the verge of change. It's going to be up to you how you harness it and how much you're able to convince people that finally now after half a century: "pau already.' "

During yesterday's conference, Small Business Hawaii named Edward Medeiros, head of Aloha Flea Market Inc., as its small business person of the year. The state Aloha Stadium Authority canceled Medeiros's contract to operate the popular swap meet last year. Medeiros, who has operated the swap meet for 20 years, claims he's the target of political retaliation because he supported Lingle in the 1998 gubernatorial election.

The state denied the charge but awarded the swap meet contract to Consolidated Amusement Inc. Medeiros has sued the state.

"He is a tremendous success: He gave back to his community, he gave to individuals, he gave to the state," said Sam Slom, president of Small Business Hawaii.

"The reward for all of this ... was that his job, his livelihood and income were taken away by the government that he sought to change for the benefit of all of us."