Hawaii's Business Climate
Price of Paradise · Hawaii Public Radio · aired 1995-01-22
Guests: Norm Nichols (small businessman); Bill Wood (business journalist)
Duration: 1:04:37

[00:00:00] Randall Roth: are two fellows perspective. Bill Wood, currently, is a freelance writer but previously was editor of Hawaii Business Magazine and Hawaii Investor magazine. Norm Nichols is president of Electric Petroglyphs, a local small business in the high-tech field. Bill, Norm, good morning. Well, I'm just kind of curious. What do you think, Bill? What's the business climate here in Hawaii? Good, bad, or somewhere in between?
[00:00:25] Bill Wood: Well, according to surveys, if you if you believe the latest, it's terrible, and I think that it's it's been in that area for quite some time. There has been little real improvement over the years, going back to a time when it wasn't the key issue that it is today. But business's temperature seems to vary with the condition of the economy, and when economic times get rough, why that's when you hear, or at least perhaps pay attention more, to the outcries from the the small business community.
[00:01:01] Randall Roth: Well is that the explanation, the economy is off and so the business climate is down in their opinion?
[00:01:07] Bill Wood: That's part of it, certainly. I mean, if you were if you were running a small business and and things were just great for your business, you would be less inclined to complain about the things that stick in your craw about the way government regulates you and that sort of thing. But I think that there are fundamental reasons for these complaints and then now with the with the weak economic climate, those reasons are coming to the fore.
[00:01:34] Randall Roth: All right. Well, I want to come back to those fundamental reasons, but Norm, what do you think? Business climate in Hawaii? Great, terrible, or somewhere in between?
[00:01:41] Norm Nichols: Brutal.
[00:01:43] Randall Roth: What does brutal mean?
[00:01:44] Norm Nichols: Well, as a small businessman working in the high-tech field, we work in computers and the video, audio area for broadcasting and and production. Very expensive area to work in. Equipment is not cheap. Uh it's we're driven by technology, in many cases, uh turnover in technology, innovation in technology. I mean, we're we're trying to stay somewhat on the cutting edge of being able to offer goods and services and when you compare trying to do business in that kind of market change or industry change, um and and and are held back by or impacted by the government sector, the economic sector, uh right now in Hawaii, for me, it's brutal. I mean, there's a real parity there.
[00:02:35] Randall Roth: But you seem to be saying that you're held back in Hawaii where if you were in Kansas or New York or Florida, you wouldn't be held back. What specific government action or inaction here in Hawaii makes it tougher on you in Hawaii than it would be on you some place else?
[00:02:52] Norm Nichols: All the cost, the cost of doing business here. Over the last three, four, five, six years that I can readily think of now, the number of friends, business associates that I've had that have moved to the mainland that I do stay in contact with and I would say there's probably 30 of those. In fact, I just came back from staying with a friend in Las Vegas who moved up who's in the business industry. Um there's easily a 40% differential between the cost of his his labor, his medical, his unemployment, his you know business type taxes uh compared to what we pay here.
[00:03:30] Randall Roth: So basically the same thing that consumers complain about that it's roughly 40% more expensive here than the average on the mainland is at the heart of what Hawaii business people are complaining about. It's roughly 40% higher.
[00:03:42] Norm Nichols: It's about 40%.
[00:03:44] Randall Roth: Bill, does this fit into what you were saying before about fundamental reasons for a bad business climate?
[00:03:49] Bill Wood: Uh yeah, the climate is inherently, the way that the way it's structured, the climate is is hostile to the to the small businessman. What I'm saying is that when he can overcome that with the buoyant economic times, he's less inclined to complain about it.
[00:04:06] Randall Roth: Okay, now it's it's hostile in Hawaii but not elsewhere?
[00:04:09] Bill Wood: Oh, it's more host all things are relative. I think you have to look at the national picture as well as the the local picture and try to isolate other areas. But I think it's it's more so here than it is in practically every other state.
[00:04:23] Randall Roth: Let's talk about why our this particular radio show tries to focus on on the Hawaii aspect of whatever the topic happens to be. What is it that's different here in Hawaii that you would say is counterproductive from business standpoint?
[00:04:36] Bill Wood: Well, I think you have to take kind of a historical perspective of this and then how things, how these these mandates, for example, legislative mandates evolved.
[00:04:45] Randall Roth: And by mandate, you're talking about employers having to provide prepaid health care?
[00:04:47] Bill Wood: That's the costs, employer costs that are required by law, by state law. Okay. Okay. And um it's it began back in the 60s, uh just after statehood when we had a climate that was not only just explosive economically, but also there was a temperament in the legislature which went unchallenged to to be very uh um um permissive and supportive of labor. And um now there a lot of reasons for this, you don't want to get into but the this from this supportive, nurturing labor oriented climate came about all this legislation.
[00:05:33] Randall Roth: Okay.
[00:05:34] Bill Wood: And those things were allowed to to pass and to to to to remain in place, and business didn't complain particularly because uh I mean they were willing to go along with it in order to keep [unintelligible — audio glitch] vibrant economy going. Uh and um but uh in recent years, when the economic times have turned the other direction, then all these excessive or more excessively permissive um supportive laws become very onerous.
[00:06:07] Randall Roth: Well now Norm, if the costs of things like these mandates that Bill is referring to puts your cost of business 40% higher than it otherwise would be, why don't you just charge 40% more for your product?
[00:06:20] Norm Nichols: Well, it's just not that easy. I mean it's for the type of work that we do, a 40%, I I have to compete against the mainland. I mean a lot of the goods and services that that we provide here on a local basis to some degree are available if you want to wait and pay a little shipping or you know deal with the mainland, you can get the same sort of services there.
[00:06:44] Norm Nichols: I think one of the things that we've seen here in the in the very recent past is the introduction of the the the big mainland chain stores, the the factory type outlets, the Eagle Hardwares, the Border Books, you know, this sort of thing. They've they've they see Hawaii as a fairly uh rich market as far as being able to come down here and compete.
[00:07:05] Norm Nichols: They're they have the ability to move product in in large numbers back and forth to cut their costs. I don't. I work in a fairly small market. I deal primarily with individuals and other small businesses. Um and the there's there's large outlets that do videotape duplication or you know, other kinds of work, supply computers, uh that can do that in much greater numbers, much more efficiently than we can here.
[00:07:31] Bill Wood: It's a mistake I think to to to isolate the small business community because on a much broader scale, the consumer is going through the same sort of pressures that is affecting the small business community. I mean the consumer is getting a wake up call now, I mean because, and this gets back to the reason it's so painful to the small businessman is this costs are keep going up you see. And if if if the costs continue to rise and his revenues or his sales uh decline or even remain static, uh he's he's going being consumed by the by the soaring cost of living and the soaring cost of doing business in his case.
[00:08:14] Randall Roth: Well I think there are a lot of people out there that would say, well, so somebody goes out of business over here, someone else is going to step into their shoes, things are going to go on. Um aren't we just hearing complaints from people who are finding it harder to make a profit. What do you say to folks like that?
[00:08:30] Bill Wood: Well, that's true to some extent. I mean [unintelligible — audio glitch] to a normal, quote, normal economy, um there is always a certain amount of turnover. Business failures and bankruptcies and that sort of thing. And uh it's just that they have become worse here, and and there's a threshold there some place.
[00:08:52] Randall Roth: Well, and we we feel badly about those folks who who will lose their business or whatever, but for everybody else, what's the problem that there are that many more than perhaps they're used to being, Norm?
[00:09:04] Norm Nichols: Well, I it's a matter of perspective, I guess. I mean taking I'm going back to the one of the local publications here, Pacific Which one? Pacific Business News.
[00:09:14] Randall Roth: We'll mention them since Bill does a lot of writing for them.
[00:09:17] Norm Nichols: puts out a publication once a year called All About Business in Hawaii. And the last year's issue because we're just I'm hoping the next month or so that we'll probably get the new one out but in last year's um as a matter of perspective here, we're talking about uh business in Hawaii, the number of firms in Hawaii and the number of employees that they represent. Um and a number of employees uh from zero to four, companies with employees zero to four, uh there were 14,912 or 56% of the business in Hawaii that was being done was being done by companies with four or less employees. If you take that one level higher, five to nine employees, you're talking roughly 5,000 firms, or 18%. So 18 18% of the of the number of firms in Hawaii, just those two alone, so less than 10 employees, you're talking about 70 some percent of the businesses in Hawaii have less than 10 employees. I mean we are we truly are an economy of small business. We're doing the majority of our business around the state with companies with less than 10 employees.
[00:10:29] Randall Roth: Well, but I talked to somebody from from DIBED, the state Department of Business what is it? Business and Economic Development too many and in that title. At any rate, he was telling me that if you look at business startups and business failures, that we're continuing to gain, even today, when we all know the economy's not in great shape, we're continuing to gain in the number of businesses here in Hawaii. So, again, we feel badly that some folks are are losing their businesses, but isn't that the nature of of competition, Norm?
[00:11:02] Norm Nichols: Well, it is the nature of competition, but I think you have to look at how that impacts the zero to to nine employees that are out there. When I'm trying to provide uh a livelihood for the people that work for me and we've got a company of four or five, so um you know, based on that, it's much more difficult for me to to watch my business activities to try to compete in the marketplace and supply a living wage to those people that work for me. Um than it is for again, I go back to the the people and friends that I've had that have moved to the mainland. I work on a much tighter margin of business. Uh and [unintelligible — audio glitch] harder for if if I go out of business tomorrow, I don't have a great impact on the on the economics of Hawaii. I have a tremendous impact on the five people that work for me because now they're having to go out and try to find work. I mean it puts a real uh turmoil in their life and and yes, it's only five. But when you've got that kind of turnover in small business, you impact a lot of people.
[00:12:10] Randall Roth: And I suppose if uh the business you lost, you lost to somebody on the mainland, then uh your former employees are going to have to move to the mainland in order to work for the person that took the business away from you, if indeed that's that's the hope.
[00:12:22] Norm Nichols: And and that to a to a great degree is part of it.
[00:12:25] Bill Wood: Yeah, in in in measuring startups and uh and shutdowns, I think you look at the turnover rate, you see, the rate of turnover, because [unintelligible — audio glitch] a truer indication of what's happening at this time [unintelligible — audio glitch] business community rather than, say, we've got x number of new business having started this year and y number of those having closed.
[00:12:50] Randall Roth: And the volatility is is up.
[00:12:52] Bill Wood: The volatility is definitely up, yeah.
[00:12:54] Randall Roth: In case you tuned in late, this is the Price of Paradise radio show. I'm Randy Roth, and my guest today are Bill Wood, a freelance writer here in Hawaii, who's been editor of Hawaii Business Magazine and Hawaii Investor magazine, and Norm Nichols, the president of a small business here in Hawaii, Electric Petroglyphs, which has, quote, solutions for digital multimedia. Our topic is Hawaii's business climate, and listeners are invited to ask a question or make a comment by calling 955-8821. Neighbor Islanders are always invited to call collect, the number again, 955-8821.
[00:13:28] Randall Roth: Bill, earlier you mentioned fundamental reasons that aren't new. And um I'm just wondering what are some more of these fundamental reasons and and if you could focus on those that are somehow unique to Hawaii or magnified in Hawaii. And I'd really like to if we can, isolate those things that we here in Hawaii have some control over. Things that we could do different, whether it's on a political level or on some other level that we have some control over.
[00:13:59] Bill Wood: Well, if you're talking about the electorate, it has a great deal of control over the legislature, for example.
[00:14:07] Randall Roth: We should elect different people?
[00:14:10] Bill Wood: Well, it's, I think that uh, I think certainly this is the this is the case nationally, with what happened in Congress uh late last in the last election.
[00:14:18] Randall Roth: Are we talking about, you know, um a political thing in the sense that we should have Republicans rather than Democrats running things. If we had Republicans, things would be better. Is that what we're saying?
[00:14:27] Bill Wood: No, no, no, no. I think no, no. Hawaii has always been very slow to respond to the mainland trends. And a lot of people are calling attention to the fact that that there was this uh mini revolution that occurred in Congress uh last fall, uh that put the Republicans back in power in the House for the first time in 40 years. And Hawaii didn't experience that. But maybe the president of that is going to wake up enough voters here to make them far far more demanding of their legislators.
[00:15:03] Randall Roth: I see. So whether it's a Republican or Democrat, the problem is with the people, the people aren't vigilant enough, they're not demanding enough.
[00:15:06] Bill Wood: Yeah, I think the the the cause of the the revolution that took place in Congress is that the voters were dissatisfied with the lack of progress.
[00:15:13] Randall Roth: But here in Hawaii, we're not?
[00:15:15] Bill Wood: Hawaii, we can say the same thing. We've had no progress for a very, very long time. And maybe the voters are saying, hey, this is our responsibility, which it is.
[00:15:24] Randall Roth: Okay. Norm, you're a small businessman. Where do you stand on this?
[00:15:27] Norm Nichols: Well, uh you know, my view of that is is that when as a consumer, small businessman, supplying to consumer and as a as a consumer of goods and services, uh I can't at this point, excuse me, replace my home, uh should a hurricane come, because I can't afford the insurance for hurricane. Most insurance companies aren't writing that insurance on cars. The the sort of thing that that I do to try to protect myself personally, uh that I also do as a small businessman for my employees. Uh when you look at the the things that have gone away, and then the attitude of government, I think to to the extent of of how how they deal with that. There's a real, whether it's a plantation holdover or what, I'm not sure, but this there there's a real paternalistic attitude that the the government of the state of Hawaii has had for a long, long time. And it's well we can generate as as a government, we can generate new business because we'll get into business doing that.
[00:16:34] Norm Nichols: And and to to that extent, government is now in the insurance business with the the pooled risk.
[00:16:40] Randall Roth: Well let's let's talk about that, and and one of the insurance issues that's in the paper the most these days is worker's compensation, which is a form of of insurance.
[00:16:51] Bill Wood: Why is it ever. It's an expensive one.
[00:16:54] Randall Roth: Yeah, you kind of grimaced when you heard the word. Well, it's, yeah, that's going up again. You know, I I went back and looked through my records as to what we started, uh when we started paying, when I started business and what we were paying in work as comp and what we're paying now, and it's it's more than doubled uh in in the last three or four five years uh for what we do.
[00:17:14] Bill Wood: Of course we, you know, grown a few more employees, but it's there's again this this attitude that uh it's going to be supplied for me. Um it's it's hard for me to uh deal with with those kinds of issues from the standpoint that as an entrepreneur, as a small businessman, as many in the state are, we walk a fairly fine line of, you know, what we are expected to provide and then what we're mandated to provide for our employees. So the two are very similar.
[00:17:49] Randall Roth: To a degree they're similar. There's things that I would like to be able to do for my employees, but I can't uh because the state has told you what you have to do to eliminate your flexibility.
[00:18:00] Norm Nichols: And they it truly eliminates the flexibility as far as what we can do.
[00:18:04] Randall Roth: I want to come back and and Bill get your thoughts on workers comp but we have a caller from Maui, Bill, good morning.
[00:18:10] Speaker 3: Good morning. Can you hear me?
[00:18:12] Randall Roth: I sure can. What do you have for our guest?
[00:18:14] Speaker 3: Well, we had a situation here where I put up a size amount of money, about half a million dollars, for some young people doing air freight business between the islands. And for over two years, we couldn't get the lease and mortgage on the leasehold approved by the Department of Transportation. So when we inquired about this wait, and then they later they disapproved it. They said, well, their average time was two years. It took that they had this land use board, they had the attorney general, and they had the department of transportation, and the airport department, and they bounce this thing around for two years.
[00:19:00] Randall Roth: And that was a big problem from your perspective?
[00:19:03] Speaker 3: Well, you couldn't you couldn't plan your financing. Little businesses need financing. Mm-hmm. Until you can do your financing.
[00:19:00] Bill Wood: you don't have a business.
[00:19:01] Randall Roth: Yeah, Norm is is nodding as he's listening to you, Norm.
[00:19:05] Bill Wood: Bill, you make a real good point. I mean that's one of the things that that small business battles here all the time and that is the the interaction between small business and government. Small business on for the most part are gorilla warfare people. I mean, we have to turn on a dime and be able to change direction of money, securing financing for projects and everything that you know, that we get involved with. It isn't a long-term planning process, it's not like government. And here, you know, trying to deal with the state and the counties to a great degree and to get approval like you were talking for a permit, they'll put you out of business while you wait.
[00:19:44] Randall Roth: So you pretty much do it now, or you don't do it. But what do you say to the environmentalist, for example, who say, "Look, if government is out there making real quick decisions, turning on a dime, if you will, and saying, sure, go ahead and use this land for that, and go ahead and use whatever else for other purposes," they're concerned that one day we're going to wake up and Hawaii isn't Hawaii anymore.
[00:20:06] Norm Nichols: It isn't? Well, can I make one comment? These these are on buildings, existing buildings on the airport, so there was no environmental problem.
[00:20:15] Randall Roth: That's true. This building was it was a vacant building and we wanted to lease it and the company in it had gone bankrupt maybe for the same reason.
[00:20:22] Bill Wood: This is another side of the government problem. Uh we we've tended to to focus on the the legislative side, the laws that are there and that are changing. Uh but uh the administration of those laws is another very, very important side and some could argue very effectively that it's the worst side. Um it's and this is the problem that uh that Bill or caller had has had the the the administration of the laws.
[00:20:48] Norm Nichols: And you appreciate that the airports are the lifeblood of the islands, these they aren't like, you know, being selling hot dogs at the stadium or something like that.
[00:20:56] Randall Roth: That's true. So now we're kind of talking about uh the reinventing government thing that somehow or another, government has to be restructured so it can be more responsive and Well, we we have developed over the last 30 some years a enormous bureaucracy. I mean that's been publicized.
[00:21:13] Bill Wood: How the state government has grown. And um uh it uh it it it is little wonder that it takes so long to head to to get action through them because it's got to go through so many layers. And I think there's a great deal of streamlining uh that could go on. There's a great deal of I mean, you have to set the pace from the top.
[00:21:36] Bill Wood: If the governor were to sit down with with all these department heads and say, look, I don't want anybody sitting on his hands. I want to move this stuff through as fast as the law will allow us to do so. If that means burning the midnight oil, that's what it means. And if he sets the pace, and he said, I require this of you, my department heads, and they will turn around and give it the message to their deputy department heads, and they to everybody else down this bureaucracy, and then if they really crack the whip, they'll I think that would make a big difference in a lot of the problem, not all by any means.
[00:22:10] Randall Roth: Well, yeah, I think our caller here, Bill is again, because of the situation has raised the point where there's no intermediary if if that's the proper way to do it. There's no He has no recourse to go back uh to to try to expedite, you know, the problem that he's faced with. And you there's a channel that he has he is forced to go through. Uh there's no way to circumvent that, there's no way to expedite it. I'm not asking government to to grow with reckless abandonment, I mean, or or to proceed with a reckless abandonment on things, but, you know, here he's talking about existing buildings and an existing situation.
[00:22:49] Bill Wood: It would appear to me that this is something there should be a facility within the process to be able to look at something like this and say yes or no, uh and not to go on with two year, what was it Bill? Two three years worth of hearings.
[00:23:01] Norm Nichols: Over two years and then they said, no.
[00:23:04] Bill Wood: Okay. And meanwhile, you go in addition to the friction, you have enormous legal bills while you're doing making, you know, all the additional steps that are required. Right, work fast. Uh Okay, well Bill and Maui, I appreciate your call. Um Bill here in the studio, um we were talking about workers' comp and we got some of Norm's thoughts. Uh that seems to be, or let me ask you, is that as big a problem as what the reports in the newspapers seem to suggest it is, and Norm says that it is to him.
[00:23:33] Norm Nichols: Oh, sure. Well, if it is to him, then it is to an awful lot of other people. And I think this is what I was talking about earlier. This is a problem that's been around for a long, long time. So why And that they threw a bone to the business community a few years ago by by putting a a moratorium on in rate increase, right? And everybody sort of, well, that's gone away for And then you tend to lose sight of the fact that it's still there, you see. And now when they boost the rate, it's back, and all of a sudden. Well, in fact, they they requested a rate increase of something like 80%.
[00:24:05] Bill Wood: Percent, yeah. Um which I guess it just meant instead of having 20% of your for four years, but this is a very complex I mean, nobody knows for sure who to blame for this, right? Whether it's the the the medical providers, or whether it's the insurance industry, or whether it's the legislature, or whether it's all the abuse that's permitted by the those in in the state who administer workers' comp. Um everything obviously needs reform.
[00:24:30] Randall Roth: Well now it seems like the legislature is approaching things different this year, now they just started their session as too early to see whether the actions are going to be in sync with the words, but the words seem to suggest the times are really, really tough, that they're going to have to do something about workers' comp, they're going to have to do something about car insurance, they're going to have to do something about a number of issues that haven't really been dealt with in the past. Uh Norm, you optimistic?
[00:24:56] Norm Nichols: Well, getting back to, you know, Bill's earlier comments that there's some real fundamental things that need to change. Uh and one of them, I think is an individual, it's everybody that's out there that's listening or that works in the in the community, and business community in any capacity, there there's got to be a change in attitude. Government can't supply everything. They they can't supply all of the protection, all of the umbrellas. Uh people have to take responsibility for themselves. I think one of the issues that everybody faces uh in any at any level of business in Hawaii is the uh the fact that here because there is an increased cost of doing business in Hawaii, we've run on a very narrow edge and it doesn't take very much to push a company over the edge and put it into bankruptcy or put it into foreclosure. Uh because we work on a very uh a much thinner margin and support level than our counterparts in the mainland do. But people here have to take the responsibility, if you're sick, you know, go and get well, you know, and you know that better. I mean, the government can't tell you when you're sick and you can't expect government to pay for it when you are.
[00:26:10] Randall Roth: Interesting, you and Bill each at different times and different contexts have said that we as a community have to demand something different, or it's not going to happen, as opposed to sitting back and waiting for it. You're listening to the Price of Paradise radio show. I'm Randy Roth and the topic today is Hawaii's business climate. My guests in the studio are Bill Wood and Norm Nichols. Your calls are welcome. The number is 955-8821. We have a caller from Haula, George, you're on the air. Good morning, George.
[00:26:39] George: Yes, Mr. Ross. I have to suggestion this difficulty about uh breaking the log jam in in uh in with the bureaucracy, wouldn't it be helpful to have a an industrial uh ombudsman that uh the people can go directly to so that they get the ear of the governor?
[00:26:55] Bill Wood: Well, that'd be one more government employee, but maybe if it's an employee doing something that needs to be done, it would be uh a good addition to the staff. What do you think, Bill? I I if I have the governor, I'd appoint my own ombudsman but I wouldn't call him that, but I would have him as a member of my staff, and have him uh available to the public uh to industrial or the general public and maybe he has a small department and his job is to field complaints and questions and things of that sort. Help keep me as governor more closely in touch with the uh the people.
[00:27:29] Randall Roth: I guess if if this person ombudsman or whatever we would call this person, if if he or she didn't have the support of the governor or somebody fairly high up in government, wouldn't do much good to call him and complain anyway, wouldn't it? Well, the governor has to again has to set the tone and he tells this person who he has, uh look, I want to hear from you uh every day. Mhm. And uh I want to know what's going on out there. keep your ear to the ground, right? If the people find out that hey, this kid's action or kid's response then it then it become this guy will become very popular. Well, and it wakes us up maybe because we feel we do have some power if there's somebody there to call. Norm, right now if you got a problem with government, is there a place for you to call where you feel like you've got some power, you feel like somebody who can do something is going to be really listening? No. Not really. And and I guess the problem that I would have uh with a uh with putting somebody in like an ombuds ombudsman that I could call would is that you in essence perpetuate the inefficiency that already exists. In other words, if you're going to let somebody like that uh act in your behalf, who can get answers for you, who would report back to the governor, then if if if a roadblock exists out there where actions aren't being, then action needs to be taken there. I don't want to see somebody come in who can basically answer my question and and but not, you know, not solve the roadblock problem. Right. You don't want anything cosmetic. You want something that can really make a difference and I think that's what Bill's saying. It starts at the top and if there's that commitment. If government is responsive, you don't need the ombuds.
[00:29:19] Randall Roth: Okay. Well we have a call.
[00:38:00] Speaker 1: isn't a part of this conversation.
[00:38:02] Bill Wood: Oh, I think it's definitely part of the business climate. Uh potentially a much bigger part. I mean there's been some talk over the years about what Hawaii is going to do when it grows up, um whether we become a one of the one of the ideas floated is we become a an information center, and the university would certainly play a very important role in that, and the university plays an important role in other economic development uh possibilities.
[00:38:32] Speaker 1: Well, I'm curious. You raise the information industry which I guess is uh you know, technology and all that sort of thing. Norm, you're in that business. Is the climate here in Hawaii with respect to that what many people see as as the future, high-tech, telecommunications, information, that's your area. Do you feel as though the climate in Hawaii is particularly good or particularly bad with respect to folks in that area?
[00:39:01] Norm Nichols: Well, it's it's still the jury is out on that, I think at this point. Uh Hawaii has been in a unique position over the years to capitalize on a number of different things, and for one reason or not, we haven't. I mean, we had I think But you haven't given up. I I haven't given up. I I you know, I think that you know, the nationally, the the utilities are being forced to allow for more competition. I think that, you know, that the GTE, Hawaiian Telephone people, and the Hawaiian Electric people, and the cable companies here are going to you know, the the services are going to get spread around and competition is going to come into this marketplace. Uh I feel that, you know, we have an opportunity uh to still capitalize on that. There's, I think, the business and industry people here are willing to make the commitment, both in time and dollars to try to promote this as something that we can take advantage of here. Uh and and I'm encouraged by that. I'm discouraged from the standpoint that we've got government still trying to participate in the private sector with the Manoa Innovation centers and the Mowi, I want to say Memorial Park, but the Mowi High-Tech Park, and that that they are they still feel that they are the one only ones who can promote new business in Hawaii, and are putting up facilities and funding facilities with tax dollars, but doesn't that help you?
[00:40:22] Norm Nichols: No. Not at all. I I'm out there spending my own money, my own my company's money uh to promote goods and services and I'm competing against my tax dollar with facilities that the state is putting up, trying to do what I'm already doing.
[00:40:37] Speaker 1: So you're saying the the state by trying to help the few people that are being directly affected by that, they're hurting the other business people who who aren't uh receiving a subsidy of some sort in the form of better rent or whatever.
[00:40:50] Bill Wood: Sure. If they Go ahead, Bill. Part of the reform that has to that has to occur, and Hawaii is kind of late in coming to the table on this, okay. We've had this euphoric period for 30 years after statehood in which we felt everything is going to continue to grow and it'll be just fine. And uh the government's position was, well, we got our role is to be protective, protective of the workers, protective of the environment and therefore we will heap all these layers of regulation to to slow down the process. And uh but now all that's over, I think and Do they know that? No, they don't, yet. No, not yet. Okay. But they'll have to find out.
[00:41:24] Speaker 1: I want to come back to that uh but Lucy from Honolulu's been waiting patiently. Good morning, Lucy.
[00:41:29] Lucy: Good morning. What do you have for us today?
[00:41:31] Lucy: Well, I was just you know, talking I'm I'm talking about the how how the business, the bureaucracy and levels. We have a um financial planning and real estate business where when we've been in business under this company name as a sole proprietor for for about four years, and I was surprised just recently we incorporated. And just to to go and reassign our or get a new real estate license for the new entity, I guess a corporation. I had to go through and take my um go down to Kakaako and sign off that we were zoned properly and then come back up to the state and this is an address we've been at doing the same business for all these years. And then I came to the state to get my new license, and they wanted me to get a certificate of good standing, which um in the state of computer age, you know it's right there, but they wanted $25 to do it overnight, or 15 to do it You pay one thing to get it done and another thing to get it done quickly, right? Yeah, to get it done quickly. And you know, and then it takes a week to get it if you choose the $15 one. And it goes to the woman at the desk, literally, 3 feet away. And I said, can't you guys just look this up and hand it to them? But no, I had to come back down and pick it up and walk it to the desk next door. And um you know There ought to be a better way, right?
[00:42:53] Bill Wood: Well, I think, you know, Bill made the point earlier [unintelligible — audio glitch] the the the growth of government is such that uh and Lucy experienced it here. I mean, we've got we've got too many people trying to do, in essence, the same job. I don't know that the the two ladies that you dealt with are overburdened with the amount of work that they're doing, but it's, you know, one of those applications where it sounds like one person could do that job. Give them a computer to be able to access the information and let them do all of it. Don't, you know, we're trying to keep people busy in government here, uh because we've employed them and uh it's it it it doesn't work. It really adds to the inefficiency.
[00:42:56] Lucy: Well, it's it's just like everything that we did, you know, to just do something as simple as change, you know, incorporate, um you have to pay an additional fee for the corporation's license and and um it just seemed like everywhere you went, they were they were trying to stop us. And then on top of this, of course, we have this G E T thing where I I bring in a commission, I pay 4% on this commission. I turn around and I give 60% of it to our agent who again pays 4% on the commission. Mhm. And nothing is nothing new is generated for the state. Um, I don't know, I just it's been really discouraging. Mhm. And although we're surviving and doing well, it's still I, you know, I hear these shows like this morning and it's just like yes, yes, this is there is a major problem here.
[00:44:21] Speaker 1: Well, it's not as though, Lucy, the folks on the other side aren't aware of of the shortcomings. Robbie Olm, who who formally was uh the head of that particular department, the Department of Commerce and Consumer Affairs, has been on our show and he said, you know, it's not that those folks down there are bad people, they're good people in a bad system. And I think And to their credit, they were all very nice. Well, and and I think we're we're all saying the same thing, both those folks who are dealing with government and people inside government are saying, you know, we really do have to change the system. And I think that's what Bill is saying and Bill is suggesting it starts from the top and so if we at the bottom can can be pushing why maybe it'll happen. Lucy, thanks a lot for your call. Thanks. Bye bye.
[00:45:00] Speaker 1: You know, I wanted to ask you to something that sends shivers through me when I think about it. I heard several of of the bank economists recently, uh Leroy Lanie from First Hawaiian and and Dave Ramsar from Bank of Hawaii, suggest that just maybe the tough economic times that we're going through here in Hawaii aren't what they called cyclical, but instead what they called structural. And as I understand it, what that means is that maybe we're not just, you know, at the at the bottom of this normal cycle where if we wait long enough we'll be back up at the top, that maybe things have have structurally changed to where um things aren't going to get any better, Bill.
[00:45:41] Bill Wood: I think it's both. I think it's both. I think the structural problems make us much more vulnerable than we have realized in the past to the cyclical changes. Mhm. And they they talk about you know, for years, Hawaii was quote recession proof. That's what the bank That's what the bank economists said. They were not Therefore it must be true, right? But this last big recession uh proved otherwise. And it was because of a combination of other things plus I think this this bloated bureaucracy plus a lot of other things that we were that were structural that made us more vulnerable to economic changes and the coincidence of of recessions both in our both our our largest markets, United States Mainland and Japan. And a lot of things teamed up and have created a monster for this economy.
[00:46:32] Speaker 1: We have a caller from Molokai, Shell. Good morning, Shell.
[00:46:35] Shell: Good morning. Uh very interesting program. Uh tweaking a lot of my buttons. Uh just want to make one comment uh as someone who's been working uh trying to reform the auto insurance situation uh for three years and connected with something someone just said about uh the comment of Robert Aulms, a good people in a bad system. Uh after this will be the fourth year that I'll be going down to testify at the legislature on auto insurance reform. And uh I've learned a number of things in these four years, of of one about auto insurance, which I'll not bore you with. But the other is to go down to the insurance to the uh legislature and try to communicate with a group of people from diverse walks of life who who happened to for various reasons, wound up in the legislature. Uh most of these people do not have the background to deal with some of these highly technical, complicated issues such as insurance. And you sit there and you you watch these people struggling with the and you you've got the lobbyist there and they're giving their side, then you've got the the the poor suckers like me that are caught in the system trying to to articulate our position that don't you understand that that uh all this theory that you people talk about up here, I'm I'm here to tell you how it's actually working. They don't understand. Of course, all of them have car insurance, right? But take this any subject. Uh then people start lambasting the use of consultants. Well, I'm also a consultant. I'm going to hang up a shingle on car insurance consultant, I think. Uh my point is, I guess uh they're they're currently talking about, let's use this example, the car insurance uh uh situation. Uh the speaker of the house insinuated that they're now talking to one of the most knowledgeable experts in auto insurance, and my my heart nearly stopped because I thought, oh my gosh, who have they found now to complicate the thing? Does anybody know who that is?
[00:48:52] Bill Wood: Uh no, Shell, I don't, but I can sympathize to the extent to the that what you've gone through. As a small businessman concerned about issues in the community and wanting to get involved, uh I'm a member of small business Hawaii, Sam Sloan's um organization. Uh the hardest thing for me, again, running a small business is the ability to to to make the time to go down and I have to applaud you for being able to do that. Uh I wish I had more time to go down and get actively involved in the legislature to try and get things changed, but I can't run a business and spend hour after hour day after day at the legislature trying to testify and sit there like you say, with with people who are laboring with issues that they're being paid to be there. Paid to be there and labor with issues that they are really not capable of handling. I mean, I don't I I don't want to put names on the table here and I and but I mean there is a legislator from the windward side of the island that is what 23 years old that's being asked to deal with issues that has no more knowledge or background in uh than most of the people down. I mean this this gentleman hasn't had enough life experience uh to deal with many of the complex issues that that he's being faced to to deal with. Is that the one that has a politically important father?
[00:50:13] Speaker 1: You guys are going to be giving initials pretty soon. Let's. No. But I mean, but that's the kind of thing we're faced with. We have a lot of people in the legislature who have never paid workers' employment taxes, who have never owned and run a business, who have at best maybe only been employees, uh and they're being asked to deal with small business economic kinds of issues. Let me break in here because now, Bill in one context, Norm in another and and Shell in a third have pointed a finger, I think at at us, the community, that we are electing people that that norm here is saying, obviously shouldn't be in in in the legislature. Um how do we turn that around? How do we get more people in this community to get more plugged in to what's going on, more concerned, feeling more responsible and somehow demanding that there be a way for the community to to affect the future of Hawaii. How do we get that to happen? I I like Hawaii Public Radio and I would hate to see anything that's going to bring crowds of people to this front door. But I, you know, I I'll throw this out because it is something that I guess that I truly do uh believe in. I don't think that we need a Washington, D.C. In fact, I would uh turn it into a park tomorrow and bring all of those people home. By the same token here in the state, I would fire or deselect the vast representation that sits down in the capital building down there. So you're not a a Republican, you're a libertarian. No, I'm not necessarily a libertarian. I think that we've got the communication skills and the network to be able to deal with government in a much better way. Well, but people people haven't been doing it. What are you going to do that's going to cause people to do it in the future if they haven't done it in the past? I would take the representatives from each of the districts around the state, the state, the senators and the representatives and take them out of a building, out of their conclave, their their safe haven down there, and put them back and make them responsible to the neighborhood boards in the areas that they deal with. Okay, let me shoot get Bill's thoughts on this then, Shell, I want your thoughts, too. Go ahead, Bill. Yeah, that's a very very interesting suggestion. To make the the legislature more responsive. Because they are, and in in fairness to the legislators, which we, you know, we ought to try to be fair, and it is that uh uh you know, they're they're confronted, they only meet for a three months out of the year, and they are confronted with increasingly complex, increasingly pressured issues. Mhm. And they're having to cope in a relatively short period of time and they're inundated. I mean I don't know how much the how how these people have to read, but it's got to be voluminous. Norm mentioned a 23 year old. I think you could take a very experienced uh 60 year old with three PhDs and they would be overwhelmed by just the breath and everything. Go ahead. Yeah, because the government has come become extremely complex. Mhm. And uh we're looking for solutions to that, nationally as well as locally. And I think that it's uh there I mean I'm encouraged to the extent that I think we're getting closer to answering whatever those answers may be. Mhm.
[00:53:15] Shell: Shell, what do you think? Well, I want to tack somebody else. Uh uh All of this, of course is is uh part of the truth, and and and again, yes, we can't throw the entire blame at at uh those people. And many of them in with great faith and great sacrifice trying to do uh what is right. Uh but be that as it may, uh uh it has gotten to the point that's too complicated for for uh uh mere mortals, I think, to deal with it. Okay. Shell, you you had a another point and I've got somebody waiting, so if you could make it quickly, I'd appreciate it. Uh I I would like to see Small Business Hawaii become less adversarial with the Democratic Party. I think that would go I wouldn't get near them right now with a 10 ft pole because I'm a Democrat. And that's my perception. I would love to to work with those people, uh but I I don't even feel comfortable calling them because of that. And I don't mean that critically, I'm just telling you my perception. So if Small Business Hawaii could could get a little less confrontational with the Democrats, because there's a new democratic uh uh party now and we would like to uh uh uh I say we, I can't speak for the party, but those those Democrats that I know that have been working for reform would like to get more involved but uh So there's a potential for an open line of communication, but uh Small Business Hawaii maybe needs to um be a little bit friendlier? Uh well, just recognize that there's a new leadership to the Democratic Party. Okay. Thank you, Shell. Thank you. Harriet from Maui, Harriet, you've been very patient, I appreciate that. Good morning. Harriet, are you there? Yes. Good morning. I wanted to uh kind of respond to one of the gentlemen who was talking about legislators who are elected who do not know much or anything about particularly complex problems in the community. I'd like to remind uh people because I happen to think a lot of the legislature, that legislators are elected as representatives of the people. They're not uh elected as experts in a particular field, and that their expertise is learned on the job and also that committee work that they engage in gives them the opportunity to get input from community members in order to gain the expertise. Okay. Harriet, I I appreciate that. Norm, I I know Uh Harriet's, I think you're right, to a to a degree. I I think where it changes is that uh uh it seems like once they get over here and they get in the capital, uh a lot of that community representation that they're supposed to have tends to go away and they just it's not that they're not knowledgeable and that they're not trying, they just get swallowed up by the volume of stuff that they're trying to deal with. Yeah, I do agree that there's a tremendous amount of work, and hopefully, when they are assigned to committees and when they have committee hearings, that's when some of the workload hopefully can be spread around. Okay. Thank you, Harriet, we appreciate your call. Okay. All right, bye bye. We're down to just the last minute or so and I'm wondering, I want to ask each of you, uh what haven't we said that really needs to be said given the topic of Hawaii's business climate. Bill Would? Uh I think that uh that a lot more emphasis needs to be put upon the way the laws of the state are administered, rather than changing looking for changes. Um I think we're we're getting maybe 10% of the efficiency out of the laws that are already on the books. Mhm. Someone once said, don't make new laws until you've used up the ones that are there, right? That's right. That's right.
[00:57:00] Bill Wood: It's like continually buying new clothes, you know, and when you got all these perfectly good clothes in the closet. I think you you you use what you've got and get be satisfied that you're getting maximum effectiveness out of what you've got. Okay. And that is again, we get back to the question of leadership. And I think that the governor can could do that.
[00:57:19] Norm Nichols: Okay. Norm? Well, I guess to follow up on what Bill just said is that to prioritize. I think government has to recognize where money comes from. Now who generates the money? Government uses money. They use the money that business generates. Uh that government in and of itself really doesn't generate money.
[00:57:38] Bill Wood: So government shouldn't take folks like you for granted.
[00:57:41] Norm Nichols: Well, yes. To be perfectly honest with you, I think that's that is true.
[00:57:45] Bill Wood: Okay, thank you, Bill Wood and Norm Nichols. We really appreciate you joining us today. Today's show was produced by Susie Roth with technical support from Jeff Ailardi. We hope you'll tune in next week. Our guest will be Harold Masumoto, who was Governor Waihee's director of state planning, and currently is the executive director of the Research Corporation of the University of Hawaii. Our other guest will be Jerry Burris, the editorial page editor of the Honolulu Advertiser. We'll be talking about a host of controversial issues including the Waihee administration's diversion of $65 million of airport funds to buy real estate that had a much lower assessed value.
[00:58:21] Bill Wood: We hope you'll tune in to listen to all of that. You've been listening to the Price of Paradise Radio Show. I'm Randy Roth. Aloha.
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