Monday, April 25, 2005

Granholm Complaining

Governor Granholm is complaining that her "Jobs Today" and "Jobs Tomorrow" plans aren't sailing through the legislature, as she'd like them to.

Gee, let's think about that. Her plan is to lower the Single Business Tax for the industries that are fleeing Michigan such as manufacturers. So far so good. Ah, but she wants it to be revenue neutral. Therefore the tax is also raised on the industries in Michigan that are actually creating jobs, such as the insurance and financial services industries. Wow, great idea. Tax the growth industries in Michigan more.

In addition, her plan to sell bonds so that bureaucrats can invest the money in startup businesses isn't going so quick. Again, as though bureaucrats are better than the market at investing. She's trying to borrow the state into prosperity.

And a third aspect is for the state to offer low or no interest loans to school districts so that they can build new buildings, again, with the hope that this will increase construction jobs. State borrowing to create jobs doesn't help the economy. It hurts in the long term.

Our governor (and much of the legislature) need to go back to Economics 101. They should start by reading Frederic Bastiat's That Which is Seen and That Which is Not Seen.

Friday, April 22, 2005

Michigan’s Economy Ranks Dead Last

A recent report issued jointly by the National Governor's Association and the National Conference of State Legislatures (hardly partisan hack groups) this month said that Michigan's economy ranks dead last in the nation.

Some highlights are:

  • Personal income grew in Michigan by 3.29 percent between March 2003 and March 2004, placing Michigan second to last among the states. The national average was 5.15 percent.

  • Michigan was last among the states in employment growth between January 2004 and January 2005, showing a -0.3 percent decline, compared to a national average of 1.4 percent growth.

  • Michigan tied for 43rd in population growth between 2003 and 2004, registering 0.3 percent growth. The national average was 1 percent.

  • In the mean time, the governor and legislature continue to push useless "economic development" initiatives to give some businesses tax breaks (and tax increases to others). The Mackinac Center just released a report showing that the Michigan Economic Development Corporation has been completely ineffective over the last ten years at creating jobs.

    Time to face reality and fix Michigan's economy with real reforms:

  • Drastically reduce or eliminate the Single Business Tax

  • Make Michigan a Right to Work state, allowing workers to refuse to join a union if they don't want to be a member

  • Lift the cap on charter schools to create a dynamic market for education
  • Wednesday, April 20, 2005

    Casino Closer to Opening

    The federal government is in the process of approving the Gun Lake band of Pottawatomi Indians to open a "class 2" casino in the Wayland area. A class two casino can only host gaming such as bingo and a few other electronic games. Once that is opened, the tribe can pursue a class three license with the state to allow everything else you normally see in a casino.

    Of course, the powers that be are up in arms. A local group, mostly consisting of business folks in Grand Rapids, calling themselves "23 is Enough," referring to the 23 casinos in Michigan, is fighting the decision.

    But that very name is the picture of hubris. 23 is enough? Says who? Certainly not the marketplace. This type of rhetoric is coming from the business community. We've never seen them have a campaign against taxes, saying "40% is enough." Perhaps they should concern themselves less with a job-creating enterprise than with the job-killing enterprise of excessive taxation.

    We look forward to another local casino. The more the better.

    Tuesday, April 19, 2005

    GRPS Sticking to Its Guns

    Yesterday the Grand Rapids Public Schools board voted in favor of outsourcing all school bus services. The move is estimated to save $2 million per year for the school district and $18 million over five years. Hundreds of protestors showed up, according to the Press, to try and convince the board not to outsource.

    How can the district save so much by outsourcing? One reason is that the state's retirement pension system is extremely expensive for school districts to pay in to. In addition, school districts have no choice - all employees are covered by the pension system whether they want it or not. The pension system is very similar to Social Security in that it's another pay as you go system that will only get more expensive and unsustainable as time goes by. It's a "defined benefit" plan rather than a "defined contribution" plan. It's the same type of system that the legacy manufacturers of America are getting clobbered with, again, because of union demands.

    Second, the teacher's union runs its own health care plan, called MESSA, which is estimated to be 20% over market cost. What does the union do with that extra money? They apparently skim it into their own coffers.

    Basically, the school district can outsource those jobs to companies that will pay the bus drivers the same wage, but save millions on the extremely expensive benefits that the state and union mandate. These folks will still get benefits, just not benefits that subsidize the union.

    Unfortunately, these folks are the victims of their own union. They demanded more and more until the market simply couldn't sustain them any more. Now they have priced themselves so far ahead of what the average worker gets in terms of benefits, that the school district can save $2 million a year by outsourcing only 225 jobs. That's over $9,000 per yer, per job, that the school district will save. And that's just for part-time bus drivers.

    We applaud the board to sticking to its guns and ensuring the school district spends its money wisely. Hopefully they won't stop at just bussing.