Hawai‘i Becalmed Economic Lessons of the 1990s CHRISTOPHER GRANDY Hawai‘i Becalmed Hawai‘i Becalmed Economic Lessons of the 1990s Christopher Grandy University of Hawai‘i Press Honolulu © 2002 University of Hawai‘i Press All rights reserved Printed in the United States of America 07 06 05 04 03 02 01 654321 Library of Congress Cataloging-in-Publication Data Grandy, Christopher Hawai‘i becalmed: economic lessons of the 1990s/Christopher Grandy p cm Includes bibliographical references and index ISBN 0-8248-2630-2 (paperback: alk paper) Hawaii—Economic conditions—1959–2 Hawaii—Economic policy I Title HC107.H3 G73 2002 3330.9969'04—dc21 20020039988 University of Hawai‘i Press books are printed on acid-free paper and meet the guidelines for permanence and durability of the Council on Library Resources Designed by Argosy Publishing Printed by Versa Press, Inc For Harvey “Sei” Kaneshiro Contents Preface ix Acronyms xi Introduction The Bubble Three Pinpricks 23 A Change in Fortune 34 A Change in Administration 45 COR, ERTF, and Crisis 59 The Election 76 Second-Term Agenda 86 Lessons and Conclusions 104 Appendix 1: Economic Revitalization Task Force Proposals 115 Appendix 2: The Lingle Plan and Detailed Potential Response 119 References 123 Index 127 vii Preface This book offers a personal view of Hawai‘i’s economic voyage during the 1990s— along with some of the lessons that I hope we learned I came to Hawai‘i as an assistant professor in the Department of Economics at the University of Hawai‘i, Ma– noa in 1991, on leave from Barnard College at Columbia University Personal and professional interests kept me in Hawai‘i While teaching in the Economics Department I learned a good deal about Hawai‘i’s economy from people like Jim Mak, Sumner La Croix, Lou Rose, Jim Roumasset, Seiji Naya, and others I learned even more after moving downtown to the state Department of Business, Economic Development, and Tourism (DBEDT) when Seiji Naya became director of DBEDT in Governor Ben Cayetano’s first administration Working directly with Pearl Imada Iboshi, head of the Research and Economic Analysis Division, we tried to understand what was happening to Hawai‘i’s economy and what we could to improve things It was a valuable and fascinating experience in a difficult period for the state This book reflects, then, what I learned about Hawai‘i’s economy at the university and at DBEDT The analysis and opinions expressed here are mine While my colleagues might agree with some of the views expressed here, they will disagree with others I have been fortunate to work with people who not only tolerate but encourage differing perspectives I wrote this book with a number of goals in mind First, I wanted to tell the story of Hawai‘i’s economic voyage during the 1990s as I understand it Second, I wanted to convey my sense of what we should learn about economic policy from this period Finally, I wanted to convey this story in a way that would be accessible to—and hold the interest of—students, business people, and government workers and officials To some extent this is an idiosyncratic work I not pretend to know everything there is to know about Hawai‘i’s economy There are several issues I not touch on at all, such as education, native Hawaiian issues, details of environmental policy, public health matters, and so on Rather, this book reflects my experience, with all it limitations, in the field of economics and economic policy as applied to Hawai‘i I would like readers to see this book as a contribution to the existing body of knowledge on Hawai‘i It is not intended to be definitive in any dimension, but I hope it will contribute to the ongoing debate in Hawai‘i about our economy and our relations with the rest of the world ix Appendix The Lingle Plan and Detailed Potential Response Lingle Proposal Response Detail Addressed DBEDT business advocate reviews new or changing state regulations for their impact on business Improve the Business Climate Eliminate unnecessary regulations Small Business Task Force on Regulatory Relief began meeting November 1996 to identify inappropriate regulations and to recommend changes 1997 consolidation of state business forms reduced 12 separate forms and applications into one 1998 Hawai‘i Small Business Regulatory Flexibility Act (Act 168, 1998 SLH) requires consultation with small businesses affected by any proposed state rules and regulations Legislation (Act 164, 1998 SLH) requiring state agencies to specify maximum time period in which action must be taken on permits, applications, and licenses continues 119 120 Appendix Lingle Proposal Response Detail Zero tolerance for favoritism Addressed Since 1993, and as subsequently amended, Hawai‘i has had a rigorous competitive sealed bid and competitive sealed proposal statute for procurement (Chapter 103D, HRS) Selective privatization and performance-based budgeting Addressed Act 230, 1998 SLH, established a process for reforming government accounting and developing a privatization plan Small business preference program Addressed Parts X and XI of Chapter 103D, HRS, devoted to assisting small business in bidding for government contracts and giving preferences to Hawai‘ibased products and services Tax Reform Cash rebate for Hawai‘i businesses that increase payroll Addressed Enterprise Zone Program provides tax incentives tied to employment gains Reduce 4% GET on commercial leases to 1% Addressed Existing sublease deduction reduces the GET rate to 0.5% when fully phased in Eliminate GET on exported professional services Addressed The Cayetano administration has submitted measures to exempt all exported services from the GET, thereby treating them the same as exported goods Fight attempts to tax pensions Rejected The demographic changes facing Hawai‘i in the next 15 to 20 years require reevaluation of the tax-free treatment of pensions Appendix Lingle Proposal Return counties’ share of TAT 121 Response Detail Rejected After several years a dedicated source of funding for tourism promotion that comes largely from the visitor industry was achieved in Act 156, 1998 SLH Returning the TAT to counties would reverse this accomplishment Addressed Secured dedicated source of tourism promotion funding Economic Diversification Never take military or tourism for granted Completed Convention Center Participated in siting USS Missouri in Hawai‘i Develop health and wellness industry Addressed Led several efforts to attract facilities to Hawai‘i: Mayo Clinic, M.D Anderson, etc Encouraged development of telemedicine facilities Establish a Hawai‘i film school Not Addressed Develop technology partnerships Addressed State has been focusing on developing high-tech businesses and capabilities for some time This began to pay off with the arrival in Hawai‘i of Uniden and Square USA During Cayetano’s administration, Hawai‘i moved from being one of the lagging states in telecommunications development to being at the forefront via deregulation continues 122 Appendix Lingle Proposal Response Detail Such partnerships already exist For example, DBEDT/ Kaua‘i Economic Development Board and Pacific Missile Range Facility, and the Departments of Defense (state and federal), the Maui super computer and the Research and Technology Park operating the Pacific Disaster Center Encourage agriculture, biotechnology, and marine research Addressed Biotechnology actively promoted and developed Resolution of issues surrounding water uses important to developing diversified agriculture in leeward O‘ahu References “Asian Currencies: More Turbulence Ahead.” The Economist, 21 August 1997 “The Baht Spills Over.” The Economist, 24 May 1997 Barrus, Jeff “Long Year’s Journey into Third: How Pat Saiki Lost the Race for Governor.” Hawai‘i Business Magazine, (January 1995) Bin, Alberto, Richard Hill, and Archer Jones Desert Storm: A Forgotten War, Westport, Conn.: Praeger, 1998 Bonham, Carl, and James Mak “Private versus Public Financing of State Destination Promotion.” Journal of Travel Research, (Fall 1996) Brewbaker, Paul H., Lowell Kalapa, Randall W Roth, and Marcia Y Sakai “Government Spending: Smoke & Mirrors.” In The Price of Paradise, Lucky We Live Hawai‘i?, Edited by Randall W Roth Honolulu: Mutual Publishing, 1992 Callies, David L Regulating Paradise: Land Use Controls in Hawai‘i Honolulu: University of Hawai‘i Press, 1984 ———Preserving Paradise: Why Regulation Won’t Work Honolulu: University of Hawai‘i Press, 1994 Card, David Edward, and Alan B Krueger Myth and Measurement: The New Economics of the Minimum Wage Princeton: Princeton University Press, 1995 ———“Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply.” American Economic Review, 90(5)(December 2000): 1397–1420 Clapes, Anthony Lawrence Blue Wave Millennium: A Future for Hawai‘i Honolulu: Dark Matter Press, 2000 Crampon, L J Hawai‘i’s Visitor Industry, Its Growth and Development University of Hawai‘i, School of Travel Industry Management, 1976 Eisner, Robert How Real Is the Federal Deficit? New York: The Free Press, 1986 Grandy, Christopher “ and Maybe Government Didn’t Grow Much, After All.” Honolulu Advertiser, 29 September 1994 Hall, Robert E., and Charles I Jones “Levels of Economic Activity Across Countries.” American Economic Review, Papers and Proceedings 87:2(1997): 173–177 ———“Why Do Some Countries Produce So Much More Output per Worker than Others?” Quarterly Journal of Economics 114(1999): 83–116 Hitch, Thomas Kemper Islands in Transition: The Past, Present, and Future of Hawai‘i’s Economy Edited by Robert M Kamins Honolulu: The First Hawaiian Bank, (distributed by University of Hawai‘i Press), 1992 123 124 References “How Many Paths to Salvation?” in “Survey: East Asian Economies.” The Economist, March 1998 Johnson, Chalmers, Laura d’Andrea Tyson, and John Zysman, eds Politics and Productivity: The Real Story of Why Japan Works New York: HarperBusiness, 1989 Katz, Richard Japan, The System That Soured: The Rise and Fall of the Japanese Economic Miracle Armonk, N.Y.: M.E Sharpe, 1998 Keith, Kent M “Is Hawai‘i Being Overdeveloped?” In The Price of Paradise, Volume II Edited by Randall W Roth Honolulu: Mutual Publishing, 1993 Kennan, John “The Elusive Effects of Minimum Wages.” Journal of Economic Literature 1950–1965, 33(December 1995): 62–78 Kent, Noel J Hawai‘i: Islands Under the Influence, 2nd ed Honolulu: University of Hawai‘i Press, 1993 Krugman, Paul “The Myth of Asia’s Miracle.” Foreign Affairs, (November 1994) “The Lingle Plan.” (advertisement) Honolulu Advertiser, 16 August 1998 Lucas, Robert E Jr “On the Mechanics of Economic Development.” Journal of Monetary Economics, 22(1988): 3–42 Lynch, Russ “Cruise Ship Switching to Ship with No Casino.” Honolulu Star-Bulletin, March 2001 Mishkin, Frederic S “Global Financial Instability: Framework, Events, Issues.” Journal of Economic Perspectives, 13(4)(Fall 1999) Mok, H “The Effectiveness of Destinational Advertising: The Case of Hawai‘i’s City Magazine Campaign.” Ph.D diss University of Hawai‘i (Ma–noa), 1986 Morgan, Theodore Hawai‘i, A Century of Economic Change, 1778–1876, Cambridge, Mass.: Harvard University Press, 1948 Neumark, David, and William Wascher “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment.” American Economic Review, 90(5)(December 2000): 1362–1396 Olson, Mancur, Jr “Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor.” Journal of Economic Perspectives, 10(2)(1996): 3–24 Perez, Rob “It’s My Job: Even in a Bad Economy Laying Off Workers Is Difficult.” Honolulu Star-Bulletin, 13 October 1998 ———“HEI Exec Often Absent for Revenues Council.” Honolulu Star-Bulletin, 30 May 2001 Pratt, Richard C Hawai‘i Politics and Government With Zachary Smith Lincoln: University of Nebraska Press, 2000 Romer, Paul “The Origins of Endogenous Growth.” Journal of Economic Perspectives 8(1)(1994): 3–22 Roth, Randall W., ed The Price of Paradise: Lucky We Live Hawai‘i? Honolulu: Mutual Publishing, 1992 ———The Price of Paradise, Volume II Honolulu: Mutual Publishing, 1993 References 125 State of Hawai‘i, Department of Budget and Finance The Multi-Year Program and Financial Plan and Executive Budget Vol December 1994 ———The Executive Budget Supplemental Vol January 1996 State of Hawai‘i, Department of Business, Economic Development, and Tourism A Listing of Foreign Investments in Hawai‘i 1995 ———Foreign Investment Activities in Hawai‘i and the United States, 1954 Through 1998, by Country 1999 ———Hawai‘i Gross State Product Accounts, 1958–1985 June 1989 ———Quarterly Statistical and Economic Report Various issues ———“A Reconsideration of Council on Revenues Projections.” 21 March 1997 ———Restoring Hawai‘i’s Economic Momentum January 1996 ———The State of Hawai‘i Data Book Various years State of Hawai‘i, Proceedings of the Constitutional Convention of Hawai‘i 1978 Vol Honolulu, 1980 ———Report of the Tax Review Commission.1 December 1989 ———Report of the 1995–1997 Tax Review Commission 16 December 1996 Stevenson, Richard W “Two Economic Policy Captains Working with Different Tools; Greenspan Is Determined to Avoid Repeating the Mistake of 1990.” New York Times, January 2001 Stiglitz, Joseph “The Insider: What I Learned at the World Economic Crisis.” The New Republic, 17 April 2000 “Survey: Business in Japan.” The Economist, 25 November 1999 Tax Foundation of Hawai‘i, Government in Hawai‘i Various years “Thaied Up in Knots.” The Economist, July 1997 “Thailand’s Economy: Feeling the Heat.” The Economist, 15 May 1997 Tulip, Peter “Do Minimum Wages Raise the NAIRU?” Federal Reserve Board Working Paper, August 2000 Woodward, Bob Maestro, Greenspan’s Fed and the American Boom New York: Simon and Schuster, 2000 Yamamura, Kozo “LDP Dominance and High Land Price in Japan: A Study in Positive Political Economy.” In Land Issues in Japan: A Policy Failure? Edited by John O Haley and Kozo Yamamura Seattle: Society of Japanese Studies, 1992 Index Adler, Peter, 66 affordable housing, 19 Ala Moana Shopping Center, 15 Aloha Tower Development Corporation, 50 American Hawai‘i Cruises, 57n 10, 90 Anzai, Earl, 47 A+ after school program, 19, 45 Arakaki, Dennis, 32n 11 Asian crisis, 5, 6, 32, 59, 71–74, 75, 88, 93, 99, 106 Baker, Rosalind, 69 balanced budget See budget, balance requirement Bank of Hawai‘i, 42, 65 becalmed, 1, 82 Big Island See Hawai‘i County Board of Education, 67, 70, 116 Bonham, Carl, 53, 54 brain drain, 109 bubble, Hawai‘i, 16, 21, 23, 26, 41; Japan, 2, 3, 6, 9, 13, 21, 30, 41, 104, 105 See also economic growth in Hawai‘i budget, 17, 60; balance requirement, 35–36, 47, 48; federal, 27; Hawai‘i state, 4, 17, 35, 36, 45, 46–47, 87; positive balance, 17, 36, 37, 46, 47, 78, 105; revenue, 26, 57n 9, 59, 60; special funds, 36; surplus, 36, 78 Bush, George H W., 29–30 Buyers, J W A “Doc,” 65 California, 3, 53, 98 Card, David, 98 Cayetano, Benjamin J.: governor, ix, 4, 5, 45, 46, 54, 56, 63, 68–69, 76–82, 84, 86, 87, 91, 95–96, 99, 101, 105, 106; lieutenant governor, 45, 76, 77, 105 CIP (capital improvement project), 63 Clapes, Anthony Lawrence, 102n Clarke, Robert, 65 Clinton, Bill, 29, 46, 82, 86, 96–97, 98, 99, 102 construction See economic growth in Hawai‘i, construction consumer price index, 62, 82–84, 85n 7, 96, 99 See also inflation convention center, 81, 121 Coppa, Bruce, 65 COR (Council on Revenues), 4, 25–26, 43, 46, 57n 5, 59–63, 75, 106 cost of living, 18, 97, 108 Couch, John, 65 Council on Revenues See COR currencies, 71–72; yen, 14, 54, 73, 74 DBEDT (Department of Business, Economic Development, and Tourism), ix, x, 26, 43, 50, 52, 53, 54, 59, 61–63, 63–64, 75, 80, 92, 106, 116, 119 deficit See budget Department of Budget and Finance, 60 Department of Business, Economic Development, and Tourism See DBEDT Department of Education, 91 Department of Labor and Industrial Relations, 91 Department of Taxation, 60, 61, 64, 70 dependence See external effects diversification, 23, 30, 109–110, 121 Docket 7702, 49 Dods, Walter, 65, 68 127 128 Index earned income tax credit, 99 economic growth in Hawai‘i, 3, 6, 9, 34; in 1980s, 3, 9, 20, 23, 37, 101, 104, 108; in 1990s, 1, 3, 6, 34–35, 40, 42, 43, 52, 54, 56, 62, 74, 76, 82, 99, 101–102, 105; and construction, 16, 18, 21, 40, 41; gross state product, 9, 10, 99; jobs, 6, 40, 54, 56, 82; personal income, 6, 26, 43, 45, 54, 56, 62, 63, 82, 99; unemployment, 17, 41, 54, 56, 63, 99, 105, 112 economic policy, 23, 32, 41, 48, 49, 50, 51, 52, 54, 55, 56–57, 63–64, 65–66, 67–68, 69–71, 72, 75, 76, 79, 81–82, 84–85, 86, 94, 95, 97, 98, 101, 106–110, 112–114; asymmetry of, 2, 76, 102, 104, 107, 111–112; and economists’ role, 7; tradeoff with economic growth, 1, 6, 19, 86, 101, 104, 106, 107, 108–109 See also high-tech incentives; hotel tax credit; minimum wage Economic Revitalization Task Force See ERTF Eisner, Robert, 27 election, 5, 45, 76–85, 86, 106 electricity prices, 24 Employees Retirement System, 92 environmental protection, 1, 18, 19, 51, 104, 110 ERTF (Economic Revitalization Task Force), 4–5, 59, 63–71, 75, 79, 81, 95, 99, 105, 115–117 Ethics Commission, 92 expenditure ceiling, 24, 47–48 exports, 2, 19–20, 22n 29, 106–109; Japanese, 11, 21n 3, 30, 73–74 external effects, 2, 8n 1, 20, 23, 74, 76, 102, 104, 105, 106–107, 111 Fasi, Frank, 45, 56n Federal Coastal Zone Management Act, 51 Federal Reserve Board, 18, 26, 28, 29, 33n 17, 34, 44n 5, 74, 91 Federal Telecommunications Act of 1996, 49 film school, 80, 81, 121 First Hawaiian Bank, 42, 43, 65 Fukunaga, Carol, 69 Fuller, Lawrence, 65 gambling, 110 gasoline prices, 24, 110 general excise tax See GET general fund See budget GET (general excise tax), 17, 39, 57n 9, 60, 66, 67–69, 79, 80, 81, 89, 110, 115, 120; contracting tax base, 15–16 government, size of, 4, 38, 40, 43–44, 76, 77, 78, 105 governor See Cayetano, Benjamin J.; Waihe‘e, John Great Depression, 26, 28 Greenspan, Alan, 28, 44n 5, 91 gross state product (GSP) See economic growth in Hawai‘i Gulf War, 2–3, 6, 23–26, 36, 99, 105, 112–113 Halekulani hotel, 15 Hanbo Steel, 71 Harbors Division (Department of Transportation), 50 Hawaiian Airlines, 24 Hawai‘i Community Development Authority, 50 Hawai‘i County, 87 Hawai‘i Maritime Industry Policy Advisory Task Force, 50, 51 Hawai‘i Strategic Development Corporation, 92 Hawai‘i Tourism Authority See HTA Hawai‘i Visitors and Convention Bureau See HVB Hawai‘i Visitors Bureau See HVB health care, 18, 19, 104 Heen, Walter, 65 high-tech incentives, 5, 6, 79, 81, 86, 91–95, 101, 110, 121; tax credits, 91–95, 106, 109 Index High Technology Development Corporation, 92 Hilton Hawaiian Village, 89 Hirono, Mazie, 97 Hong Kong, 33n 18, 72, 93 Hong, Stanley, 65 Honolulu city council, 39 Honolulu Symphony, 19 hotel rooms See visitor units hotel tax credit, 5, 6, 86, 87–90, 101, 102n 4, 106, 109, 113 housing prices See property values HTA (Hawai‘i Tourism Authority), 70, 71, 92, 106, 115–116 HVB (Hawai‘i Visitors Bureau), 24, 25, 52, 53, 70 HVCB See HVB Imada Iboshi, Pearl, ix, x IMF (International Monetary Fund), 71, 72 income tax, 57n 9, 60, 62, 67–69, 79, 81, 85n 3, 89, 95, 106, 115, 120 Independence, SS, 50 Indonesia, 72, 73, 93 inflation, 18, 26, 62, 96, 97, 99 See also consumer price index Iniki, 23, 40 Inouye, Daniel, 57n 10 interest rate, 26, 28–29, 72, 74 International Monetary Fund See IMF Iraq, 23, 25 Iwase, Randy, 69 Japan, 10, 20, 30, 33n 18, 73, 112; economic policy, 11–12, 19; economy in 1980s, 2, 9, 12–13, 14; economy in 1990s, 3, 13, 23, 30–32, 54, 56, 59, 99, 105; investment from, 3, 10, 15; visitor arrivals from, see tourism, Japan Japan-America Institute of Management Science, 66 jobs See economic growth in Hawai‘i Johnson, Lawrence, 65, 68 Jones Act, 50 See also Passenger Services Act 129 Kaua‘i, 15, 23, 24, 87 Keith, Kent, 58n 13 Kelley, Richard, 65 Kennan, John, 98 Kent, Noel J., 8n Keynesian fiscal policy, 27, 36–37, 38, 39, 44n King, Charles, 65 Koki, Stan, 82, 84 Krueger, Alan, 98 Krugman, Paul, 30–31, 33n 18 Kuwait, 23 La Croix, Sumner, ix, x Laffer curve, 26 Land Use Commission See LUC land use regulation, 1, 4, 18, 48, 51–52, 79, 104, 105 Laney, Leroy, 43 Leppert, Thomas, 66 lessons of 1990s, 7, 101, 104, 108–110 Lingle, Linda, 5, 77, 79–81, 82, 84–85, 106, 119–122 Long-Term Capital Management, 74 Loui, Patricia, 65 low-income tax credit, 67, 99, 115 LUC (Land Use Commission), 18, 51, 52, 58n 13, 67, 70, 116 Lucas, Robert, 102n mainland economy, 30, 34, 56, 74, 82, 91, 96, 99; recession, 3, 6, 23, 26–30, 33n 17, 36, 105, 112–113; unemployment, 26, 30, 41, 56, 99 Mak, James, ix, x, 53, 54 Malaysia, 33n 18, 71, 72, 73, 93 Malcolm, Donald, 65 maritime regulation, 48, 50–51, 79, 105, 111 mass transit See rail transit Maui, 15, 77, 87 Mayo Clinic, 81, 121 M D Anderson, 81, 121 medical center, 113 minimum wage, 5, 6, 19, 86, 95–99, 101, 106 Mizuguchi, Norman, 65 130 Index Mortimer, Kenneth, 65 motor carrier regulation, 79, 111 NAFTA (North American Free Trade Agreement), 97 Naya, Seiji, ix, x Neumark, David, 103n 15 new growth theory, 93 New Jersey, 98 Norwegian Cruise Lines, 58n 10 O‘ahu, 87 Office of Space Industry, 19 Office of State Planning See OSP oil prices, 24 Okata, Russell, 65, 68 OSP (Office of State Planning), 52 Passenger Services Act, 50, 57n 10 See also Jones Act performance-based budgeting, 70, 77, 79, 117, 120 personal income See economic growth in Hawai‘i; expenditure ceiling pineapple, 9, 40, 51, 54, 104, 106, 109 Plotts, Diane, 65 port authority, Pratt, Dick, x, 85n Price of Paradise, 22n 15 productivity, 31 property tax, 17 property values, 17, 40 public education, 111 public goods, 89, 90, 93–94, 111 public service company tax, 89, 90 Public Utilities Commission See PUC PUC (Public Utilities Commission), 49 rail transit, 3, 39, 45, 78 rainy day fund, 37, 47, 48 Reagan, Ronald, 26, 27 reduction in force See RIF Reed, John, 65 Restoring Hawai‘i’s Economic Momentum, 54, 55 RIF (reduction in force), 4, 46, 57n 6, 78 Rodrigues, Gary, 65, 68 Romer, Paul, 102n Rose, Lou, ix Roth, Randall W., 22n 15 Roumasset, Jim, ix Route 128, 93 Saiki, Pat, 45, 56n September 11 (2001), 8, 99, 112–114 Sheraton Moana Surfrider, 15 Silicon Valley, 93 Singapore, 33n 18, 72, 93 Sofos, Stephany, 65 Souki, Joseph, 65 South Korea, 33n 18, 71, 72, 73 special funds See budget, special funds standard of living, 20, 23, 93, 94, 106–107, 109, 111 state workers See government, size of; RIF stock market, 13, 28, 30, 56, 71, 74, 93, 96 subsidies See economic policy; high-tech incentives; hotel tax credits sugar, 9, 40, 51, 54, 104, 106, 109 Taiwan, 33n 18, 72 Takahashi, Stanley, 65 Taniguchi, Barry, 65 TAT (transient accommodations tax), 67, 70, 79, 87, 88, 106, 115, 121 tax breaks, 19, 22n 27, 86, 90, 94, 104; individual credit, 17 See also hightech incentives; hotel tax credit tax cuts, 26, 27, 63, 67–70, 79, 95, 106, 115 Tax Foundation of Hawai‘i, 21n 12, 44n tax revenue See budget, revenue; COR Tax Review Commission, 81, 90, 102n technological change, 31, 50, 91, 93, 94 telecommunications, 4, 48–50, 79, 81, 105, 121 terrorism, 23–24 See also September 11 Texas, 93, 98 Thailand, 5, 33n 18, 71 See also currencies Index Thumbs Up!, 42–43, 44, 44n 9, 105 Tokujo, Roy, 65 tourism, 6, 9, 10, 23–24, 25, 40, 55, 63, 74, 82, 109, 112; eastbound, 13–14, 25, 30, 40–41, 54, 82, 88; Japan, 3, 14, 24, 74, 99; promotion, 24, 25, 48, 52–54, 58n 14, 63, 67, 81, 105, 109, 113, 115, 121; U.S mainland, 24, 99; westbound, 3, 25, 29, 30, 40, 56, 74, 88 transient accommodations tax See TAT Tulip, Peter, 103n 16 unemployment rate, 98 See also economic growth in Hawai‘i, unemployment; mainland economy, unemployment 131 United States economy See mainland economy University of Hawai‘i, 67, 70, 91, 116 visitors See tourism visitor units, 87 Volcker, Paul, 26, 28 voucher, 111 Waihe‘e, John, 36, 45, 46, 77, 78, 105 Waikiki, 87, 88, 89, 90, 116 Wailea Resort, 15 Wascher, William, 103n 15 Westin hotels, 15, 24 Wright, Chatt, 65 yen See currencies, yen ... book offers a personal view of Hawai‘i’s economic voyage during the 1990s along with some of the lessons that I hope we learned I came to Hawai‘i as an assistant professor in the Department of Economics... that the policy throws out of work the very people it intends to help These policies emerged in the last two years of the 1990s as Hawai‘i’s economy showed signs of recovery A number of economic. .. for most of the decade, and with it Hawai‘i’s economy The third shock, the bursting of the Japanese economic bubble, turned out to be longer lasting and of greater effect than the other two Hawai‘i’s