Archive for July, 2010

Recovery and Transformation coming soon

July 28th, 2010

ThinkTech Hawaii

ThinkTech, HVCA and a number of other business and tech organizations will present “Recovery and Transformation, Straight Talk on Rebuilding our Troubled Economy,” on August 25th at the Plaza Club. The flyer and signup forms are on You should come.


ThinkTech is concerned about Hawaii's economy and how little we understand it. So much of the news we get about our economy is anecdotal. It's up, it's down, and we don't really know what to make of it. We're in a protracted recession and it's uncertain if tourism has the resilience to get us through to the other side.

This is made more complex by the fact that tourism and travel decisions are made elsewhere and dictated by events over which we have no control. What can we do to make our economy more productive and moderate our increasing exposure to global downturn?

Back at home, how is the recession undermining our conventional economy, and our future? We know things are changing even profoundly under the hood, but do we know how will our quality of life be reshaped? We're at a turning point and the stakes are high. We need to make life good for everyone again, or else.

This is a time when Hawaii has to figure itself out and determine what it wants to be in the 21st Century, when investment is scarce and resorts all around the world are vying for attention. Missteps in economic planning are dangerous for everyone and certainly for every destination resort.

That's why we've organized Recovery and Transformation - to get the best minds to tell us what's going on, to do a drill-down analysis of the economic matrix of our state and see the risks clearly enough to plan the future.

The speakers are blue ribbon and their collective understanding of the way things work is formidable. This could be the most important and useful conference you've attended in a long time. It’s a fast-moving discussion, breakfast through lunch, at the Plaza Club on Wednesday, August 25th.

I don't know exactly what our speakers and panelists will say at the Recovery and Transformation program, but I wanted to express some of my own views on the troubles and sea changes that are surfacing in our economy, and in the thought that these things might be worthy of some discussion at that program. After all, the state economy is, or should be, the single most important issue in the Fall elections.


Singapore does. In the downturn, it’s up 25% in the first quarter and that means prosperity. Its casinos are completed, popular and paying off. There are mechanisms by which homeowners can vote to tear their building down and start fresh. Cars older than 10 years must be replaced. Things are being renewed. That’s more than economics – everyone is uplifted by the prospect.

Seventy percent of the population owns its own homes. There are a million public housing units, managed by private managers. There’s discipline and predictability, and that’s good. You speed, you get caught electronically, no excuses. If the local people want to gamble they have to pay $100 to get in, and that discourages gambling among them. High school graduates get big college scholarships from the government, and they go all over the world to study. They also come home, where there are good jobs and a future.

We're a long way off from all of that. The paper tells us we will have to repay $32 billion in debt. How are we going to pay that on top of the $5 to $10 billion we’ll have to spend on rail and the $2 billion we’ll have to spend on the undersea cable? And that assumes no hurricanes or tourism disasters. How will we do this? Surely, we’ll go broke in the process. Do we have what it takes?


More and more of our businesses are owned by outside capital. What’s left of our local estates and trusts gets invested on the Mainland, so our own money doesn’t do a local turn. The profit all goes elsewhere – look at Waikiki, big boxes, the stores in the big boxes, the big construction companies, the big developers. You name it. They’re all from offshore and their profit is all going offshore – it isn’t staying here. What’s staying here is wages for low-end jobs.

In a spasm of self-immolation, we busted the huge economic benefit of SuperFerry and of 221 investment in the tech and movie industries. Merck recently purchased the often-touted dengue fever vaccination unit out of Hawaii Biotech's Chapter 11, and the work on that vaccine will move to the Mainland. Although there's some action in renewables, we’re really not paying attention to the huge potential of local diversified agriculture. Who’s in charge here?

The Chinese are flying to Las Vegas, not Lihue. Locally we’re building prodigious numbers of time share units. We’re doing this for the blush of construction, but there are fewer takeaway jobs on time share units than hotel rooms. And again the profits fly offshore on little wings to the Mainland. Let’s all buy lots of shares in Disney, I suppose, and hope they do well.

There is one industry that seems to be indigenous. It’s the real estate industry. The component parts of that industry have one thing in common – they’re bent on pushing for the highest prices, and usually the only one that can pay that price is from somewhere else. Local people just can’t pay that much.

The prices go up, and the local people are undone in the process. This has a huge effect on the economy and frankly it’s getting pretty serious for all of us. Look at the foreclosures and the homeless stories every day in the paper. Look at the bankruptcies and furloughs, and also at the failing state infrastructure.


What’s wrong here? It’s the land system. The whole thing is built on a failed land system, a system that became oppressive years ago, and which is slowly suffocating our economy, our families and our future. Lots of people leaving for cheaper houses and rents on the Mainland. At least they'll have a roof over their head.

The high cost of occupancy is putting the money from the low income groups into the pockets of the high income groups, and little else. The high cost of occupancy makes it hard to start a business, an education, a household or even a retirement project. In fact, it makes it hard to do anything in Hawaii.

The irony is ten feet tall. The paper reeks of foreclosures and homelessness, and at the same time includes a thick real estate section advertising homes a stone's throw away for millions. Do the homeless have money for that? What about the not-so-rich retired people, boxed into fixed and sometimes very modest incomes?

Do you think our kids have the money? Do you think they'll stay here if they have no prospect of buying a home? Do you think it's good for us that they go? What’s left – only fancy retreats, expensive villas and legions of homeless. Where's affordable housing when we need it?

I haven't even gotten into the question of industrial and commercial land, but in a funny way that's even worse for our future. High costs of occupancy yield a different if not permanent kind of homelessness, a business homelessness, the kind it’s very hard to come back from.

It's not just that we lack a good land system, it's that there are those out there who are interested in keeping it this way and, in fact, resisting any change. They are the ones who fight hard to maintain the status quo, all at the expense of the greater good and the greater community and even while our economy is slipping away from under us. What makes them do that?

They include the large landowners, including those from Hawaii who should know better, but landowners from far away who have acquired the land from afar. They are self-interested and don’t seem to much care about the greater good or fixing the troubled economy or reversing the growing disparity. They want to maximize their rents, and little else. There are uncomplimentary words to describe this.

Who in the real estate industry wants lower prices? Everyone there benefits from and consequently campaigns for higher prices. As a result the prices go up even in recession, and the cost of occupancy and doing business increases even in the worst of times. But people in Hawaii have tolerated this fantasy for years and have come to accept it even while it is eating away at their prospects and our economy.


There is another way. If we seek a greater good for the greater community, perhaps we can stop the downspin by being just a little less self-interested. There is no need to keep pushing the prices up on a knee-jerk basis. We should be looking for ways to make the land system more equitable, as hoped by the Great Mahele.

Why is it that people turn away from this issue, as they have for generations? We're careening down to new lows, and we seem oblivious to the elephant in the room. The cost of occupancy is relatively higher here than it's ever been, and has become painful in so many ways. How long can we tolerate that pain as a community? How long can the homeless and dispossessed tolerate it? What will happen if we reach the tipping point? You won't like what happens then.

One solution is that there be a Great Mahele of the year 2011, and that the legislature find a clever and constitutional way to bring the large owners back to noblesse oblige or, failing that, rethink the system. Perhaps it's time for us to address the unspeakable possibility of land reform in a state where the land owners have historically held all the cards. With too much land comes too much power, and at some point it needs change.

Yes, the economy is troubled, and that’s obvious and a clear campaign issue. It's also obvious that until we fix the land system, we’ll never be able to fix the economy. Neither is easy, so let’s start working on it right away. Perhaps August 25th could be a beginning.

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Act 221 - whipping boy, like the good old days

July 21st, 2010

ThinkTech Hawaii

If you hadn’t heard, Sean Hao wrote a headline story running 221 down in last Sunday’s paper. It was like the good (perhaps I should say bad) old days, when the Honolulu Advertiser would run 221 down every time it had a chance.

They never praised 221, even though it was the darling of the tech community. They ran it down over and over again throughout all the years of the Lingle administration. My favorite was the headline story reporting the revelation that it was actually the wealthy people who were investing under 221.

The Lingle administration led the charge, feeding the press twisted numbers and fomenting them into a witch hunt against 221 and 221 investors and companies. Since 2003, the administration and DBEDT, led by director Ted Liu, have worked hard to bring it down. And with the help of the press, they did.

The anomaly is that when Lingle went to China last month she told Duke Aiona to veto SB 2401, an anti-221 bill, and when she got back she herself vetoed SB 2001, another anti-221 bill. Given her steadfast efforts to bring 221 down, these vetoes were really remarkable. Some said she had turned over a new leaf.

But that didn’t last long. Not long after, DBEDT released the data that fed the story in Sunday’s paper, and as in earlier attacks on 221 the questionable data that Sean Hao relied upon came from DBEDT. Plus ca change, plus la meme.

The reaction to Sunday’s story was immediate. On Monday, the email threads started flowing around the tech industry, and it was angry, just as in the old days, complaining that Sean Hao was running 221 down on the basis of bad data and that the story was erroneous and misleading. Deja vu all over again.

As the email circulated, the leaders of the industry joined in a crescendo of comment about the inaccuracies, and one prominent entrepreneur called for a meeting with the editors, expressing concern that this was more of the same trouble the industry has had with the press in recent years, and that if nothing is done the paper would continue to undermine any future effort to promote tech.

Jeff Au, an outspoken supporter of 221, pointed out in a fire hydrant of criticism that the data in the story was inconsistent with earlier reports from the Department of Taxation, which has better tax information than DBEDT. After all, DOTAX administers the tax laws, and one wonders why DBEDT, rather than DOTAX, would be the agency to respond to the paper’s request.

This raises questions as to why one agency would report things one way and another agency another way, particularly after the recent resignation of the tax director and the vetoes of 2401 and 2001. Is there disagreement in the house?

Ted Liu responded to Jeff Au’s comments by claiming that DBEDT released the information only because the paper had requested it. He provided Jeff Au with the “entire” report DBEDT gave the paper, but he did not provide the request by which the paper originally called for that information.

Why would the paper make such a request, and why now? And after having received DBEDT’s report, why would the paper use that information to fashion another 221 headline attack when we are between sessions and there is nothing actually happening on 221 right now.

Like Superferry, the trick is to kill something, then, after it’s dead you kill it again to justify killing it in the first place and possibly also to make sure that it’s quite dead and won’t be coming back. The similarity between what happened in SuperFerry and in 221 is chicken skin.

The public and the legislature have been so often confused by the media that they have completely lost touch with the real issue – incentivizing the development of the tech industry in hopes of achieving some useful level of diversification in our economy. That issue has been all but forgotten.

The attacks against 221 have always been destructive in nature, and there has been no suggestion and no effort to replace 221 with any other incentive. Even now, as its star sinks into the sunset at the end of this year, there is no incentive that will replace it in any way. The venture capital cupboard is bare.

What’s worse is that so few people understand the relationship of investment to the health of the economy. For the lack of an extension of 221, the investment funds many tech companies had are drying up, and they themselves are drying up and their human capital is drying up and leaving town.

That is the issue, rather than how many employees or independent contractors should have been included in the DBEDT report or in Sunday’s article. Our greatest tech investment icon has been brought down in ruins and our state, like Humpty, is in complete disarray as to what to do next. Seppuku, or what?

After the pummeling 221 has taken, the public’s appetite for tax incentives and startups has been thrown over the side. At this point, public opinion is completely impacted against the notion of diversification, now or going forward. In the words of Jean Paul Sartre, “les jeux sont fait,” the die is cast.

Strange threads seem to run through our popular and political culture. Who will stand up and climb out of the bucket for 221? The joy of schadenfreude seems to far outweigh anyone’s efforts to build a bridge to better times. So we go futureless, day to day, careening down the path to backwater and a more robust homelessness. Standing still, we’re frozen solid and falling way behind.

To be clear, 221 is expiring in December without possibility of reprieve, in outrage by the industry and in ignorance by the public. If you ask the average person, he will tell you knee jerk style that 221 has been abusive and made only for fat cats, who should be held in contempt and watched carefully. In that, he’s badly misinformed. What will it take to make him understand?

When Linda Lingle imposed additional requirements, obstacles, and threats against 221 on so many occasions during her administration, the young people abandoned the possibility of seeking its benefits. It was too much of a hassle for young entrepreneurs to run that gauntlet, and many of them bowed out.

Act 221 could have been the greatest tech-building statute ever adopted by Hawaii. It would've given us a chance to compete with other tech states around the country and the world. Had we just left it alone over the past eight years, we could have been a contender. All we needed to do was leave it alone.

But we couldn’t keep our hands off it. We nickeled and dimed and regulated the pants off it, and in so doing we undermined its effect and defeated its purpose and possibility. We repeatedly diminished it in the eyes of the public and those young entrepreneurs it was supposed to incentivize and encourage.

For a few sound bites, the one visionary statute we’ve produced to strengthen our economy has turned into a non-incentive and national embarrassment for our state, and the one industry that offered real hope to moderate our mono-economy has lost its momentum, leaving us all a tragic victim.

When we will see that as a banner headline on the front page?

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CNC World - China's New Global Soft Power

July 13th, 2010

ThinkTech Hawaii

Earlier this month, China started an international English-speaking 24-hour TV news channel called CNC World. It’s operated by Xinhua News, China’s state news agency, which already has bureaux in over 100 countries.

The Chinese government is spending billions to expand Xinhua, including Xinhua’s CCTV domestic station and the People’s Daily newspaper. They’re proud to say that Xinhua will open an office in Times Square, next to Reuters.

Soon enough, I suspect CNC will be on TV and cable everywhere. Their goal in the first year is to reach 50 million viewers by satellite across Europe, North America and Africa. My guess is that they’ll make it.

CNC hopes to acquire overseas media shares by 2014 and become a TV news terminal with global influence by 2020. It’ll have reporters around the world covering world news in English and Chinese and also in French, Japanese, Spanish, Portuguese, Arabic, Russian and other languages. It’ll have feature channels such as the Confucius Channel and the Environment Channel.

In a recent low key launch, CNC told the world that its intention is to deliver news, not propaganda. That’s a relief, but is it true? I think that this move is also China’s push for what Pacific Forum’s Joseph Nye would call “soft power.”

Up to now, Xinhua’s coverage has been boring and biased, but CNC will reflect an effort by Xinhua to distance itself from the reporting of the past. Whether they’ll go far enough to make a difference in world perception is yet to be seen.

The Chinese make no secret that they want to present an “international vision with a China perspective,” and in the process challenge BBC and CNN. So far, CNC is airing only in Hong Kong, but is otherwise on the Internet.

How do you reconcile their promise of no spin against China’s continuing culture of censorship? It’s not clear what we’re going to get. They’ll want to do some spin but they’ll be concerned about avoiding criticism. Time will tell.

Look at CNN. It emerged as a global leader during the Gulf War and shaped opinion everywhere. It was more than reporting facts - it was putting a special American face on things, a face which was carried to everyone everywhere. For most of the world, CNN was the storyteller, and its coverage defined that war.

Today CNN is not alone anymore. It has been joined by other global TV news networks including BCC, CNBC, Bloomberg, Fox News, CBC, and for that matter al-Jazeera. Each of them has the potential to influence worldwide public opinion.

So far, the Chinese haven't been all that effective in managing their global image. Sometimes they seem to think they live in a vacuum. When they go to build infrastructure in the developing world, they assume we will appreciate their efforts and ignore their environmental diffidence. They think the world will listen when they tell it to keep its nose out of their difficulties and failures in Tibet, food processing, corruption, civil liberties and criminal justice.

Olympics or not, the fact is that China’s global image has been tarnished in recent years, and at this point they have their work cut out for them if they want to be considered a mature and responsible world leader, so as to be able reach strategic goals.

How can they improve that image? Of course, they can rely on the Western press to tell their side of it, but the Western press is always looking for juicy if not critical tidbits. So the Chinese are well-advised in their move to create their own CNN in the form of CNC, and build it within the strength of Xinhua.

Doing it in English worldwide will give CNC a place alongside the other global networks, and will make it a global voice on China’s perspective. It will be an effective way of dealing with any negative press. Over time, it will give China much more influence and greater credibility in the halls of world opinion.

China has the resources, technology and skill to do this. It’s a decision that should be applauded from the Chinese side and from our point of view also. It will give us more information about what they are thinking and want us to believe and will open up a worldwide conversation that has not existed before.

Perhaps CNC will enable China to overpower the world with their view of news in China? If, at the same time, they censor Western media about those events, as they did for Google, we’re going to get the very same kind of the propaganda they say they want to avoid. It’s a risk, and requires vigilance by other media.

If you had unlimited resources and wanted to improve your image in the world, you’d do exactly the same thing. You’d roll out your own news channel just for you, just like this. You’d have the news your way on your own global network.

Some Chinese believe CNC is doomed to a short life. Although it may succeed in Hong Kong, they say it’s unlikely that China will allow access to CNC on the mainland because China wants to protect CCTV as its domestic station, and that without a mainland audience, CNC’s advertising prospects and revenues will be limited.

I think they’re wrong. CNC is going to be great, for China anyway.

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Let's help the homeless help us

July 7th, 2010

ThinkTech Hawaii

The editorial in Tuesday's paper threw me for a loop. Give the homeless tickets back to the Mainland? The idea, I suppose, is like the LA hospitals that drop them back on Skid Row – just get rid of them at any cost. Actually, air fare to the Mainland isn’t cheap any more – sending them back will cost plenty.

Will it work? I doubt it. Some of them will go, and come right back after a nice holiday or unwanted family visit. Others will try to sell their seats. Can they upgrade? Will they be able to keep the miles? All in all, it’s not a very good idea. There’s got to be a better way to deal with them.


In a political attack geared to help Duke Aiona’s campaign, Linda Lingle’s chief of staff Barry Fukunaga recently pointed out that Mufi has just been pushing the homeless from one place to another. That’s no solution. Sending them on a plane is also pushing them from one place to another, and is no solution either.

The administration’s efforts to stash them in Kakaako Makai didn’t work. Sprung structures in Waianae haven’t worked either – the homeless don’t like the close quarters and the rules. Mufi’s efforts to build homeless apartments in Chinatown have failed because of the Mayor’s unwillingness to face the NIMBY.

We can’t let them live in a filthy and dangerous hovel behind Waipahu High School. It’s not good for them, it’s not good for the students at the school, and it’s not good for us. We can’t permit that. For our own self-esteem, we need to provide them a baseline of shelter, food, safety and health services.

I’m concerned that (a) the existing system isn’t working, (b) we’re playing with fire by letting things worsen and we need to do something or we’ll pay a terrible price, (c) we can’t punish them for being homeless, (d) we can incentivize them not to be homeless, (e) the incentive should not be limited to benefits from bureaucrats, the whole community has to buy in, (e) we need to act quickly, time is of the essence, (f) with determination and creativity there is no reason we can’t do this, (g) it’s worth the money, (g) it requires political leadership we haven’t had and (h) it affects us all.

No doubt that this is a hot issue, getting hotter in an election year, with trouble on all sides. I’m hoping it ‘ll be a priority campaign issue, and that in that context there will be thoughtful conversation about it.


The tension is, as always, between reason and passion, chaos and order. In a free society we must allow them their choice, but in a complex 21st century society seeking security and prosperity for all we cannot afford to have a critical mass of our population on the beach and outside the mainstream.

It’s not efficient, and it’s not safe to have that critical mass of people homeless, either for them or for us. No one will argue that at some point it’s a breakdown, leading to a lack of good order and discipline, leading to the infectious partnership of drugs and crime and a lack of personal security on the streets.

There are limits to personal freedoms in Singapore, but Singapore doesn’t have homeless. If you get papers to move to Singapore, you get a job right away and you get to buy an apartment for a price you can afford by payroll deduction. Singapore manages the welfare of its population. We should too.

Our current system is designed to keep the homeless away from us and prevent them from disturbing or reminding us of their troubles – a kind of homeless-phobia. Keeping them away from us creates a visible class distinction, homed and homeless. That’s not freedom and it’s not healthy in Hawaii or anywhere.

We can’t just push them around anymore, literally or figuratively. This country is built on personal freedoms, and we need to respect the freedoms of the homeless too, otherwise, there will be trouble, either inside the law or outside. Sanctions against the homeless are not a great idea and won’t work.


We have an interest in preventing thousands of homeless from wandering the streets. It’s not that we should arrest them or send them to the Mainland. Rather, we should incentivize them back into the Mainstream, and give them a kind and caring chance again, especially when there are kids involved.

I had heard the subject discussed at my former Neighborhood Board, where too many of the members just wanted HPD to move them along. The police correctly responded that we don’t most people along these days unless they’ve broken the law. The days of vagrancy laws and debtors prison are over.

I don’t know any homeless. Do you? Some are quite coherent and thoughtful. Take Tony, a fellow I met walking around the streets in my neighborhood, slightly lost. He came to Hawaii 10 years ago, had a job until 4 years ago, then lost it and went to the streets. By now he’s noticeably street-wise.

He said he likes the freedom, likes being outside the pale and refuses to in a homeless camp. He does ok for himself, somehow, but he’ll do better four years from now when he reaches age 62 and starts drawing Social Security. He’s got it all planned out and he said it works for him. Do we accept that?

Tony likes it his way. But is there an inherent right in America to be a dropout, like Thoreau in Walden Pond, or the mad bomber George Metesky in a cabin in the woods, or for that matter the people in the movie recently made about the flower children of the 1960's at Taylor Camp in Kauai? Should we try to stop them?

Can we afford to let people live outside society and outside the law? And how many? They don’t make any contribution to our economy or our community. They reject the mainstream and live on the fringes of it, many because they have no choice in the matter, but others because they do have a choice.


The country and the state are in recession. I heard one guest on CNBC today say this is still the richest country on earth, but another take him to task saying how can we be the richest country in the world when our roads, bridges, sewers and other infrastructure have been ignored and are falling apart.

We’re not such a rich country, or state, anymore. Can we afford to carry a huge number of people who live on or outside the fringe? Or should we take steps to make them productive in some way. I’m not talking about cruelty or punishment, only an effort to incentive people to participate in the economy.

We delegate proxies to deal with them, River of Life and IHL do a great job at feeding the hungry, but most of us would rather turn away than deal with them. We don’t want them in our community or presence, and we expect the government to step in and do something to alleviate the problem.

Without our participation and active engagement, government simply isn’t good enough, clever enough, committed enough to handle this very knotty problem, especially in an election year. So our summary dismissal of the homeless and the individuals who comprise the homeless is bound for disaster.

It’s hard to count the fish in a koi pond. They swim and swim and keep moving. They only way to get a handle on it is to freeze frame them for a second, by taking a photograph perhaps, then counting what you have in the photo. The homeless are also a dynamic population and it’s hard to count them too.

It was recently reported that there are 4,741 (or some exact number like that) homeless. I can’t believe that that number could be accurate, or that the government could make an accurate count. Some live in pipes and drains, under bridges and in junkyards. Have we counted them all? Do we know the scope of the problem?

Hawaii is a magnet for the homeless, and even if we go through the futile and costly exercise of sending them back to another place, they will keep coming here because they like it here. The weather and tolerance they find are clear incentives. If we are incentivizing them to come, trust me they will come.

Questionable count or not, their numbers are clearly growing, and you can find them and see them in many places previously reserved for the mainstream people. Some people complain that they take our parks and beaches away, and you can’t take a leak without running the gauntlet among them. It’s true.

It costs us plenty to have the homelessness in our community. The burden would be over the tipping point if they reached a critical mass, like say 90%. The burden would be minimal if they were only a handful. As their numbers increase, so does the burden. We will all be better off if they are better off.


We’re a tourist destination. Tourists are offended if not horrified by our homeless problem, and a number of letters from tourists to this effect have appeared in the newspapers. It’s probably already having an effect on the tourist industry, and unless I miss my guess it’ll have a greater effect in future.

Tourism is the engine of our economy. If the world thinks that the homeless are a nuisance to tourists here, it won’t be interesting or cute. It’ll be a major turnoff and will cost all of us lots of money. It’ll be a one way street to further decline of the tourism industry, and thus our economy. Can we afford that?


I suppose we would not be so concerned it all the homeless were adults. But the most tragic victims are the kids, shades of David Copperfield. How weird it is that these kids live in squalor on the beach and then trundle off each day to join the mainstream kids in school, returning to the beach in the evening.

If we can put them in school, can’t we give them a roof over their heads? Where are the priorities in this theatre of the absurd? How do they, how can they, relate to the mainstream kids? What kind of world view can they develop? What kind of complexes does this create? Can they grow up normal?

There are kids living on the beach and in the junkyard behind Waipahu High School. What is happening to them is intolerable, and yet we tolerate it. Those kids are being injured and scarred every day. If we are a decent, caring community, how can we let this happen? What does that say about us and our Aloha?

We have to step in, to intervene, for the kids.


So it’s time to put our heads together, for compassion and also for our economy and our community, to address and solve this problem, or at least make it less of a crisis. We have to be clever and creative and actually think of a successful solution. It can’t be unfair or unconstitutional, and it has to be effective.

That’s not easy, and I’m not here to tell anyone how it’s done. But I do have some considerations to mention that might be helpful in the analysis. First, we can’t buy our way out of this – we’ve had too many big giveaways. Generally, they don’t work and in any event we can’t afford them, especially now.

But there is common ground. We need to run an orderly society where everybody is basically in the boat. The homeless need more than soup kitchens and shelters. They want consumer goods too, and even if they don’t care about their own achievements, undoubtedly they want a better life for their kids.

So we’ve got to wean them off the streets and out of the pup tents and have them reengage with the community. It’s so easy to drop out, and we’ve got to give them positive incentives to reengage if we want to reverse this. In short, we’ve got to give them a way to make a decent living and pay their bills.

It’s not just giving them sinecure jobs where they stand around and don’t do anything. We’ve got to give them meaningful jobs that pay enough for them to get back. When faced with life on the street as against a nice place to live and some perks and spending money, all of humanity knows what to do.

We don’t have to throw money at them, just give them jobs that will pay enough to make it worthwhile for them to come back. We don’t have to hand them a middle class life, just the taste and prospect of that life. The program must make them better off than on welfare, not the same and not worse off.

The better they do, the more perks and money they get, and after a while they have enough to move back to the mainstream. On the flip side, if they don’t take the incentive, they don’t get the perks and money and stay at subsistence. Since their peers are moving up, this is not a place they want to be.


So the idea is to set up a job program that will give them enough money to live significantly better than they would otherwise, and that will give them some degree of job satisfaction and esteem. The flip side of that is that we’ve got to give them housing they can afford with the wages they earn in those jobs.

I’m talking about a real economy, not just a giveaway. Giveaways lead to ghettos, and serial generations living on the dole. We don’t want that, although there are clear indications it’s already happening here. Hawaii is famous for being a low wage state and a high rent state, and it’s eating away at our fabric.

So the idea would be something like Roosevelt and WPA. We have aging and failing infrastructure and we don’t fix it or we pay too much when we do. We need to organize an entity, public or private, that will be able to get infrastructure jobs and hire people, especially the homeless, to work on those jobs.

The WPA entity would hire and pay them enough to get back. They could be off the streets and off the beaches, and public projects could finally get done. They could clean the parks, patch the roads and otherwise make our state look great. There are a thousand ways they could improve the community.

To do this, we’ve got to encourage the government to let infrastructure contracts to the WPA entity so the work can proceed. It’ll take some starter money, but it’s the best way to spend it – making our homeless productive again. This money would go to them, not the unions and not the investors.


But that’s just half the equation. Jack needs to have a decent place to live at a decent rent. We’ve got to develop more rental units, nice ones that are comfortable for people and don’t cost an arm or leg. This may involve stiffening up the affordable housing laws, rent control, or maybe giving up state land.

The problem with rents in Hawaii is that they are too high, and the reason is that everyone in and around the real estate industry wants values and rents to go higher – owners, landlords, managers, brokers, appraisers, escrows, everyone. We’ve been on a tear to higher prices since Statehood.

We can’t afford to do that anymore. We’ve got to take care of our people, including the homeless and those who will soon be homeless because they are paying too much for housing. Too few landowners own too much property and have too much power in our community. This is no longer sustainable.

So we’ve got to get rents lower. We’ve got to build comfortable apartment units. We’ve got to find a way around landowners who are uncaring about the homeless or the future and just want to maximize their cash flow, even though the collective effect of that is disastrous. It’s time for land reform.

In the end, homelessness is about land. The high cost of land brought them low in most cases. We need to provide decent housing at fair and reasonable rents to give them a chance again. There’s lots of state land in Kalaeloa, and some could be used for them. Why not – it’s not being used for anything else.


The homeless are a manifestation of more dangerous sea changes in Hawaii, and we’d better do something about them and for them before it’s too late for all of us. Life in Aloha land assumes that everyone has his fish and poi, a little grass shack, and a piece of the pie. Disparity works against this.

The homeless are the canary in the coal mine. As they go, so go many others just at the fringe. Put a little more pressure on the mainstream people and we’ll have a lot more homeless here. It’s time to make a more sustainable economy, and life, for the homeless and for those in the homeless pipeline.

After all, we are them and they are us, and there but for the grace of God go all of us.

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It's time for us to grow some biofuel

July 4th, 2010

ThinkTech Hawaii

Whatever we do to move ahead one step, government and the activists, often directly or indirectly working in tandem, take us back two steps. We need more environmentalists who can calm the public rather than excite it into knee-jerk objections to everything that calls for progress.

Hawaii has some of the best natural energy in the world, but we haven’t yet demonstrated an action commitment to take advantage of this endowment and use it in lieu of spending $7 billion a year to buy oil from countries in the Middle East who are not always our friends.

PV is moving in the residential, although it’s being slowed down by delays in the grid moratorium and feed-in tariff dockets at the PUC. Wind is moving, but activists are in play in Molokai and elsewhere. Hopefully, we’ll have more wind in Kahuku next year.

Perhaps the most interesting renewable is biofuel. HECO is buying agricultural oil from Iowa and MECO is buying palm oil from Asia, and these imported biofuels will run two major power plants in Kapolei and Kihei pretty soon. But growing commercial biofuels locally would be so much better.

Hawaii BioEnergy and Grove Farm are trying to develop JP8 algae biofuel for the military in Kauai, and they hope to increase their test site by 1,200 acres soon. Although jet fuel is too rich for HECO’s turbines, this research may teach us how to do better biodiesel.

The thing about a diesel alternative is that once you have it in the pipeline, you don’t have to rebuild the diesel plants. They don’t need to be retooled to work on biofuel. So locally owned biofuel could actually be cheaper than putting in expensive wind turbines.

My point is that we need to focus more on biofuels, and in particular algae biofuel, in Hawaii. It’s a natural, and the infrastructure is there waiting for it. We have the sun, the season and the soil, all ready to grow it at a prodigious rate to replace all those billions of imported oil.

It’s something we ought to focus on. We should incentive the local companies that are working on algae, with monetary and moral support, and most important of all with Act 221 type investment capital so they can grow their testing and production facilities.

Land, as usual, is a show stop in Hawaii. Sure, Grove Farm has 40,000 acres waiting some productive use in Kauai, but what about other smaller producers? Algae farmers, if you will. They also need land, in the form of fee simple land or long term leases.

We need to get that land to them. We need to help them with the capital to buy it. We need to incentivize or jawbone or otherwise encourage large landowners to sell it to them, or to give them long term leases, so they can get financing for their farms.

We should focus big time on algae, on the organization and development of Hawaii’s 21st Century agriculture. Not only by the big landowners, as in the days of the Big Five, but the little guys, the mom and pops, and their kids, who could evolve into a new generation farming the land.

Perhaps the tragedy of the Gulf of Mexico is a wakeup call to Hawaii, to remind us of the problem and of our own capability. The activists may think that algae has some risks, but oil spewing out of permanent holes in the Gulf of Mexico, now there’s some real damage.

Even in the unlikely event that algae escapes local cultivation ponds, it won’t do anything else to the damage that’s going on every day in the Gulf. Unlike that oil, algae is not going to run rampant and destroy miles of coastline in days and damage the global ecosystem for generations.

To do it right, we may need to import strains of algae from the mainland, like from San Diego where they’ve been working on algae that has been cultivated to yield far more oil than locally grown algae. It’s the ability to yield high lipids that will make the difference.

Algae, whether local or imported, whether naturally or genetically modified, is all quite controllable, and nowhere near as problematic as the kind of oil drilling BP and others have been doing in the Gulf and elsewhere. Compared to that, all algae are quite benign.

With good science and crop management, algae could be the golden crop in Hawaii for years to come, the source of an agricultural boom that would make the success of the old plantations look small. It could provide the diesel substitute we need to power Hawaii.

And it could be an export we could sell all over the world, just as we once sold sugar and pineapple all over the world. It could be Hawaii’s greatest crop, the basis of the high tech agriculture and economic diversity we have been waiting for since the plantations failed.

Just as this would change things in Hawaii, it could change things globally. We could become experts, just as we were in sugar and pineapple, and show the world how to grow algae, jatropha and other crops that will substitute for oil, and thus to happily avoid global dependence on oil and ocean drilling in the Gulf and elsewhere.

Our local success would only be exceeded by a newfound global fame and fortune. This is a really good bet, and the risks are minimal. After all, algae doesn’t explode.

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