An old Hawaiian proverb states “O ka makapo wale no ka mea hapapa i ka pouli” (only the blind gropes in the darkness). As the Wall Street meltdown spreads into the Hawaiian economy, the island’s business class and Republican Governor are doing their fair share of groping. The state’s extreme reliance on the tourist industry makes it one of the most vulnerable regions to what is quickly becoming a global recession. Couple this with the free-market ideology of Governor Linda Lingle and Hawaiian residents are faced with the very real prospects of a painfully deep recession.

Historically, the islands’ business class has transitioned from one monocrop economy to another. Sugarcane production peaked in the 1970s and has registered consistent declines from a high of 1.2 million tons produced to 200,000 in 2006. Pineapple production has also contracted from 680,000 tons in 1987 to 188,000 in 2006. A collapsing plantation economy was substituted for a dependence on tourist revenue which now accounts for nearly 25% of Hawaii’s Gross Domestic Product. Tourism dependence has fastened the Hawaii's economy to the now declining fortunes of both North American and East Asian economic zones. (National Agriculture Statistics Service, 2/7/08)

Tourist sector statistics anticipated the general slowing of the American economy. When the hotel occupancy rate topped out at 83% in 2004, it seemed that success in the tourist sector would once again guide the general economy. The unemployment rate was driven to a 30-year low of 2.2% in December of 2006. The first blow to the tourist sector was delivered in early 2008 as Aoha and ATA Airlines collapsed thereby reducing the number of available flights into the islands. Calls for the Hawaiian or Federal government to intervene and nationalize the airways were rejected by free-market Governor Linda Lingle. Consequently by mid-2008, the Bank of Hawaii reported that passenger volume from North America had declined on a year-to-year basis by more than 12%. By September, as the shock from Wall Street began to filter into the global economy, Hawaiian tourism was in a freefall. Room occupancy plunged to 65%, domestic arrivals declined by 22% and the economy lost $141 million in visitor spending. Business began immediate firings, 1,100 layoffs in the tourist sector alone, which drove the unemployment rate to more than double its 2006 level at 4.5%. (Bureau of Labor Statistics; Pacific Business News, 10/27/08; Hawaii Economic Trends, Bank of Hawaii, 8/26/08)

The emerging crisis could not be isolated in the tourist industry. As in other parts of the country, the housing bubble also burst producing a crisis in foreclosures. 594 homes were foreclosed on in September, a 77% increase from August. The spillover into the rental market forced the median average rent to nearly $1,200 a month. Residents have been driven to desperate measures to secure affordable housing. In the Honolulu neighborhood of Kalihi, slumlords created an improvised housing structure made of poles and plywood down the side of mountain. 50 families paid between $500 to $700 a month to live in this cramped, unsanitary and structurally unsound structure. Resident Bernadette Yockman described her unit, "It was unsanitary. It was terrible. But we needed a roof over our heads." The unstable mass of materials eventually collapsed sliding off the mountain into a nearby streambed with ten people still inside. Kalihi is an early signal of the coming barbarity of a society in recession. (Honolulu Advertiser, 10/28/08; Pacific Business News, 10/23/08)

In the face of these steep economic declines and their related social effects, Hawaii’s first Republican governor in 40 years, Linda Lingle, has proposed a “focus on innovation.” Lingle, who was a contender for John McCain’s Vice-Presidential nomination, understands the cutting of state spending as being particularly innovative and, in a September 21, 2008 speech, pledged that “we will continue to lower business fees and not increase taxes.” She also called for “frank discussions” with island’s trade unions and a continuance of the “state’s conservative budget structure.” Instead of mapping out a plan for relief she continues to tout Forbes Magazine's upgrading of the state's bond rating. Business leaders on the island have applauded Lingle’s conviction that the private-sector can inherently “stabilize and self-correct,” and that government intervention is futile. (see especially, Linda Lingle, Keeping Focused on the Future of Hawai’i, Honolulu Advertiser, 9/23/08)

Multinationals have read these political signals clearly and seem to be treating the financial meltdown as opportunity to move on weakened local businesses and real estate. The drugstore chain Walgreens recently announced the purchase of four local pharmacies on the island of Maui and seeks to expand further Disney has continued plans to construct a large-scale mixed-use resort which will feature more than 800 units. The 21-acre oceanfront resort in Oahu represents an expansion for Disney, since this vacation housing is not supported by a nearby theme-park and brings the company into direct competition with hotel chains such as Marriott and Hilton. One final effect of multinational corporations came indirectly in the food industry. The Flamingo Restaurant had, since the 1950s, made itself a staple throughout the islands by serving up a menu of American-style “comfort food.” In October of this year, one of the last Flamingo locations, only one other remains in operation, announced its closure, buckling under rising food costs, increasing lease payments and competition from low-priced fast-food businesses. A customer marked the loss “It is like a part of your family because you grew up with these local places, these eateries, yeah?” (Pacific Business News, 10/16/08; Star Bulletin, 10/23/08)

Hawaii is not as exceptional as it may seem. Other areas in the country equally reliant on Wall Street have been devastated and there is more pain to come. Yet, the early peak of the Hawaiian economy and the sharpness of its subsequent decline offer grim lessons for other regions just entering the worst of the recession. People can expect little assistance to automatically be provided local and state governments - power concedes nothing without a demand. Politicians such as Linda Lingle will remain committed to “market-based solutions” even while residents construct third-world slum housing. Large corporations view this power vacuum as an opportunity. A financial crisis will help Corporate America to accelerate their monopolization of every aspect of life. The question at hand is how much longer working people will be willing to blindly grope in the dark. Perhaps another Hawaiian proverb might provide guidance out of this disaster, “I ku ka makemake e hele mai, hele no me ka malo`elo`e” (if the wish to come arises, walk firmly).

-Billy Wharton

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