We don’t have to ask what happens when Democrats mess with the economy. We have Hawaii, frozen in COVID-19 fear, a test laboratory with the answer as clear as a stinky petri dish full of bacteria.
Hawaii exists as distinct economic microbiomes. The Hawaii most people know is beautiful Waikiki, a place that if the darn Russians had not coined the term Potemkin Village would have taken the name for itself. Waikiki is fake, joyously fake, a kind of mellow version of the Vegas swindle, as if Ikea was the designer instead of 1950s mobsters. It exists only to separate tourists from their money. The beach is indeed gorgeous (but man-made, even it is fake), the ocean delightful, and prices are kept reasonable enough that it is accessible to a large number of people, as opposed to say Tahiti or Aruba. And for the most part the only locals a visitor will encounter are there to serve them. Viva! Back to Waikiki in a moment.
A small but very important sector behind the facade of Waikiki is the wealthy, whose apartments near Honolulu but away from the spank of Waikiki go for millions and whose stand-alone homes on the Windward shore the multimillions. They live on the beaches tourists don’t visit, just barely maintaining the illusion of mandated public access to that soft white sand via thong-wide hidden paths between their walled compounds. The Obamas bought such a place, though many of the other super wealthy are from Asia. A careful look at names on tax records allows one to map the various Asian bubbles and recessions, with clusters of Japanese there, Chinese here, and Koreans nearby.
These people have nothing to do with the rest of the Hawaiian ecology except they are the apex taxpayers who fund the extensive social welfare system taking care of much of the rest of the state. Benefits packages in Democrat-ruled Hawaii are the highest in the nation, an average of $49,175 in 2013, and mostly untaxed.
For the last nine years Hawaii spent more on public welfare benefits, about 20 percent of the budget, than it did on education (technically, economists call that “shortsightedness.”) More than one out of 10 people statewide get food stamps, with about 30 percent of residents on the outer island of Molokai qualifying. That’s in addition to free meals at schools and for the elderly. Hawaii already vies with California for the nation’s highest state income tax.
The other sources of revenue are federal defense spending (not part of this trip) and tourism—I told you we’d get back to Waikiki. Visitors to Oahu may not notice all those decaying apartments outside their Uber’s window between the airport and Waikiki, the tent villages on the remote beaches or along surface roads. Few tourists diverge from the round-the-island one day rental car pilgrimage to poke deeper inland. It’s okay, tourists are not supposed to, and in fact are really not too welcome in many spots. This is where the bulk of Hawaiians live: in a cross between rural West Virginia, especially in per capita rusted cars, and one of the nicer Third World countries—deep in poverty but gaily painted.
Hawaii is nearly always one of the top states in homelessness, unemployment, food insecurity, and diabetes. The people behind those statistics live in a relationship with the ultra-rich that is like those little fish that swim inside a shark’s gills. Unseen and unminded, somewhere between symbiotic and parasitic, depending on your politics. It is precisely such relationships which define the Third World.
The thing is in many ways this economic ecosystem sort of worked pre-COVID. Because it lacks the racial tensions that burden places like New York (white people are a minority in Hawaii at 25 percent; only 2 percent of Hawaiians are black) crime is almost all intramural, people victimizing each other inside their own neighborhoods. Think of Hawaii’s poor more as herbivores who occasionally fuss over territory and New York’s as carnivores always looking for fresh killing grounds, just because. Drugs are a horrible problem off the beaten path, but in the eyes of the rich, not really much of a problem, as the drugs stay “over there.” Until recently, when Mexican imports began arriving like invasive junk fish in a cargo hold, Hawaii’s favorite weed and meth were even a local product.
COVID-19 upset this finely balanced system. Suddenly fear gave Democrats the chance to run fully amuck, with nothing to limit even the stupidest ideas. Everything was done by emergency decree, no debates, no votes, no process, no dissent.
Step one was to slam the door hard on tourism, once accounting for 24 percent of the economy, to throw tens of thousands of people out of work. In just one example, the open-ended nature of the shutdown led rental car companies to sell off 40 percent of their inventory, with shortages now gagging any revival of tourism.
So many lost their jobs. Did those workers come from the Honolulu Gold Coast, the multimillion-dollar homes of Kahala, or the beach areas near Kailua—always voted one of the world’s best? Of course not. It was the working poor who lost their jobs. But Hawaii already had in place a robust unemployment insurance system, whose payouts were made fatter by federal supplement money. None of these workers missed the benefits from their old job, as they never had any benefits.
Fast-forward through 16 months of COVID and now the Hawaiian government would like some tourists to please come back and leave some money. The government would also like workers to return to their Waikiki jobs to dance hula, serve drinks, and rub suntan lotion on all those white fish-bellied visitors. The workers are mostly saying no, and the media is awash with articles about how the jobs are unfillable and woe is us if the tourists cannot be served to fix the economic mess COVID overreaction wrought.
Elsewhere in America the jobs are so soulless and pay so little the only way to fill them is to force people by cutting unemployment benefits. No politician in Democratic-controlled Hawaii is ready for that. Those “unfillable” jobs on the islands pay about $10 to $12 an hour, and so the employer can stay exempt from paying into Obamacare and limit workers to under 20 hours a week. That’s $240 a week, before it is fully taxed and social security deducted, plus the costs of going to work chipping away at the edges.
Because the Hawaiian government still restrains trade by holding bars and restaurants to limited capacity and hours, any tipped jobs are artificially capped. Many tourists are staying home, too, as Hawaii is the only U.S. state left which still requires COVID-19 tests for entry (that program has cost taxpayers $60 million in direct costs, even as travelers are saddled with paying $120 or more per test), and it is one of only two states still requiring full indoor masking.
Hawaii has set an arbitrary nonsense threshold of 70 percent vaccinated before restrictions start to go away, meaning it could be never. Arrivals are down more than 50 percent overall, with the once-lucrative Asian trade hovering at zero. Every time a plane lands the media headlines “Tourism is back!” but they’ll be saying it for a long time. Think cargo cult.
The way 25 other state governments found to force people to work for low wages is to do away with the federal supplement portion of unemployment insurance, so people can choose between about $130 a week unemployment or $240 a week working. Hawaii, as committed to its social welfare state as any college sophomore is committed to his vision of socialist utopia, has no plans to drop the federal unemployment money. The economy is now dependent on unsustainable Federal funding, including $196 million in “Biden Bucks.”
Another “solution” to the lack of willing workers is to restrict tourism to match levels with what is open, or charge tourists higher fees to visit popular sites, because no one can imagine that would send holidaymakers to Florida instead. Running underneath all this are some of the highest gas prices in a long time and accelerating inflation, as out-of-state Democrats muddle in the national economy.
If it wants to return to a running economy, at some point the Hawaiian government has to decide if it will loosen COVID restrictions to flood in more tourists, or even give out less unemployment money (because ain’t nobody got time to raise wages). Or maybe Biden will do it for them, as he plans to end the federal supplement for all states in September to mark our second lost summer.
If not, thanks to government intervention all along the system, the media will be running labor shortage articles until someone on the Ron Burgundy Action News team figures out $400 in unemployment money is a bigger number than $240 cleaning toilets.
Peter Van Buren is the author of We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People, Hooper’s War: A Novel of WWII Japan, and Ghosts of Tom Joad: A Story of the 99 Percent.