The bailout crisis touches everyone. How confident are you that the U.S. government can design a bailout that will work? How confident are you that our governor can resolve the state budget crisis from the campaign trail?

The price of a coach ticket is obscene, the hotels are empty, the beaches are flush with homeless, businesses are closing, the job market's bad, foreclosures and bankruptcies are catapulting. We're in trouble. There are a million people here. What will we fall back on?

ECONOMIC CROSSROADS

This downturn is not just another same-old business cycle. It's an economic crossroads for the country and for Hawai'i. And when this cycle ends, however it ends, our Islands will be different, permanently. None of us is exempt.

We've been going steady with tourism since statehood. While the world has been advancing around us, we've focused only on tourism, and taken the easy money. In the process, we've painted ourselves into a corner and squandered other opportunities.

In Thomas Friedman's new book, "Hot, Flat and Crowded," he says America has lost its way — partly because of 9/11 and partly because of the bad habits we've developed, habits that have weakened our ability to take on big challenges. Is that also true for Hawai'i? You bet.

INFRASTRUCTURE WOES

If you hadn't noticed, our infrastructure has gone to pot, including the infrastructure that makes tourism work. Honolulu Airport is dilapidated. The way to Waikiki is gray and uninviting. The roads look lousy and the sewers need work. The parks and bathrooms are disgusting. We don't care about them, and it shows we've lost our way.

The more our infrastructure deteriorates, the more tourists are turned off. The fewer tourists that come, the less money we have to rebuild the infrastructure. To avoid a spiral into chaos, we need to invest real money in the infrastructure.

Our economic distress is already noticeable, and it's only beginning. Most tourists plan way in advance. If a tourist cancels a trip today, the visitor count is down months later, and we feel the pinch months after that. Revenues will get worse before they get better. The hard times coming will accelerate this process and further erode our marketability.

NO BACKUP ECONOMY

Diversification is a kind of economic infrastructure, a sustainable asset for a rainy day. The physical infrastructure is the metaphor. Its deterioration was predictable and could have been avoided, but we chose to ignore it. It's the same thing for a backup economy. We don't have one. We knew that — it was predictable and could have been avoided, but we chose to ignore it. And here we are, without an excuse and without a paddle.

The good news is that tech gives great diversification. It works with and complements tourism. If tech is allowed to flourish, it will generate tax revenues that can sustain tourism, revenues the tourists won't be contributing to our economy as their numbers decline. Tech is a tremendous asset that can put tourism back on track.

Tech, especially including renewable energy, is like a coiled spring, ready to do what the state needs. It's reaching critical mass, not with this governor's help but despite her long-term lack of support. Diversified agriculture isn't big enough to make a difference. And can we continue to rely on defense spending knowing that Dan Inouye won't be in office forever? Tech is the one. It's an industry that can produce huge value, jobs and state revenues, and it's our best chance for diversification.

ATTACKS ON ACT 221

Ben Cayetano saw the need for diversification and tech tax credits and he set Act 221 in motion before he left office. When she ran, Linda Lingle solemnly promised to leave Act 221 in place and get up early every day to call Mainland companies and get them to come here. She hasn't performed on either of those campaign promises. Want to hear what she said? See www.thinktechhawaii.com/2002.aspx.

Lingle has always favored the tourism economy, even after she decided to create her own new "innovation" economy. Now, after beating up on Act 221 in good times and bad since 2002, she's started down a warpath to kill the act even before its expiration in 2010. This anti-initiative is the centerpiece of her tech policy, which is more of an anti-policy.

When the governor tells us that tourism is our main industry and we've got to stand behind it, we should see this as a kind of political opiate, and we should reject it as the Emperor's New Clothes. When she says that her innovation economy, consisting mostly of well-publicized high school competitions, is more important than encouraging venture capital for tech startups and careers, we have to wonder what she's been thinking.

So, Whose fault is it?

We should feel badly for having let it get to this point. Had we planned better, had we held our government's feet to the fire, we would have a two-tiered economy today and the precipice we face would not be nearly so sharp and dangerous.

It's our own fault.

It's a bad idea to eliminate government programs in favor of increasing government salaries — that will not bring our tourists back. We need to incentivize investment in the tech enterprises that will diversify and revitalize our economy.

For that, we shouldn't be tearing down Act 221, we should be preserving and extending it. In times of prosperity, complacency is only a little imprudent. In times of recession, it's downright stupid.

Thomas Friedman is right. We're challenged about challenges. We need to break up with old habits and take this challenge on now while the world is in turmoil. That way, when the world recovers we'll be ready to compete with a full deck. We need to look at the enemy, and find out that it's us. We need to look at the future, and find out that it's now.

Jay Fidell is a business lawyer practicing in Honolulu. He has followed tech and tech policy closely and is a founder of ThinkTech Hawaii. Check out his blog at www.HonoluluAdvertiser.com/Blogs.