A Must-Read on Michigan’s Economic Situation
Too bad this Saturday op-ed by David Littman of the Mackinac Center for Public Policy in the Wall Street Journal was behind the pay wall, because what it said about Michigan’s economy needs to be read by all.
First, Littman describes the pervasive nature of the state’s economic problems (bolds are mine):
Conditions suggest that it’s more than a problem with the auto industry. Most recently the state has also experienced losses of headquarters and jobs in financial and pharmaceutical sectors, e.g., Comerica Bank and Pfizer. Even lumber yards, motels and other low-profile employers are hurting.
Underpinning this downturn are a few economic myths that must be dispelled. Perhaps the most pernicious myth is that Michigan is caught in a cyclical recession.
While chief economist of Comerica Bank, I tracked monthly index movements of the state economy over a 50-year period. What I found in the data is disconcerting: Michigan is not in a cyclical decline. Quite the contrary. Vehicle sales in the U.S. have averaged 17 million units over the past five years. Our decline has been a trend, a steady downward slide.
Net out-migration from Michigan, according to the nation’s largest household moving company, has been occurring for 30 consecutive years. As of early 2007, the net out-migration of firms and population is so profound that some rental car companies in the state no longer allow one-way rentals. Their fear is they won’t find anyone to return the vehicles.
Then he notes that governor’s prescriptions for a turnaround will only make things worse:
Her recent call to impose a 2% tax on most services is a nonstarter. But she’s also calling for a new tax on the estates of wealthy residents, giving those with the means an even more urgent reason to leave. Michigan’s slide will continue.
Littman advocates abolishing the state’s income tax (an idea that needs to be imitated in Ohio), passing right-to-work legislation, and getting a grip on out-of-control public employee retirement entitlements. Those are good starts; he has more suggestions in a radio interview here.
What won’t work is more of what Governor Granholm is pushing.
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UPDATE: Beyond parody — “An iPod for Every Kid?” The Detroit News reacts (HT Large Bill).
[…] So we’re nervous about Michigan and we see our own stagnant economy, net migration of folks out of state as a slightly fuzzy version of what’s happening in MI. And what’s happening there? Bizzyblog hits the latest from David Littman of the Mackinac Center. Conditions suggest that it’s more than a problem with the auto industry. Most recently the state has also experienced losses of headquarters and jobs in financial and pharmaceutical sectors, e.g., Comerica Bank and Pfizer. Even lumber yards, motels and other low-profile employers are hurting. […]
Pingback by NixGuy.com » A Prescription For Michigan — April 10, 2007 @ 7:53 am
Please join Americans for Prosperity, the Michigan Taxpayers Alliance, the Wayne County Taxpayers Association, the Kalamazoo Taxpayers Association, and others for the Michigan Taxpayer Tea Party on the steps of our state Capitol on Wednesday, April 18, at 11:00 a.m.
We need you to come and join the voices of the hard-working men and women of our state in saying ‘enough is enough!’
At every step we’ve heard from small-business people (including contractors, realtors, restaurant owners, and others) who say Governor Granholm’s tax plan would do their businesses in. Our state government spending continues to increase every single year, while our own incomes are going down and jobs are bleeding out of our state on a daily basis.
April 18 is taxpayers’ day to come to the Michigan Capitol and let Governor Granholm and our state lawmakers know we will not stand for job-killing tax increases. Our goal is to fill the Capitol lawn with men and women like us — men and women who are working hard to support our families while Michigan weathers this economic storm.
Bring a tea bag to give to Governor Granholm. Bring your children to watch democracy in action. Bring as many friends as you can to ensure taxpayers’ voices will be heard in Lansing on April 18!
If you have any questions about the rally, please contact Rose Bogaert with the Wayne County Taxpayers Association at wctaxpayers@comcast.net.
Thank you!
Comment by Rose Bogaert — April 10, 2007 @ 12:50 pm
Michigan is a basket case, and it will be quite some time before it gets better.
I recently heard the current Chief Economist at Comerica, Dr. Dana Johnson, make the same comments as David Littman.
Comerica is moving it’s headquarters out of Detroit, not closing all its branches. This is significant because it is moving those high level jobs to Texas. A state with no income tax and the opportunity to engage in serious enterpreneurial activity. Exactly what you would do if you wanted to attract high end employees.
The news from Michigan is actually worse. You’ll find some more info here http://otherclub.blogspot.com/2007/04/circumspice.html House Speaker Andy Dillon’s comments are particularly egregious. We have Jennifer Granholm and a bi-partisan collection of idiots reprising Smoot-Hawley.
Comment by hershblogger — April 10, 2007 @ 6:50 pm