As I See It - A Sign of the Times - 9-3
Thursday, February 25, 2010


By David R. Breuhan 
Michigan boasts the longest coastline in the United States, has more than 12,000 inland lakes, hundreds of golf courses, state parks, camping facilities, snowmobile and hiking trails, wonderful towns and cities and a great human capital base. We enjoy four seasons and a temperate climate, and have very few natural disasters: no hurricanes, mudslides, earthquakes, wildfires. Our road system, power grid and access to unlimited supplies of fresh water are superb — all critical elements for business expansion. Our universities compete head to head with other institutions in the United States and attract students from all over the world.
So with all this going for our state, why has Michigan consistently ranked highest in unemployment this entire decade, seen its per capita personal income plunge to 37th among the states, and now has a falling population as outmigration increasingly outstrips the number of people moving into the state?
Some point to the decline of the Big Three automakers, but this begs the question of why dozens of new "trans-plant" auto factories have opened in other states in recent decades, but none in Michigan. That leaves just one culprit: Destructive government policies.
Economics is based on human incentives. Linear-thinking policy makers implicitly recognize this when they authorize selected tax credits for firms in the solar, batteries and the movie industries. But such efforts fail because government is incapable of reliably picking winners and losers in the economy. Thus, this state is losing the competition for job creators and entrepreneurs with the other states in the country even as it hands out ever greater numbers of selective, discriminatory subsidies and tax breaks.
All those special favors actually amount to a tax shift, one that further aggravates the manner in which the Michigan Business Tax increased taxes on some companies more than 400 percent.
Another excuse often proposed for Michigan's decline is blaming foreigners for manufacturing job losses. Yet increasingly, technology is at the root of these changes as plants become more efficient. This excuse also ignores the truth that most of Michigan's job losses are to other states, especially Right-to-work states with lower overall tax rates.
The sign says it all. We are relying on federal money rather than local imagination and creativity to foster job growth. When the stimulus money runs out, be it borrowed or printed, the unemployment will be the same and the currency will be weaker.
Michigan is a great state. A Renaissance in public policy is needed most. Businesses are not leaving the state willingly; they are being run out by unenlightened leadership that does not attract as many innovators as it should.
David R. Breuhan is a money manager based in Bloomfield Hills, Mich., and is the author of "Spread The Wealth: More Haves Fewer Have-Nots."
The author is courtesy of the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, MI.

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