Wednesday, November 25, 2015         


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Hawaii economy could use more legs to stand on


There's been no shortage of unsettling news on the economic front, particularly from the national perspective. Dismal private-sector job numbers on Friday prompted dark ruminations from economists fearful of a double-dip recession, and the national unemployment rate ticked up to 9.1 percent.

Locally, things look a little better. Tourism has been recovering, even more robustly than anticipated. The Hawaii Tourism Authority last week reported a 5.3 percent rise in visitor arrivals, a healthy net gain despite the cataclysmic decline in tourists from earthquake- ravaged Japan. And spending by those tourists who did come even rose, by a healthy 20.2 percent. That injects some hope for the local economy, and for the tax coffers that finance the state's many public needs.

But with all that encouragement last week also came a strong cautionary note. Richard Lim, new director of the state Department of Business, Economic Development and Tourism, told members of the Hawaii Economic Association that the mainstays of the economy may not be permanent fixtures.

It was tourism in particular that was the focusof Lim's concern. Everyone's breathing a sigh of relief that this industry is underpinning the islands for the short term, but Lim observed that it has remained essentially stagnant for the past two decades. Hawaii will need another cornerstone for building a prosperous future, he said.

Lim is only the latest person to issue this reminder, and to urge businesses to keep up with the search for tomorrow's technologies. It hasn't been so long since the previous governor trumpeted her hopes for innovation as a new economic force to develop. That was the drumbeat that sounded through all those programs on robotics and otherwise promoting math, science and technology studies in the public schools.

But Lim was right to sound the alarm a bit, lest anyone continue to lean too heavily on tourism for the future. Nobody was talking about tourism back in the heyday of plantation economics, and Hawaii's public and private leaders need to keep an eye out now for the next big thing, whether it's in the realm of film and entertainment or elsewhere.

His other major point — that businesses need to partner with government more strongly — also resonated, although that theme needs more detailed development. Coming off a legislative session when tax breaks were rescinded to balance the budget, it's hard to picture now how these partnerships, including his plea for private-sector help with parks improvement, would benefit business. Government can reasonably hope that recovering tax revenues could allow for new, or resuscitated, tax incentives in coming years.

Recent events do suggest some other openings. For example, the city government plans to partner with a private contractor in the updating of its parking-meter system. The contractor would assume the front-end costs for a city beset with cash-flow problems, and would reap part of the proceeds from parking fees and fines. Perhaps that approach — having businesses share revenues as well as costs — could apply elsewhere.

Further, some of the looming fiscal problems Lim describes — the costs of caring for an aging population, just to name one — could become the necessity that is the mother of invention. If the private sector can find ways of meeting needs more effectively, such new strategies and services would be in great demand and profitable, helping a budding innovations economy reach critical mass.

While economic instability persists, it's easy to dismiss such rosy-colored thinking. But in the aftermath of a financial meltdown, many venerable structures are crippled and must be rebuilt or replaced. Some out-of-the-box thinking is required. It might even be time to throw the box away.

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