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Cooperation between Democrats and Republicans is the key

By Mike Markrich
Kailua-based writer and researcher

Just before the general election, the Democrats I knew were in denial.

A Native Hawaiian gentleman said: "I don't think we are going to choose a white Republican. We tried that already."

An AJA Democratic insider said: "It's going to be tough having two AJAs on one ticket, Mazie and Matt, but its not going to make that much of a difference."

In the end, they were all wrong. As in the primary, the candidates talked about "change." But the ideas they presented were amorphous.

Lingle, the former Maui mayor who eventually won that election for governor, presented an ambitious list of ideas, but without a clear road map of how to achieve them.

Lt. Gov. Mazie Hirono answered critics who complained that state government had become erratic, expensive and unresponsive to the needs of ordinary people by asking for their continued trust in her as an individual.

No one was talking about the basic math of how to come up with the $3.5 billion (of operational money) needed annually to hire state employees and provide essential services in a small state with an entire gross state product of only $44 billion.

In the end, it didn't matter.

People were so tired of what seemed an unworkable status quo that they were willing to risk something different. The reason may have had much to do with Hawai'i's economy.

As high-tech industries on the Mainland contract (and take with them both jobs and revenues) to the extent that once-highly-prosperous states have been forced to make deep cuts in services (Virginia, for example, has a $2 billion deficit), many people in Hawai'i are gratified to find that its economy, though low in the water, is still afloat.

With less than 4 percent unemployment and 6 percent growth in tax revenues, based largely on real estate sales, it is a lifeboat not moving in any particular direction but not capsizing, either. In the minds of many, stagnation is by no means ideal, but it is better than sinking.

In fact, economists have found that 25,000 new jobs have been created in Hawai'i. Most of these jobs are in the low-paying healthcare and retail sectors, but some are well-paying high-tech jobs — the delayed promise of the high-tech boom of the 1990s.

"There were 500,000 jobs in 1990, and there 575,000 jobs according to the latest census," said Bank of Hawaii senior vice president and economist Paul Brewbaker. "These changes are real."

The other significant change is demographic. Hawai'i exhibited a dramatic outflow of people during the late '80s and early '90s. Most were island-born residents who left in despair, feeling that in Hawai'i's hierarchical structure there was little opportunity for the talented and independent.

They were replaced, particularly on the Neighbor Islands, by entrepreneurial newcomers who were willing to take risks.

But now many locals have come back and, to their amazement, have found out that compared to what they were used to in California, Hawai'i actually is affordable.

"I have a friend who went to San Jose in the 1980s because he was led to believe he would never be able to buy a house here," said Brewbaker.

"He stayed there for 20 years and bought a house. Well, he just sold the house in San Jose, came back, bought a house in Ka'a'awa and found he had money left over. He found that, compared to the Bay Area, our houses were substantially under market."

However, this is of little help to those in Hawai'i seeking now to enter the housing market. In 1974, there were 18,000 new housing units (homes and condos) brought to market annually. This year, 4,000 were built in a state of 1.2 million people.ÊMany of them are upscale properties in gated communities on the Neighbor Islands.

In a state where 60 percent of the people cannot afford to buy their own homes, these numbers have enormous impact.

"People look at these numbers and they can't believe it," said Brewbaker. "They are even more surprised that this situation is not going to change anytime soon. It takes years for a contractor to get the necessary permits to build and get financing. This is going to create another affordable-housing shortage for renters."

It will also be likely to create a new inflow of venture capital into the Hawai'i real estate market.

Presently, the only new large projects are hotels built for time-share purposes, retail malls, luxury tract homes in resort areas like Maui and military construction.

Perhaps it is time to rethink the whole process and ask our leaders to create a vision based on our reality. Why not change zoning laws and permit the building of more high-rise towers in downtown Honolulu?

The expanded growth outside the city means more money has to be spent on expensive infrastructure projects, at a time when the city can barely maintain its present sewer system, and water is seen as increasingly expensive and scarce.

Why not accept that the boom days of Japanese spending are over and look for new options?

Japan, although still a wealthy country, is suffering massive deflation. The big spenders are more likely to be aging Mainland baby boomers or Chinese tourists than Japanese. It makes more sense to look for new opportunities than to chase old deals.

Why not also admit that the rush to convert agricultural land into upscale housing is a one-time gain? After it's done, Hawai'i will lose its allure and become a clone of California, whose problems dwarf that state's ability to cope.

We do have specific niches in Hawaiian music and arts, organic farming, coffee and sports, and we should make the best of them. Surfing is not high-tech, but the local competitions combined with the fashion industry are a part of a global, multibillion-dollar business.

Instead of being ashamed of our assets, we should take a long look at what we have.

• Build affordable housing. It will stimulate job growth and provide an important base for local families. The problem will get worse if nothing is done.

• Break up the state Department of Business, Economic Development and Tourism. It has been largely unimaginative and ineffective.

Transfer its marketing functions to a new private nonprofit agency dedicated to selling Hawai'i products.

The people who work for this office should be paid a base and commission. This will encourage new ideas and incentives. State departments of business where people are paid by the hour to make sales are out of date.

• Build a technology park with low rents at the foot of University Avenue, five minutes from the offices of University of Hawai'i professors. The buildings near Puck's Alley and the surrounding neighborhood are outmoded.

Why not create a technical university park there similar to those that surround the university districts in Richmond, Va., Charlotte, N.C., Philadelphia and state-run institutions like Florida State?

This is a tried-and-true formula for success. The research from the universities is tied directly to world niche markets in technical fields, virtually guaranteeing the inflow of outside capital.

In the history of Hawai'i, governors, politicians and legislative sessions come and go. It's not enough simply to mouth platitudes and hope that things will get better.

The great visions that propelled Hawai'i's economy over the past hundred years — sugar, pineapple and tourism — had things in common.They were based on long-term, strategic thinking, some luck and the idea that, by continually being willing to take risks and try new things, a mass-market niche for things from Hawai'i would be found.

The fact that this effort has not been successful in the recent past does not mean that it cannot be done. It does mean, however, that we have to have leaders willing to be held accountable for the promises they make about our future.

Lingle has changed the future of Hawai'i just as surely as the Democrats once changed its past. It's in the interest of all of us that she succeed.