Thursday, March 24, 2005

Michigan Unemployment Rises (Again)

Today we see that Michigan's unemployment rate again increased. February's rate is 7.5%, up from 7.1% in January.

Meanwhile, the legislature and governor wrestle with a $400 million budget deficit for next year.

The news just isn't getting any better for Michigan. What is to be done to help this state? It seems we're heading toward returning to the days of double-digit unemployment. That's not the Michigan I want to live in.

And the news over the horizon is even worse. Ford and GM, two of the state's largest employers, are steadily losing market share. GM just announced that their 2005 results will be far lower than previously expected.

Our state is reaping the results of heavy unionization. GM and Ford have such enormous unfunded pension and health care liabilities that there is a lot of doubt that they'll be able to pay the bills in the next few years. This article quotes the former CEO of American Airlines saying that if GM doesn't fix its pension and health care problem fast, "it cannot continue." What would happen to Michigan if there is a GM or Ford bankruptcy?

Radical changes are needed for this state to begin to prosper again. Here are our radical recommendations:

  • Make Michigan a right to work state - end mandatory union membership in union shops. Free workers to negotiate their own wages and benefits. The UAWs of the world are so out of touch with reality that they are actually harming their members in the long term.
  • Cut taxes and state government dramatically. Don't just make Michigan even with other states in tax and regulation levels, make Michigan irresistible to businesses by slashing the red tape and cutting taxes deeply.
  • Lift the cap on charter schools. Let the private sector compete to improve education. Don't prop up dying monopoly school systems that are badly failing.

    Then, just maybe, we'll begin to see a turnaround in Michigan. Unfortunately, there is no easy, short-term fix. Just long term solutions to a structural problem in Michigan are what will work.
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