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Good News: A Small Elite No Longer Runs Hawaii

Bad News: Nobody Does

(page 3 of 4)

Attorney Bill Meheula says Native Hawaiian and environmental groups
have pushed for laws that now give them more power over development.
Photo courtesy of Bill Meheula

Offshore ownership

Of course, local leadership is not entirely to blame. Money is power and so much of Hawaii’s money is now controlled from the Mainland and overseas. Look at the growth here of companies that are headquartered elsewhere. In the Hawaii Business Top 250, the number of companies with out-of-state headquarters has changed only modestly since 1983 (up from 26 percent to 30 percent), but those offshore companies’ share of gross revenues jumped from 19 percent to 32 percent. That’s about a 70 percent increase in outside financial control.

Even this number underestimates the power shift, since many large Hawaii corporations with out-of-state ownership did not participate in the Top 250. That includes retailers like WalMart, Costco, Macy’s and Target, and media companies like The Honolulu Advertiser. These and similar companies represent tens of thousands of employees and billions in revenue. If they were local companies, their owners would be major power brokers in the state. Instead, the companies are run by branch managers and have a ghostly, neither-here-nor-there quality.

Offshore ownership means important decisions about Hawaii’s future are often made beyond the influence of Island politicians or community leaders. Projects are planned, funding secured and assets managed from offices in New York, Los Angeles or Tokyo. Because they happen over the horizon, these business decisions are often made with little regard for their impact here.

But the dispersion of power is even more insidious. Traditionally, Hawaii’s powerful business leaders also used their influence and wealth for civic purposes. They served as directors and major funders for most of Hawaii’s nonprofits. They bankrolled and advocated for politicians and social issues. Each generation of leaders incubated its successors. In short, Hawaii’s business leaders and the power they wielded were valuable community assets. But as their power diminished or migrated offshore, it became harder for the community to tap that resource. For example, most CEOs of locally owned companies are well known to local nonprofits and serve as donors and board members. But the local managers of companies headquartered elsewhere rarely have the authority or personal wealth to serve as community leaders. The result is a more anemic civil society.

Even companies with seemingly impeccable Island pedigrees – firms with local headquarters like Alexander & Baldwin, Bank of Hawaii and Hawaiian Electric – have seen their influence move offshore. Many are publicly traded companies, including seven of the 10 largest for-profit companies in the Hawaii Business Top 250. Their managers may still have strong local commitments, but ownership is dispersed across the country, even the world. The old kamaaina families that founded these companies and, for better or worse, presided over Hawaii civil society for nearly a century, have largely divested their interests in the family businesses. There are no Baldwins left on the board of A&B; no Castles preside over David Murdock’s Castle and Cooke. These families, through trusts and charities, still exert some influence over Hawaii’s future, but their power is largely dispersed.

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

Dec 13, 2009 12:53 pm
 Posted by  JohnKSmith

Good News: A small elite no longer runs Hawaii -- Bad News: Mufi thinks he can change that

http://www.hawaiifreepress.com/main/ArticlesMain/tabid/56/articleType/ArticleView/articleId/1260/Good-News-A-small-elite-no-longer-runs-Hawaii-Bad-News-Mufi-thinks-he-can-change-that.aspx

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