HAWAII’S ANTI-BUSINESS ENVIRONMENT

Source: rootedinreason.com
July 19, 2010, 12:28 pm

By Kelsey Winther

The Hawaii Reporter published an article this morning by software developer David Thielen explaining why high-tech companies do not locate in Hawaii. The benefits of having a high-tech industry are obvious, yet Thielen claims that companies are discouraged from moving here by a number of factors from educational to infrastructure problems. He says that Hawaii’s failing public schools prevent high-tech workers from wanting to relocate their families, the lack of “world class universities” prevents a supply of interns and recently graduated employees, and that there is need for strong support and service companies. Each of the factors that Mr. Thielen mentions has some validity. However, I would argue that these are not the most significant reasons.

To an increasing degree, employees in the high-tech sector are young and without families, making the public school point almost non-applicable. The weakness of local universities does not prohibit companies from being fueled with qualified workers. Any student or graduate of Berkeley, Stanford, or a similar school could seek an internship or employment at a high-tech company in Hawaii. Finally, infrastructure must be developed with the demand for it. If high-tech companies desired to come to Hawaii, they would invest in the needed service companies (like web designers or accountants). Support industries would develop with the demand created by high-tech companies.

So then, what is the main reason why high-tech companies are not moving to Hawaii? The question can be answered by a recent report by CNBC which ranked Hawaii as the 48th best state for business. High cost of living and low capital availability are both caused and added to by heavy taxes and regulation. As the state continues to engage in fiscally irresponsible activities and accrue more debt, more capital is sucked from the private sector.

David Thielen’s assessment was in no way incorrect, only incomplete, ignoring the most significant aspect of business deterrence. State intervention into the private sector and the resulting reduction in capital is the key reason why high-tech companies (along with others) are choosing not to locate in Hawaii.