Archive for February, 2011

We can learn a lot from Civil Union

February 22nd, 2011
By



ThinkTech Hawaii

Wow! Civil union passed in the first six weeks of the session.

Unhesitating they were, with clarity, speed and determination. With all the debate and controversy, it was almost incredible. One thing for sure - this means that when it wants, the legislature can do things really quickly, with resolution, daring and leadership. For me, it was remarkable and encouraging.

So the big question - why can’t they do this for tech and clean energy, for capital formation and the diversification of our economy? These things are also critically important to our quality of life and the future of our islands, and many people are equally passionate about seeing them converted to action.

In short, what we need to have is the same focus and alacrity on initiatives relating to our state economy. Whatever remarkable thing happened here, we need to do it again, and regularly.

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Could gambling be the new form of diversification?

February 15th, 2011
By



ThinkTech Hawaii

PBS Insights had a troubling episode last Thursday night. It was a debate on gambling, with Reps. Carroll and Souki arguing for it, and a local social worker and mainland economist arguing against it. Could it be that PBS could not find any con panelists from the legislature? The implication of this configuration was that the legislature somehow favored gambling. That’s scary, whether true or not.

Although gambling didn't seem to have a chance in the past, lots of people would now like to balance the budget with gambling in lieu of taxing state retirements. As is often the case, self-interest rules. They’re not so concerned with the underside or what it will do to local people with lower incomes.

Gambling could arguably enhance tourism revenues, since lots of tourists like to gamble. But it would take us further down the road of dangerous dependency on tourism, and far away from diversification, unless you treat gambling as a separate industry, which Rep. Souki seemed to do in the PBS discussion.

After all the resistance, confusion and failure about incentivizing our young people to diversify into tech, is that what we now want to do, diversify into gambling? It’s a one-way street to a blind alley that will undermine our values and social environment. This is one wild session, all right.

Glitter or not, gambling won’t diversify us into tech. It may offer dealer jobs to our kids, but it won’t offer them high paying tech jobs, and it won’t keep them from leaving. In fact, it’ll probably expedite their departure. Who wants to make a career in casino town? For me, there is no way that gambling would work for the greater good, help the tech industry or lead to a meaningful diversification.

Follow the money. If local people gamble, they’ll put the money into the bandit, the bandit sends a healthy slice back to its owners on the mainland, which the economist on PBS thought would ultimately be a Vegas gaming company. Winnings would be shared among local and visiting winners. The local winners would get less than the local losers put in. The result: a net loss for our people and economy.

Ah, but then there’s taxes. The winnings earned by local people would be taxed locally, so the local winners would keep still less out of their winnings. That doesn’t sound great. If you want to take more taxes from people, why not just be straight and raise taxes? At least that way we’ll know the score.

The winnings earned by visitors would probably not be taxable locally, so although the local people pay additional taxes into the system, the visitors are likely to take their winnings home untaxed. Does that sound attractive to you? The benefits to our people sound more and more illusory.

But we do have income taxes on the profits earned by the bandit. That sounds like peanuts and not worth it when you consider the money the local people will lose and the social trouble that will be visited on so many struggling local families if they gamble away their money. Rather than making our economy better, it rather seems calculated to put more people on the beach, and make it worse.

It’s fool’s bait. Just like rail isn’t going to solve our traffic problems, gambling isn’t going to solve our economic problems, never would and won’t now either. It won’t build the economy, just make some offshore gaming companies rich on the money local people put into the bandit. And there’s no good evidence we’ll have a rush of tourists or new tourism dollars if we put bandits into our community.

If you really wanted to gamble, you’d take a trip to Las Vegas. And if you’re wild about being part of the global gambling scene you’d go to Macau or Singapore, where the casinos are stupendous. Frankly, we’ll never be able to compete with the likes of them. We’re not Las Vegas or Macau or Singapore and we shouldn’t try to be something we’re not. Let’s be Hawaii and do things to make it a better Hawaii.

Why do legislators argue for gambling, the most desperate option of all, when the legislature has done nothing to diversify our economy? Who are they talking to that they would favor this option? In what’s turning out to be a session that could go anywhere, it seems like the legislature is caught on distraction. If we don’t fix the economy, the economy will fix us. And we’ll feel it long after they leave office. We won’t remember their names, but we’ll have to live with what they did.

Every legislator should be thinking hard every day about what he or she and his or her committees can do to fix the economy. That’s Job One, and frankly there is no Job Two. Let’s get to business rather than fool ourselves with cutting corners and falling for an easy buck. It’s not about politics or even personal wealth. It’s about decency and doing a decent job for the people who elected you, and who depend on you for their lives, families and futures.

Do they really want you to do this?

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A short commentary on comments to the mariculture article

February 9th, 2011
By



ThinkTech Hawaii

The comments started rolling in Sunday after the StarAdvertiser hit the streets. Although there were a couple of online comments that seemed to agree with me (“State must save, not end, open-ocean fish farming”) a number of other comments were negative or incomprehensible.

In theory, I appreciate any comment on anything I write, and certainly all the comments on this article. Just spell my name right. But I do wonder why the paper still allows anonymous comments. This was a problem with the Advertiser and led to some pretty wild comments. Wouldn’t it be better for the paper to require commentators to use real names? That only seems fair, doesn’t it?

Some commentators suggested we should open up the mariculture issue for further debate. That’s a backward step, since the issue has already been debated years ago and it’s been state policy ever since. Re-debate assumes the debate isn’t over, and the guys who lost it last time can have another shot, and maybe another one after that. That way, either side can prevent the issue, or initiative, from ever coming to rest. That’s not good or predictable government, here or anywhere else.

This problem is exacerbated when government adopts a policy but doesn’t follow through on it. Although mariculture has been longstanding state policy, the state has done little to incentivize it and in fact has made raising capital more difficult in recent years. Development of the industry hasn’t been anywhere close to what it might have been had it had more enthusiastic state support.

The attack on mariculture is fueled by the fact that it’s still early in development and capital formation, and thus still vulnerable. Like all those 221 companies, it hasn’t yet had a chance to thrive. This vulnerability makes it easier to attack. When it becomes stronger, it will be more difficult to attack. That’s why progress is so threatening to those who want to bring it down.

Some people feel we can have the extravagance of closing down a food industry. Do that and you'll see what happens – we’ll pay a terrible price. We’ll pay higher prices for lower quality food from far away, and our money will go there, not here. There won't be jobs, there won't be food security and there won't be self-reliance or sustainability. We'll be strapped into a cargo cult dependency that will strangle us, from which we’ll have greater and greater difficulty escaping. And if you didn’t realize it, the people with modest incomes will suffer the most.

My sense from the online comments is that lots of people are in a long-term denial overlaying the past and the future, and would rather stand still and perseverate. I sincerely hope they will see the reality and where Hawaii really stands. I hope they will see that eternal argument works against us all. It is not the solution, but the problem. Hit and run commentators don’t make good policy. They only defocus our priorities and undermine any chance of collective will.

I’ve also found that when I write a column like this, the most thoughtful comments of all come not in the online but by email. I appreciate them all the more for writing to me directly, and I can tell you that after this article was published I got lots of email from people who roundly agreed with me. That very nearly made up for my disappointment with the online comments.

In fact, one reader liked the article so well he suggested that I email it to the entire legislature. I told him that as the author I was reluctant to do that, but he could do it if he wanted.

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Lots to discuss at ThinkTech this spring

February 1st, 2011
By



ThinkTech Hawaii

If you didn’t know it, ThinkTech produces three hours of community television content every week on OLELO and a weekly 30-minute program on OC16. See Olelo.org and oc16.tv for details. Beyond that, ThinkTech also organizes business conferences downtown, and this spring there are a number of them.

APEC MEANS BUSINESS - February 24th

The first thing we need to do is get ready for the APEC (Asia Pacific Economic Cooperation) Summit in November. Hawaii Venture Capital Association and ThinkTech are collaborating to present APEC Means Business for Hawaii on February 24th. We have a fabulous panel for that program: Lieutenant Governor Brian Schatz, Jim Tollefson of the Chamber of Commerce, Ambassador Lauren Moriarty, Dick Baker of the East-West Center and our own Darren Kimura of Sopogy, all to talk about how Hawaii business can get in on APEC.

Here are some additional questions we hope will be discussed:

1. What is APEC going to involve diplomatically? What questions will be discussed and what deals might be at issue among the chiefs of state, other officials and CEOs.

2. What are the metrics: How many people will be here? How many heads of state, how many other officials and how many CEOs? What supporting staff and family will be here?

3. What kind of activities will they engage in while they are here? What is the schedule of events and conferences and other presentations, gatherings and recreational activities? What are the venues, and can the venues include downtown presentations?

4. What access will the business community have to the groups involved, i.e., the heads of state, the participating officials and the CEOs?

5. Assuming access at one point or another, will there be opportunity for Hawaii businesses to talk business with them, and what kinds of deals should they be thinking about?

6. How can Hawaii businesses determine the individuals and organizations that will be here, and how can they contact them in advance of the Summit to set up meetings?

7. Who will make the introductions? Will the Committee help? Will some other agency help? Will the State Department or the U.S. Commercial Services office help in making introductions and getting the APEC players and local business people in the same room?

8. What is your advice on how Hawaii businesses can follow up on introductions and preliminary business discussions? What opportunities will local business have to follow up with APEC officials or CEOs or staff after the Summit is over?

9. What kinds of Hawaii business are most likely to be able to participate? Who will be able to get access? Who will not be able to get access? Who will be able to make deals and who will not be able to make deals?

10. What after-hours and social contact will be possible and appropriate for Hawaii business to pursue business relationships with APEC officials and CEOs? Will APEC have social events that Hawaii business can attend?

11. In a Summit like this, what are the APEC officials and CEOs looking for in terms of credible business proposals? What areas are most attractive these days?

12. What kind of paperwork and preparation will be necessary or helpful for Hawaii business to approach APEC officials or CEOs or staff members to make the best impression?

13. What are the events and milestones that will take place between now and November? What should Hawaii business be doing to prepare contact with APEC officials, CEOs and staff?

This ought to be very helpful for any Hawaii business that has an interest in APEC or in doing business with people involved in APEC. To sign up for the program, see thinktechhawaii.com or hvca.org.

HOUSING IN HAWAII - WHAT'S HOLDING US UP? - March 23rd

Housing is an increasing challenge in Hawaii. Land is expensive, and so is construction materials and labor, and the result is housing is more expensive than it should be, to the point where it’s hard to afford a house and many people can’t. In our current decline, many people are losing their homes. The American dream of owning a house, or even renting one, is becoming more difficult in Hawaii. And the number of homeless families is huge and getting larger to the point where it's a major problem.

So we thought we’d examine the housing problem in another HVCA-ThinkTech program at the Plaza Club on March 23rd. This will be a half day program, starting at breakfast and running through lunch. It’ll feature a wake-up keynote and four blue ribbon panels of experts involved in every aspect of housing in Hawaii, including those who do the planning and sometimes oppose it, those who develop and build, and those who market the finished products.

With them, we’ll make a candid inquiry into why we don’t have sufficient housing for our people, what we can do to provide more housing that our people can afford, and what will happen if we don’t. It’ll move very quickly, as all of our half-day programs, and some of the speakers will undoubtedly take your breath away.

Want to know what’s holding housing up (a triple entendre), and what we need to do, individually and as a community, to preserve opportunities for decent housing in Hawaii? After all, if you can't find reasonable housing, you're either on the beach or out of town. One way the other, this issue will affect us all, and profoundly. Sign up for this program at thinktechhawaii.com and hvca.org.

RECIPROCAL INVESTMENT WITH CHINA - April 28th

Of course, China is investing in the U.S. and to some degree in Hawaii. And certainly Hawaii people can invest in China. Some say the returns from investments in China are terrific. But how does a local business find investors in China, and how does he negotiate an investment from them. Likewise, how do local investors find worthy investments in China and how does he make that investment without losing his shirt. When you’re talking about international investment, the stakes are high, but so are the complications and risks.

So being educated on these things is very important. And that is the point of our program in April. On April 28th, ThinkTech will again team up with the Hawaii Venture Capital Association to present a luncheon panel program at the Plaza Club entitled “Reciprocal Investments with China.” What that really means is that we’ll study both sides of the coin – how we can invest in China and how can we get them to invest in us. China has billions to invest, and it has new and vital companies in all kinds of industries. Surely, there must be some opportunities for us.

To find the answer, we’ll turn to another panel of experts. We’ll have experts in what’s going on in China and what’s going on when China comes here. We have a law professor who teaches international investment in Shanghai, some lawyers and businessmen who handle investments going both ways, and a tax expert who can tell us the tax challenges of making deals with Chinese entrepreneurs and investors.

Like it or not, the destinies are China and the U.S. are linked, and more than that the destinies of China and Hawaii are linked. We have some knowledgeable experts in Hawaii, and we can still become the bridge to Asia, and a special place along the way for China’s relationship with the U.S. They are investing all over the world, and inviting investors from all over the world to invest in their huge market. This should not be lost on us, and we should jump in if we possibly can.

Their ability to manufacture things is formidable, including technology that will change the world. In recent years, they have become world leaders in wind turbines, PV cells and other tech and clean energy devices. What’s more is that China has often linked the sale of their equipment with investment in the buyer of their equipment, an enormous benefit for startups. See what happened in the case of Hoku Scientific, a public company. This could be very valuable to Hawaii, especially in tech and in the burgeoning clean energy industry.

Regrettably, Hawaii has not yet taken advantage of its historic connection with China. We have not done direct flights. We have not achieved any meaningful level of tourism. We haven’t even posted signs in Mandarin at the airport. And despite Madame Wu Yi’s visit in 2006, we haven’t sold them much at all, either in chattels or land. Nor have Hawaii investors done much in investing in China. We’ve lost time, and maybe this program can show us the way to catch up. We need to learn how to do this, and then we have to do it.

Our mission at ThinkTech is to reveal things that can raise global awareness for Hawaii, and this program is intended to do just that. The panel is very impressive and knowledgeable. Many are multilingual. All are global citizens and have been through various transactions and investments, with lots of stories to tell. To hear them, and meet them, sign up for this April 28th program at thinktechhawaii.com or hvca.org.

Stay tuned for more details on these and other joint programs on both of these sites.

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