As promoted on ThinkTech Hawaii:
The host for this episode is Keli’i Akina. The guest for this episode is Connor Boyack.
Just as Covid-19 has inflicted death and disease upon Hawaii’s population, measures to deal with the pandemic have crippled our economy. As lockdowns are gradually lifted, what is the pathway to restoring Hawaii’s economy? Connor Boyack, head of the Utah-based think tank Libertas Institute, shares some directions and warnings that could make a difference for Hawaii.
A transcript of the conversation is below.
11-10-20
Connor Boyack with Keli’i Akina on “Hawaii Together”
ThinkTech Hawaii
Keli’i Akina: Aloha everyone, and welcome to “Hawaii Together” on the ThinkTech Hawaii broadcast network. I’m Keli’i Akina, your host and the president of the Grassroot Institute of Hawaii.
We’re terribly saddened that we’ve witnessed the decimation of Hawaii’s economy in recent months, especially the tourist industry upon which we relied so heavily. But there is good news, as we move forward there is a pathway. I’ve got a guest today who has seen what works as best practices across the nation and the world, and we’re going to talk a little bit about that. His name is Connor Boyack. He’s the president of Libertas Institute in Utah.
Connor founded the institute in 2011, and he serves as its president. It’s a sister organization to the Grassroot Institute in Hawaii. He was named one of Utah’s most politically influential people by The Salt Lake Tribune. His leadership has led to dozens of policy reforms spanning a wide range of areas, such as privacy, government transparency, property rights, drug policy, education, personal freedom and more.
Some of you may know Connor’s work, in terms of the 20 books he’s written. Best known are “The Tuttle Twins” books, a children series that introduces young people to thinking that is rigorous and yet accessible in terms of economics, politics and civic principles. A California native and Brigham Young University grad, Connor lives in Lehi, Utah with his wife and two children. Connor, good to have you on the program. Aloha.
Connor Boyack: Aloha, Keli’i. Thanks for having me on.
Akina: A lot of people are familiar with “The Tuttle Twins,” which is a tremendous curriculum and resource for parents. Tell us a little bit about that.
Boyack: This is a set of children’s books that helps kids understand adult ideas, the way the world works, and so we do get into economics and politics and social issues like the Golden Rule. Our goal is to help kids understand these big ideas about what makes a thriving society, a healthy functioning society, and this is content that is not typically taught in textbooks or by teachers.
Our school curriculums tend to omit the types of ideas that we talk about, which is sad from a broader social level, because these are the very concepts upon which healthy societies are based, and so “The Tuttle Twins” books fill that void and help parents talk to their kids about these concepts, do activities and lessons and learn about these ideas together.
Akina: How about that. If it’s simple enough and can be understood by children, do you think political leaders could understand it?
Boyack: Well, when asked about what the age range is for our books, I always say it’s 5 to 11, and then members of Congress. [Laughs]
Akina: [Laughs] There you go. We’re facing the same problem across the nation, but recovering from the coronavirus lockdowns is taking a lot longer for Hawaii than for anywhere else in the country, and part of the reason is our isolation, part of the reason is the dependence we had on one industry, the tourist industry for the most part. But before we start talking about how we can find our pathway out of this, what are we trying to become? What constitutes a good economy? What should we be looking for as the model as we emerge from this terrible season that we’ve been in economically?
Boyack: It’s a great question. I would say that we need to understand what an economy is. It’s very easy to abstract an economy, to have it be this kind of mathematical thing, charts and graphs, something big that I can’t identify. In reality, the economy is each of us making independent choices that benefit our lives. It’s us buying things at the grocery store, it’s us going to work and offering our products and services to others. And so in the aggregate, that becomes the economy, with millions of people all going about their business and interacting with one another through prices and buying and selling and exchanging. But if we’re talking about what is going to make a strong economy, we then have to talk about what is going to benefit the specific individuals, the small business owners, the microentrepreneurs, the young entrepreneurs trying to get a job and save for college or start their own business.
We can’t have a functioning healthy economy if we do not contemplate, take into account and provide a path to success for those who are simply looking out for themselves, for their families, trying to thrive, and have a safe and strong family. The economy is not a big business. It’s not about the Jeff Bezos of the world. The economy really is about the guy down at the local coffee shop or the little food truck on the side of the road. If we don’t have the right policies in place that allow them to provide their products and services to others, then we don’t really have a thriving economy.
Akina: What’s one or two principles that we need to keep in mind as we reconstruct the economy for Hawaii and everywhere else? You mentioned one thing, the ability of people to look out for themselves. One economist, a long time ago called that enlightened self-interest. Sometimes we hear the phrase “free market,” and a lot of people misunderstand that, they think sometimes that’s greed or dog-eat-dog. How does the principle of free-market really work in terms of empowering and building the right kind of economy?
Boyack: I did a trip a few years ago to Africa with some family members as part of a charity trip, and I distinctly remember driving through some of these remote villages and seeing how there was near-universal cell phone adoption. There were no telephone wires and all the infrastructure that often has some corruption and intrigue to it, in terms of which company gets the bid and so forth. These villages skipped light years ahead of all of that telecom infrastructure, and they skipped to the proliferation of cell phones, and they were benefited here in these remote African villages by access to technology, remote work opportunities, all of these types of things. Technology can be an amazing opportunity for people to thrive economically.
I think the other thing, though, is barriers to entry. If there were no cell phone towers, then there wouldn’t be cell phones. If there are laws in place that restrict people, then that’s a problem. The thing that was interesting to me about being in Africa was seeing that people had a path forward, that even the poorest people now had all kinds of economic opportunities to provide for their families that they never before did.
Economics is not about helping Elon Musk get richer, it’s about that person in the African village that I met finding a way to immediately triple their family’s daily income and move away from being a subsistence farmer to a knowledge worker or a task worker or whatever it is, to improve their station and life.
To me, thinking about Hawaii, thinking about my state, improving the economy, it’s always about the little guy. This is something that left and right can get behind. It’s about the immigrants coming in. It’s about the young people needing help. It’s truly about social justice, about helping people who see these injustices in their life and they’re struggling to remove the barriers in their way that allow them to excel.
If we have laws in place, regulations, restrictions and other things that prevent the little guy from starting his little microbusiness — maybe it’s a food truck, maybe it’s something else — then we don’t really have the right laws in place that are going to allow an economy to recover and thrive. It’s always about the little guy, and that’s why it’s so critical that we remove those barriers that might be in the way for the little guy to be able to start and to succeed.
Akina: Connor, what I hear you saying is that a good economy is not necessarily one in which we give things to people, in which we make promises and fulfill them in terms of their needs for housing or jobs or education or healthcare or anything else. But it’s a system in which people have opportunities, in which we remove the barriers so that they can actually succeed and actually provide for themselves.
In terms of taking a look at what we have to do in Hawaii, what are your thoughts about this? Is the problem we have economically now something new, caused by the COVID crisis and our government reaction to it, or were the roots of this problem in place long before the COVID crisis? For example, going into the COVID crisis, we already owed a huge amount in terms of government unfunded liabilities, to the tune of over $80 billion.
We were also rated as one of the worst states in terms of business conditions, conditions that would make businesses thrive. I’ve been wondering this for a long time: whether it was the actual crisis of COVID and the lockdowns that has caused our economic woes, or whether the roots of those woes are long before we got into that crisis?
Boyack: Fantastic question, and as someone coming from a state that is usually at the top of those business rankings, I will say that there is definitely a contrast that two states at opposite ends of business friendliness can experience similar lockdowns and economic impacts, but come out of it and bounce back one much more quickly than the other.
And that’s the key. We want the negative impacts that may come — justifiably in some cases — we want any negative effects to be temporary and time-limited and narrow in their scope and their impact. Yes, if there are exist– Think of COVID itself. Who are the people who are most likely to suffer a fatality? It’s people who have some of these pre-existing health conditions. People who are previously healthy are likely to be among the 99.XX% that get it, have mild symptoms and then they continue on.
I myself am one of those. I had COVID just a few weeks ago. It was extremely mild, and I’m back at work, no problems, whereas other people who have pre-existing health complications can die from COVID. It’s the same thing, or I should say, it’s very similar, with the economy. If there are pre-existing problems that complicate things when you have a new disease vector, when you have a new threat, that can provide a fatal dose of the problem. Whereas other people can weather that storm much better because they have their house in order, because they have those existing problems.
I think there’s a lot of validity to what you’re saying. It does speak to the need for broader economic reform so that as new things tend to happen, the storm can be weathered much better.
Akina: We’re going to dive in and start talking about what we can do economically in just a moment. First, I want to thank our viewers, because we have a question that has just come in online. It’s this, Connor, it goes back to our discussion earlier about how we teach children. How do you teach economics while ensuring you keep politics out of it? Great question. Thank you, viewer, for that.
Boyack: That is a great question. The proverbial lemonade stand is not political. Kids trying to learn how to make money and what it takes to entice customers, and how competition works, these things are very apolitical. There are, of course, in the economy, there are business owners who are from the left end of the spectrum and the right end of the spectrum. The underlying principles apply the same.
It is very possible to teach basic economics and help children understand how markets work without having to be political about it. There are a lot of people who have political opinions baked-on or layered on top of economic ideas, but the economic ideas are really just about how humans interact. They’re about how we exchange and buy and sell and what we prioritize, and how we express our preferences in terms of what we buy, and so forth.
These are things that can have political implications, but they don’t necessarily need to be political. It is very possible, and I would argue very important, that we talk to our kids about the way the world works and that language of economics to understand how humans interact through the marketplace.
Akina: Conor, the big bugaboo, which has been blamed for our economic calamities, is the lack of diversification in the Hawaii economy. We basically have military, government spending and the private sector. We have tourism, and tourism is our biggest and most profound, concentrated industry of all. Legislators have talked about diversification for a long time, haven’t figured out how to do that and think that the government can use law in order to bring diversification of the economy about. What are your thoughts about that?
Boyack: I would actually express caution to that. Central planning rarely works. Typically, when economies are centrally planned, there are a lot of unintended consequences, that people who are well-intentioned, sitting in a conference room cannot anticipate. It’s very important to actually facilitate the decentralized approach, where innovators and entrepreneurs, again, don’t have those barriers to entry in the way, where they can go experiment and try things out and are empowered to go solve the problem, rather than people coming up with a plan and having a program, and top-down fashion saying what it should be.
We always see more success with healthy, robust economies, diversified economies, when it’s the entrepreneurs who are allowed and empowered, and even in some cases, encouraged to go solve the problem themselves and come up with that creativity that well-intentioned people in a conference room would not have been able to do on their own.
Akina: Well, there are a lot of people in Hawaii who think that for an industry to succeed, it needs to have the government get behind it and give it tax credits and breaks and special advantages and protections and so forth. What are your thoughts about that?
Boyack: That’s very enticing, I would say, and certainly, a business owner is not going to turn down a tax break when it comes. It speaks to an overall fairness question about, if the government should be picking winners and losers. I think, generally, we see across the country that it creates more problems than it tries to solve.
Akina: We’re going to go to a quick break and come back and talk about ways in which we can rebuild the economy. My guest is Connor Boyack, the President of Libertas Institute. I’m Keli’i Akina with the Grassroot Institute. We’ll be right back on Hawaii Together on the ThinkTech Hawaii Broadcast Network. Don’t go away.
[Intermission]
Akina: Thanks a lot for not going away. I’m Keli’i Akina with the Grassroot Institute. We’re talking with Connor Boyack of Libertas Institute. We’re going to dive right back into our conversation, as we discuss how to rebuild the Hawaii economy post-COVID style. Connor, we were just talking about diversification and how it’s not the greatest idea for the government to choose winners and losers and back one industry over another.
I’m wondering if there are things that the government can do. You’ve talked a lot about regulatory sandboxes. In other words, a unique environment that allows private companies to develop a product or develop services, where we temporarily lift regulations from them and let them just go full speed ahead without any barriers, and so forth. Do you see that this is something that could help the Hawaii diversification of our economy?
Boyack: Absolutely. Here’s a very simplified example of how this would work. Let’s say an entrepreneur wanted to create a new transportation network. There’s a company on the mainland called Turo, where it’s like the Airbnb of cars. You can actually share your car with other people, and they could rent it for a day or for a week.
In many locales, as in our capital city, Salt Lake City, there are these laws on the books that were written decades ago, that never contemplated this different business style, never contemplated that people would be able to do this. There were laws written about car insurance and transporting other people for hire, and all these kinds of things that prevented this company from being able to operate.
Again, it was never the intention of the people, the legislators, or the city councilmen decades ago, sitting down saying, “We want to prevent this totally unique business model we don’t even know exists right now.” That wasn’t the intention, but it was an unintended consequence.
What a regulatory sandbox does, is there is a legal program that is set up, passed by the Legislature, and they say, “Look, we recognize that there may be unintended consequences in the future, and so we want to create a safe space, if you will, in which an entrepreneur or a business that finds itself running up against a law or a local ordinance, they can enroll and enter into this program.”
While they’re in this program, they are shielded from any negative enforcement. They’re not going to be shut down. They’re not going to get fines. They are allowed to continue going about their business, notwithstanding the conflicting law, for a period of one to two years, provided that the regulators first do an analysis and they say, “Hey, we’ve concluded that this business activity is safe. No one’s going to be harmed or injured or defrauded. As long as it’s safe, we’re going to allow it to proceed so that we can watch it, and then go back to the Legislature and say, ‘Hey, look, we’ve identified. Here’s this problem. We’ve been watching them. Everything has been safe and fine. Let’s now go fix the law so that they can continue to proceed.'”
It’s a kind of an incubator, if you will, for these new business models, new companies, new approaches to doing things to say, “Look, as long as we’re safe, let us continue to go to market,” because after all, that is the whole idea behind regulations and laws — it’s to keep people safe. It’s not to protect certain businesses, certain classes, certain regions, anything like that. The whole idea, the justification, is to keep people safe.
As long as you’re safe and you go in the sandbox, you’re shielded from whatever these laws are. You’re allowed to build your business, show the use cases that you’re doing well. You’re helping the economy. You’re serving your customers very well, and then you’re able to take that evidence to the Legislature or the city council and say, “Hey, look, everything’s fine, can we please now fix this and update the law, so that we can continue to exceed.”
Rather than an innovative company getting shut down, and then trying to work with the Legislature and legalize their new business model or activity, instead of a fist, it’s a handshake. It’s like, “Hey, we’re going to work with you. We want to support entrepreneurship and innovation, and so we have this little safe space where you can stay there while we figure it out.”
This is something that Utah is leading on, many states are now jumping in as well, and certainly something that could help Hawaii and every other state to say, “We want to have a way to support our entrepreneurs and build a better economy.”
Akina: One of the things I like about this is it promotes innovation, and it gives an incentive to businesses to try something, while at the same time not leaving the taxpayers holding the bag after something the government invests in fails, and that’s important. The other thing I like about it is, it’s a natural way for developing regulation. See what works, and then develop your regulations after that. Our state is so regulated, in terms of whether people can actually be licensed or not in terms of businesses.
You know that our state doesn’t allow for lemonade stands? Infrequent businesses by minors still require permits. It’s hard to believe. But of course, lemonade stands in and of themselves aren’t going to revitalize the economy. These restrictions are part of the problem when it comes to COVID recovery, wouldn’t you say?
Boyack: It does speak to what we discussed earlier, and that is barriers in the way. I gave the example of the people I saw in these African villages, but every American and all the people in different states, the same principle applies to us as well. I think of this family I know in my state, and they are an immigrant family, very poor, but they launched a very small business and there were some regulations preventing them from doing so. Fortunately, they know people like me that could help them get those regulations fixed, and it was a success story because clearing those regulations out of the way, that family was able to launch their business and succeed and grow and pursue the American dream.
It really comes down to: The government’s role is to keep things safe, but to the extent possible, let’s remove those barriers that prevent people from setting up the businesses they want, the businesses that can serve their customers. And this is a definite role for the government, is that where those restrictions exist, we need to question them. We need to question their basis, their intent and determine if this is actually causing more harm, especially post COVID when you’re basically going to have to give CPR to Hawaii’s economy …
Akina: Absolutely.
Boyack: … and come back to life. It’s a great opportunity to come in and say it’s something like a regulatory sandbox or other programs where we can go look at our regulations and try and figure out how we can free up the entrepreneur to go out and serve customers and rebuild the economy. It’s a great time, an opportunity really, to try and resolve some of those existing issues.
Akina: I think opportunity is the keyword, in fact. |You’ve talked a lot about city and state regulations, but as we get beyond the local level, what about the federal side? Do we need to envision some changes there, in terms of being able to invigorate the economy?
Boyack: I think with Hawaii, the Jones Act is the perfect example. The answer is yes, there’s absolutely federal reform that is needed to remove some of these restrictions to just allow — again, the economy is people like you and me wanting to do business together. — let’s allow free people to just pursue those decisions as best as they can, and so things like the Jones Act, I think, are a great example.
Where I think a lot of people struggle is that federal reform is very difficult. There’s a lot of constituencies and lobbyists and money and intrigue, and maybe corruption, whereas at the more local level, at a state-level, certainly at a local level, it’s much easier to have conversations with people about these issues and try and set up a dialogue with them and persuade them or discuss common ground.
Those are conversations that are very hard to have in a country that’s so massive as the United States. It’s much more difficult to have all those conversations enough to then change public opinion and pursue legal reform. In short, certainly, federal reform is needed. I really wish we could address the Jones Act and free up some of these restrictions.
Akina: Sure.
Boyack: To the extent that that remains difficult to do so, again, back to the word opportunity, your Legislature and even people at a local level have opportunities to stand up and say, “We want to support our entrepreneurs, our young people, our struggling people who are just trying to build a better life. There are plenty of opportunities at that local level to pursue some of these changes.
Akina: Absolutely, and you’re certainly right. The Jones Act affects virtually every business and consumer in Hawaii. In addition to that, there are other federal regulations, particularly those which affect farmers and their ability to be able to actually be entrepreneurs themselves. Now, let’s bring this conversation, as we close a bit, down to the more personal level in terms of individuals and families that have been negatively impacted. How can they use their assets in a post-COVID world to financially recover? Do you have any thoughts for them?
Boyack: Oh, this is where I might say, “Buy some bitcoin.” Half as a joke, but I’ll say this: I have a podcast for young people. I’ve been talking a lot recently about COVID. There are a lot of challenges that this whole circumstance has created. COVID itself; the government’s response to it, as you point out; some of the pre-existing issues that have teed up some states to do better than others. But where there is chaos, there is opportunity. Where there are problems, there are solutions.
… There are fewer times in our history that have been better times for entrepreneurs to identify problems that people are having and [asking], “How can I solve them?” I would encourage people listening, looking at their own families, [to ask], “How can we lift ourselves up by the bootstrap, pursue the American dream, notwithstanding all the struggles we’re having?” You need to think from that problem-solving mindset like an entrepreneur would and say, “Well, what challenges are created, and so let’s look at those instead as opportunities. How can I take advantage of this? What are the problems people have with this, and can I come up with solutions that they will want and pay me money for so I can start a business, even amid post-COVID-19, and still pursue that American dream?”
I still think it’s possible, no matter the challenges that exist right now, for the right people who are dedicated, focused and have that right mindset. Entrepreneurs can thrive in any type of economy because people always have problems that they are looking for solutions for. If our families gather around the dinner table and try and have these conversations and say, “What can we do? How can we be entrepreneurial?” I think you can do it, and I would encourage you to do it.
Akina: Great, what an inspiring ending to our conversation today. I hope the conversation goes on for all of us. Connor Boyack, Libertas Institute, thank you so much for spending some time with us today. Really appreciate you being here.
Boyack: Thanks as always for having me, I appreciate it.
Akina: To everyone who’s watching today, we wish you the very best until next time. I’m Keli’i Akina on the ThinkTech Hawaii broadcast network with the Grassroot Institute. Aloha.
