It's an old concern with new immediacy — raising money to invest in tech so we can expand the economy. But where will this investment come from if we don't have the money that came in under 221?

Even now, people don't see how fragile the tourist economy is. They don't realize how vital it is for us to build our own economy.

We should try to change their minds, and in the process encourage them to become investors themselves. It's not an option, it's critical because, in fact, the patient is critical.

LOCAL INVESTMENT

Why don't we have a local investment fund for local people to invest local capital in local tech and energy companies and projects? Let's call it the People's Investment Fund.

It would be a rally point, a symbol and reminder of our commitment to a new economy, something that will be out there, 10 feet tall, to raise the pride and optimism of everyone in the state.

In the current recession, Hawai'i has become a transformation waiting to happen. I think lots of people would vote for tech by investing in it.

The People's Investment Fund would give us a chance to find new confidence. It would allow us to invest in Hawai'i's startup and middle-tier companies, showcase our talent, hold on to our young people and allow them to pursue their dreams at home. It would also give us a chance to make some money.

Act 221 was for sophisticated investors and required accountants and lawyers; the People's Investment Fund would be open to investors from Polihale to Puna. Act 221 drew investment from offshore; the People's Investment Fund would be limited to local investors, who have the most to gain and lose.

Qualified investors would be limited to local residents and businesses. They would be permitted to invest no less than, say, $1,000 to avoid the inefficiency of smaller investments, and no more than, say, $50,000 to avoid domination by big players.

Let's assume the fund would be popular, and 50,000 local residents and businesses (less than 5 percent of the population) invest in it. If they each put in $1,000, the fund would have $50 million. If some people put in more than $1,000, it could go higher still.

At first, we may want to try this without any tax benefits, without credits or deductions, since it's not likely that the Legislature will want to spend money for any tax incentive in 2010. But if the Legislature wanted to make the dividends tax free, I doubt the community would stand in the way. After all, the successful companies funded with these investments will be paying plenty of taxes.

The good news is that if the fund is set up as self-supporting, it wouldn't cost the Legislature a dime.

PROS AND CONS

Make no mistake, this would be risk capital. As with any investment, you could lose your money.

If we do succeed in attracting public investment, it will show the world, and us, that we can redirect the ship of state and heroically remodel our economy. It would be big news.

As usual, the difficulty is in the details. We'd have to satisfy applicable securities laws. State registration isn't as onerous or expensive as federal requirements, so perhaps the fund could be structured as an intrastate offering.

The People's Investment Fund is only a beginning. If it attracts investment and is well managed, it could grow in size and influence and become a model for the future. In any event, the fund should not preclude more ambitious initiatives emanating from the Fukunaga-McKelvey workgroup or the HSDC "best practices" conference set for Dec. 4.

Whatever we do, we have to bring the public into the equation. We need incentive mechanisms that not only raise money, but arouse public interest and participation. Without that, we run the risk of a disconnect between what the government is trying to do and what the people want it to do, and that's a disconnect we can't afford, either in good times or bad.