How do you un-scale an economy? The first economics class I ever took that actually had an effect on me was all about US economic history and the factors at play that helped scale it up to where we are today. The main argument was that through a combination of institutions (laws, organizations, culture, etc.) and factor endowments (the natural resources available to the country), an economy can grow rapidly or slowly and that’s why we see different countries developing at different paces. The goal of scaling up your economy is a better life for all. Humans have unlimited wants, but there’s only so much we can get. With a larger, more efficient economy, we can get all sorts of things we previously couldn’t. We can get lower mortality rates, larger food supply, better technology, and really push the boundaries of what’s possible. But what if we wanted to reverse development?
This question first came to mind when I first learned about the Hawaiian Sovereignty Movement. My initial understanding of this movement was that its goal is to return Hawaii to a more agrarian state so native Hawaiians don’t get priced out of living on their own islands anymore. Reportedly this movement gained traction during the pandemic as more of the population realized that they were getting along just fine without the revenue that tourism brought in every year. While preserving the land for the sovereign people is a noble goal, it poses a very intriguing economic problem. How do you go about un-developing a state?
Let’s begin by listing some basic assumptions. First of all, let’s assume that competition is driving the cost of living prices higher for everyone living on the islands. Cost of living is very high in Hawaii, but the wages don’t really seem to be keeping up with it. This is most likely due to the fact that local buyers are competing with foreign buyers from all over the world (I mean foreign as in anyone who does not live on the islands. This can include other citizens of the USA). In the housing market, for example, local buyers have to beat their neighbors' offers as well as the offers of every real estate mogul and corporation from the mainland, and that is a very hard fight to win. So assuming competition is driving prices higher, we’ll need to figure out institutions that will restrict the market to keep prices within reach for local buyers.
Next, we assume that economic growth is not the goal here. That’s a pretty tough one to come to terms with as per my very first paragraph, humans have unlimited wants and scarcity requires economies to scale up in order to satisfy those wants. But let’s separate from that fundamental assumption of economics and assume that preserving the land is the goal - not economic growth. As assumption 2.5, we’ll assume that this is the collective mindset of all Hawaiians. In other words, we’re going to assume that on average, most Hawaiians are part of the “satisfied” crowd instead of the “consumption” crowd.
Our next assumption is that some of the development has to stay. If we didn’t care about maintaining any standard of living, we could simply say we’re going to remove all modern advances from the islands and leave only the most basic of tools behind, but that would reintroduce all sorts of problems. No forms of modern transportation or infrastructure would mean emergency medical aid would be severely inhibited in who it could reach - there were even hospitals around to help. Some form of modern life has to stay. If not, some entrepreneur will reintroduce them again anyway. That’s the way markets work.
Finally, let’s just assume that the safe de-scaling of an economy is even possible. While we do have examples in the real world of countries whose economies go from booming to not-booming, this tends to happen in a dramatic crash which leaves the populus worse off. We want to do this in the least disruptive way possible.
Our assumptions so far are: competition is driving the cost of living up, we’re more interested in preserving the land than we are with growing the economy, we do need to keep some aspects of modern life, and we’re assuming that this kind of safe back-tracking is possible.
After gathering a bit more understanding about the Hawaii Sovereignty Movement and what it is they are trying to accomplish, we may have a bit more clear a direction forward. According to an interview with Dr. Jonathan Kay Kamakawiwoʻole Osorio, the dean of the Hawaiʻinuiākea School of Hawaiian Knowledge, there are a couple different factions within the movement. Dr. Kamakawiwo’ole Osorio sides with the one that calls for decolonization as defined by the UN. Through this method, they are entitled to a vote on whether or not they want to stay part of the USA, and (assuming they vote in favor of seceding) the United States would be required to provide money to help facilitate the transition. The pros of this method would be that it gives Hawaiian policy makers time and resources to make their new country as they see fit. It doesn’t look like this requires a full return to the agrarian lifestyle I previously thought it did, but it instead enables Hawaiians to protect/use the land as they see fit.
Let’s use that as our solution, then! How does seceding from the US and using the restitution money provided help solve the problems we listed in our assumptions?
First we’ll tackle the competition problem. With money from the US federal government, the new Hawaiian government would have the means to buy up land and businesses from off-shore parties. This would remove several competitors and reconsolidate it all under one group’s control. We know the opposite of competition is monopoly, so reducing the number of firms is consistent reasoning with a broader understanding of economics. Additionally, laws could be passed that would exclude foreign parties from repurchasing land so that the resources are all kept entirely within Hawaiian hands. This takes us right into solving the land conservation problem. After buying up land and businesses from off-shore parties, the new Hawaiian government could turn right back around and sell it to local firms that focus on conservation and sustainability instead of resource exploitation and gain. The government would need to carefully decide what to sell and what to keep, as we want to maintain a certain level of modernity.
So how do you un-scale an economy? Well, as best as I’m able to figure out so far, you need to first utilize the existing market system to concentrate all land and resources into the few hands that share a common goal, then exclude other parties from intervening further. Once that’s done, resources can be bought and sold within the community of people whose main goal is to take care of what they have. It would take a lot to shift an entire economy from one of limitless consumption to one of satisfaction, but if the populus of Hawaii already shares the same mindset of satisfaction, then excluding those who strive for consumption is the way to go. If that mindset shift can/has not occur(ed), then the existing system will continue on as normal.
https://www.afar.com/magazine/understanding-the-hawaii-sovereignty-movement
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