Hawaii's Economy
Price of Paradise · Hawaii Public Radio · aired 1997-06-29
Guests: Dan Boylan (political scientist); Jim Brewer (worker activist); George Mason (publisher emeritus, Pacific Business News)
Duration: 1:04:23

[0:00:00] Randall Roth: Ah, this is Randy Roth, host of the Price of Paradise radio show. We're broadcast live Sunday mornings on KHPR and KKUA, and then rebroadcast Sunday evenings beginning at 8 o'clock on KIFO. Everyone who works to bring this program to you is a volunteer who believes in the importance of lively and informed public dialogue. We believe the brightness of any community's future is directly related to the level of activity in its marketplace of ideas. Our topic today has to do with Hawaii's economy, specifically what's wrong with it and how can it be fixed. With me in the studio, ready to answer these questions, are George Mason, Jim Brewer, and Dan Boylan.

[0:00:38] Randall Roth: Dan is a Professor of History at the University of Hawaii West Oahu, host of the Dialogue TV show, and a regular columnist for MidWeek Magazine. Jim Brewer is the executive producer of a cable access TV program called Employees Today and the publisher editor of a new magazine that bears the same name. He and I decided the most accurate description of his current position is activist for employees and low-income people. Introducing George Mason is a little bit of a problem in that it would take me about 10 minutes just to read about the 26 awards he's received during his career as founder, publisher, editor, and columnist for Pacific Business News.

[0:01:15] Randall Roth: My solution is to skip all of that and just tell you that from 1955 to 1962, he served the State of Hawaii as director of what he eventually evolved into DEBED, the Department of Economic and Business Development and Tourism. George, I hope you don't mind if I chose to highlight your government service.

[0:01:33] George Mason: No, I don't mind at all because, frankly, it served me well when I started a business and started to take all the risks and I had a perspective of government that was from firsthand experience and not from reading some propaganda.

[0:01:50] Randall Roth: I notice in this morning's paper, and it wasn't a part of this radio show, but it happened to be on the same topic, and so they told the readers about our radio show as as part of that. Doc Kelly evidently gave a speech recently, and it was at least in part in this morning's paper. I read a speech that you gave last year, and at least in in my mind, it was kind of similar. Tell me real, real briefly about your speech, and if you want to add a thought or two about you what you've seen of Doc Kelly's speech, you could do that as well.

[0:02:24] George Mason: Well, I I think what Doc Kelly's trying to do is what I've been trying to do for a number of years, and that is to wake up the business community. It's it's a fear-ridden portion of our economy and a very important one to the fact that we have too much government to educate people to that fact, that far too few people vote. I don't think it's commonly known that only 46% of the people 18 and over who are citizens of this state actually cast votes in the last two elections.

[0:02:56] George Mason: We we suffer from an awful lot of apathy, and I am particularly annoyed the legislature has for too long ignored the most important segment of our economy for the past 20 years, and that is tourism. And I think the what they did in the last session was a good example. 10 million dollars is ridiculous, it's a tiny fraction per visitor or per hotel room or per whatever that other states, cities and counties spend on tourism promotion. That that's it in a nutshell, there are a lot more factors that I can discuss as we go along.

[0:03:33] Randall Roth: Now, when you mention the word apathetic, if I recall your speech, you commented that you thought labor had been anything but apathetic, that they had been very effective politically.

[0:03:45] George Mason: Absolutely, I mean, they have solidarity, business doesn't.

[0:03:49] Randall Roth: So you're not so much complaining about them as you're saying the business sector ought to be over here as involved politically as the labor sector has been.

[0:03:57] George Mason: Absolutely, and I'm not the only one that's saying that. On the same day that Kelly gave his speech to the Hotel Association, Tom Lepper of Bank of Hawaii gave a rousing speech with that very similar to the Honolulu Board of Realtors annual meeting. I don't have a copy of that, but and last year, John Couch, head of A&B said the same thing. He just he said in effect that business is jeopardizing its own future by its apathetic stances, its fear, and its lack of political involvement.

[0:04:38] Randall Roth: So if I've got it right, the overlap of the various speeches and articles that you've been referring to is that a lot of people from the business world feel that government in Hawaii is too big, taxes too high, unions too powerful, as compared to the business sector. Is that kind of at the heart of it?

[0:04:55] George Mason: That's at the heart of it, and of course, if you want, later on, I'll I'll go on to my latest preachment and that is that I think we've got to tell people that business does not pay taxes.

[0:05:06] Randall Roth: Okay. Jim Brewer, I got a feeling you're going to disagree with a few things that George Mason has just said.

[0:05:13] Jim Brewer: Well, yes, but before I do that, I'd like to maybe just outline some of my thoughts about the economy. First of all, I believe that the problems of the Hawaii economy really can't be separated from the problems of the US economy as a whole. Today, the US economy is really two separate and distinct economies coexisting with one another. One economy is the economy of Wall Street, and its main feature is super profits. We can see those super profits in the steep and steady climb of the Dow Jones average. Record-breaking highs are recorded on a weekly basis, and this has been going on for years now.

[0:05:49] Jim Brewer: The other economy is the economy of Main Street, America, and its main feature is extra-low wages requiring extra-long working hours to make one decent paycheck. While Wall Street stockholders' prosperity is soaring, Main Street wage earners see their standard of living lying stagnant or sinking.

[0:06:07] Randall Roth: Jim, let me let me interrupt just for a second and get right back to you. In essence, are you saying, are you saying the rich are getting richer, the poor getting poorer, and that's part of what's wrong with the economy here in Hawaii?

[0:06:19] Jim Brewer: Right, as a matter of fact, the low-wage economy on the mainland and here in Hawaii is basically hurting us because when consumers can't buy, small business really hurts and I have some thoughts on that. But I I did want to just make summarize. Go ahead.

[0:06:37] Randall Roth: I just I want to make sure that our listeners know exactly where you are because we just found out where George is. Rich are getting richer, the poor are getting poorer is problem number one.

[0:06:45] Jim Brewer: And we have a low-wage economy and a super profits economy, two of them sitting alongside each other. And what this means is an economy with a Wall Street boom sitting on top of a Main Street depression. That's basically what we have, and it's very much evident here in Hawaii. We just have to, we have the complicating factor of the economy of Japan and I did want to say that the fact that we have this schizoid kind of a situation, we have two basic, you may have seen Business Week. They did an article feature thing on this about there's two economies, there's the Lehman Marcus crowd and the, and the Walmart crowd.

[0:07:27] Randall Roth: Okay. You know, Jim, I've I've seen your, your television show. This morning was the first time you and I had, had met. But from watching your show, I'm under the impression that you don't think government in Hawaii is necessarily too big, or that taxes are necessarily too high, or that unions, including government worker unions, are necessarily too powerful as compared to to other groups in Hawaii. Do I have it right?

[0:07:54] Jim Brewer: Um, partially right. Um, I think that taxes are too high, but they're too high on some people and too low on others. In other words, So businesses and the wealthy should be paying more? Definitely, because they were really untaxed at the federal level during the Reagan years. Their tax rates were basically cut in half. And some economists, I've seen them on C-SPAN, say that 1/3 to 1/2 of the present $5 trillion debt, that the national debt, can be attributed to the cuts in the taxes to the highest income people in the country.

[0:08:30] Randall Roth: Okay. Dan Boylan, you're a legend for keeping your ear to the ground so far as political movements are concerned. Um, we've got George that I picture as being on on one side of this in terms of what's wrong and what we do to fix it. Um, Jim, maybe it's not 180 degrees, but at least I see him as being more on the other side than not. Uh, what does all this mean from a political standpoint today and the implications for 1998?

[0:09:00] Dan Boylan: Well, I I'm I'm not, I think George is entirely right about the business community being frightened. It always has been for many, many years now and after all, it's faced 50 years of Democratic control of the government. Now that and with government being such a huge slice of the economic pie here, the federal government, the military, the state and county government, that's just an awful lot of business that business has to do business with. So if you are, for example, Campbell Estate, sponsor of this program or underwriter of this program.

[0:09:35] Randall Roth: Underwriter, thank you for reminding everyone.

[0:09:37] Dan Boylan: An underwriter of this program, but it's it's an important point. Campbell is not going to be able to build a second city if they cannot draw state or federal or some sort of government jobs out there. They must deal with Democratic politicians in order to to get that to happen. They cannot therefore cause a revolution, Democratic Party say that it's strong labor support, they cannot answer Dr. Kelly's call and campaign against Democrats who support unions, if they want those same elected Democrats to move jobs out in that, state jobs out in that area. Just can't do it.

[0:10:16] Dan Boylan: And business has had to contribute equally to Democratic candidates, who are often high-tax people who support higher taxes or support social legislation.

[0:10:29] Randall Roth: Right, right there. Why have they had to contribute to people who stand for things that they don't stand for?

[0:10:34] Dan Boylan: For the very simple thing that the fact that those Democrats have controlled the government, every aspect of it for so long. I mean, we've just had a what we call a revolt at the polls in Hawaii and it took the Republicans from seven seats to five seats in the House, no gains in the in the Senate and there and no no seats in the congressional delegation. You have to do business with Democrats and the the basis of the Democratic support is union support.

[0:11:02] Randall Roth: Now as I read Doc Kelly's speech in this morning's paper and as I've heard George Mason talk in the past, there are people out there calling for a political revolution. Is that possible?

[0:11:14] Dan Boylan: I I think we've I think, as Jim has pointed out, we've had a bit of a political revolution since 1980, and and by and large, Republicans and business have won it. Tax rates have gone down nationally.

[0:11:25] Randall Roth: Wait, are we talking about Hawaii?

[0:11:27] Dan Boylan: Uh, oh yes, I think we're we're talking about Hawaii to to the extent that Hawaii is a part of the national government. We all pay federal taxes and richer people in Hawaii pay less federal taxes than they did in 1980. Uh, I mean that's that's It is my imagination, or are you agreeing with both George Mason and Jim Brewer? Absolutely because they're both right, and that's that's the that's the sad part of our of our politics now.

[0:11:50] Dan Boylan: It has become so polarized that, uh, that I find as a fellow, as I've grown older, I've grown more conservative, I find that, uh, uh, you can't, you can't make anybody happy anymore because people now are so polarized that they selectively decide what part of you they like or dislike, and they dislike whatever, you know, whatever column you took the conservative stance, or whatever column you took the the liberal stance, and there seems to be no in-between. In-between is where American politics operates. Uh, Newt Gingrich found that out after trying to go too far in one direction, uh, and, uh, uh, Democrats or Liberals have found that out, too.

[0:12:30] Randall Roth: A quick thought from Jim Brewer, then George Mason, and then we're going to take a call.

[0:12:33] Jim Brewer: I think it's kind of funny that I think you folks expected me to really be disagreeing with George Mason. I find myself really disagreeing with Dan Boylan.

[0:12:43] Randall Roth: Well, at least you're disagreeing with someone, Jim.

[0:12:46] Jim Brewer: And, and the part that I disagree about is is playing that politics between, uh, the Gingrich, Reagan, Republicans, and the, uh, conservative, uh, Democrats like Clinton. I think that, uh, I and I wasn't going to mention this, uh, uh, because my wife always tells me, don't talk before you've done something. But the thing is that I am a member of the New Labor Party, which formed last year in in Cleveland, Ohio. And before that, for five years, I had resigned from the Democratic Party, I was a member of Labor Party advocates.

[0:13:21] Jim Brewer: And the thing is, I believe that the new militancy of the AFL-CIO, you know, they they dumped their national leadership and they have a new organizing leadership, and I think the formation of this Labor Party, uh, indicates that working people, uh, are not going to stand for crumbs and cracker crumbs and and drips while, uh, money's gushing up to Wall Street.

[0:13:42] Randall Roth: Okay, George Mason.

[0:13:43] George Mason: Yeah, I want to, uh, expand on what Dan said about, uh, political polarization. I came here in, uh, late 1947, and I was rather appalled, the Republicans had been in complete control since 1903. And I thought that was bad, uh, that we didn't have a, a balanced two-party system. In '54, the Democrats took a lot of seats in the legislature, and I was in government, um, for about three or four years with what I would call a fairly balanced legislature between Republicans and Democrats.

[0:14:21] George Mason: It hasn't been comfortable ever since, and I think until we get back to having a two-party system, uh, with a thin majority for one party, where there has to be some compromise and some understanding, and so on. I think it's going to be an unhealthy situation until we, um, reach that point, and, uh, we've, you know, since about 1965, this has been a total one-party state and the Republican Party died a borning. And, uh, I, I just think we have to get back to it.

[0:14:53] Randall Roth: Okay. If you tuned in late, this is the Price of Paradise Radio Show. My name is Randy Roth. I'm here with Dan Boylan, who's a Professor of History at the University of Hawaii, West Oahu, uh, Jim Brewer, who is the executive producer of a cable access TV program, and publisher editor of a new magazine, both of which bear the name Employees Today, and George Mason, who is publisher, editor, columnist, etc., emeritus at Pacific Business News, or I guess you're still writing your column.

[0:15:20] George Mason: Oh, yeah.

[0:15:21] Randall Roth: So emeritus on everything else, active on uh on columnist. Uh, if you'd like to ask a question or make a comment, now's the time. Our number is 9558821. If you're on a neighbor island, it's 1-800-955-8821. If you want to catch the show in its entirety tonight at 8 o'clock on KIFO, 1380 AM, you'll have an opportunity to do just that. Again, we're talking about what's wrong with Hawaii's economy and how can we fix it. Our number is 9558821. Let's go to Renee from Makiki. Good morning, Renee.

[0:15:58] Renee: Good morning. I would just like to make a couple of quick observations, um, about for instance this this claim that government is too big, of some claim that the state's revenue problems are exacerbated by bloated state government. By the way, work for city government and they use statistics showing that Hawaii's are state expenditures for government are one of the highest in the nation and totally ignore statistics showing Hawaii's city and county expenditures are the absolute lowest in the nation.

[0:16:28] Renee: And these two statistics, as a lot of people have pointed out are created by the following fact, that Hawaii is the only state in the nation that has a centralized education system, which the state pays for, instead of the counties on the mainland, the counties pay for education. Hawaii state government also funds airports, harbors and prisons, which on the mainland are also funded by counties and cities. So if you remove education, airports, harbors, prisons from state responsibility and give them to the counties, Hawaii state government would be smaller and somewhere in the middle of the national spectrum.

[0:16:59] Renee: And my observation as a government worker is that since government is being downsized, anecdotal reports show that downsizing has led to short staffing, which leads to a lessening of services, which to me indicates that government was not bloated, but that it was just the right size to meet our needs.

[0:17:14] Randall Roth: Renee, let let me get, uh, some reactions to what you're saying. George Mason, any thoughts about what you're hearing Renee say that that maybe government isn't too big here in Hawaii, that, um, that's a misconception?

[0:17:26] George Mason: Of course it's it's a, it's a misconception. Government is too big because the government workers have no real incentive to produce. I'm a great believer in privatization and there are some fine examples across the country, Indianapolis being the greatest, of where privatization has, um, has made a city, or a county, or a state, very, very prosperous. It's happening in fact all over the world, including China. Uh, privatization is the trend, the socialist government in New Zealand went for privatization and the New Zealand economy recovered. Government is inefficient because as I know from firsthand experience, there is no incentive to be efficient, there is no bottom line in government.

[0:18:12] Randall Roth: And and here in Hawaii, regardless of which side of the privatization issue you're on, I think everybody agrees, at least right now, we're moving away from privatization as a result of this Kono opinion from the Supreme Court of Hawaii. Jim Brewer, any thoughts on what Renee has raised and George Mason just commented on?

[0:18:29] Jim Brewer: Yeah, I would just like to say that the record of privatization is really very mixed. In Baltimore, the school system has turned off the TVs that the private, uh, um, uh, people had put in there to give, uh, hours and hours of TV commercials to kids. They've turned that off and taken it back over. Um, privatization, I think the best example I would like to use, uh, is the A+ after-school program. When the A+ after-school when

[0:19:00] Dan Boylan: And after school, childcare was in the hands of the private sector. About 10% of the need was filled in Hawaii. Now that we have it in the public sector, about half of the need is filled, and more could be filled if it was fully financed. Dan Boylan, any thoughts before I go back to Rene?

[0:19:18] Rene: No, go back to Rene.

[0:19:19] Dan Boylan: Okay, Rene, I think I interrupted you. Had another comment you wanted to make, and then we need to move on to another caller.

[0:19:24] Rene: Thank you. This, the second observation is about the loss of tax revenue. The state lost tax revenue from the loss of tens of thousands of plantation jobs lost because of policies originating in the business sector, downsizing and that sort of thing, and the lack of construction jobs. And this is not brought up by those who claim government is too big and claim that it's government which gobbles up all our tax revenue. Actually, it seems to me the recent loss of tax revenue from has a lot to do with the loss of jobs, and therefore the taxes you could have gotten from those working people and the loss of people to the mainland, the taxes we're no longer getting from them.

[0:19:58] Dan Boylan: Okay. We'll take that as a comment. Rene, thank you very much for calling in this morning. Let's go to Lloyd from Waikiki. Good morning, Lloyd.

[0:20:05] Lloyd: Aloha. I always feel that one of the most important things about this economy is we've got to bring back the Aloha spirit. Our our tourists are going way down to the bottom because they're bringing in all these cheap tours, especially in O'ahu. And they're just dropping daily. If we don't bring back the Aloha spirit and forget about all these others trying to make money, trying to get rid of somebody. The main thing is to fight and bring back these islands to where they belonged and back in the 50s and 60s. I know it's a very difficult situation, but it has to be done, or we'll go further down. Okay, so And one other comment. After seeing Frontline last night, I don't know if I trust any of these politicians. I really saw my eyes were open because I was against that golf uh zoning, and now we find out why it got in tail during the Japanese boom. And it's very disappointing to see that our government is run the way it is. Aloha.

[0:21:00] Dan Boylan: Aloha. Um anybody know what what Lloyd was referring to in his second comment in the studio. Nobody knows if we've got a caller out there that wants to shed a little bit of light on that, that'd be great. Let's move to Arturo from Chinatown. Arturo, good morning, Arturo.

[0:21:14] Arturo: Good morning. I'm in the only class that the UH ever had in foreign trade and uh just give an example the short sightedness of the state, they really did want to pay for the faculty, and so we had only one class. The object was to make uh Sand Island a free trade zone, but my question is, with this background, one of the things you hear often and on and more maybe lately, is the Jones Act. I happen to be also owner of Arturo's Salsa company and I know it costs me quite a bit of money to send stuff to from the mainland here. How about maybe going one step at a time? And most people agree in the state about the Jones Act thing. I'd like to get some comments from the your audience.

[0:21:58] Dan Boylan: And when you say they agree, you think most people would like to get get away from the Jones Act?

[0:22:03] Arturo: Well, just let free trade. I mean, that's a simple as that. I mean, the lowest producer. And if it's trying to protect these jobs with the union, you could do the same thing like they did with the railroad, just buy them off over time. We're not talking about that many people.

[0:22:15] Dan Boylan: Okay, well let me get a reaction from from Jim Brewer. Uh Jim, I think our listeners know the Jones Act is something that that is supported by labor and we've got a caller suggesting that maybe uh that's part of the problem with what's wrong with Hawaii's economy. What do you think?

[0:22:29] Jim Brewer: [unintelligible — audio glitch]

[0:23:09] Dan Boylan: No, if you if you got rid of the Jones Act completely, it would mean that foreign bottoms with foreign crews would be able to operate between here and the mainland, okay? That would ostensibly put uh Sea Land and Matson out of business in terms of the way they currently do business. Yes, it would eliminate American jobs because you can get foreign crews at much, much less. I mean, that's the essence of it. There may be compromises. Some people are looking for ways to compromise and not necessarily dump all the American workers. [unintelligible — audio glitch]

[0:24:58] George Mason: You can replace lost jobs with better jobs and we're doing it in the in the technical field around the country. Uh we're doing it in tourism. Uh tourism is not a low pay industry. Anybody that says that doesn't understand that you can make $60, $80,000 a year just being a waiter. So uh, I mean, some of these people make big money. So, um tourism is the growingst industry and technical fields are growing around the country. So, you replace the back-breaking labor of the plantations and the farms and so on, uh with other types of of economic activity. Uh that's the real secret. But you can only do that if you keep the costs of doing business under control. What is what has wiped out industries in Hawaii is the high cost of doing business. I think we can't pay as much here as they can on the mainland. People leave here, buy a house at one quarter the price they pay here and get 10% more in pay. The cost of doing business, of surviving here is just too high.

[0:26:08] Dan Boylan: I think Jim Brewer wants to get in on this, and then we're going to go back to Arturo and move on.

[0:26:12] Jim Brewer: Yeah, I um actually maybe go back to Arturo because uh George has taken me off on a different, it's really off the Jones Act.

[0:26:19] George Mason: [unintelligible — audio glitch]

[0:26:49] Dan Boylan: Okay. Let's uh thank you Arturo. I appreciate your call. Let's move to Alan from Kailua. Good morning, Alan.

[0:26:55] Alan: Yes, good morning, interesting program. Got a lot of comments, first one that George, you uh uh mentioned earlier in the program that you can't tax business. That's something I absolutely agree with uh because it merely is an expense on the company's ledger that they pass through to their customers. Could you expand on that?

[0:27:14] Dan Boylan: Very briefly George, because I know you uh this is a favorite topic of yours.

[0:27:18] George Mason: Yeah, business does not pay taxes. Every cost of doing business, whether it's taxes, rent, or payroll, is in the price of the product or service. You cannot deny that, you cannot refute it because any business that doesn't do that, goes out of business.

[0:27:36] Dan Boylan: Well now, let me ask, Jim Brewer, can you deny that? Can you refute that? You have called in the past for for higher taxes on on business as though business pays them. George is saying, hey, they just pass it on to the so-called little guy out there.

[0:28:00] Jim Brewer: Sure, actually, I think that's really a misunderstanding standing of what I've talked about. As I've really talked about raising the income tax cap on the on the very wealthy in the state because again, income tax is is a place where you can't pass it on to somebody else.

[0:28:05] Dan Boylan: So you would agree with George that businesses don't pay taxes, they just pass it on to others?

[0:28:10] Jim Brewer: No, I as a matter of fact, a friend of mine who of mine who is a labor economist has said, and I'm sorry, I don't know his argument, that when you raise taxes on businesses, they do have difficulty sometimes passing it on to the consumer and they have difficulty surviving. That's my point.

[0:28:31] Dan Boylan: Well, you know, that's I would like to reply to the survival of business in Hawaii. I think there needs to be some myths kind of the balloons need to be popped. One of them is over the years in Hawaii, you've heard Sam Slom and people like that just with a mantra that Hawaii is bad for business. And the thing is that during the really good years and whatnot, they say that and during the bad years they say that. And the thing is that um um if Hawaii is bad for business, especially, you know, back when things were really good, why is it that um a business could charge more for their products and pay their workers less? Now, it seemed to me that what that means is that Hawaii's bad for employees, not bad for business, because they get to charge more and they get to pay their employees less.

[0:29:21] Dan Boylan: Let me get a quick reaction to that from George Mason, then we're going to let Dan Boylan tell us what it all means and we'll remind listeners what they're listening to, and then we'll move on. George. which is passed on to the consumer who doesn't make as much in salary because the cost of of competing, I mean the the necessity to compete in business requires them to keep their costs down as much as possible in order to survive. Less than half of the businesses in Hawaii, year after year, show any profit. Just check the tax office records.

[0:34:26] Dan Boylan: Dan Boylan, I noticed that you were were nodding agreement when Jim Brewer was saying the arguments we're hearing from the business sector now, in bad times, are very similar to what we were hearing in the good times. Uh, tell me why you were nodding and what it means. [unintelligible — audio glitch]

[0:36:17] Alan: Yes, that was a good discussion. One other little point I'd like to throw into this, and that is the matter of permitting. I was personally aware of several uh contractors who were trying to develop small hydroelectric plants here in Hawaii. One guy particular on Kauai, I think, I think you, my if my memory serves me correctly, he had to get like 40 separate permits. And he was working on one of his last permits when the first one expired, because he hadn't been able to get through the permitting uh grill in time to preserve his first permit, so he gave up.

[0:36:53] Dan Boylan: So this is this is part of George Mason's argument that we were over-regulated in Hawaii. George, real quickly.

[0:36:58] George Mason: Yeah, very quickly. Um, I have been told by developers here, for example, in the the West Oahu and so on, that is to get subdivision approval here takes from five to seven years, okay? I have been talk to developers in Las Vegas and in other Nevada cities, and I have said, how long does it take you to get approval of this subdivision? Maybe hundreds of homes. Oh, from five to seven weeks as against five to seven years. Do you realize what cost is incurred? Do you know the government regulation here, plus taxes, sometimes amount to 40 or 45% of the cost of a house. That is not true on the mainland.

[0:37:43] Dan Boylan: A few thoughts from Jim Brewer.

[0:37:44] Jim Brewer: Yeah, I just wanted to finish up what I was saying about small business. I happen to have had a small business experience on the mainland once and, uh, um, this idea that Hawaii is bad for small business, uh, there's something you have to understand. If you

[0:38:00] Randall Roth: Sydney, Australia, you got a Vancouver, Canada, uh San Francisco or any uh or here in Hawaii. Uh small businesses after five to six years, 90% of them go out of business. It's a tough world for small business. And the thing is that what this does is it gives you lots of grist for the mill to say that Hawaii is bad for business, because uh anywhere you go, small businesses have a very short uh uh life uh uh predominantly.

[0:38:27] Randall Roth: Alan, thank you for your call. We really appreciate that. In case you tuned in late, this is the Price of Paradise radio show. We're talking about what's wrong with Hawaii's economy, and how could we fix it? If you'd like to ask a question or make a comment, the number is 9558821, or on a neighbor island, it's 18009558821. With me in the studio is Dan Boylan, a professor of history from University of Hawaii, West Oahu, who hosts the dialogue TV show and is regular columnist for Midweek Magazine. Also Jim Brewer, who's the executive producer of a Cable Access TV program and the publisher editor of a new magazine, both of which are called Employees Today, and George Mason, who is a columnist for uh Pacific Business News and publisher emeritus of that publication. Again, our number is 9558821. We go to Keith from Kahaalu. Good morning, Keith.

[0:39:19] Keith: [unintelligible — audio glitch]

[0:40:07] Randall Roth: Certainly the odds are against them.

[0:40:08] Keith: The odds are against them.

[0:40:10] Randall Roth: Keith, go ahead.

[0:40:12] Keith: Uh we had pretty much a free market in real estate during that period. The Japanese came in, and they spent billions, and drove the price up. They've created the situation where local people really have had to move out. I'd like the comments of the panel.

[0:40:33] Randall Roth: Um Keith, I'll tell you what, let me take what you've said as a comment and our panelists can comment on it. In time I I've got a whole bunch of people on the line and I'm going to try and run through them real quickly and then we're going to let our our guests comment on on anything and everything that they've been listening to. So Keith, thank you for your call. Lisa from Nuuanu, good morning.

[0:40:52] Lisa: Good morning, Randy. I simply um wanted to address the comment that um business um is taking more profits than they should. I've been in the non-profit sector for quite a number of years, and the fact is the cost of of government and wages and workmen's comp are putting non-profits out of business.

[0:41:13] Randall Roth: Okay. Anything else?

[0:41:15] Lisa: No, just that you know, you you we've begun to practice open book management and um when you show your employees the cost of the increased in escalating costs, they really um begin to gain a lot of knowledge.

[0:41:30] Randall Roth: [unintelligible — audio glitch]

[0:41:35] Lisa: Yeah, which is the delivery of services to our citizens.

[0:41:38] Randall Roth: Okay. Lisa, thank you for your call. Let's go to Joe from Mililani. Good morning, Joe.

[0:41:42] Joe: Uh good morning. Uh my comment is about the the technological impact of uh say computers on the um the business uh community and especially people's uh jobs. Um I think uh you know, I I've been working in business as an architect for you know, roughly uh 20 30 years you know, and uh when I started I I did major buildings in Hawaii in Honolulu and uh we had numerous draftsmen in the office to do basic drawing. Today uh the offices have downsized. We don't even have a secretary because uh a lot of the draftsmen that are still remaining are actually doing the reception and the secretarial work. So in the meantime a lot of people have lost their jobs uh and been replaced by say one person for say five people. Uh and I think that's one of the reasons why wages have gone down because it's a much more competitive marketplace out there in terms of looking for uh jobs. Uh the ability to retrain people and the cost of retraining people and the time it takes to retrain people who have been trained say uh back 30 years ago without computers is, you know, it's it's a it's a big obstacle to surmount. Um I have retrained myself onto the computer and it's cost me a lot to to get into say AutoCAD. Um I had to buy the software, the software alone costs roughly about $3,500 plus the hardware and I've I've been, you know, training myself and the the classes that they teach are you know, presently take forever.

[0:43:27] Randall Roth: Okay. So Joe, a earlier caller was saying it's it's hard for kids to stay in Hawaii because the cost of living here is so high and you're bringing in that it's hard to find uh a good job and and in many cases the the necessary training is either unavailable or or not easy to get.

[0:43:44] Joe: That's right, and one of your comment your commentators there said that uh you know, we're going to create new new jobs to replace the old jobs. You know, and these technological jobs, but these technical technological jobs require the the educational background and and the the facilities and the institutions to provide those jobs. And I was just talking to another person in my office the other day and he was saying the software is changing so rapidly now, it takes only like 18 months for the next generation of software to come out. You know, how do you keep up with a technological revolution like that that is constantly in a state of flux?

[0:44:21] Randall Roth: Okay. Joe, I'm going to have to move on to another caller, but I I really appreciate your call and you've raised some important issues with two professors in the room who are very much aware of how much the University's budget has been cut over the last few years. Well, we'd we'd like to uh talk some more about that, but I'm going to go to the rest of the callers so that we can hear their voices. Dot from Makiki. Good morning, Dot.

[0:44:41] Dot: Good morning. My question is, what are you going to do about it? I've been hearing all the complaints about the economy, but I'm really listening for the solutions. I hope you get to those before the hours are up.

[0:45:02] Randall Roth: Thank you for reminding us. And and that's what we're going to do when we get toward the end of the hours. We're going to ask each of our guests based on everything they've heard and of course what they've brought to the studio with them this morning to tell us what do we do? What's the prescription to get well. Thank you, Dot. Let's go to Andrew from Makiki. Good morning, Andrew.

[0:45:09] Andrew: Good morning. Um just a couple comments here. One is uh to the guy that the real estate market went down. In a bear market, money returns to its rightful owners. We do know that. And um I'm dealing with the uh a you know, I'm working in a business now and this uh the boss, they don't even want to get computers to make their business better. I can help them work um I can help them make them better. I can train the secretary to do them but they don't want to do it. I mean, I think at the top there's there's people that just don't want to accept change.

[0:46:00] Randall Roth: Okay. So maybe some of the problem is self-imposed by individuals in business as opposed to something wrong with the economy.

[0:46:06] Andrew: Yeah, and we could also maybe get another newspaper in town. Okay, one more you know, one more, you know, energetic towards business, you know, not these fluff stories. Like for all the things, you know, on the front page.

[0:46:16] Randall Roth: Andrew, I'm going to have to move on because I want everybody's been waiting to uh to be able to say something. I appreciate your call. You know, George, you started a newspaper uh a few years back, maybe you could start another one. Let's go to Rich from uh Waipahu. Good morning, Rich.

[0:46:39] Rich: Good morning. Thank you for taking my call. About uh three years ago or two and a half years ago, Muffy Hanneman was on a show, and I talked to him in regards to the HVB and that's when he was at the helm. Uh I started a business about five years ago distributing products to the sporting goods community here throughout the state. And the chief complaint, well, today we serve over about 600 accounts within Hawaii, and one of the chief complaints was a misdirection of the HVB. So we came up with a game plan for HVB to be able to target the sports community throughout the United States and international markets by devising a plan to run ads in separate or different types of magazines targeting our key natural resource source, which is not land based, but it's ocean based. With our pristine waters, the reefs, the surf, possibilities for kayaking and fishing. Uh it was sort of embraced. Uh when we went into our meeting with the HVB, an interesting aspect came up. And that interesting aspect was HVB was targeting I think at that time it was about 40% of the money that was available to the resources of selling seafood from Hawaii, which I thought was a little bit far-fetched because of the fact of the long liners and everything else depleting the natural resources around the island. Now in the meantime, we had fleets of sports fishing boats that were out of Kahii, uh, Kowalla Basin on the big island on Maui. The the guys were sitting idle because of the fact that people weren't coming in due to the lack of no advertising.

[0:47:36] Randall Roth: So Rich, we we we've got to be smarter in promoting ourselves.

[0:47:39] Rich: Well, here's what the scoop was. When we went when I went to the HVB and I went with some retailers that were willing to start working a marketing program and co-op advertising with the state, we were told that the HVB wasn't interested in it because of the fact that they were concerned with the liability. Okay. I mean, talk about sticking your head in the sand. Rich, thank you for your call. I've got to move on because I've got two more people who've been waiting very, very patiently. Um, anyone who hasn't been on the line for a long time, I'm just not going to get to you but Barbara from the North Shore, you've been waiting a long time. Good morning.

[0:48:12] Barbara: Hi, I'm calling from Payphone on one of my uh going to one of my many jobs that I need to live here in Paradise. And um my question is about the General Excise tax, especially in light of an article that was in the um I believe was the Advertiser a couple of days ago that indicated that if we eliminated the general excise tax and did it as a traditional sales tax like they do in most other states, that the tax rate here in the islands would be 11%, and if we excluded the tax on food and medicines, it would be 16% sales tax. And I think if uh those figures were floating around out there, people would be uh you know, a lot more upset about the amount of tax that we pay. I know that um I'm in real estate and and we pay a 4% general excise tax on everything we bring in and traditionally have not passed that on to the client, although I must admit I'm considering changing that these days. But uh I would like to hear that comment upon, okay?

[0:49:07] Randall Roth: Okay, Barbara, I appreciate your call. I just want to remind anyone who tuned in later, let anyone who tuned in late know that this is the Price of Paradise radio show. My name is Randy Roth. We're talking about what's wrong with Hawaii's economy and how can we fix it. With me in the studio is Dan Boylan, Jim Brewer, and George Mason. Um if you'd like to catch the show in its entirety, tune in tonight at 8:00 on KIFO 1380 AM and you can hear the show in its entirety. And then also if you have access to the Internet, if you will go to www.popweb.org, that's popweb.org, we have a discussion along the lines of what we're engaging in right now. It will continue on the internet for this coming week. Let's go to um Damon in New Valley, and I know my guests in the studio are anxious to say a lot about what they've been listening to and we're going to get to my guests in one minute. Damian, real quickly, what do you have for us this morning?

[0:50:03] Damon: Okay, thank you. Um I'm a graduating senior at UH and um it was really interesting to hear the divergent views. Um one of the books that I came across while doing some research that I realized um a lot of undergraduates are exposed to is Noelle J. Kent's Hoai Islands underneath under the influence. Um I was just wondering if that if your guests felt that that was uh um a viable guide to uh people of my generation as far as how we should deal with this economy.

[0:50:37] Randall Roth: Okay. Damon and and I I'm going to ask Jim Brewer in particular to comment on that in just a moment. We've got one last caller to hear from Sam from Hawaii Kai, and then I'm going to turn it over to the guests in the studio. Sam, good morning.

[0:50:49] Sam: Good morning, Randy. This is Sam Sloman. Since Jim Brewer used my name in vain and Dan Boylan nodded in agreement, let me just make a couple of quick comments for you.

[0:50:58] Randall Roth: You know Dan well, is that?

[0:50:59] Sam: Yes, yes. I know his nod very well. Um first of all, my um my position is different from everybody else's there. There's nothing wrong with our economy, but there's everything wrong with our political structure. And a couple comments. Uh everybody said that uh those of us in business were complaining when times were good as well as times were bad. Uh when we lead the nation in bankruptcies and foreclosures and have the worst business climate and have no income growth and lose jobs daily, uh that's easy to take note of it. The difficult part is when things seem to be going well and people like myself and George Mason and Low Calop and Marion Hega and others say, if you don't cut the taxes, if you don't privatize, if you don't get rid of some of the mandates, then you're going to have these problems. And then in fact, when the problems occur, then everybody says, why didn't somebody warn me? And I would remind Jim Brewer that when we had uh the agricultural sugar and pineapple plantations, we paid the highest agricultural wages in the world, we paid the highest benefits in the world, and that's part of the problem. You can't keep on doing those things just because the union wants it, or because the government finds it palatable. As far as as far as George Mason's comments about business, I've been a strong critic of government but also of business, too. The fact that business tries to placate the ruling party or does not participate. We've got to do that. So I guess my final question is, as the lady that called earlier, let's have the solutions. What would Jim do to suggest that uh Forbes is wrong and Financial World is wrong and Fortune and Investors Business Daily and everybody else, and that the cities like Las Vegas and Phoenix and Seattle and Denver and Atlanta, where our uh residents have gone, uh where they're all wrong. What is it that we can do by more taxes and more government to salvage our economy?

[0:52:10] Randall Roth: Now darn it, Sam, I knew that Dan Boylan was going to try to wrestle control of this show for me, but I didn't expect it from you. Sam, thanks for the call. Jim, you and the other guests have been listening to a lot of callers and Sam Slone just asked you, okay, what are you going to do? How do you respond?

[0:52:58] Jim Brewer: Well, uh the first thing I would say is that uh over the years, one of the things that always struck me is uh why do they lay that on my shoulders or lay it on the shoulders of the employees or um the consumers or whatnot. Uh my question is always been why doesn't business take care of business. I mean um and the thing is that we've heard them say that they're over taxed. We've heard them say that government is too large, even though a person called up and explained that government in Hawaii is not all that large and that we get a lot from our government services in Hawaii. So, the thing is that I would like to hear Mr. Sam Slom uh say um uh when is business going to start taking care of business?

[0:54:11] Randall Roth: George Mason, you're not Sam Slom, but the two of you I think have been saying some similar things over the years. How would you respond to Jim Brewer's question?

[0:54:22] George Mason: Well, first of all, business does not want employees to suffer. Business wants employees to prosper because the more money they have in their pockets, the more money they'll spend with businesses, okay? Let's get that clear. We are not trying to keep the poor poor. So what what what's the prescription? How are we going to fix things? The first thing that's necessary in the state of Hawaii is to get out the vote. I want to see more than half of the people eligible to vote going to the polls. I am absolutely ashamed of the apathy that exists in this state, especially among those in the 18 to 35 age group. I mean their their turnout, their voting record is horrible. I'd like to see a realistic approach to privatization which I think is there. It's not just the neighbor islands. Even even Harris was talking about privatization and they've got some privatized operations here that work very well. Uh I the counties are for it, not just here but all across the nation because they're closer to the action and they see how much waste there is in government. Government doesn't produce anything.

[0:55:12] Randall Roth: Jim Brewer in one minute, what's your prescription? How do we fix what's wrong with the economy?

[0:55:19] Jim Brewer: Oh gee, that's the big question.

[0:55:23] Randall Roth: That's all, huh?

[0:55:24] Jim Brewer: Okay. Well, uh the thing is that uh my suggestion would be that for instance, we need to raise the living the minimum wage to be a living wage because no worker should be required to work for less than it makes uh takes to make a living. And that may seem weird uh but it's not. Uh the thing is that if we raise the minimum wage, there's a ripple effect and it raises all wages in Hawaii. And the thing is that what this will do is it it will keep profits that go out to Daie and Japan and Moar Kai and Pennies and Sears and whatnot. That keeps that money here in this economy and it circulates and whatnot. And I think that frankly, that would be good for the economy right now and it'd be good for people who are making really low wages. But what else is to raise the price of everything because it's cost of doing business. Go ahead, Dan. Dan Boylan, we haven't heard from you for a while. I'll bet you've got words of wisdom. How do we fix? How do we fix what's wrong? I doubt that. But uh um, one, I think that the that one of the problems we have when we talk about bloated government, we demonize two things here. We demonize business as as uh we've got to tax business, we got to tax the rich, we got to and then we demonize government. All government is bad, it doesn't produce anything, it's too bloated. Where is it bloated? Where is it bloated? That there is a question that I don't think many in politics really want to answer. They'll they'll go around the side or they'll come this way, well, it's the high three. We got to get rid of the high three, that's good. You know how much the high three saved us? Zero or practically zero. Uh we I and it's because politicians can't, in fact, Republican and Democratic

[0:57:00] Speaker 1: politicians can't look at the difficult ones. Uh perhaps we've got to go to the private commission kind of thing where we we appoint commissions of people we respect and say, now you look at the total thing and tell us where government can in fact be cut. I mean, our our biggest expenditure in governor is government is public schools. You want to cut school teachers?

[0:57:18] Speaker 1: I mean we already have one. Do we want to cut that? Well, no, then people say, how about the bureaucracy of public education? All right, let's cut the bureaucracy. I'm told that actually, right now our bureaucracy of public education, you get it pretty pretty damn lean at this point. Should we get rid of the unions? I think we should get rid of some unions. I think we should get rid of teacher uh college teacher unions. Roth and I do not need a union. [unintelligible — audio glitch]

[0:58:39] Speaker 2: You're right.

[0:58:40] Speaker 1: And and when it comes to when it comes to business, George, we're not going to deal with uh we're never going to talk about uh some of the huge salaries of our bankers in this town, are we? Or some of the huge salaries of some of our businessmen which comes out of somebody's pocket and we'll say, oh they provided so many profits for the company and they answer to the board uh to their boards. Well, come on, they also making that on the backs of somebody.

[0:59:03] Speaker 2: Dan, you're on a roll and I hate to jump in front of this this moving train, but real quickly, what's your reaction to Doc Kelly's statement in the paper this morning, quote, people don't initiate change until the pain of the status quo becomes worse than the fear of the unknown. Are we there or are we not there?

[0:59:21] Speaker 1: [unintelligible — audio glitch]

[1:00:09] Speaker 2: Jim Brewer, you've got about 45 seconds. Don't waste any of it, go for it.

[1:00:13] Speaker 3: [unintelligible — audio glitch]

[1:00:36] Speaker 2: George Mason, 45 seconds. Don't waste any.

[1:00:39] Speaker 4: All right. I uh I have to agree with uh Dan that almost everything he just said um is true. But I'll tell you something, we've got in our state Constitution, a requirement that all government employees including you professors at the university must belong to a union. There is no state in the nation that requires that. So why don't you amend that constitutional thing? Why don't you call for a constitutional convention and get yourselves out of that bind?

[1:01:11] Speaker 2: [unintelligible — audio glitch]

[1:01:11] Speaker 2: The worst thing Gary Rodriguez did was was was knock down the constitutional convention, not uh go up against privatization. It was knocking down the constitutional convention, we should have had it. It was, it was Well, and you want to close this show for us? Well, folks, we're down to the end of this show.

[1:01:27] Speaker 3: You've been listening to uh Dan Boylen, uh he's a professor of history, University of Hawaii, West Oahu, Jim Brewer, who is an activist for employees and low-income people, and George Mason, who is publisher emeritus for Pacific Business News.

[1:01:39] Speaker 3: The views and opinions expressed on this program do not reflect the views of Hawaii Public Radio or its underwriters. Jeff, we should at least say it doesn't necessarily reflect the views.

[1:01:49] Speaker 3: At any rate, you've been listening to Price of Paradise radio show which is produced by Suzie Roth, the director of operations is Jeff Ilarity, we've had a lot of help from Wally Roth this morning. You've been listening to Pop Radio, aloha.

[1:02:55] Speaker 2: I tell you, I agree, we haven't hit bottom yet. In about three or four more years when the state's bonded indebtedness, the bond rating, goes down to a B or lower, a B minus, you watch. There will be a revolution. That that is going to take it off right there. We can't borrow anymore to build a million dollars worth of unneeded construction.

[1:03:23] Speaker 2: I mean, there's so many buildings, and then Uh! God!

[1:03:29] Speaker 2: I mean, we don't need to build anymore, we need to find an economic use for what we build.

[1:03:37] [music outro 46s]