GUEST COMMENTARIES BY SMALL BUSINESS HAWAII MEMBERS

Sir Roger Douglas had some extraordinary advice for dismantling government, once one gets into that seat of power. His talk was delivered at the Hawaii Small Business Congress on November 10th. Douglas ought to know what he's talking about -- he was the Minister of Finance in New Zealand from 1984-88 and was primarily responsible for the reversal of the welfare state down under.

According to Douglas, New Zealand was suffering a stagnant economy as a result of legendary government-imposed subsidies and economic barriers. Inflation was 50% higher than the OECD average, indeed everything was higher than average: debt, unemployment, trade deficits, regulation, and taxes. The only thing that wasn't high was the quality of goods produced.

His new government was able to remove a great many of the controls and to make comprehensive changes that have greatly improved the quality of living. Says Douglas, you have to have good use of resources and that can only be done when the price signals are allowed to make that possible. New Zealanders have finally achieved a 6% annual growth rate with inflation, debt, unemployment, and taxes all falling to dramatic laws.

Douglas' gang also accomplished reforms toward freeing the labor, farm, and capital markets. Government itself. It is now operating in surplus.

HOW?

Douglas says that politicians avoid reform until they are absolutely forced by crisis to do something. Up to the minute of crisis they will pretend that their opponents are merely being deceitful in order to trick the populace into changing captains. But when the crisis comes, and the longer it is delayed the worse it will be, Douglas believes that politicians can be successful with the following points of advice.

POINT #1: "Avoid compromise. Whenever we compromise the problem remained." Politicians like to get a consensus before acting. Don't! Take the leadership and the consensus will build afterward. Compromise policy always comes back to haunt one.

POINT #2: "Implement reform in quantum leaps, otherwise interest groups will stop you." Speed is essential. There are always costs and benefits with any change. Since the costs come first, a slow implementation will allow the interest groups time to build resistance before people can experience the benefits. Once you have momentum, don't stop. It is difficult to shoot a moving target.

POINT #3: "Don't underestimate the ability of people to adjust." People will underestimate their own abilities, but they must be challenged. Farmers once received a third of their incomes from government and now get nothing. The result today is that the farm sector is strong and growing and no one wants to go back to the old subsidies. In fact, once the privileges are removed from one group, they work hard to help remove the privileges of others. The farmers were fiercely opposed to change until they lost their subsidies, then they became the greatest of allies in targeting the subsidies of other sectors. "If I can't have it, then nobody can!"

POINT #4: "Credibility is everything and you must be consistent to be credible." Outline your goals as far as possible and don't underrate the public. Explain everything. Above all, don't blink. The public's confidence depends on your composure and the perception that you fully believe what you are doing.

WHEN?

This may be helpful advice to some crew that suddenly finds itself in the seat of government. But what about getting into that seat in the first place? Douglas was a little more vague on that point -- probably because he isn't convinced that his point #4 to get into power in the first place is followed. Indeed, I think he believed it was an accident that his people got to power at all.

Douglas' socialist Labor Party was whisked into office following a snap election and the populace didn't really know what they were getting. "I wrote a little book beforehand called There's Got to Be a Better Way, but only about three thousand of the five thousand printed copies had been sold." Basically his party did what they had to because the New Zealand government finally ran out of credit and foreign exchange. Rich countries eventually get into trouble just as poor countries, they're simply given more rope to hang themselves.

One wonders if it is possible to get elected if you tell the voters beforehand that you will not compromise, that changes will come in quantum leaps, that the populace will have to adjust dramatically, and that you will be consistent in applying the changes to everyone. I suspect that people will vote for radical responsibility if they personally feel the severity of the crisis, but people in the U.S., unlike Eastern Europe or Mexico, are far from such a visible crisis yet. So the extent of debate in the U.S. revolves around balancing the budget after 3 or 4 more congressional elections.

Rights and Responsibility

University of Hawaii student and faculty demonstrators at the Death of Education Rally on Halloween, reportedly, shouted down and cursed the Governor. They denied him a very basic American right -- freedom to speak!

The demonstrators ran off the very guy who could help with their grievances. For a bunch of UH academics, this doesn't appear too smart! They had the public's attention and the Governor on hand -- and, they blew it.

The Governor has a helluva problem running this state. Taxes are too high. The economy is not vibrant enough. There are insufficient funds for the level of government spending that many expected. Strong government employee unions oppose trimming the bureaucracy. And students want tuition at rock bottom.

Ben Cayetano didn't create this mess. He and his party and their legislators all played a role -- and so did we! We keep putting these guys back in office.

Several basic truths about Hawaii need to be remembered:

* The people of Hawaii are burdened with one of the heaviest tax loads in the country. We don't need higher taxes.

* Just like in our family budget, we can not spend more than we have. If tax revenues aren't enough, there's only one solution: Cut government spending! Fund only the highest priority needs. Period! There are no free lunches.

* Lastly, our dilemma is a product of our politics, a one party system that has nurtured the peoples' dependency on government. That's got to change. No welfare state has survived!

Common sense and experience tell us that things won't get better without new leadership. Current political power is corrupted by its own failures and can't change.

We need new faces, new ideas, wisdom and courage.

But most of all, we have to vote for change! That's our responsibility! It's ok to vote against the power structure. Remember, that's our right.

Join the revolution.