Saturday, June 26, 2004

Trade isn’t the Problem

The Detroit Chamber of Commerce commissioned a report to determine the reasons that manufacturers have been leaving Michigan at such a rapid clip. They (correctly) came to the conclusion that free trade isn't the problem. Some of the reasons could be called problems, others are just progress.

For example, the report concludes that, "Increased manufacturing productivity plays a far greater role in job losses than offshore outsourcing." Just like the telephone switchboard operator has gone the way of the telegraph operator, so have many manufacturing jobs. Automation and higher productivity are displacing far more manufacturing workers than offshoring ever could. The report states, "Increased manufacturing productivity plays a far greater role in job losses than offshore outsourcing."

Michigan needs to be more attractive to international companies looking to invest in the United States. Another conclusion of the report is that, "Michigan needs to improve the business climate for manufacturers and increase foreign direct investment ('insourcing')." In other words, we need to make Michigan a state that companies want to invest in - a place where they can do business and make money at the same time.

Some of the report's suggestions follow:

  • Control health care costs
  • Control retirement costs
  • Reduce the federal tax burden
  • Reduce the cost of regulations and regulatory compliance
  • Accelerate the phase-out or replacement of the Single Business Tax

    In other words, less government is needed. Bureaucracy and regulation drive up those costs to business, forcing them to look elsewhere to do business.

    Unfortunately, the manufacturers also call for more government by asking for such things as increased support for manufacturing development programs and increasing state R&D initiatives. However, the recommendations in that area are pretty mild.

    The biggest change the chambers of commerce should push for is a lift on the cap of the number of charter schools in this state. They need an educated workforce, and that strong education starts in elementary school. If the poor state of education in Michigan is to be improved, much has to be done to provide choice for parents and implement true school accountability.
  • Friday, June 25, 2004

    GR Losing Residents

    Today the US Census Bureau released a report showing that the city of Grand Rapids is losing population. Surpised? Hardly. As we've reported earlier, the city of Grand Rapids now has the second-highest tax burden in the county. And what do we have to show for it? A nifty new convention center. Even as young people are moving downtown into the newly-renovated apartments and condos, the population continues to dip.

    What does this mean? It makes for a depressed housing market (fewer homes are needed). So those of us who live in the city who are already hit with lower home values because of poor schools and high taxes, get squeezed even more.

    What's the solution? There's still a lot of wasteful city government. Taxes should be reduced, both property and income tax, to attract businesses and homeowners. As people leave the city and property values decline, so does tax base growth, making the problem worse.

    So, why should we stay in the city, again? Someone remind me.

    Monday, June 21, 2004

    Tax us some more!

    As you may all know (or not know), the Grand Rapids Public Schools millages both passed last week and everyone's property tax will go up another $110 per year, on average. Since November of last year, taxes for residents of Grand Rapids have gone up about $206 per year. And they wonder why the middle class is fleeing the city? Add on top of that the fact that property tax affects those in lower income brackets more than the upper brackets - everyone's getting squeezed.

    Only East Grand Rapids has a higher tax burden in Kent county than residents of GR. Does this sound like a good way to promote growth? Less money will be put to productive use so that the bureaucrats can keep their jobs and developers from outside the city can suck up our tax dollars to build overpriced new school buildings. Do they really expect bricks and mortar to improve our city?

    Friday, June 11, 2004

    ACLU Sues Detroit Schools

    An interesting story came across the wire today saying that the ACLU has sued the Detroit school system for illegally searching students in a high school.

    This is one of the few areas where we applaud the ACLU over here at GR Pundit. They like to ignore some amendments to the constitution while over-interpreting others. Anyhow, back to the story...

    It appears as though a mass-search of Mumford High School in Detroit was conducted by police on Feb 18th. The search included patting down all 1800 students and forcing them into an auditorium while the search was conducted and not allowing them to leave. The term "false imprisonment" comes to mind here. Police are now corralling students into an auditorium and not letting them leave? Sometimes I wish I was an attorney just to go after things like this.

    But, as you already know, this author is not an attorney so I can't give legal advice. However, if I were a student at this high school I would refuse to be searched without a warrant. One such student did this, but was arrested for disorderly conduct. Getting in the way of the government's monopoly on force can be dangerous indeed. Challenging the authorities has historically been a bad idea.

    But, at least one student had the guts to refuse the blanket search. Who knows on what grounds this student refused, but it is a sad testament to what is being taught in schools these days. It's pretty clear the constitution is not a topic of learning any more. Every student should understand his or her right to refuse a search without a warrant.

    Before you reply with "well, you don't understand what kind of crime and drug problem those schools have...", allow me to add this: nothing was found in the search of those 1800 students.

    Friday, June 4, 2004

    "Cool" Cities?

    Amongst all the humorous banter about how government can make a city cool (an oxymoron if we've every heard one), a pollster released the results of a survey of college students this week. They were asked what makes a city cool. It wasn't nifty bars or government-funded entertainment district studies, or whoppingly expensive light rail, or gigantic convention centers - it was pretty simple: jobs. Good jobs.

    However, as bureaucrats and politicians do, they ignore the fundamental conditions that are necessary for the creation of good jobs. That solution involves fewer bureaucrats and politicians, so that one's out of the question.

    Of the respondents that are actually going to stay in Michigan after college, 12% want to move to the Detroit area and 8% want to move to the Grand Rapids area. Notice we say "area." We did a little analysis on the tax rate in Grand Rapids city and came to an interesting conclusion.

    The city of Grand Rapids currently has a property tax millage rate of 26.6998 mills, which means that for every $1,000 of taxable value of a home, the owner pays $26.69. According to the US Census Bureau, the median home value in Grand Rapids is $91,400, which means that the owner of the median home in the city pays about $1,220 in property tax per year. The GR kleptocrats love to point to the fact that Grand Rapids has one of the lowest millage rates in the county. They're right... but there's a catch.

    Grand Rapids residents have the privilege of paying a city income tax! The median household income in the city is about $37,000 and the average household is 2.57 people. For our purposes, we'll make it three people. That means the average household is paying about $451 in additional city income taxes. If we translated that into mills for a $91,400 home, it would mean an additional ten mills, and suddenly we have an effective millage rate of 37.7 mills! That's the dirty secret. Now suddenly the tax burden in Grand Rapids is higher than in the Northview, Forest Hills, Caledonia, Kentwood areas... and the list goes on. About the only municipality with a tax rate higher than in the city is for residents of East Grand Rapids who are also in the East Grand Rapids schools district.

    So, back to cool cities. Instead of suggesting that taxes be lowered to attract those who are affected most by high taxes - the middle and upper classes - they want to spend more taxes on determining what's cool. Bureaucrats are much better at determining what's cool than the average folks who spend their money they way they want to. Sure.