As we approach the general election, voters need to appreciate that the economy is desperately in need of their attention, not just because it is the source of jobs and income for workers and their families, but because its weakness is hurting all the other institutions of our society here in Hawaii. To turn the economic tide, Hawaii must start ...
Thinking
outside the rocks
By Anthony L. Clapes
Special to the Star-Bulletin
The sinking ship
The word "economy" is just a name we give to much of what we do every week: Go to work, shop, pick up dry-cleaning, get a car fixed; in other words, earn, spend or save money. Just because we give it a separate name, though, doesn't mean that economic activity is separate from the rest of our lives. The economy is like the hull, engine and propellers of a ship. From the passengers' point of view, those parts of the ship are completely uninteresting; they're just infrastructure supporting the stuff passengers care about: The dining rooms, the bars, the deck chairs, the theater.But suppose the engine blows up, and the explosion blows a hole in the hull and knocks the propellers off their shafts. Suddenly, the infrastructure is the only thing on the passengers' minds. That's what's happened to Hawaii. The one-cylinder engine of our economy has thrown its rod, the hull has sprung a leak and the propellers have fallen off. Believe it or not, only the voters can solve this terrible problem; but to do it, we have to "think outside the rocks," because the solution is not on the rocks.
Been down so long, it looks like up to me
Measured in terms of jobs and income, Hawaii's economy is shrinking. In December 2001, there were 610,000 workers and unemployed in the civilian labor force in Hawaii. In August 2002, there were 596,000. The number of unemployed people dropped by 5,700 people between December and August, but the number of employed people dropped even more, by 8,300. In fact, there has been virtually no growth in nongovernmental jobs in Hawaii in 10 years.Income for the employed and their families is in even worse shape. Of the 25 occupations that employed the most people in Hawaii in 2000, the majority paid average wages of less than $20,000 per year. In fact, three-quarters of all jobs in the state pay less than a living wage. Median household income in Hawaii, after adjusting for inflation, was 3 percent lower in 1999-2000 than it was in 1989-'90; in the United States, median household income was up 11 percent over the same period. In every year of the past decade, average personal income in Hawaii has been lower after inflation than it was in 1990. In 1990, average personal income in Hawaii was 14 percent higher than in the United States as a whole. In 2000, it was 6 percent lower than in the United States as a whole.
In the weeks following 9/11, the fragility of a one-note economy was obvious to all. Yet today, the sinking feeling in the pit of most people's stomachs after 9/11 has probably disappeared. After all, the ship of state didn't sink, did it? We're not all floating in life jackets on the open ocean, are we? Life goes on, right? Wrong! You've just been down so long, it looks like up to you. Hawaii is experiencing declining personal income, a shrinking work force, an incurable brain drain, declining tax revenues and declining charitable contributions.
The problem is so serious that government can't solve it alone. Yet government has so far proven incapable of even being a part of the solution. That's where the voters come in. As with the van cams, the voters must tell the candidates what to do.
The sound of silence
The voter robotically pulling a party lever and the lazy, disinterested or protesting voter who stays away from the polls send the same message to the politicians: "Keep on doing what you're doing; we don't care." Since those people constitute the vast majority of the electorate, their message signals the majority's willingness to settle for ill-considered solutions. Need evidence? During the past 20 years, the state has repeatedly spent tax dollars to develop plans to diversify the economy. What happened? Nothing. As it turned out, executing the plans wasn't needed to win re-election, so the politicians said, "Why bother?"To the politician, the sound of voter silence is the sound of voter contentment. Are the voters really content to have such a bleak jobs and income picture in Hawaii? Of course not, but if they don't care enough to get to the polls, or if they vote simply by pulling the party lever without thinking, they are contributing to Hawaii's decline. That's why fixing the economy is the voters' job: The voters have to make it absolutely clear that they will vote only for candidates who will commit to specific jobs and income measures.
Thinking outside the rocks
You know about "thinking outside the box," but in Hawaii what we need is "thinking outside the rocks." We need to realize that the solution to Hawaii's economic problems isn't in the islands.In the early 1980s, both Hawaii and Ireland developed strategic plans to diversify their ailing economies into growth industries. Today, Ireland's strategic plans have succeeded far beyond anyone's expectations, producing hundreds of thousands of new jobs. Hawaii is still adrift, with virtually no job growth outside government. Why the difference? Ireland's people were thinking outside the rocks, thinking about Ireland's place in the global economy and how to improve it. Hawaii's people were not.
There's a tendency in Hawaii toward insular thinking. Why should we compare our governor, our Legislature, our bureaucracy, our schools to those of other states, or of Ireland? "This is Hawaii. We're different, and we like it that way."
Insular thinking is OK for a society that truly is insulated from the rest of the world, but Hawaii is not insulated; it is mainlined to the rest of the world. Our economy is globalized, and has been for over two centuries. Since Captain Cook's arrival, if not before, Hawaii has satisfied its increasing appetite for goods from outside the islands by using its natural resources to create purchasing power in international markets.
Today, tourism -- another industry based on natural resource exploitation -- is our primary producer of export revenues; but it is an odd export business. Think outside the rocks: We don't ship tourism to customers; they have to come here to pick up the "product." Unlike other export industries, then, the perceived cost, inconvenience or peril of travel can dramatically affect our ability to sell our principal export goods.
More significantly, the lack of growth in tourism during the last decade has hurt Hawaii, for two reasons. First, the population is growing, and each additional mouth to feed increases the demand for goods and services from outside the state. Tourism hasn't generated an increase in dollars flowing into the state to pay for those imported goods and services. Second, tourism is a low wage-rate industry, as are most of the industries that support it. Too many of our people are unable to cope, even though they have jobs. We can't just decree that everyone who's earning less than a living wage shall now be paid a living wage, because there's not enough money in the economy.
What we need (in addition to satisfying as much of our demand locally as we can) is a broader base of economic activity; not new types of import businesses like Wal-Mart, but new types of export businesses with growth profiles, that can give us a multibillion-dollar alternative to the tourism industry. For that to come about, we have to think outside the Rocks.
How do we create large, growing export industries in Hawaii? Simple: We persuade companies from outside Hawaii to locate facilities in Hawaii. The government has long had a contrary view, that all we need to do is to help our local industries go global, but that solution is riskier and takes decades, as we can already see. That's why most regions that have diversified into growth industries, including Ireland, have done so by attracting growth companies from elsewhere and then developing clusters of indigenous firms around those "anchor tenants," just like a shopping mall does.
We need to think outside the rocks about the election not only because the markets we need to reach are outside of the islands, but also because most other regions are trying to diversify their economies, too. Potential "anchor tenants" will evaluate Hawaii against those regions and select the most attractive environment for their facilities.
What's interesting is that the factors they consider are the same factors that are important to indigenous growth companies, too: Taxes, regulatory environment, education system (kindergarten through college), livable communities and cost of living, among others. Right now, we don't measure up.
That's why, when we say, "This is Hawaii. We're different, and we like it that way," we are consigning our state to failure in the international competition for jobs and income. We are forcing, and indeed have already forced, an exodus of college graduates, construction workers and many other types of workers from our state. Ultimately, we are committing Hawaii to a long future as an economic backwater, which means that the infrastructure for all our institutions -- health, welfare, cultural, ecological, academic. corporate, labor and social -- will not keep them afloat.
The voters' role
That's why the voters have a critically important job this year. The candidates must believe in their hearts that they can't simply rely on the voters either to stay home or to vote mindlessly, and that they have to make specific commitments to get your votes. The People's Platform will help you do this.The People's Platform is a set of five simple promises and associated goals that will bring a brighter future to Hawaii's workers and businesses if voters use it. It is nonpartisan and nonpolitical. It is based on extensive research and discussions with community leaders across the social spectrum in Hawaii, as well as economic development experts and industry executives from outside Hawaii. It reflects principles of economic health that have worked repeatedly in other places.
What voters need to do is identify candidates who support the People's Platform principles and goals most strongly, and vote for them. That means attend candidate forums or read the newspaper or watch the televised debates and interviews. Then, on election day, vote for candidates whom you feel have made the strongest, most specific commitments to creating more jobs and better-paying jobs in Hawaii.
For a list of questions to ask candidates, see www.enterprisehonolulu.com/peoplesplatform/questionnaire.htm.
Anthony L. Clapes is the author of "Blue Wave Millennium: A Future for Hawaii." He is an international technology lawyer and a consultant on intellectual property management who has represented a variety of U.S. mainland high-technology companies. He lives in Honolulu. About the author
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The People's Platform is a set of five simple promises and associated goals that will bring a brighter future to Hawaii's workers and businesses if voters use it. The People's Platform
1. Make a balanced growth economy the first priority of government. Goals: Strong focus on creating a better society by expanding the economy in a balanced way that respects culture and environment, while creating more jobs/income. Set challenging goals and keep the public involved.
2. Create and empower a permanent partnership on economic expansion. Goals: Promptly establish a permanent partnership among government, business, labor, academic and nonprofits to develop and implement a strategic plan for a healthy economy, and keep the media and the public informed and involved regarding plans and progress.
3. Build a result-oriented education system, K-16 and beyond. Goals: Public school students will test in the top third on national tests within four years for elementary schools, six years for higher grades. Prepare public school students well for college or vocations. In 10 years, the University of Hawaii will be one of the top 50 teaching/research institutions in the United States, and an engine of commercially viable inventions. Triple the university's endowment every three years in the next decade. Create five start-up companies from university innovations next year, and double that number every two years.
4. Create a 21st-century, result-oriented government. Goals: Adopt the best economic development practices, including incentives, of sister states during the next three years. Put Hawaii in the top third of states in modern, efficient operations. Create a cabinet-level agency on economic expansion. Eliminate nonessential services in four years. Make government 10 percent more efficient and effective. Cut taxes to levels below the top third of states in four years. State programs to sell Hawaii will include business themes.
5. Marshall capital for growth ventures. Goal: Establish a $200 million venture fund for financing small, proven companies that need financing to go global.
Source: Anthony L. Clapes
