Hawaii comes in first — at being the worst state for business

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

For the first time in the 20 years that national news outlet CNBC has been ranking America’s top states for business, Hawaii came in dead last.

In particular, the Aloha State finished 50th in terms of infrastructure and the cost-of-doing-business, and landed among the worst for its workforce, business friendliness, access to capital, cost of living and technology and innovation.

Hawaii usually ranks in the top five for “quality of life,” which helps prop up its overall placement, but came in sixth this year.

Earlier this week, a local reporter with KITV’s “Island News” asked me what I thought of our state’s ranking.

“Reality hits,” I said. “It's just not an easy place to do business.”

The reality is that Hawaii’s business climate is getting worse, not better.

And nothing encapsulates the absurdity of our misguided approach to supporting businesses quite like the recent controversy over Honolulu’s Office of Economic Revitalization.

As I wrote earlier this year, the city’s auditor took a hard look at the 6-year-old OER and concluded that it has essentially been an ineffective boondoggle. The audit showed that the office ran through hundreds of millions of dollars, accomplished very little, and operated with a notable lack of transparency.

The Honolulu City Council had the only rational and fiscally sound response: It drastically cut the agency’s funding.

Those who disagreed with the Council’s move lobbied Mayor Rick Blangiardi to veto that line in the approved budget, which he did in an attempt to restore the $2.9 million he requested.

Thankfully, enough Council members voted to override the mayor’s veto — and I am pleased to report that one of my colleagues at the Grassroot Institute, Ted Kefalas, was among the few individuals present at that hearing urging them to do so. He helped Grassroot achieve yet another win for economic freedom.

The Council, too, deserves praise for sticking to its guns. On top of everything else, many of the functions performed by the Office of Economic Recovery were redundant and can continue to be carried out by other agencies.

If we want to improve our economy, wasteful government programs are not the answer.

The government is actually notoriously bad at helping businesses. In fact, a study published just last month found that government-funded business incentive programs don’t do much to create jobs, but they are effective at creating lobbyists.

Hawaii’s ranking as the worst state in the nation to do business is precisely the result of the kind of thinking that fueled support for the OER — the original purpose of which, mind you, was simply to manage the distribution of federal stimulus funds during the COVID-19 crisis.

It is always tempting to think that a new agency or program can solve our problems. But the fix for a bad business climate isn’t more bureaucracy, it's less.

Reducing taxes and regulations will help revitalize our economy, if only our lawmakers would embrace those policies more often. Best of all, they wouldn't cost taxpayers a dime.

E hana kākou! (Lets work together!)