 This is Think Tech Hawaii, Community Matters here. Aloha, I'm Marcia Joyner, and this is Community Matters. Today, we are really talking about what community matters. Talking about a subject with a person that most of us, A, know. Our illustrious Economist group. Come get ready to call you Dave. That's my old boss. Dave Brubeck. Yeah, that's my hero. Okay, this audience doesn't know who that is either. Oh, God. Anyway, he is the foremost Economist of Hawaii. Yes. And we're going to talk about what is an Economist, how that impacts our lives, and above all, tourism and the impact of tourism on our lives, on our economy. So, here we are. Thank you so much, even if you're not Dave Brubeck. You know, I saw Dave Brubeck with the Honolulu Symphony in about 1972. And that was one of the most memorable concerts I've ever been to there. So, tell us now, all about you. Tell us about who you are, how you became an Economist. What does it take to become an Economist? What is an Economist? Well, I know it sounds simplistic, but an Economist is somebody that does economics. So, then your next question is about that. You know, it's a social science that's maybe a little more quantitatively rigorous than the other social science disciplines. It's evolved that way because of advances in mathematics and the ability to gather and manipulate data that allow us to look at how the world works from a particular perspective that's different from some of the other social sciences. But I grew up here and was introduced to economics in high school and had a teacher who thought I should be doing better in her class. I'm not making that up. And so, she sent me off to UH one day to spend a day with a professor named Steve Jackstatt who started the Hawaii Council on Economic Education. And I just hung out with the guy for a day. We went out to have a meal, have a sugar meal. And so, it sparked an interest that I pursued in college, ended up going to graduate school to advance my studies and got this amazing opportunity to come back and be an economist at Bank of Hawaii more than 30 years ago. And so, I did that, you know, I had one job. Remember those days? Yes. And now I'm a consultant. Like, you know, talking about my generation, right? So, we're all consultants now and I'm still doing economics. So, it started as a curiosity and a passion and interest. I studied other social science and science disciplines. Anybody thinking about doing it seriously should never stop taking mathematics. So, just keep taking your math classes all the way to the end. But it has been a field that has been enabled in its advancement in the last century or so by computing technology and by advances in mathematics that have also helped engineering and aerospace and, you know, the hard sciences, physics and, you know, astronomy and whatnot. So, I love it. It's quantitative. It's a different way of thinking about the world. It's a perspective that isn't commonly cultivated. And so, you can be a part of a conversation where different people with different backgrounds and viewpoints are, you know, all discussing the same thing and actually be able to make a slightly different contribution to that conversation because of the way economics... Now, as opposed to other sciences who are always looking at the past, from what I have watched you and other economists, Lowell Colapa, our audience may be old enough to remember, it's always the future. Well, people's interest is always the future. But listening to economists when they talk about where the state is going, is it always the future? Well, so the dirty secret is that we spend all of our time trying to understand the past because we have all this great data to work with. But it does enable one to say something about the future, not entirely accurate, but it's a little like weather forecasting. You know, we can pretty much tell from the path of Hurricane Neal that once the hurricane... You're right, they come along the intertropical convergence and when they get to South Point Big Island, if they turn right, you pretty much know they're coming up to Oahu and Kauai, right? So that kind of thing, you see the patterns in the past that enable you to help think about what the future might look like. Well, now the big issue today with... We did a series on think-tank of candidates before the primary from all over the state, South Point, the whole... Everything in between. Everything in between, Nehal, strange places that most of us haven't heard of. And one of the things that was consistent from every island were the complaints about tourism. Yeah. Now. Because they're making too much money from it? No. No. I'm kidding. No, that... I guess if their income was better, they wouldn't... But the congestion, the people just everywhere, the lack of spending, and yet there's so many people, the highway congestions, the candidate we had who's in the area is Hanna Maui. Yeah. Hanna Maui says the traffic is so bad that if you live in Hanna, it takes you three hours to get home because of the rented cars. I was going to say, I was pretty sure it took three hours before, but no, I'm kidding. Yeah. No, I understand what you're talking about. So if we have these complaints about tourism, how do... Well, now, of course I'm old enough to remember when tourism didn't fill up and everybody wanted the tourists to come because of the money that they spent, they built high-end hotels to accommodate the tourists. And now tourists stay... They don't stay in Waikiki. So... Well, they actually do, but there's even more of them than there are rooms in Waikiki. Yeah. So tell us about the economics of tourism. Yeah. It's a big subject, but I think we can break it down into some pieces that are bite-sized. We're living in a different time in Hawaii now. This is one of the issues. A different time from the one that we grew up in. Yes. And... But the first thing you need to understand is that in a place like Hawaii, which is a small, open economy, it's small in a number of dimensions, but people just sort of geographically small. It's also isolated, but it's an open economy. So, for example, North Korea is not an open economy. Open? Open to the rest of the world. And when you're open to the rest of the world, you have an opportunity to raise your living standard by sourcing goods and services or information from the places that do a really good job and make them cheap, and in exchange, exporting what you do better than they do. So once upon a time, that was sugar and pineapple. Right. Before that, it was whales and sandalwood. But 200 years later, tourism is our principal export. There's another thing we do in Hawaii that other places don't do, which is provide strategic defensive services to the rest of the United States. But that's about half the size of tourism. It's probably the number two most important export, but we're not talking about that today. And so tourism has grown to be about 15 to 20% of gross domestic product in Hawaii, and that's a large share of any economy. But for small, open economies, it's not that unusual for one thing to be relatively large. So for example, if you grew up in a steel town in Pennsylvania or you lived in the motor city in Detroit, I'm pretty sure automobile manufacturing was 20% of Detroit's GDP. And so this issue of there, you live in kind of a one-industry town that is part of the concern that you're talking about. When you're going from scratch, when you're Roy and Estelle Kelly and you're building outrigger hotels down on Lour Street, and it's 1955, there's nothing but upside, and Gidget's coming to Hawaii, and now all of a sudden Elvis is singing Blue Hawaiian, and everybody wants to come there. Well, that's one phase of the industry's development. It's really an export, one phase of our export development. But that ended in about 1989. We sort of used up all of that upper, I mean, we harvested the low-hanging fruit by the end of the 1980s. And since then, tourism exports adjusted for inflation, taking it into account the fact that prices rise, have never quite gotten back to that level. This year we may get there. Before Hurricane Lane, I thought we were going to get there for sure. Before the volcano, okay, maybe, but we're that close. And it's an interesting time to reflect on its role because for the last 30 years, we've sort of stayed in that same, we've had that same level of real economic benefit to the state, but some of these costs that you identify being perceived in communities around the state seem to have risen, so we need to think about those separately because we're at a really important juncture in Hawaii. We have to make a decision. For the next 30 years, do we just, if for 30 more years our number one export stays the same, then somebody needs to leave. Because we can't support everybody if... Now, I remember as we had two businesses in Kelly Hotels, people came for the season. The same people came every year at exactly the same time, and they came for the season. And then in the late 80s, they started coming for the weekend. We didn't see these same people year after year after year. And then people came for the weekend because it was easy to get a flight. And that's when we saw things change. We no longer had lay stands on the corner, we no longer had fruit, fresh fruit, everything changed. Well, so everything has changed. And not all of it is entirely regrettable. I didn't say that. I just said it changed. I understand, but it's just important to remember that everything was going to change anyway. But I think the real challenge we face right now is that the industry, I'm sorry, the export, tourism in real terms hasn't really contributed any more to the economy than it has for the last 30 years. And we as a community and as people, as individuals, have an expectation that there must be something more than this or we aspire to have a better standard of living or an opportunity to spread the wealth a little more widely or whatever we're motivated by or a reason for our children not to have to move away. I mean, not that we're opposed to that, if they can go get a great job some or by all means go get a great job and then you can support me in my old age. I'm just saying we're at that point where we've sort of used up, we've harvested the low-hanging fruit, we find ourselves three decades later kind of going through the same motions, but here's the problem. Three decades ago there were six million tourists and today there are ten. Ten million versus six million, but we're making the same amount in terms of real export receipts. That doesn't sound like all that great a deal. And then when you think, as you suggested earlier, when you think about ten million people moving around the island as opposed to six, and now think about ten million people and every one of them have the app that tells you where the good secret spot is that we were trying not to tell them about, now they're everywhere. And among the other changes is that transportation technology got faster, better, faster, cheaper, so you're right. People are coming and going, they come to the weekend, but the technology also lowered the barrier to entry to start a lodging business. So now I can take my undocumented vacation rental and my path to citizenship is Airbnb, and I can rent it out every once in a while. So is that a good thing? Is that a bad thing? Oh, they're good and bad things about it. And that's what's troubled so many communities that the bad things seem more obvious than the good things sometimes, and then the question becomes how do we deal with it? So we need to take a break, and this time I'm not going to call you by Dave. We're going to get it right this time. Okay, but we will be back in one minute. Thank you. I'm Yukari Kunisue. I'm your host of New Japanese Language Show on Think Tech, Hawaii, called Konnichiwa, Hawaii, broadcasting live every other Monday at 2 p.m. Please join us where we discuss important and useful information for the Japanese language community in Hawaii. The show will be all in Japanese. Hope you can join us every other Monday at 2 p.m. Aloha. I'm Marcia Joyner, and we're back. We are talking today on Community Matters with Mr. Brubaker, and I'm not going to call him. I'm going to get it right. He is our resident economist. One of those people that seems to understand... Some things. He seems to understand how the economy works and doesn't work. The cost of tourism, what we get from tourism, what we don't get from tourism, and how our state fares with the economy of tourism, and where should we go from here? Is that a lot to ask? Boy, I'll tell you. We were talking about how tourism is our principal export, and an analogy would be if we were in Saudi Arabia, we were talking about petroleum, or Norway, or a bunch of other places, or Saskatchewan, we were talking about fracking. Most places do one thing really well, or a small list of things, and Hawaii is really small, so we do one thing really well, and we make a lot of money out of it. We make our living off of it, because people want to come here. But that has side effects. In fact, everything does. If you happen to move next to the airport, you're suddenly aware that there's a lot of noise from airplanes taking off and landing. They build a highway past your house, the same thing. A lot of what people object to in terms of side effects of tourism, or what technically are uncompensated, but unintended negative side effects. Nobody intends to disrupt your neighborhood, but there you are. There they are at the Airbnb, and boy, they're up late. Most of those things are not intended to be the main consequence of tourism as an export activity, and yet when you have 10 million people engaged in the activity, that's the potential for a lot of congestion and crowding, or evolutionary drift in popular culture that maybe the host community wasn't entirely prepared for or comfortable with. You think about how music evolves or the performing arts, because this is what makes money, but this is really what we want to do. This is what we think is authentic over here. This is what the audience is willing to pay for. So these are more subtle challenges that arise. And you see them in many tourism destinations for all kind of the same reasons. The short list is congestion and crowding, and then some kind of erosion or undermining of host culture, authenticity. Is this worldwide? Because people, like you said, are traveling. It's easier to get there. It's definitely become something that people worldwide are more aware about and are talking about more and more. In fact, there's a word now for it, overtourism, that you hear all the time. Remember when 30 years ago nobody had heard of sustainability? And now we all have heard of the word. We don't know, have no idea what it is. And by the way, my friend taught me this. Resilience is the new sustainability. But overtourism has become popularized as a kind of conceptual umbrella under which all of these problems fall. And so it's important to understand what part of those problems is attributable to tourism and is manageable, or that we can mitigate through tourism management protocols and whatnot. And what part of it might have happened anyway. I'll give you a perfect example. You may be shocked to find out, as I was when I was asked to look into it, that the number of registered motor vehicles in Hawaii per person has tripled since statehood. Yes. First time I found that out, I nearly fell on my chair. I mean, let me get this straight. The number of cars and trucks in Hawaii has grown three times as fast as the number of people. So I'm thinking there was going to be a congestion problem. Yes. Whether or not we had. And you look at how many of them are one person in the car. Well, we could go on and on about that. And then how many of them are rented cars? Now, it used to be early days of tourism. You knew it was a rented car because it said so until people started breaking into those cars. And then they stopped identifying them as rented cars. But you know all of the Ford convertibles are rented cars. All of the Red Mustang convertibles. Yes. Yes. But when you look at these things and that this is a cost of tourism is the impact it has on our daily lives. How can we manage that? So first it's important to recognize that we probably would have had congestion anyway. And part of what you're talking about is a consequence of how the structure of the industry evolved in different places. So for example, on Oahu, the structure of the industry evolved so that an urban destination, Waikiki, you know, tall buildings, I mean, you cram a lot of people, was associated with professional mass transit group and package travel services provided. Yes. So when you look at the rental car facility at Honolulu International Airport, the thing was small, you know what I mean? But on the neighbor islands, all the resorts are located as far from the airport as it seems like you could possibly get and the people traveling to those destinations are independent travelers who are more likely to drive. So you have a very different outcome on the neighbor islands where everybody has to have a car and then they have to drive all the way down to Wailea, all the way to Honolulu or Princeville from the other side of the island. And that almost guarantees congestion problems in a place which only has two lane roads and blah, blah, blah. So you'll have a different set of solutions for those types of destinations than you'll have in an urban destination that can conceive of mass transit and other mobility, inter-modality interventions to mitigate these problems. But then there's a deeper problem, which is that it's not just the tourists. We're all driving around. You're around my neighborhood. There's cars everywhere. You pick up trucks everywhere, which suggests to me as an economist that it's too cheap to drive. And so this is an important... What do you mean, too cheap? It's too cheap to drive. How much do you pay to emit atmosphere carbon into the atmosphere when you drive around in your Ford F-150? Answer, zero. So let me get this straight. I drive around in my Ford F-150. I emit 15, 17 tons of atmosphere carbon per year for nothing. How much does it cost you to drive through the polytunnel at 7 a.m. in the morning along with half of the windward walk? Answer, nothing. Well, not exactly. If you're going through the H-1, H-2 merge at 7 a.m. in the morning, the cost you're paying is the amount of time you have to wait because there's some guy in front of you just like you impose the cost on somebody behind you by being in the next place. So there are interventions. Road pricing would be one. Taxing carbon emissions or making a market for atmospheric greenhouse gas emissions where we all have to pay to emit. That could reduce congestion whether or not tourism was making a contribution which in many places it does disproportionately. But a perfect example would be Singapore where 20 years ago when I was traveling there on business I realized that they use scanners to scan you as you drive into town in the close to five zones and the closer you get to downtown the higher the toll, electronic toll that you pay. You have to buy the right to buy a car so there's a market for the right to buy a car so this is something an economist designed obviously. But if there's too much traffic and there's too much congestion the first thing an economist will say is not there's too much tourism the economist will say well it's too cheap to drive. Now we talked earlier about how apps smartphone apps have increased recreational access to residents as well as tourists to the secret spots, the trails the offshore islands at the same time that people's recreational preferences have evolved. We live more active lifestyles we're all going to run the Ironman or something we're going to hike up to Manoa Falls or something like that. Back in the day you went to the resort you played tennis and you played golf and the resorts added golf and tennis nobody went hiking. So recreational leisure time preferences lifestyle has evolved and the apps have made access have increased access and how much do you pay to hike on a trail? Nothing. So you go up there and stomp around in the mud and increase the erosion and park your pickup truck on the top of the hill and so yeah my sense is that some of these problems we're talking about some of the side effects the congestion, the environmental degradation the cultural erosion are maybe not unique to tourism and we should be thinking about solutions for them anyway which may involve pricing which may involve using technology so that you make you go on your app and you make a reservation I'm going to hike on the trail at 10 am on Saturday morning which is the time everybody else wants to be on the trail so it's more costly I mean when I go to the movies I go to my app I pick my seat I pay for my ticket and then I show up at the movie so these are things that we could do now mitigating the ones that are associated with tourism probably involves a mix of solutions that would apply to everybody on the road as well as solutions that are specific to tourism and about those I'm not as well informed but I'm convinced that there are many people professionals in the industry in particular who have the expertise to come up with, you know, to help craft for public decision makers and other solutions that will help resolve the community concerns that have arisen and without going the the one step too far which is saying you can't come here and the danger here is that we risk stepping over a line into a kind of tribalism that says, yeah, you can't come to my side of the island, bro you know, you can't remember with Super Ferry, no, we don't want you Oahu guys drive your truck over to Kauai you're like, oh, seriously? we don't want you Kauai guys coming over to Olamana Saturday then, what? so yeah, we don't want to be doing that we benefit from mobility we benefit in the United States like no other place in the world by being able to move around the country at will to seek out new civilization to seek out new world to seek out new economic opportunity to find a job that's suited to our skill set you know, to follow a romance to another place but that mobility in this country is a really important I mean, it's constitutionally ingrained in the interstate commerce clause well, what can I say? you this is an awful time to have to stop you will come back you let me do all the talking I want to talk some more so you will come back because there is a thing called the Jones Act which I think would take the whole time I've got a unique perspective on that too so you will come back and spend more time with us okay, aloha and thank you so much for being with us and we'll see you next time