 And then one in May, I'm Pierre Adler, I'm a mediator, I'm a facilitator, I'm a strategic planner, I've worked in the legal world and the business world and I'm most pleased to introduce a couple of friends and colleagues, Bill Temm, who is a lawyer and a former deputy attorney general and the head of the water commission. He is a lawyer by training and practice, but he's an economist by avocation and I want to ask him how come he didn't become an economist and he said the law has better tools. So Bill, welcome, Colin Moore, another good friend and colleague from the University of Hawaii. He's a well-known political commentator, he's especially present during the election time, he's kind of like a golf color man, he's a professor of political science and director of the UH public policy program there. Today what we're going to do is focus on economics and politics and a lot of questions running. You know, let's assume we're fast with COVID in another month, two months, three months and then we're into the economy and all the issues that attend that. So what happens when the medical crisis is fast and we are into that recovery? How bad will it be? Will it be a recession, a depression, a deflation? What sits ahead for big business, for small business and for the businesses other than tourism like agriculture and defense and technology development? What does it mean for Hawaii's political leadership in that time when we know that we are going to have to do some recoveries? Is it going to be same-same? Is it going to be generate new political leadership, new energies? So that's what we're going to be talking about today and again Colin Bill, thanks so much for joining in this conversation. So let me start with Bill. Bill, what are you thinking about? What are you assuming lies ahead once the medical emergencies have passed? What sits ahead for us economically? Let's frame the question a little bit. I don't want to get lost in numbers, but let's get a few numbers out there on the table just so we can understand this. The world's economy is about $86 trillion. The U.S. economy is about $21 trillion. The global debt is about $253 trillion. That's 322 times the GDP of the world. The U.S. debt is around $19 trillion. And by comparison, China is only about $5 trillion. And the Hawaii GDP is on the order of $95, $97 billion. And real pro-capital income is around $51,000, compared to about $50,000 for the U.S. Maryland, but given the cost of living. Our workforce is about 660,000 people. And so when you hear about 250,000 to 300,000 people filing unemployment claims, you're talking about a third of the workforce already without a job. So that's sort of the framework we're starting with. I think that one of the things that the state plans so far, the House, the committee and others have looked at, is how to get back to where we were. We're not going to get back to where we were. The future is not the past. And whatever you thought was normally gone, I was encouraged people to read from works by Adam Toons, who's an economist at Columbia, and wrote a really fine book called Crash about the 2008 financial crisis. And he's just... Give us a little synopsis. Give us a quick rundown on that. Well, the concept is that the assumptions we were working with, the econometric equations we use, are based upon a series of assumptions we developed over the last 30 or 40 years, maybe the last 30 years. But like if you think about the state of Hawaii during the monarchy period, the republic period, the territorial period, and the state, we've had a series of laws and structures that were somewhat based on the past and we modified them a little bit. The reverse start is still in the post-state world view that tourism, for example, is going to keep growing. We're up to 10 million tourists a year, and it's starting to tax our resources and our infrastructure, our wastewater systems, our water systems. And the idea that that's going to keep growing is because it's useful for both the hotel industry and the line airlines, is not based on the reality of what's going on. But once the climate change is going to alter that a lot, secondly, with regard to tourism, if you think about flying someplace right now, well, if you want to get on a plane to fly for 10, 5, 10 hours, 15 hours, sit next to a bunch of people you don't know, have no idea what you're breathing, even if they're all good, it only takes one out of that circumference of maybe 6 to 8 to 10 feet of breathing that air to give you a problem. So the wealthy people can afford to fly to Hana, fly to Hana. They can go to places that are remote and they don't see a lot of people. But the people who you need to travel a lot more or who need to travel a lot more are the people who can't afford it. They just lost their 401K. They've just lost their job. The idea that they're suddenly going to decide to come to Hawaii now, whether it's from the mainland or from Asia, it's just not in the cards. So I think one of the things that happened, for example, is that the upper-end hotels, they've got the capital of those survived. Mid-lower levels have come hotels. They are not going to have the cash flow to hold on for two or three years. So I expect that those hotels will go to bankruptcy through the stress sale, for example. One thing we might do is think about whether we should stand up a public entity, issue some bonds, buy those hotels at the stress rate, because they're not going to hold, they're going to have to sell them to somebody, and maybe a public entity picks up a bunch of those for 40 cents and a dollar, and there's a bill that's the structure. You call it Peter Stavio and some other people and say, hey, you know how to do this. Renovate these hotels so they're a small apartment, keep them rental, don't allow speculation, and suddenly you start to solve some of the housing problem in a way that people live here, including the homeless as a separate set of issues. And you've now got bigger structure at 40 cents and a dollar, and you've now started to change the dynamics of the way. The second thing I think that deserves attention is that we need to think in terms of our values first, and the economics then comes along to support the value, not the other way around. We've been seduced by the financial world, and the financial world has a series of rules and concepts and actions, which first of all are crashing by every 10 years now, because they encourage behavior that may make sense if you're in a hedge fund, but don't make sense to the rest of it. So I think one of the things that we're going to have to do is rethink our financing based upon our values, and we have to look ahead. The last thing I'll say before we get on other subject is the effect of climate change on this is going to be dramatic. We are going to be a series of cascading events. Recently, in fact today, I think the CDC apparently lost funding to support one of the labs in China where they had been taking other specimens, because there are a whole lot of other things lined up behind the COVID-19. That's not the only virus out there. These are a series of problems we're going to attack our health care system, and so we're going to have to revise our health care system. We're going to have to revise our economics, and most critically, we're going to have to train people in new fields. Health can be huge. Everyone's going to have to start to rethink how they educate themselves for the rest of their life, not just a one-time job. Bill, thanks for those first thoughts. Quick question, and then I'm going to turn over to Colin and give us some speculations on what happens. Again, we're thinking beyond the immediate medical crisis, and we're looking 18 months down the road. Majority of people, we either develop herd immunity or we have antibodies floating around now in our bodies, so we'll assume that. Let's just assume that. It'll be prolonged, but at some point the medical crisis passes, and then the economic crisis is in full force, and we have to confront it. What's the function of all this mounting debt? I mean, the U.S. has a monstrous debt, and it's getting bigger, and most of the time I remember some very famous Republicans who said nobody cares about debt, but that's not true, debt has a big function. Tell us a little bit about debt, and then I'll turn to Colin. Sure. Right now the U.S. debt is 320, well, the world debt is 320 times the total GDP. The U.S. debt is a little over 106 percent of the GDP. As you know, states can't print money, so we have to every year come within our budget. In the short term, we cannot think about debt. I mean, debt is going to happen. We're going to spend what we have to do to get out of it. The longer-term consequence is going to be we're going to become like our grandparents or our parents. Having gone through the depression of World War II, we're going to start saving, there's a personal matter that's going to be critical, and people don't want to have four weeks of savings and come across a situation like this. So we're going to start saving more, going into debt less, in fact, getting out of debt as fast as we can, on a personal level, at a national level, 70 percent of our economy in services and consumption, that's going to have a cut against the growth of the economy. So we're going to have a prolonged period in which everyone's going to have to save more, everyone's going to have to be smarter about what they buy, stop buying the stuff you don't need. I mean, if this isn't a wake-up call about what you really need and what you don't need, I'm not sure what is. So the debt issue is going to hang over the whole country. We're going to have to pay it off some way, and we're going to have to have some inflation to do that in nominal terms, because that's the way you handle long-term debt. And that leads for the rest of our lives. I wouldn't really have to think this through. I mean, people are going to have to educate themselves and start getting really smart about what they need, like our grandparents and parents did in the 30s. Well, we just have to get more frugal. Colin, what is this tough economic challenge that Bill's outlined for us? And we can talk about the degrees of hurt and pain that are coming. But what's the political input? Let's assume that it's going to be hard and serious. What are the political implications? I mean, it's going to be incredibly challenging for any elected officials to manage this. I mean, there's going to be national implications, and we'll see if Donald Trump can pull off an election victory. I'm skeptical that he can. But locally, I think there's really a couple of ways this could work. And I think right now I'm not terribly encouraged. I mean, right now the response which has from political leaders still has kind of, you know, you still see a lot of the infighting and grandstanding and, you know, kind of petty jealousies that you often see in local politics without more of a larger vision about how we're going to move forward. And I agree with everything that Bill said. I mean, first, this isn't the time to focus on austerity or debt. I mean, this will take federal spending, we hope, and state to get out of this. But in terms of politics, you know, I think that you know, I think you're going to see people's frustration with our political class build and reach a breaking point. Hawaii already wasn't in a good way before this. I mean, let's keep this in mind, although we had a very low unemployment rate and by many measures the economy was prosperous, you saw our population declining, which was always a very serious statistic given, you know, the prosperity and how beautiful of a place it is to live. A lot of working families, younger families, people who really would be the engines of the economy and of our society moving forward of leaving this place to Portland and Las Vegas. I think you're likely to see that increase. I think we're going to see overall decline in our population, particularly among younger families, because like Bill has talked about, tourism isn't going to come back for a long time and it may come back to the economy. But politically what I think is going to happen is frustration you saw from nearly every public opinion poll out there. I mean, Governor E. gave you for this was one of the least popular governors in the entire country. You know, the trust in our state government is by some measures lower than the trust in the U.S. Congress, which is already incredibly low. You know, there's a lot of foreign party state and the Democratic Party here in Hawaii from a lot of voters now that may or may not be fair, but there's this perception I think that the government is not responsive or maybe it's only responsive to a large public sector unions. That's only going to grow no matter what happens, even if they find a great way to manage this crisis there's going to be increasing pressure and anger and frustration on the government. You haven't seen so much of that so far but I think there's a certain rally around the flag effect during crises like this where people are willing to give their elected leaders the benefit of the doubt. As this moves into a long-term economic crisis that's going to start collapsing unless you get some very clear leadership and direction around some of the policies that Bill talked about that. And I'm not sure our political class is really capable of that right now. Go ahead. No, no. I want to just ask you if you thought there will be a turnover in some of the generational leadership that goes on. We have a lot of millennials and others that are coming of age that there's some that are poking their heads up and they're kind of interested but we also know that political leaders tend to want to grasp and retain power ones who've been around for a long time. Do you see this economic crisis being a pivot point? Potentially it could. I mean although I thought you were going to see younger people take more leadership positions in the past or more of the younger progressives run and win office but I actually am not optimistic that's going to happen. I mean I think that would be a healthy thing to happen but I don't think it's going to happen in the short term. I think you're going to see really what tends to be kind of an incumbency racket for them to circle the wagons to protect the incumbents even more and to be even more pressure on people not to sort of upset the card at this point from the Democratic Party and so in the long term maybe we'll see some shifts but I wish I could say something different but I don't expect much dramatic change in the short term. What I do expect is increasing frustration and for younger people the very people who might challenge our existing leaders for them to choose exit rather than voice. In other words for them just to simply leave Hawaii and go somewhere else. Question for both of you then that bridges both of these discussions it has to do with the unions and their influence. We know that we are highly unionized state. We know that the unions exert tremendous influence and pressure sometimes on any kind of changes what happens to that algorithm what happens to the unions simply just dig in and try to maintain the same thing will they be malleable will they change and again that could be very influential to the economics because there will be a fight to retain jobs and the unions will be at the forefront of that. Your thoughts? Bill? Well Beth you go ahead Bill. If there's somebody in the union movement I'm sure there are a few who are shrewd about how they first started and what contracts they made as a social contract with everybody they recognize they can't just stand there and keep doing the same thing over and over again that doesn't work. I mean I was in the state for a long time and the vertical silos are very difficult to penetrate we tried some other techniques which I think would work and if people would be shrewd about doing it you could work and that would start doing things horizontally. We kept meeting for it, we kept supervisors out we got people at roughly the same level so they weren't dealing with somebody that's going to criticize them and we would organize task forces among departments but horizontally and people then could organize themselves and do things. I think the NGO sector is a great source of hope for people to go out and just start doing things and the government may be the last to come along the unions have got to recognize there's a new social contract that has to be negotiated and you can't just stand there and say this person has a job as they didn't commit a felony for six months to the rest of their life it doesn't work. I had to go through the process of firing people in the state that took me a year for each individual person and that's absurd I mean there's no organization in the world that works on a basis that no one should ever be fired it's just not human nature now there's some trade-offs you can make job training for example is one of them if you think you're getting skills you may expect a lower wage for a while if you get skills that will allow you to do things so it's got to be a trade-off here to make it nimble but the nimbleness has got to come through leadership and that's going to have to come with people who are prepared to make some changes and that's the key so one of those tensions is going to be the the ossification and because we know government is very siloed and unions are very influential in all those silos and we're going to have to figure out how to get nimble and the unions probably are going to need to bend on some of what they would normally assert during good times. Colin unions? Economics right economic picture and political picture so the unions are the most arguably the most powerful political actors in the state the public sector unions but I think they realize particularly after some of their authority after the Janus decision was eroded a little bit which has made it easier for people to opt out of those unions I think I entirely agree with what Bill is saying the unions if they want to survive because there's going to be a lot of pressure on them even more resentment than I think normal is normal from a lot of citizens of the state you're going to ask well why should this privileged class of public employees protect their benefits protect their salaries well everyone else is suffering and they're going to have to actually confront those questions it's not going to be enough to just stand on past contracts or past successes because I think the resentment level is going to increase now what I think the unions could do is try to really embrace what Bill is talking about trying to embrace new ways of structuring government and the deliver of public services and to be able to say look people in the union these public sector workers these are the best and the brightest you are getting tremendous value for your money we're the first to kind of police our own we are very open to rethinking about how government is structured how policies and procedures work if they can do that I think they'll actually be able to protect some other salaries and benefits which will be good for their members because unions are a beneficial thing but I don't think they've been very nimble they've actually been some of the least nimble groups in Hawaii and you can see that how slow our government has been to react I mean you know anyone who's worked for a public agency here can talk about how it will drive you to peers sometimes even people inside the agency are trying to get things done it's just demoralizing and I think the union should see themselves as a force for change and not just simply running some job protection program just for those who may not remember it or know it give us the one-sentence version of what Janice said the Janice decision so in short Janice says you can't run a closed shop in other words you can opt out of being a member of the union which you already could but you don't have to pay any dues at all prior to Janice you could opt out of a union and you'd get a certain percentage of the dues refunded now you can opt out and you don't have to pay any dues into the union and the union would argue that that's just creating free riders because those people are benefiting from the collective bargaining contracts good we've got a few minutes left and I would like to ask you both Alan Oshima who's a respected guy and comes out of the electric company and is a regulatory lawyer by training and very wise and smart in the ways of government and business and definitely the ways of Bishop Street what advice would you each have for him if we, if he called if he asked what would we tell him what would we say and he's got a plan he's kind of phasing and staging I'm not quite sure who he talks to who's on his revitalization group or his work group but what's the advice we give him what would we tell him the crisis will pass through it'll take 18 months maybe a little less maybe a little more what advice would you offer him Alan go ahead well the advice I'd offer him and I'd offer this to the rest of the EGA administration as well this plan that they've crafted isn't going to mean much if they can't sell it to the public and I think that they have to figure out a strategy to communicate this and the plan we sort of visionary like they're not wasting this crisis but it has to be a plan that people can buy into that the legislators can buy into and I don't think the communication around much of this crisis has been very good and you know there may be more technocratically oriented people who will say well that's not so important but it is it's essential if we're actually going to develop a coherent strategy that we're able to enact Bill what advice I'd say one if you have to go out and meet with the community and hear them and have people in your committee that are respected leaders in that community talk to cool it talk to people talk to people who've been doing things in the community in the Hawaiian community and don't try to force things through without their input and the second thing is you either grow or you pay more for remaining things so you're going to have to get outside of what's comfortable in your experience and what the people in Bishop Street understand all that they can't just repeat the same pattern they've got to find people who recognize like Ariushi did actually in a lot of ways that you've got to do something that is fundamental in people's feelings and not simply rehashing the same story going over you know like you both I've been watching Cuomo from New York in the mornings and contrasting him with our president and they're very different styles and Cuomo is quite interesting and he brings reporters in who ask smart questions and they have a dialogue he doesn't pretend to have all the answers he brings a lot of facts on the table somehow we don't seem to have that at the moment that kind of eloquence and spokesperson and I don't say that critically I'm in Governor Ege's again he's a nice guy and very collaborative in his own ways but we don't have a tough iconic leader who's grounded in facts which seems to be something that we quite need and I don't know where that will emerge hopefully that comes up in the next year or so as we start to contemplate the change in economics well we have just a couple minutes left talk Peter I'd like to suggest that people look at Roosevelt 1944 State of the Union address in the last section he outlined in the middle of the war mind you this is 1944 before Normandy a second Bill of Rights and in that he outlined things that he's pretty well today and if you read those things you realize in the height of World War II before the invasion of Europe that he was willing to lay that out and having come through the invasion I think people would be amazed at what he said it was a remarkable act of leadership and I think something like that has to be reframed today I would encourage people to look at that as a model this is a time when we really need that I've just finished reading Doris Kern's wonderful book on leadership and the poor president's crisis management and transformation and that interesting nexus that happens when we reach the right moment even though however flawed they may be there is something that is quite above and beyond in those kinds of moments any other thoughts Colin? what they wrote about didn't splinch from telling you what the problem was what Brown about it's like Churchill was but don't hide the don't hide the problem yep Colin I would agree with Bill and to follow the the New Deal example he's given I'll say one of the biggest problems we're going to confront is long-term unemployment and there's nothing worse for people for their psychological health for their physical health than to be employed I think we should look at some sort of works progress administration for the state in the short term I think that would be great that's something we can do right away those were really great great deeds that they did and some of those are lasting things projects on roads on bridges all kinds of things but it will take that cooperation also with the unions to make that happen that's exactly the new compact that needs to be forged gentlemen thank you so maybe our best therapy Bill and Colin thank you so much for this brief conversation May 14th part 2 will take place I'll have with me Don Chang who is a lawyer and a social worker but very much a thoughtful native Hawaiian who looks at a lot of different pieces of what's going on she'll talk to us about culture and Celeste Connors from Green Growth and Aloha Plus Challenge will talk to us a little bit about sustainability and its connection to security so gentlemen thank you so much for joining us and back over to Hailey and Eric at Think Tech thanks Peter