It’s an old concern with new immediacy – raising money to invest in tech so we can expand the economy. But where will this investment come from if we don’t have the money that came in under 221?

Even now, people don’t see how fragile the tourist economy is. They don’t realize how important it is for us to build our own economy.

We should try to change their minds, and in the process encourage them to become investors themselves. It’s not an option, it’s critical because in fact the patient is critical.

THE PEOPLE’S INVESTMENT FUND

Why don’t we have a local investment fund for local people to invest local capital in local tech and energy companies and projects? Let’s call it the People’s Investment Fund.

It would be a rally point, a symbol and reminder of our commitment to a new economy, something that will be out there, ten feet tall, to raise the pride and optimism of everyone in the state.

In the current recession, Hawaii has become a transformation waiting to happen. I think lots of people would vote for tech by investing in it.

HOW IT WOULD WORK

The People’s Investment Fund would give us a chance to find new confidence. It would allow us to invest in Hawaii’s startup and middle tier companies, showcase our talent, hold on to our young people and allow them to pursue their dreams at home. It would also give us a chance to make some money.

221 was for sophisticated investors and required accountants and lawyers - the People’s Investment Fund would be open to investors from Polihale to Puna. 221 drew investment from offshore - the People’s Investment Fund would be limited to local investors, who have the most to gain and lose.

Qualified investors would be limited to local residents and businesses. They would be permitted to invest no less than say $1,000 to avoid the inefficiency of smaller investments, and no more than say $50,000 to avoid domination by big players.

DOING THE NUMBERS

Let’s assume the Fund would be popular and perhaps 50,000 local residents and businesses (less than 5% of the population) invest in it. If they each put in $1,000, the fund would have $50 million, as much as anyone ever dreamed for a local fund. If some people put in more than $1,000, it could go higher still.

At first, we may want to try this without any tax benefits, without credits or deductions, since it’s not likely that the legislature will want to spend money for any tax incentive in 2010. But if the legislature wanted to make the dividends tax free, I doubt the community would stand in the way. After all, the successful companies funded with these investments will be paying plenty of taxes.

EXISTING STRUCTURE

The method of selecting the companies to invest in will always be perilous. We’ll need to establish a competent and credible fund manager that will make good investments and at the same time avoid any possibility of favoritism.

There’s no need to reinvent the wheel on this. The legislature created the Hawaii Strategic Development Corporation with this very kind of arrangement in mind. HSDC may have statutory authority for some of this, but some further legislation may also be necessary to start things up.

The good news is that if the Fund is set up as self-supporting it wouldn’t cost the legislature a dime.

PROS AND CONS

Make no mistake – this would be risk capital. As with any investment, you could lose your money, every penny of it.

If we do succeed in attracting public investment, it will show the world, and us, that we can redirect the ship of state and heroically remodel our economy. It would be big news.

As usual, the difficulty is in the details. We’d have to satisfy applicable securities laws. State registration is not as onerous or expensive as the federal requirements, so perhaps the Fund could be structured as an intrastate offering.

NO ONE SOLUTION

The People’s Investment Fund is only a beginning. If it attracts investment and is well managed, it could grow in size and influence and become a model for the future. In any event, the Fund should not preclude more ambitious initiatives emanating from the Fukunaga-McKelvey workgroup or the HSDC “best practices” conference set for December 4th.

Whatever we do, we have to bring the public into the equation. We need incentive mechanisms that not only raise money, but arouse public interest and participation. Without that, we run the risk of a disconnect between what the government is trying to do and what the people want it to do, and that’s a disconnect we can’t afford, either in good times or bad.

Although Hawaii has been faced with difficult economic and challenges this year, there are still more than a few reasons to give thanks. Not an exuberant, noisy, loud thanks, perhaps a more moderated thanks, but a thanks nevertheless.

Sure we’re thankful for IHS and River of Life and other local charities that help people in trouble, but we also want people not to be in trouble. Homelessness is our canary in the mine. We’ve had terrible fiscal problems but hopefully we’ve seen the worst of it. The stock market seems to be okay, knock wood. If it can keep going, this could raise spirits and take the economy out of the woods.

We should give macro economic thanks too. Thanks to China and India and Korea for standing fast in the recession. They’re competitors, but they know we’re all in the same boat.

THANKS TO LOCAL OFFICIALS

Sometimes we should give thanks to the bureaucrats too - to DLNR for granting the open ocean aquaculture permit to Hawaii Oceanic Tech and to DOA for granting the algae importation permit to NoriTech. And thanks goes to the PUC for having adopted the Feed-in Tariff in Hawaii. Done right, that could be great in our quest for renewables. Could it be that the regulators are finally finding a way to enlightened policy? That would be fabulous.

Despite the audit difficulties that the DBEDT director has been having, we’re thankful for what appears to be a new vitality among the attached tech agencies – Yuka Nagashima at HTDC, Karl Fooks at HSDC and Ron Baird at NELHA. Likewise for Ted Peck, the Tech Administrator at DBEDT.

We're thankful that the Cancer Research Center may now be back on track. Although UH is in disarray over money, thanks to those who bring reason to chaos and make it right for the students, and the community. UH cannot afford to displace education with university politics.

THANKS TO OUR CHAMPIONS

Tech champions in the legislature also deserve our thanks. Sen. Carol Fukunaga and Rep. Angus McKelvey, for example, who organized the tech industry workgroup to identify worth initiatives for the next session.

Surely, tech will be one of the biggest issues in the coming election. Soon we’ll hear tech visions from candidates. We hope they will carry those visions all the way to the finish. This is the year of the Transition. Is that Transition moving to resurrected glories or the bottom of the barrel? It’s up to us – either as beneficiaries or victims of what we have wrought in electing them.

One way or the other, we’ll have a new governor. Some will be thankful of that. We should be hopeful the next governor will be a leader who can focus on building a diversified economy.

BAD THINGS THAT DIDN'T HAPPEN

There are many bad things that didn’t happen – terrorism, epidemics, social unrest and natural disaster – and we should be sincerely thankful for them, that they didn’t happen. The sun still shines and the trades still blow; lots of tourists still come and the sea level hasn’t climbed up to Moilili yet; we still have something of the old aloha; and we haven’t had a blackout in some time. We should be thankful for that and more.

Bud I'd have to add that 2009 is not over yet. Here we are at Thanksgiving, and anything could happen between now and the end of the year. Remember, this is the year of Transition on the way to the year of the Ox.

THANKS TO ENTREPRENEURS

Although I would never be thankful for the recession we’re having, this kind of adversity is in many ways an invaluable opportunity. We should appreciate and make good use of it - carpe diem.

HVCA recently gave entrepreneurship awards to Henk Rogers and five others, and that’s a good sign that they exist and are worthy. They are our tech heroes, even in difficult times. All tech companies bear on our future and must be appreciated even if they don't do as well as we might have wished. Every entrepreneur is a hero, and we must be thankful for each one.

We are also thankful for companies like BAE Systems, which works so hard to do outreach and encourage our entrepreneurs. We are lucky to have such good corporate citizens in Hawaii. We should appreciate them and look for more.

Sometimes I visit the K-Bay O-Club. As I pass the sentries, I tell them I appreciate their service to our country every day. This it not completely unrelated. In their own way, our entrepreneurs and tech leaders should also be appreciated for what they do for us and the future of our state.

No, not the Year of the Rat, this is the Year of the Transition. I think I’d rather have a Year of the Rat.

It’s not the end of the year yet, but with six weeks to go, I think it’s safe to look back and reflect on what’s been happening. Actually, that’s always appropriate. My observation is that Hawaii has been affected by strong vectors that have put things into transition, things that affect all of us and each of us.

Transition, at least in my view, is like interesting in the Chinese sense. By transition, I don’t mean good changes - I mean those special “interesting” changes, not really good at all. It’s also confirmation that all things are somehow connected to all other things, especially in an island state, by very few degrees of sanguinity. You can look at the effects and if you think about it you can find the cause or causes.

We know the effects - Hawaii hasn’t been having a very good year. The Superferry was killed in an untimely death. So was Act 221. The Civil Union bill, a symbol of civilized policy, went down in flames. Lots of people lost their jobs, lots of people were furloughed, excuse the expression, lots of government programs were terminated, what was a mediocre education for our kids has now turned notably worse.

We’re stuck in a controversy on rail while we have no money to fix the streets. Property taxes are going up and we’re getting nickled and dimed in a million ways on both state and county levels. With all that, we still haven’t found a way to balance the budget or deal with a billion dollar deficit. Given the meager tax collections and the caution of an election year, things promise to be equally dire in the 2010 session.

The K-12 schools are a mess, and the University is falling apart. The orchestra is over the side and lots of non-profits are in crisis. The city administration is spending its time rooting for our mayor’s campaign. The Lingle administration is in its last days of a double feature that wasn’t worth waiting up for.

The sun still shines and the trades still blow, but the tech industry hasn’t attracted much investment and the country doesn’t think much of our style these days. Occupancy is down, not only in Waikiki but all over the state. Lots of companies are failing. The papers are thinner and TV news is now consolidated.

Our social safety net is stretched thin and in many ways dysfunctional. There are more foreclosures and bankruptcies. The homeless line the beaches and the kids don’t know what to do with their time after mini-school. More of them get into trouble. The ones who do well invariably leave town, leaving us even less well prepared for the future.

Many of these processes have been in play for years, but in this year, 2009, they seem to have moved faster with fewer moments of relief. That’s why I call it the Year of Transition – we’ve been transitioning from bad to worse. It’s visible, and it has had a disruptive ripple effect on everything around all of us. People behave differently and perhaps not as nicely when they’re feeling the pinch, real or perceived.

What vectors put all these things in motion? We really need to know so we can try to do better. The obvious one is the meltdown in the national economy, just about a year ago. It’s taken a toll all over, and Hawaii is by no means exempt. Despite recent stock market gains, we haven’t seen the end of it.

A related factor is that Hawaii wasn’t prepared for it. We relied, and do rely, on a mono-economy dependent on tourism, incredible as that may seem in a world of vigorous competition among the destinations. We didn’t see or plan for it, and we didn’t do very well when it happened, except to indiscriminately slash and burn programs, leaving government unable to cope with what’s left.

We’ve transitioned right into the barrel on this, and it’ll be a while before we will know the extent of the damage or be able to properly reorganize our economy or pay for our schools and infrastructure, which are all inextricably intertwined. When will our middle class and small businesses be able to recover?

When will the jobless get jobs again? When will the business barometer signal fair weather again? Right now, the rest of the year of the rat looks like more of a downward spiral. Maybe the next legislature will be able to get things going, to finally diversify the economy and reinvigorate our children. Bets anyone?

See what you think. Has this been an ordinary year, or is it a combination of vectors and transitions leading to a wakeup bell that will ring louder than before? How loud will it have to be? And finally, when we will roll up our sleeves and transition the other way instead?

The thing about transitions, like sea changes, is that while you’re in them you may not know where they’re taking you or when you’ll arrive. You only know you’re going to a different place. In this case, I think we can be relatively sure that that place won’t be as good as where we’ve come from.

Next January is the year of the Ox, the start of yet another transition. Surely this time we can do better.

If you haven't seen it already, see tinyurl.com/kroft, the segment on last Sunday’s 60 Minutes reporting on cyber snooping.

It’s the kind of story that sticks in your brain. As much as you would like to ignore it, you really can't. Sure enough, there was a similar story in today’s Washington Post - tinyurl.com/nakashima-pomfret.

Both reported that the Chinese are looking at our military secrets. They might not be doing anything with that information but they are certainly getting it. It's hard to react because we are doing the same thing, but it’s still troublesome to know that their technology is that good and that they are using it regularly.

This first came up in the paper about six months ago, when a group of graduate tech students in Toronto reported that the Chinese were breaking into computers around the world. That was disturbing, but it’s somehow more disturbing when you find out on 60 Minutes and the Washington Post.

Snooping isn't the end of it - there's also cyber sabotage. 60 Minutes also talked about how the bad guys, e.g., the terrorists, can take our grid down or snafu our money system. Either would have a profound effect. The money system would take a little longer but the result would be the same – disorganization then anarchy.

The program showed a scenario in which a turbine can be destroyed over the internet. Since the grid is interdependent, everything would be down until it was fixed. With the city dark, it wouldn’t be easy to get a replacement especially if it was manufactured overseas.

What do you think would happen to a modern American city if the power was out for three or four months, much less three or four days.

Things could really come apart. Our backup systems, and for that matter our cell phones, would run down pretty quickly. Our cars would run out of gas. We’d be reduced to primeval in a matter of days. They wouldn’t have to hurt us, we’d hurt ourselves.

Is the federal government doing anything to prevent these scenarios? Probably yes. Should we be confident? Probably no. The further away you get from a populated area, the safer you are. But most people are near the city center, and they are the most at risk.

It’s only a power failure, a blackout. What can you do? Does it warrant a nuclear response? That seems inappropriate. The bad guys, whoever they are, didn't actually hurt anybody, so why would we? My guess is that we wouldn't.

Leveraged technology makes our world so different. It makes the risks and possibilities so much more fearful. As one of the intelligence people on 60 Minutes said, the next war isn't going to start with shots or explosions, it'll start with a blackout. And go down from there.

You can keep water in the bathtub, but how long will that last and what good will it do? It’s all food for thought, though, and personal reflection.

It’s quiet, dry and hot in Kakaako most Saturday afternoons. Perfect for a deli sandwich at the Bagel on Cooke Street across Fishers. I call it the Bagel because years ago the proprietors called it that, even though now they’re calling it This is It Deli and Bakery.

It’s home on Saturday afternoon, and for my money the turkey pastrami on fresh baked rye is better than anything on Sixth Avenue or the Lower East Side. It’s tasty and light, perfect for a hot Saturday afternoon, although a bialy and lox wouldn’t be bad either.

The staff make you feel at home. The people who straggle in are so sweet – they’re all part of the phenomenon, from the local woodworker to the priest that feeds the poor, and others I recognize from so many times before. It’s the Kakaako crowd, people you could write a book or play or make a movie about. They find themselves at the Bagel.

I truly love this unpretentious restaurant with such a big heart and rich history. Years ago, I worried that KS would close it and bulldoze the block as part of its Kakaako plan, assuming there was one. There’s no sound of any such plan these days, and certainly not on a quiet Saturday afternoon, so I think the Bagel is safe for a little while longer.

And for a time, I thought the Bagel would be a perfect watering hole for the biotech park we were then most surely going to develop down the street in Kakaako makai, courtesy Edwin C. Cadman, legendary dean of the medical school. I envisioned, as he might have, a daily deli crowd there, lined up ten deep waiting for their turkey pastrami sandwiches.

But there’s no biotech park, or even the prospect of one, and world class visitors don’t straggle into the Bagel, either on weekdays or on quiet Saturday afternoons. So these days I’m not worried about losing access to my favorite deli sandwiches. No tech park is coming to Kakaako any time soon. From a personal deli point of view, that’s just fine.

But from a state economy point of view, it’s a disaster. Things are so quiet you can hear the grass growing in Mother Waldron Park. What happened to the dreams and promises of JABSOM II, the Cancer Research Center, the Regional Bio Safety Lab and, of course, the KS Asia Pacific Innovation Center? Now, there’s only tumbleweed on Ilalo Street and a distant if not macabre chant of “Live, Work, Learn and Play in Kakaako.”

Who’s to blame? KS could have and should have built the Innovation Center years ago, not for profit but to build a tech industry that would provide good jobs and futures for their graduates. No such thing. The rest of these projects were killed or squandered by UH, which controls the land, for reasons which were indecipherable both then and now.

Now we have a new team that exercises the University’s power in Kakaako – Marcy Greenwood and Virginia Hinshaw. Do they know the story of what preceded them in Kakaako, the story of all the projects that went to the bottom? Will they do anything to implement Ed Cadman’s dream and realize the promises of their predecessors? So far, there’s no sign from the heavens on this, so we’ll just have to watch what happens.

You can watch from the tables outside the Bagel, where you can see all the way down Cooke Street to the tumbleweed. Take your time – no one's likely to disturb your lunch.