Are The United States & Hawaii Competitive?

by Adam Smith

World leaders, business executives, bankers, journalists and other influential policy makers recently met in Davos Switzerland to discuss the most pressing economic and political issues of the day.

During this year’s gathering, there was mutual agreement that soft economic conditions are forcing countries to rethink how they can become more competitive in order to attract new businesses that will create more jobs and also provide tax revenues to pay down public debt. The need for the United States to become more competitive in world markets was also made clear in Mr. Obama’s recent State of the Union speech.

Do the United States and Hawaii currently offer a competitive environment that will attract and stimulate economic growth?

Most people would say no. The United States has one of the most complex tax codes in the world and one of the highest tax rates among developed countries. According to the Tax Foundation’s most recent report, Hawaii’s tax system is ranked 35th among the 50 states. Both the United States and Hawaii have costly regulations when compared to other countries and states and Hawaii has a reputation for not being a pro-business state.

Also, according to the Pew Foundation, the United States is over 15 trillion dollars in debt and Hawaii has projected unfunded pension obligations of over 16 billion dollars and projected unfunded Medicaid obligations of over 10 billion dollars. These debt obligations are making it increasingly difficult for the governments of the United States and Hawaii to fund public infrastructure projects that will support economic growth.

Why does being competitive matter?

Business activity and growth is the primary source of wealth. It funds jobs and provides a tax base that pays for government. Without a vibrant private sector and sustained economic growth there would not be enough jobs or enough tax revenues to pay for existing government obligations. Without economic growth the economy would stagnate and eventually lead to a painful downward economic spiral.

What should the United States government and Hawaii’s state and county governments do to become more competitive?


  • Focus government budgets on actions that will stimulate economic growth. Infrastructure projects, primary research and development initiatives and workforce training programs are good examples. Require persons receiving unemployment benefits to enroll in re-training programs. Cancel and defer funding for “nice to have” projects and programs that do not contribute to economic growth. However, continue to fund programs that support the physically and mentally handicapped.
  • Simplify the tax code and lower tax rates. Discontinue the practice of giving special tax breaks to established businesses and using the tax code to achieve social agendas.
  • Provide a three-year tax holiday for all small business startups and tax incentives to financial institutions so they will be incentivized to lend to small business startups.
  • Eliminate unnecessary, burdensome and outdated laws and government regulations. Simplify the rules and government regulations for small business startups.
  • Fast track the regulatory review of domestic energy projects so United States and Hawaii can become less dependent on foreign energy sources.
  • Utilize process re-engineering and other cost reduction techniques to make government agencies more service oriented, efficient and cost effective.
  • Strengthen accounting and other controls that will significantly reduce the fraud and abuse that is adding millions of dollars to the cost of Medicare, Medicaid and other government funded programs.
  • Phase out government subsidies and entitlements to businesses, including agriculture subsidies. Businesses should rely on the capital markets for funding.
  • Eliminate costly government programs that yield little benefit, such as those that support illegal immigrants.
  • Create websites that will encourage businesses and individuals to submit ideas and suggestions on how to improve competitiveness. Share the knowledge.
  • Take action now, avoid getting bogged down in costly studies that yield little result.

These steps and other similar actions will put the United States and Hawaii on a course toward sustained economic growth. Growth that will provide jobs now and jobs for our children and our grandchildren in the future.

Now is the time for all of us to take action.

The serious challenges facing the United States and Hawaii require every citizen to get more involved in the democratic process. The time for sitting on the sidelines is past. Educate yourselves and your friends and neighbors on these important issues. Voice your concerns to your elected government representatives. The country is at a critical point in its history. Help our government representatives make the right choices. Get involved.

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