Hawaii: The Fourth-Most Economically Repressive State

According to the index of economic freedom, only California (of course), New Jersey, and New York are more repressive than Hawaii. Much of Hawaii’s (and California’s) repression comes from the land-use regulation, which makes building a home or starting or expanding a business very expensive.

The Antiplanner has told this story before, but briefly, most of Hawaii’s land is controlled by a few corporations and families. For the first half of the 20th century, these landowners argued that they could not sell their land for homes or other uses because it was too valuable as farms. They sometimes leased land to people who built houses on it, but people could lose their right to use the land at any time.

In 1954, the Democrats took control of the state legislature promising land reform, such as by taking land from the large landowners by eminent domain and selling to more people or at least forcing the landowners to sell land to leaseholders. Instead of keeping that promise, when they took office, the Democrats joined with the large landowners so that anyone who wanted to develop land had to make key members of the legislature one of their partners.

To support this system, starting in 1961 the Democrats passed the nation’s most restrictive land-use laws, effectively prohibiting any developments unless the developer greased the wheels by making some politician a partner. They justified this on the need to save agricultural lands–exactly the same excuse that the landowners made.