Why the Nation Needs to Keep Its Eye on Michigan

Michigan: Our Mistakes Coming to a State Near You
The ongoing debacle with the Big 3 is front and center in national news. It highlights the massive failure, not only of the domestic auto industry, but of the State of Michigan to properly diversify their economic plans. You might think that Congress' plan to reject the bailout (for now) means you can avert your eyes from Michigan and move on, but Michigan's woes could prove to haunt the entire nation for the next four years.

Why the mysterious premonitions? Oh, I don't know. Maybe it's because at one point recently, Michigan's Governor Granholm was rumored to be a candidate for energy secretary in Obama's new cabinet. Or maybe it's because Granholm was Joe Biden's personal debate coach. Or maybe it's because Obama is incredibly impressed by what Granholm has done for our state in the last few years. From his website:

"Obama and Biden will create an Advanced Manufacturing Fund to identify and invest in the most compelling advanced manufacturing strategies. The Fund will have peer-review selection and award process based on the Michigan 21st Century Jobs Fund, a state-level initiative that has awarded over $125 million to Michigan businesses with the most innovative proposals to create new products and new jobs in the state. "

I'm not sure if any of you have been to Michigan lately, but it pretty much blows. (Don't get me wrong, there are some kick-ass things about Metro Detroit and Michigan, which have to do with the people and our natural resources, but our economic policies don't make the list!)

Detroit was awarded America's Most Miserable City earlier this year, for-sale signs line the streets, and my fair neighborhood has record-breaking levels of foreclosed homes for auction. Empty buildings stand where thriving businesses once operated. Home invasions and arson cases are rising dramatically: a break-in occurred near my mother's home, one elderly woman was badly beaten (warning: graphic photo in link), and another elderly woman was shot and set on fire by a junkie.

But all that's just to set the mood. Let's now discuss how well Granholm's plans have panned out, so we can get a taste of what Obama has in store!

Michigan: Blowing Away Business
Anyone who lives in Michigan knows Granholm is famous for saying, "In 5 years, you're going to be blown away" in her 2006 State of the State address. She meant to impress, but today it reads like a threat. We have been blown away - by her failures.

Governor Granholm has proven she is determined to make our state an inhospitable business environment, with the exception of playing political favorites. Her 2008 proposal slashed taxes for the auto-industry (good), while shifting that tax burden, plus extra, onto non-manufacturing businesses (huh?). The net result? Driving business out of Michigan, and making sure more don't come in, unless they receive a hefty government subsidy. Her logic is baffling. Why would the benefits of tax cuts apply to automotive, but not to other businesses? Couldn't be because the unions provide a huge voting block for her personal gain, could it?

Let's pretend her plan was a good one. Even then it was doomed to backfire because encouraging advanced manufacturing and keeping the UAW happy are two distinctly different, and opposing activities. The UAW has bit Michigan automotive in the ass in more ways than I care to enumerate here, but keeping the Big 3 uncompetitive in manufacturing is one of their foibles. State-of-the-art plants cannot be built by domestic auto because of stifling union controls that ban supplier integration.

For example, Ford would have loved to bring Michigan one of the most advanced and efficient manufacturing facilities in the world, but it was not allowed to do so. So, it had no other choice but to send its capital to Brazil, where the workforce is well-treated, well-paid, and gaining valuable industry experience. (Hat tip: Rosy Villa)

Michigan: We Don't Accept Donations, But We Will Accept Your Taxes!
In 2003, Granholm turned away a $200 million private donation from local philanthropist Robert Thompson. Even larger than the $125 million Michigan 21st Century Jobs Fund, it could have made a great impact on our economy. So much for the greedy rich man in the top hat and monacle, eh?

Thompson offered the funds for the creation of 15 new charter schools in Detroit. However, because of political backlash from the school board, the Teachers Union, and their stifling contracts, it was denied by the Governor. She missed the opportunity to revolutionize the Detroit school system and serve as a model for the nation with no-strings-attached money! Insanity.

But don't worry, Granholm left Detroit's students in what she thought were the most capable hands. It's comforting to know the latest road to success from the Detroit Public School Board (who have run up massive deficits and are on the verge of their second state takeover in 7 years) is to ask the federal government for a $500 million bailout.

Michigan: Where the Losers Win and It's Caught on Film
It just gets better. In 2005, Granholm accepted a $9 million bid for state land from Toyota, when local real estate developers DPG York, LLC had bid $25 million. In offering state land for less than fair market value, she violated Public Act 671. To suit the lowest bidder and ensure political favoritism, Granholm pursued new legislation, Public Act 326, legalizing her decision after the fact.

Her latest fiscal debacle is offering cash incentives to woo the movie industry (which is not known for its advanced manufacturing techniques, profitability, or stability) to Michigan. Her effective 42% subsidy provides movie-makers with ample cash rebates funded by taxpayer dollars resulting in scant net gain to Michigan's GDP. The only benefit I've reaped from her poor decision-making is knowing Clint Eastwood got a portion of my tax money to shoot a scene in the park down the street from my home. I only hope I can score some free movie tickets for my donation.

Rumblings that Granholm will join the new President's administration should deeply worry the nation.