Community Leaders Weigh In On Slowing Economy

Hawaii's tourist-dependent economy has created many problems. The environment has been ravaged by rampant over-development. Water aquifers on some islands are being overdrawn. Hawaii's economy creates mostly low-paying jobs, but the cost of living is 39 percent higher than on the Mainland. Now that the nation and world are facing economic challenges, it is vital that the islands become diversified and self-sufficient.

Consulting economist, small business owner and State Senator Sam Slom ® said, "East Oahu residents, families and small businesses are being adversely affected by local and national economic challenges. High fuel, food, health and tax costs are battering many here. Retirement and 401(k) plans have taken a hit." One Portlock community resident said she wouldn't even read her 401(k) statements. Slom continued to say, "Some people outside our area believe, incorrectly, that East Oahu is predominantly made up of super wealthy people who can weather any economic storm. Our demographics show otherwise. There are a majority of middle income, senior citizens, retirees, public employees and small business proprietors here."

"Economic crises are cyclical; we will rebound," said Slom. "I am bullish on Hawaii's economic future; it's the political present that concerns me. I do not believe that Hawaii is in a 'recession,' but if there is someone unemployed in a family or if a business struggles to meet payroll, it may be a 'depression' for them. Government has created most of our 'economic' problems through excessive spending, debt and taxation. The GET tax surcharge is a disaster. Honolulu Mayor Hannemann wants another $6 billion-plus for a rail to nowhere; and Hannemann wants to increase real property taxes while other local politicians talk of more new spending programs. Each family and small business has had to cut back, tighten our belt and put off non-necessity expenses for now; government talks about cutting back but keeps our taxes among the highest top three states in the Nation and spending above the ability of our taxpayers to pay. Cutting taxes, not raising them, along with government spending rollbacks are the real solutions to our 'economic' problems," concluded Slom.

"The people of East Honolulu are smart, adaptable, and not easily frightened," said Representative Gene Ward. "I think FDR had it right when he said 'we have nothing to fear but fear itself.' I don't want to make light of what happened but banking is a confidence game; it is based on trust, when people no longer believe in the institutions that handle their money they withdraw personally and financially from any economic activities."

"How this will affect us in East Honolulu will vary. We have a large small business community that will have to adapt, particularly some of the smaller retailers, but our contractors and sub-contractors in construction are still humming along quite fine," Ward explained. "Having been a retailer in Waikiki for 15 years, the first things that get cut in hard times are jewelry, clothing, and art. But hoarding money rather than investing it makes no sense."

Money needs to be in circulation, Representative Ward said, "trillions of dollars change hands daily in the world economy; and we in East Honolulu just have to lay low for awhile. 401(k)s and other stock investments are of course down, but they will rebound if we just keep them and not panic sell."

Gene Ward's biggest worry, however, is that "the politicians didn't get the message loud and clear about three things: One, deregulation was not a good thing when banking, securities and insurance all got in the same act together and such things as 'liar loans' were created." On certain low-documentation loan programs, income and assets were simply stated on the loan application but not verified. Ward continued, "Our housing market, here and throughout the country, became a ponzi scheme, and now there are a lot of lower income people [left] holding the bag.

"The second lesson policy makers need to drive home is that Hawaii needs to become energy independent from foreign oil by developing renewal energy as fast as we can," Ward continued. "The Governor is on the right track. We can be a national and global model - but the question is, do we have the political will to do what it takes?"

Ward's third concern is "lawmakers have to put a line in the sand for no new taxes, fee increases, or cost of living spikes. Electricity is being charged as if it were a luxury commodity and we've done nothing about it, the Legislature takes on $25 per container fee for the 500,000 containers we bring into the state and we do all of this not thinking of how some people are going to put food on the table. Cost of living increases should be an anathema to any elected official in 2009."

Energy drives our economy. A critical component in the free market approach to the production and transmission of that energy is that of fuel diversity. Hawaii has the opportunity to be a world leader in alternative wind, solar and wave energy. Research is already underway but it will take time.

To learn more about energy, environment and economics visit The American Legislative Exchange Council online at www.alec.org. ALEC is a nonpartisan public/private partnership of state legislators, members of the private sector, the federal government, and the general public who promote and develop policies that will ensure the powers of government are derived from, and assigned to, first the people, then the states and the county.