GRIH was proud to host a luncheon featuring a talk by famed economist Mark Skousen last Wednesday. In addition to being a professional economist, investment expert, and university professor, Skousen is also the author of over 25 books, including most recently EconoPower: How a New Generation of Economists is Transforming the World. A substantial crowd, including State Senator Suzanne Chun Oakland, Senator Will Espero, Senator Sam Slom and Representative Barbara Marumoto, showed up to hear his entertaining lecture.

The debate over a possible new constitutional convention here in Hawaii opened the door for Skousen to examine issues relating to what a government should or should not do. Part of the debate centers on efficiency. Skousen quoted friend and fellow economist James Marsh's research which suggests the federal government can be run efficiently at about 23 percent of gross domestic product (GDP). Currently, the government spends quite a bit more than that, implying inefficiency. The inefficiency comes from trying to do things the government should not do.

Skousen does not support the sort of radical, near-anarchy of some libertarians, and accepts the role of the government intervention in certain areas, such as national defense, legal system, and public works and infrastructure. Yet there are limits within even these modest parameters. For example, he notes the government rightfully runs the military, but does not build the weaponry of war. Private businesses do. Allowing that some regulation of private industry is probably acceptable, Skousen firmly believes government is ill-suited to actually run businesses.

When it comes to the possibility of a ConCon here in the Islands, Mark Skousen was skeptical. The U.S. Constitution, after all, was written more or less in secret. It was also short, easy to read, and has lasted 200 years. It is doubtful any of that would apply to a new Hawaii constitution. Plus, he asked, what type of new "rights" would be adopted? Rights to housing? To a job? According to Skousen, Hawaii was ranked 46th by the Fraser Institute's survey of which U.S. states had the most economic freedom, finding us both over-regulated and overtaxed. Such a poor ranking does not bode well for a new constitution. Besides, as Skousen observes, brilliant men such as James Madison were the forces behind the U.S. Constitution. Would Hawaii be so lucky when and if it came to draft a new state constitution?

As for what a new constitution should include, Skousen's list was short. There should be a balanced budget provision. There should be some sort of limit on taxation, including limits on income taxes. Lastly, there should be a rainy day fund to cover emergencies and possible shortfalls, thus negating the need to raise taxes during troubled times.

Skousen also discussed his new book, EconoPower, which examines how economists are providing answers to many of the world's problems, from poverty and unemployment to environmental concerns. There is relevance here for Honolulu, as one issue Skousen tackled was traffic congestion. He noted research by the Reason Foundation's Robert Poole, and how Poole's policies have been adopted in Singapore. The result? No more congestion. Poole's program basically consisted of pricing strategies that would charge people to drive at certain times, making rush hour an especially expensive time to be on the road. Soon the populace decided it was too expensive to drive during peak hours, and the roads began to clear. Skousen notes that high occupancy toll (HOT) lanes, like those suggested in a recent study by U.H.'s Panos D. Prevedouros, could be used to achieve similar effects. Anyone could use these faster lanes, as long as they were willing to pay the price. The public, however, tends to reject HOT lanes as "Lexus lanes" for the rich, so they are not widely used. One traffic solution that Skousen doesn't have much faith in is rail, observing that the proposed Honolulu rail transit system does not appear to stand up to cost-benefit analysis.

Mark Skousen discussed many other topics during his luncheon talk, from education reform to Mongolian communists to whether or not the view of Diamond Head is a public good. He concluded with a lively question-and-answer session, but not before finishing his speech with a quote by French economist Frédéric Bastiat: "If everyone enjoyed the unrestricted use of his faculties and the free disposition of the fruits of his labor, social progress would be ceaseless, uninterrupted, and unfailing."