This commentary was originally published Sunday, July 19, 2020, in the Honolulu Star-Advertiser.
Worried about the loss of tourism, widespread unemployment and economic slowdown? Fear not. The Hawaii Legislature plans to fix it all through its powers of legislation.
That might seem a bit optimistic for a legislative body that has already adjourned for the year, has yet to do something as simple as create an effective management mechanism for the state’s airports, and is borrowing billions of dollars rather than reducing spending to balance the budget.
But if it’s possible to create new jobs by wishing and hoping, our state lawmakers will not be left behind. A Senate resolution passed this session pledges to create 100,000 permanent new jobs in the state by 2022.
How our senators exactly would create those new jobs is left rather vague, which suggests they don’t know quite how to do it. Instead, their resolution calls on the state Department of Business, Economic Development and Tourism to come up with a list of recommendations in time for the 2021 session.
Based on past efforts, we’re most likely to see plans that involve giving state funds or tax breaks to projects that look great on campaign literature: software and technology, public works projects and something that includes the prefix “eco.”
And it raises an obvious question: If it’s possible to create new jobs and a booming economy by legislative fiat, why haven’t they done so already?
Much of the advice being given to state policymakers revolves around the idea that the government can spend its way out of a statewide recession. This government-centered approach to economics doesn’t have a successful track record. It is, however, very good at funneling state funds to favored industries and individuals with political influence.
This is not to suggest that there is nothing the Legislature can do to help create jobs and bolster the state economy. As the Grassroot Institute of Hawaii explains in its new “Road Map to Prosperity,” the key is to increase economic freedom.
Over the years, Hawaii has become one of the most-regulated, highest-taxed states in the country. It is repeatedly listed as one of the worst states to do business. To create jobs and restart the economy, all our lawmakers need to do is embrace policies that would make the state more business-friendly.
The report includes recommendations that would help industries across the board. From tax holidays to easing occupational licensing restrictions, there’s something to help every sector of Hawaii’s economy. Some examples include:
>> A two-year freeze on new taxes and fees at all levels, state and county.>> A permanent general excise tax exemption for food and medical services.
>> Legislation protecting home-based businesses that are compatible with residential use and don’t adversely affect the community.
>> A reduction in government spending combined with legislation that lowers barriers for use of private contractors and public-private partnerships.
>> A temporary reduction in the general excise tax, transient accommodations tax and other taxes that burden the retail, restaurant and tourism industries.
The point is not to try to pick and choose the industries that receive help. Rather, we should clear away the obstacles that hinder entrepreneurship and innovation.
Hawaii’s Legislature had the right idea: It’s important to create new jobs and improve our state’s economic outlook. However, the best way to do that isn’t by increasing the state budget or picking “winners” and “losers” to receive government largesse.
A better strategy is simply to reduce the heavy taxes and regulations that hinder local businesses and let the tried-and-true approach of greater economic freedom work its miracle in Hawaii.