Pacific Perspective
Pacific Perspective
Hawaii needs to
focus on long-term
growth patterns
A few months ago, well before the events of Sept. 11, I was traveling on the mainland and noticed something that caused me to ponder. What I saw were buildings and public infrastructures that were new, thoroughly modern, and reflecting up-to-date technologies; much newer and more modern than we have here in Hawaii. And I wondered, "Why had we fallen so far behind?"Given my profession as an economist, I had been keenly aware of Hawaii's lackluster economic performance for most of the last decade. Between 1990 and 1999 Hawaii's economy grew at an average annual rate of 0.03 percent, compared to 3.03 percent for the United States as a whole. However, only during periods of significant slow down did our lack of growth generate much public interest. For example, the work of Governor Cayetano's 1997 Economic Revitalization Task Force brought great publicity to the issues of growth and resulted in some significant changes in public policies. Still, the public never fully embraced its activities or the economic development that the ERTF intended to create. As a community we seemed to be content to muddle along at our anemic growth rate.
Yet, anemic long-term growth undermines our well-being as much as does a short-term crisis. Consider the following. At the start of the last decade, personal income per person in Hawaii was 14 percent above the national average. This helped offset our well-known 25 percent to 30 percent higher cost of living. However, because of economic doldrums that characterized the decade, by 1999 Hawaii personal income per person had dropped to 4 percent below the national average. This makes a reality of a long-running joke in Hawaii: "We make up for the high cost of living by paying you less."This lack of long-term growth has many pernicious effects. It means jobs are not created at a rate necessary to for our children graduating into the real world. It means public resources are not there to provide for the services that we have come to expect. It means school and university buildings and grounds become rundown and seedy because of a lack of maintenance and replacement. It means fights over slices of a limited pie become fiercer and less civil.
We are now again rightly focused on a (hopefully) short-run economic crisis that has been created in the wake of the Sept. 11 attack on our country. As we do so, however, we should not forget that our economy must also return to the path of long-term growth. As a community, we cannot afford to repeat the lost decade of the 1990s. We have already fallen behind the mainland in terms of our standard of living. If we do not reverse this course, we threaten to relegate ourselves to further irrelevance.
Jack P. Suyderhoud is a professor of business
economics at the University of Hawaii College
of Business Administration.