Sunday, June 08, 2008


Innovation? In Hawaii it's just a word

by Larry Geller

For Governor Linda Lingle, "innovation" is just a 10-letter word. In Silicon Valley it's long been a way of life, but we're not Silicon Valley. We need to recognize hype when we see it.

Let's can the hype. The economy is turning on us, and we want to be survivors.

Hawaii's tourism-dependent economy is very fragile, and it would be good to find an alternative economic model. Unlike other states, we can be easily devastated as energy costs rise, or if visitors decide that other destinations are a better deal or more attractive.

I've written, for example, about the implications for Hawaii of post-Castro Cuba normalizing relations with the United States. With pristine beaches, quality hotels, low prices and reasonable airfares, Cuba could replace Hawaii as a destination of choice.

Even without a major threat such as that, skyrocketing air fares, the loss of more airlines, even rising costs of hotel accommodations, rental cars and interisland travel could negatively impact our main industry.

Then what would we do?

At the same time, development and the profiteers of development continue to run our government. In place of urban planning, developers and contracting firms call the shots on what our islands will look like, where transit will go, who will have access to land, and who will get corporate welfare doled out of our tax money. Check out Mayor’s backers get big rail jobs: Hannemann defends millions doled out so far to his campaign donors:

Nearly one in every three companies working on the city's $3.7 billion mass transit system has contributed to Mayor Mufi Hannemann's campaign.

Although the Governor talks about making "a fundamental shift from an economy over-dependent on land development," there's no indication this is happening. And there is no alternative economic model, so far.

But what about the Governor's push for better science, technology, engineering and math education? Of course, we should do that. We owe our children the best education possible. Finding federal money or business support to improve education is a good thing. But don't confuse science education with jobs. Those students who (for example) go on to graduate near the top of UH's engineering school will have to leave Hawaii to find work in their fields. Neighbor Island residents may not be able to share in the purported benefits, either.

That's why the rhetoric is completely hollow. Hawaii's economy does not benefit if students can't find work here. It also doesn't benefit if entrepreneurs take advantage of tax credit or even improved venture capitol opportunities—and then move jobs to the Mainland. For some reason, Hoku Scientific is a perennial darling of the business sections, but look:

Hoku Materials, a division of Hawaiian-based Hoku Scientific, Inc., held a groundbreaking ceremony in March for a $260 million production plant in Pocatello, ID. The plant will manufacture 2,000 metric tons of polysilicon per year. Polysilicon is the key material used in the production of solar cells and integrated circuits. Hoku and the city of Pocatello signed a 99-year ground lease and are expected to complete construction in 2008. The facility will create over 200 jobs. Hoku’s client, Japan-based Sanyo Electric, has agreed to pay approximately $110 million upfront through prepayments for this product to assist in financing the project. [Idaho Sets Export Record for 2006,]

Yup, innovation in Hawaii helps set export records and create jobs—in Idaho.

So how can we improve job prospects right here, for our own benefit?

It won't happen as long as the administration plans to fund change by magic. From the Governor's op-ed today:

Through incredible community support, and no state funding, 10 high school science and technology academies will be launched this fall. These programs will build our students' STEM (science, technology, engineering and math) education, a component of human capital recognized by national and international experts as critical for the 21st century.

We have also mobilized our state employees retirement system to consider funding Hawai'i's innovative ideas. We have established programs, such as the Music Entertainment Learning Experience to nurture and develop the commercial success of Hawai'i's creative human capital. And this year, despite no legislative funding, we will launch the Creativity Academies to complement the STEM academies as students pursue digital media and creative outlets.

Notice the "no state funding" part. Without making an investment, can we magically transform our economy? We're not making any intellectual investment, either. Simply finding cheap ways to improve education, valuable though that is, won't save us.

There's also something about "no pain, no gain." Or, no investment, no return. So why is the guv proud that no state funds are involved? She believes in magic perhaps.

While the Governor repeats her "innovation" mantra and cops some photo ops, "Land and Power in Hawaii" continues as the definitive guide to how this place runs. See if your library has a copy of this classic.

Land and Power in Hawaii: The Democratic Years
by George Cooper, Gavan Daws

Read more about this title...

We have abundant sunlight, rainfall, geothermal and wave-energy resources, but we are so un-innovative that we are not using them. You'd think alternative energy would be high on our list, but the innovation goes on elsewhere. You'd think homes in Manoa would be using the rainfall that cascades off the rooftops for laundry or even for showers and lawn watering, but no, we pay money for municipal water to pour on the ground instead of using what's free.

Catching up with the outside world on alternative energy could create some jobs and lower our costs as well as increase our ability to compete in a national or world economy.

We are so innovative in our transportation plans that we can't get maps, timetables or even route numbers posted at bus stops in Honolulu. Honolulu's proposed transit system isn't the result of community planning, but rather it's an ongoing political football match.

Our economic planning is not innovative at all. It took Guy Kawasaki, in a talk at the UH business school several years ago, to point out that Hawaii's location in the middle of the Pacific was not an asset to high-tech business, as DBEDT has touted for years, but a severe liability. Rising air fares will likely put the nail in this coffin forever. We need to think of something else to generate jobs.

After I write about what we are not doing I usually get a few emails "so what are you suggesting??" I don't have a good suggestion. I do think that we need to come up with a different economic model, but that's hard to do. You won't find the answer for free posted in a blog.

I hope we can get started talking soon, because the handbasket is moving along faster than anyone thought possible. We need to stop talking about innovation and get busy thinking realistically about our future.



We're a third-world country. We spend nada on infrastructure and maintenance. The roads are terrible. If we can't keep potholes filled,how,exactly are they supposed to maintain a train system?

Businesses [and individuals] in Idaho do not have the additional costs [without additional value] imposed upon them by the Jones Act.

There is competition to lower transportation expenses unlike Hawaii which has no price competition to transport goods to it or from it. What sensible business would locate in a state that has no price competition in the transportation service industry?


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