Just as we have to turn to doctors and epidemiologists to try to address the COVID-19 disease, only Hawaii’s Legislature can make the radical changes our economy needs in order to put a quarter-million unemployed back to work.

There is widespread consensus that our tourism industry will not return to its pre-COVID levels for many years, if ever. There is also a growing awareness that we don’t really want visitors to return to ten-million-a-year levels.

Commentators both in and outside the tourism industry have noted that in 1987, tourism generated more revenue in today’s dollars and only hosted 6.7 million visitors. Our roads, beaches, and hiking trails were less crowded, and local residents were a lot happier.

The marginal return per visitor has been declining for some time, but even marginal returns generate more jobs than no returns, and many of the tourism alternatives now being put forward have been advanced in the past.

Governor Cayetano had hopes for medical tourism and a “Mayo Clinic of the Pacific.” Governor Lingle was a big supporter of clean energy. Governor Ariyoshi was a fan of alternative agriculture.

Waikiki Aerial Sheraton and Royal Hawaiian Hotel with Waikiki Beach 0355.
Thanks to COVID-19, we now have many empty hotel rooms. Why not convert some into affordable housing for locals? Cory Lum/Civil Beat

Along with dreams of being a high-tech or financial center, most of these ideas have had relatively small impacts on our economy because the significant investments they require don’t make business (read: profit and loss) sense.

Just because tourism isn’t as appealing as it once was doesn’t mean that alternatives to it are suddenly more profitable or require less risk. It is telling that a majority of voices calling for things old-yet-new-again are those of politicians, journalists, and academics.

If business people see a promising new opportunity, they tend not to write an editorial about it. They’re more inclined to go do it.

Getting Specific

In order to make alternatives to tourism possible, Hawaii lawmakers need to change the “playing field,” the tax and zoning structures in which business operates. Here are three specific suggestions for the kind of things required:

  1. Tax fallow agricultural land. Land zoned for agriculture should be used to grow food, not serve as part of a long-term investment portfolio for billion dollar corporations or the wealthy. Hawaii has tens of thousands of acres that have been growing nothing but weeds for decades. This is crazy in our island state where the food supply beyond two weeks is dependent on container ships continuing to arrive. Tax the fallow agricultural land and use the revenue to support start-up farms, especially those that hire new employees.
  2. Give tax breaks to hotel-to-condo conversions for affordable housing. Since tourism isn’t coming back to former levels, we are likely over-supplied with hotel room towers. Let’s motivate the owners to turn them into desperately needed affordable housing for local residents, creating construction jobs in the process.
  3. Fund clean energy jobs with a carbon tax. Hawaii still gets 62% of its energy from oil we have to buy elsewhere. Our electricity is the most expensive in the U.S., and the oil we burn pollutes the air and raises our sea level. Solar panels on rooftops and solar energy farms will generate both electricity and jobs. We could also use carbon tax revenue to pay for a Hawaii version of the 1930’s WPA Conservation Corps. Let’s employ local people to plant trees to reduce our carbon footprint. Again, we’ve got the land to do it.

These ideas are only a beginning, but they point toward the kind of tax and legislative changes needed. Tax and zoning structures that govern the playing field on which business operates are nothing new. Many have been around so long, we’re hardly aware of them. The homeowner income tax exemption that helps support banking and construction is one example.

Let’s employ local people to plant trees to reduce our carbon footprint.

Hawaii’s lawmakers today have a mandate to shape the future of the islands for the better in a way that has not been possible since the earliest years of statehood. As President Obama’s chief of staff said at the time of the Great Recession, “Never let a crisis go to waste.”

If we want to create jobs through alternatives to tourism, our Legislature must make those alternatives more appealing to business investment.

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