Lingle’s plan: 2 out of 5 points are mistakes

The Hawai'i Independent reported Monday that Gov. Linda Lingle released a five-point plan to bolster Hawai'i's economy in the face of the global economic crisis.

Lingle intends to 1. increase tourism marketing; 2. improve infrastructure; 3. lower business fees; 4. attract outside investment, particularly in energy; and 5. maximize federal revenue.

While three of her points put Hawai'i lawmakers in the right direction, two of them do not effectively steer us from a flawed economic dependency.

Infrastructure improvement is critical for ongoing economic development, and also creates jobs. Lower business fees and taxes will ease the burden on small businesses, which are the lion's share of employers in Hawai'i. And external investment in energy helps to capitalize on a dramatically growing market.

But the two items which bookend her plan—increasing tourism spending and attracting federal dollars—are flawed. Hawai'i is too dependent on tourism and federal (read: military) dollars, and increasing our reliance on these industries is a mistake. To combat the long-term economic crisis, we must take this opportunity to invest in economic independence, and decrease our dependence on tourism and federal dollars.

With fuel costs increasing over the long term, in spite of the drop in prices in the last week, the cost of travelers flying here will be increasingly prohibitive. Most tourist dollars leave town as quickly as the visitors arrive in the form of revenue and profits to global corporations that own the hotels and airlines.

Federal support

Federal dollars for dual-use technologies and public-private partnerships do not increase our economic security. The primary market for many of these products are the military, not individual consumers. This results in a non-competitive economic environment where production efficiencies become less important than a company's ability to lobby for a government contract. Largess, pork-barrel spending, and a shrinking private sector are the results of building an economy around federal spending.

An example of this plays out in the Superferry debacle, produced through a federally-guaranteed loan by Austal Corporation. The Superferry's conception has been seen by observers as a testbed for lucrative contracts with the Navy's Littoral Combat Ship (LCS) and Joint High Speed Vessel (JHSV) programs. According to the manufacturer's website, representatives from both the Navy and the Army toured the Alakai throughout its construction as part of the ongoing evaluation of potential JHSV platforms. Austal is also a finalist in the JHSV program, in large part due to its experience with the Superferry's sister ship, the Westpac Express.

After $40 million of state taxpayer dollars were spent to accommodate the ferry in state facilities, it may be that Hawai'i's citizens were not the intended market after all, according to an Austal press release:

Austal was recently contracted to provide additional features and equipment on the second Hawai'i Superferry to facilitate its use by the military. This follows on from the long term charter, since 2001, of the Austal built 101-meter vehicle-passenger catamaran WestPac Express by the Third Marine Expeditionary Force (III MEF) based on Okinawa, Japan. As an adapted commercial vessel WestPac Express has demonstrated the enormous flexibility, cost savings and efficiencies achievable by commercial fast ferry technology over conventional air or sea transport.

Beyond the business of dual-use, the economic rationalizations of these sorts of deals make it seem that militarism is a purely economic proposition. In fact, the price of militarism is borne by civilians and combatants alike, and the natural environment. The military controls 25 percent of O'ahu and exposes our community to a host of health threats, including sarin gas testing, chemical weapons offshore of Waianae, and depleted uranium in central O'ahu, among others.

Post-Bailout Federal Dollars?

Lingle's proposal to lean more heavily on federal dollars may already be moot, however, in this new post-bailout age. States and municipalities throughout the United States will be competing intensely for federal resources. For example, California governor Arnold Schwarzenegger announced last Thursday that his state (which some estimate is the eighth largest economy in the world) may need a loan of as much as $7 billion. From the LA Times:

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

Political Courage Wanted

Lingle got it right earlier this year. At an address to the Hawai'i Economic Association on April 25, she said that we must "create balance and end the over-reliance on land development and tourism. On islands, land is finite … so is our ability to continue to increase visitor numbers to grow the economy."

Yet her new five-point plan takes a step back, and retreats to a path laid out by the oligarchs of the past and present. The Honolulu Star-Bulletin referred to this change in an op-ed yesterday about Lingle's "lack of options."

Lingle's announced five-point plan illustrates the reality of a state government's lack of power when dealing with an economy whose revenues rise and fall on tourism, a situation a succession of Hawai'i's leaders has acknowledged as risky but has been unable to modify significantly.

The Star-Bulletin is right (though I disagree with their wholesale approval of Lingle's plan). The underlying question is whether Lingle has the political courage to question the inherited religion of tourism and dependency, and, instead, put our public resources into supporting initiatives which increase our food security, our local manufacturing capacity, and ultimately, our economic independence.