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The Honolulu Advertiser
Posted on: Thursday, March 11, 2004

Isle tech plan is a failure

By Larry Geller

"The world has arrived at a rare strategic inflection point where nearly half its population — living in China, India, Russia — have been integrated into the global market economy, many of them highly educated workers, who can do just about any job in the world. We're talking about three billion people."

— Craig Barrett, CEO, Intel

It should come as no surprise when companies such as Firetide Inc. decide to leave Hawai'i ("Tech firm lured out of state," Advertiser, Feb. 27).

Larry Geller is executive director of the Hawai'i Coalition for Health.
Decisions are made by corporate bean counters. If it is in the best interests of shareholders or the private owners of a company to take an Act 221 tax credit one day and leave the next, that is exactly what they will do.

While Hawai'i still grasps for the high-tech brass ring, it's too late for this strategy. Software and other development jobs that were already being outsourced to Ireland when our state first became interested in high-tech are now shifting to other countries, but not to Hawai'i.

Our mantra to investors, "with telecommunications, this work can be done anywhere, why not here?" was never workable and we need to give it up. The very portability of high-tech jobs assures that they'll move closer to their markets, vendors or to a cheap source of skilled labor.

This is a powerful trend and cannot be reversed. Aquaculture, biotech and a few other tech fields that are more stable here unfortunately do not generate many jobs. There can and should be some high-tech in Hawai'i, but it will not thrive here.

Hawai'i doesn't have the advantages of location, access to raw materials and markets that successful Singapore has, but we still need to have a plan based on our own unique circumstances.

We lack a model for what an island economy could be so we keep trying what doesn't work. We give away tax credits in exchange for very little incremental change.

Creating an economic model for an isolated island state may be difficult, but it's essential. Without a complete and sensible model, Act 221 will remain a giveaway to big businesses with few long-term jobs created. We should not be surprised that they take the money then run to a better place.

You or I would do the same.