First of all, of course we must. Tomorrow I will suggest a plan to do it right, but today, let me start with the traditional, Hawaii depends too much on tourism and, perhaps, too, on Senator Daniel Inouye and his gifts to the State of defense funds. Both these moneymaking pathways will soon decline.
Half of our 1.3 million people work (with median family income in 2006 at $84,472), placing Hawaii 6th nationally. Unfortunately, our cost of living is 25% higher than the mainland. Our personal real estate worth is about $250 billion. The largest annual bucks (2007) came from retail sales at $26.4 billion, Federal spending was $13.5 billion and tourism $12.8 billion. Agriculture was in the range of half a billion dollars, but we spent $6.17 billion on energy. Ninety-four percent of the energy used in Hawaii is imported coal and oil.
The price of oil will almost certainly zoom upwards in three to five years, and while we will think that the visitor industry will have been saved when it next recovers, the real crunch will come in five to ten years when astronomical jet fuel prices will significantly reduce the incoming numbers. There is nothing on the horizon, either a replacement fuel (jetfuel from algae is the best, but it will still be very expensive) or a new type of aircraft that does not use a fossil fuel. About a third of the energy used in Hawaii goes for air travel.
On defense spending, Senator Inouye will reach 85 this year, and at that age, his life expectancy is 6 years. No Hawaii congressperson is close to attaining chairmanship of the Senate Appropriations Committee, and the odds are that no one ever will again. Plus, as the USA is so militarily dominant these days, with China and Russia facing severe internal and economic problems, as something has got to give in these times of economic recession, defense expenditures will drop over the next decade. With little new coming from the military and a stop in new hotels, construction will crash in a few years. There is nothing we can do about all this, now.
Shan Steinmark has an excellent, but, classical, take in the Honolulu Advertiser today on what Hawaii has to do. Basically, he says, do everything: alternative energy, aerospace, diversified agriculture, aquaculture, tropical medicine, multimedia entertainment, focus on a sustainable and green economic engine, seek high tech corporations to headquarter in Hawaii, locally developed intellectual property, and so on. All of these are great, the problem is that we have been trying to do all these things, and more, since who knows when. We have largely failed!
It is not that nothing monumental has been tried. The Kohala Task Force (so old even Google has trouble finding it) is remembered in ignominy, Act 221/215 is in danger of being too severely downsized, and a thousand other attempts have essentially gone nowhere.
Thus, here is how not to diversify the economy of Hawaii:
1. Do everything interesting and attractive at once.
2. Compete in traditional high tech areas.
3. Assist fledgling companies which then feel compelled to move elsewhere to compete.
Half of our 1.3 million people work (with median family income in 2006 at $84,472), placing Hawaii 6th nationally. Unfortunately, our cost of living is 25% higher than the mainland. Our personal real estate worth is about $250 billion. The largest annual bucks (2007) came from retail sales at $26.4 billion, Federal spending was $13.5 billion and tourism $12.8 billion. Agriculture was in the range of half a billion dollars, but we spent $6.17 billion on energy. Ninety-four percent of the energy used in Hawaii is imported coal and oil.
The price of oil will almost certainly zoom upwards in three to five years, and while we will think that the visitor industry will have been saved when it next recovers, the real crunch will come in five to ten years when astronomical jet fuel prices will significantly reduce the incoming numbers. There is nothing on the horizon, either a replacement fuel (jetfuel from algae is the best, but it will still be very expensive) or a new type of aircraft that does not use a fossil fuel. About a third of the energy used in Hawaii goes for air travel.
On defense spending, Senator Inouye will reach 85 this year, and at that age, his life expectancy is 6 years. No Hawaii congressperson is close to attaining chairmanship of the Senate Appropriations Committee, and the odds are that no one ever will again. Plus, as the USA is so militarily dominant these days, with China and Russia facing severe internal and economic problems, as something has got to give in these times of economic recession, defense expenditures will drop over the next decade. With little new coming from the military and a stop in new hotels, construction will crash in a few years. There is nothing we can do about all this, now.
Shan Steinmark has an excellent, but, classical, take in the Honolulu Advertiser today on what Hawaii has to do. Basically, he says, do everything: alternative energy, aerospace, diversified agriculture, aquaculture, tropical medicine, multimedia entertainment, focus on a sustainable and green economic engine, seek high tech corporations to headquarter in Hawaii, locally developed intellectual property, and so on. All of these are great, the problem is that we have been trying to do all these things, and more, since who knows when. We have largely failed!
It is not that nothing monumental has been tried. The Kohala Task Force (so old even Google has trouble finding it) is remembered in ignominy, Act 221/215 is in danger of being too severely downsized, and a thousand other attempts have essentially gone nowhere.
Thus, here is how not to diversify the economy of Hawaii:
1. Do everything interesting and attractive at once.
2. Compete in traditional high tech areas.
3. Assist fledgling companies which then feel compelled to move elsewhere to compete.
4. Involve the community in a constant attempt to gain consensus so that we get nowhere, slowly.
5. Play politics.
Tomorrow, I will look into how we must focus in our attempt to effectively diversify our local economy.
Tomorrow, I will look into how we must focus in our attempt to effectively diversify our local economy.
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The Dow Jones Industrials jumped 236 to 7351. World markets were mostly down, but guess what will happen tomorrow? Crude oil rose almost two bucks to $39.90/barrel and gold dropped $22/toz to $967.
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Regarding North Korea and that missile launch mentioned yesterday, apparently, this is now of the long-range Taepodong-2 version, which, it is reported, can reach the mainland USA. In side-handed deference to Secretary of State Hillary Clinton's warning not do so, the latest ploy is to place another satellite into space, something they actually accomplished in 1998.
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