First Sunday
BY MARK COLEMAN
Economist in paradise
Long before the "Price of Paradise" series was revived this year in the Honolulu Star-Bulletin, and before the highly popular "Price of Paradise" books were published in the early 1990s, there was "Current Issues in Hawaii's Economy," by University of Hawaii economists James Mak and Robert Ebel.
RICHARD WALKER / RWALKER@STARBULLETIN.COM
UH economist James Mak used a visual aid on Thursday to make points for the students in his fall semester class on tourism economics
Published in 1974 by George Mason's Crossroads Press, the slim, 80-page book discussed topics such as "Subsidizing Pineapple," "The Benefits and Costs of Tourism," "Sugar in Hawaii's Future," "Open Space vs. Development," "Financing Mass Transit" and even "The Criminalization of Prostitution."
"I (thought) the people who teach economics would find this (book) much more interesting than the dry, standard economic textbooks." James Mak, Co-author with Robert Ebel of "Current Issues in Hawaii's Economy," published in 1974
It was used by UH economics students and promoted to the business community as a quick guide to local economic issues. It had a civil tone that has characterized the "Price of Paradise" series and most constructive economic and political discussion in Hawaii ever since.
These days, Ebel works for the World Bank in Washington, D.C., while Mak continues to teach economics at the University of Hawaii at Manoa.
Through the years, Mak has consulted for many government and private organizations, helped write several books, and written scores of essays and conference papers.
He also wrote several chapters for the "Price of Paradise" books, for which he also served as technical editor. He is an expert on tourism economics, public finance and Japan's economy. He also is an authority on waterborne commerce in the United States during the early 19th century.
He currently is writing a book titled "Tourism and the Economy," intended for the layman.
When I met Mak recently for our "First Sunday Conversation," he laughed about how he and Ebel had written "Current Issues in Hawaii's Economy" near the beginning of their careers, and now, almost 30 years later -- "near the end of my career," as he put it -- somebody from the media was finally calling him up to talk with him about it.
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Before 'Price of Paradise'
Mark Coleman: Before the "Price of Paradise" books, there was "Current Issues in Hawaii's Economy." How did that originate?
James Mak: It started as an every-other-week newspaper column written by myself and Bob Ebel. The columns became extremely popular. But then both Bob Ebel and I went to Purdue as visiting professors in 1974, and it became too difficult to keep that column going long distance, so the column eventually died. Later, we put some of the columns together as a book because George Mason (of Crossroads Press) said the articles probably had some enduring value, at least for a while. And I said, "Yeah, I think the people who teach economics would find this much more interesting than the dry, standard economic textbooks." So, we edited some of those articles, and this is what came out of it.
MC: I've never spoken about this with Randall Roth (editor of the "Price of Paradise" books), but I would bet your book is where he might have gotten his idea.
JM: No, that's not true. I showed the book to Randy after he started working on the "Price of Paradise."
The origin of the "Price of Paradise" books came from the 1989 Tax Review Commission. He was an appointee to the commission, which is mandated by the state Constitution to review Hawaii's fiscal system every five years; I was hired as the commission economist. Of all of the Tax Review Commissions that we've had, that one was probably the most comprehensive in terms of its review of the overall efficiency and equity of the tax system. It came up with a set of marvelous recommendations, but when the commission chairman went to the Legislature to report our findings and recommendations, they just pooh-poohed it. That upset me, so I suggested that we take those consultant reports and publish them, to make them more accessible to the general public.
Unfortunately, there wasn't too much interest in those reports. Maybe they were too technical, or the population that would read them would be too small, so I gave up on that idea. But then Randy said, "Why don't we then turn this book into a series of short essays?" So, we started working on them, trying to translate these big consulting studies and their findings into short essays. Then, when the volume was first circulated among a few friends for comments, they said, "Jeez, all of these are public finance issues, tax issues. Who wants to read about that?" (Laughter) So, we broadened the scope of our essays to touch on things other than public finance issues, and that's when the "Price of Paradise" book finally developed. And Volume I was so successful -- I think it sold something like 35,000 copies -- that Randy decided to go ahead with Volume II and, from there, to the program on Hawaii Public Radio and columns in the newspaper.
Randy told me recently that the Star-Bulletin was reviving the "Price of Paradise" concept, and I thought, That's a great idea. It's a good venue to discuss current issues, particularly in the political environment we have today.
MC: What were some of the "marvelous" recommendations of that 1989 Tax Review Commission?
JM: Reduce the top marginal income tax rate to below double digits; eliminate some of the worst features of excise tax escalation -- pyramiding; establish a rainy-day fund; and reduce the number of special funds, which were used to hide surplus funds and circumvent constitutional limitations on government spending. Some of those recommendations were actually implemented, but it took the Governor's Economic Revitalization Task Force to implement them.
MC: Under Gov. Cayetano?
JM: Yes. We were in dire straits, we needed to revitalize our economy, so people looked around for good ideas, and lo and behold, there were some good ideas out there.
RICHARD WALKER / RWALKER@STARBULLETIN.COM
James Mak, outside his University of Hawaii office on Thursday, says focusing on Hawaii's economy has made his life "personally a lot richer." He also is an expert on Japan's economy and early U.S. waterborne commerce. He has been teaching economics at UH since 1970.
Life in the 'ivory tower'
MC: What I liked about "Current Issues in Hawaii's Economy" was that it was written for the layman and that it used university talent to address local problems. I was going to ask, somewhat jokingly, What is it like to work in an ivory tower?JM: (Laughter) Actually, here at the University of Hawaii, at least in the Economics Department, it's not entirely like an ivory tower, because we're so close to the community. It's a small town. We know lots of people downtown, so the connections between town and gown at the University of Hawaii have always been much tighter than at other universities.
MC: I've noticed that a number of the UH economics professors write on local issues.
JM: It's curious how that got started. Most of us didn't come to the University of Hawaii to become experts on Hawaii's economy. When we came to teach here, we had expertise in demography or the U.S. economy or something else, but invariably we sort of got caught up in this environment here. It sort of makes your life personally a lot richer, to feel like you're part of the community and to contribute to the community.
The beginning of my interest in doing research into Hawaii's economy was the result of Sam King running for governor of the state of Hawaii back in the early 1970s. Becky King, Sam King's daughter, came to the department chair and said, "I'm here to help my dad run for governor of the state of Hawaii, so I'd like to take a readings course on Hawaii's economy." We didn't have a course like that, so our chairman called me into his office and said, "Hey, Jim, would you consider putting together a reading list for her?" And I said, "Sure, why not?" So, I went to the various libraries and put together a collection of readings for her. After that year we thought, Jeez, if she's interested, surely there must be lots of other people in Hawaii who would be interested about what's going on with Hawaii's economy and, more importantly, why.
MC: Who was the chairman at that time?
JM: Burnham "Burnie" Campbell.
MC: What happened to him?
JM: He passed away suddenly a few years ago. He was really ahead of his time because most people, most chairmen, would have said you can't get anywhere professionally if you focus on local issues. You can get an international reputation studying about Japan, but where can you get a reputation studying about Hawaii? He was ahead of his time. He thought it was important to do these kinds of things.
Honolulu city lights
MC: Since you mentioned Japan, how did your interest in Japan's economy originate?JM: I grew up in Japan. I was born in China, but in 1951 or so my dad was moved to head his company's Osaka office in Japan. I was 10 years old, and it was right after World War II. In those days the Japanese people by and large ate just two meals a day. And talk about cheap, shoddy products -- all these cigarette lighters made from cut-up soda and beer cans and so on. But look at what's happened. It's just a miracle. When they talk about the Asian miracle, it's all driven by what happened in Japan.
MC: What were your parents doing in China?
JM: Well, my family is Chinese and we were living in Shanghai.
MC: And China was communist by then, yeah?
JM: Yes. But as soon as the communists came in, my dad took off. He knew there was no future for the businessman in China.
MC: What was his business?
JM: He was in importing and exporting. And in those days they thought of business people as leeches, that they were not productive. To be a productive person you had to make things with your own hands.
MC: The labor theory of value.
JM: Exactly! (Laughter) Now they've changed their tune.
MC: Why did you come to America?
JM: I don't know why, but I always thought, even when I was a little kid, that I was going to go to college in the United States.
MC: So, how did you end up in Hawaii?
JM: In 1959, on my way to a small liberal arts college, Quaker College in Ohio, I was on the SS President Cleveland, the American President Lines ship, headed for San Francisco, and it stopped for one day in Honolulu. It was a Statehood Day. I still have some pictures from those days. They were having statehood ceremonies downtown. August 23rd or something like that. There were 600 of us students from Asia on that ship. We were coming over in steerage class, not first class. But we had a great time, 600 of us, headed for different colleges on the mainland. When we stopped in Honolulu, that was my first time in America, and I could speak English like I do now. Most people assumed I was born and raised here and I was coming back. When the ship was pulling out at night, I saw the lights and I said, "I'm coming back." Years later, when I was getting my Ph.D. at Purdue, I had two friends with Hawaii ties, one of whom was Bob Ebel. He got his degree at Purdue a year before I did. The other person who was here was Gary Walton, now teaching at UC-Davis, and Gary kept saying, "Don't take any job offers. Come to Hawaii." You know, Hawaii was expanding like crazy. The economy was booming. When I first stepped on campus, there was so much money flowing around that we had unlimited Xeroxing at Hamilton Library. Can you imagine? No charge! And they would do it for you! We hired 21 assistant professors between 1969 and 1971. I counted.
MC: That was a real heyday.
JM: Yeah. The department grew from 10 a few years earlier to more than 30 people in my department. Some of them held joint appointments, like urban planning and the public health school and the East-West Center. We're down to about 15 today.
MC: Why?
JM: That's the effect of attrition at the University of Hawaii.
Economic way of thinking
MC: What's your future at UH? Are you going to hang around for a few more years?JM: Yeah. Look, I've been here 32 years now, and nobody else would have me. (Laughter)
MC: When do you expect your newest book, "Tourism and the Economy," to come out?
JM: I don't know. I still haven't really talked to publishers about this. Only 11 of the 15 chapters are done, but I think people here in Hawaii should read this book. It would give them a much better understanding of tourism.
MC: Well, I hope it comes out soon so we don't have to wait too long.
JM: I think you will find it easy reading. That's my intent, though the purists may balk.
MC: No, I think you're on the right track. I think math and graphs have a role, but economics is really about principles more than anything.
JM: That's what I'm saying. I'm trying to promote economic thinking so we can better understand tourism. I'm not trying to teach people economic analysis, which they'd be turned off by.
Mark Coleman's conversations with people who have had an impact on our community appear on the first Sunday of every month. If you have a comment or suggestion, please send it to mcoleman@starbulletin.com.
