A Must-Read on Michigan's Economic Situation
BIZZYBLOG
By TBlumer on Taxes & Government
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. |
