Wednesday, December 3, 2008

Surprise! GM Wants Even More Money!

The Detroit Three (formerly the Big Three) groveled in front of Congress last month, asking for $25 billion to keep the doors open. Congress rebuffed them and sent them home with instructions to return with "a plan." What do they come up with? A request that now clocks in at $34 billion. It has grown by a whopping 37% in just a matter of a couple of weeks! GM says that they need at least $4 billion immediately, before the end of 2008. It looks like they are burning through cash at a rate of around $4 billion a month now, obviously accelerating since their last quarterly report. Just last month alone, GM's auto sales were down 41%.

I'd like to relate a story that was told to GR Pundit today by someone who is a project manager for a large computer manufacturing company.

This person, we'll call him Ken, was doing a project at one of the big three automakers recently. We'll call this automaker DA (for Detroit Automaker). Ken explained how he was attempting to help DA with its PC deployment process. Here's how it worked: The computers would arrive. FedEx is not a unionized company, so the FedEx employees were not allowed to unload the computers. One unionized employee would move the PCs from the dock to the staging area. Another union employee would move them from the staging area to the storage area. Another union employee would move the computer from the storage area to the actual workstation of the person to use the PC. Each step would require a change order and a $50 charge from the union, plus the labor cost of each union employee. No one from Ken's company was allowed to move the computers themselves, only the unionized employees could do so. Ken said the entire project was such a nightmare that they basically gave up trying to improve DA's processes. Impossible due to UAW work rules.

This is why the UAW is desperate to prevent bankruptcy. It would ruin their "work rules" scam.

Perhaps this is one reason why 61% of Americans oppose the Detroit Three bailout.

Friday, November 14, 2008

Pigs Feeding at the Trough of Government Largesse

It was only a matter of time. Now that the Congress and US Treasury have decided that it is legitimate for the Federal Government to spend $700 billion "bailing out" various banks and financial companies, the line is getting longer of those holding their hands out for free money from heaven.

First, we were told that if the Federal Government didn't spend $700 billion (a figure pulled out of thin air) to buy "toxic assets" from failing banks, that the world would end. Then, this week, we are told that they don't plan to buy any toxic assets at all. Instead, everyone and their brother is holding their hands out to get more free money from the government.

General Motors is in dire straights as they burn through $2 billion in cash each month because they are such a colossal failure of a company. But hey, who cares, let's lend them another $10 billion or more to keep the doors open, even though they already have a negative net worth of over $59 billion. Just because they've lost $75 billion over the last few years and they can't pay the bills as it stands, borrowing more money from taxpayers, when no bank in the universe would do so, is a sure way to fix things, right?

But wait, don't look twice. Now cities are asking for bailout money. That's right, the City of Detroit is asking for $10 billion to shore up their budget. That's in addition to Philadelphia, Phoenix, and Atlanta. More to come, just stay tuned.

Next, our own City of Grand Rapids admitted this week that their financial manager, apparently having the intelligence level of a monkey with a typewriter, has lost $225 million of pension funds since May. Nowhere in the discussion was mention of firing the idiot who has lost that much. No, instead they discussed how to dump an additional $10 million into the fund next year. Oh, and they promise they won't raise taxes to do so (wink wink).

Folks, this is the worst financial crisis since the Great Depression and the moronity in Washington (and Lansing) seems to be at an all time peak. These bailouts do not come without consequence. Bad companies need to fail. Cities need to get their financial decks in order. Unsustainable pyramid-scheme defined-benefit pension plans are destined to fail. It's just that no one wants to face the facts now, they prefer to defer those problems to future ill-informed politicians.

Well, the cows have come home, and we have yet to see any real intelligence shining through the political class. No, instead we have the Michigan House of Representatives ramming through a law to ban wine retailers from shipping to Michigan residents. Ah yes, priorities.

It looks like the national debt is going to increase by $2 trillion or more next year as the US Treasury issues debt like there's no tomorrow. The next problem is that foreign countries will slow their buying of US debt. We're already seeing a decrease in demand for treasury issues. Countries like China and Japan are more interested in spending money on their own people than buying US Treasury securities. The stuff is coming even closer to intersecting with the fan.

Folks, this problem was created by government in the first place. We have a federal reserve that prints money out of thin air, encourages malinvestment through artifically low interest rates, and encourages leverage through fractional reserve banking. This house of cards is beginning to fall. Government can not spend its way out of this. In fact, government is making things worse.

Stop the bailouts. Stop the futile "stimulus" discussions. Reduce taxes and spending dramatically. Phase out the Federal Reserve, Fannie Mae, Freddie Mac, and all the pseudo-government entities that created this mess in the first place. It will be painful and rotten, but it will clear out the cancer of perverse government incentives in the market and allow our economy to heal itself.

But, frankly, there is no hope of any of that happening. That's why we ain't seen nothin yet.

Wednesday, November 12, 2008

Bailout GM Now!

We must bail out Ford, General Motors, and Chrysler because they are far too large to fail. This short video does an excellent job of explaining how it will all work:

Friday, November 7, 2008

Have a Few Extra Dollars? Time to Short GM Stock.

Ford and General Motors release their earnings numbers this week. The important bits of information to look at are the cash flows. GM and Ford are rapidly burning through their cash reserves. GM Burned through $6.9 billion in cash during the third quarter of 2008 (that doesn't include October, when things reallly got bad). GM now sat with $16.2 billion at the end of September. Ford is fairing slightly better, but not much.

GM Is warning that they may run out of money to pay the bills by the end of this year. Essentially, they will be insolvent. Check out a few important stories on the subject:

What's going to happen? Most likely, GM will file for bankruptcy some time this year. Of course, they are angling for another $50 billion in low-interest loans from the governmet (in addition to the $25 billion already approved). This is the wrong thing to do. Why? Because GM and Ford (and Chrysler) failed to keep themselves solvent. They made bad decisions and they should pay for them.

A GM bankruptcy will not put the company out of business. It will allow them to reorganize, shed unprofitable lines of business and contracts, and emerge more fiscally sound. You don't see Toyota with its hands out for government money. They have run their business well. Even though they are affected by the current economic mess, they can survive it because of past good decisions.

These bailouts just prolong the pain. One or more US car companies will fail, it's just a matter of when. What happens to these loans if/when these companies goes under? The taxpayers get stuck with more bad debt. The national debt is already over $10.5 trillion (almost three times higher than when George Bush took office). The government can't (and shouldn't) try to fix everything. Let the market work.

Monday, November 3, 2008

Election Day Guesses

Nope, no predictions. Just guesses.

President - Obama 53% - McCain 44%

Proposal 1 - 60% Yes, 40% No

Proposal 2 - 52% No - 48% Yes

We didn't write an article on Proposal 2 because it just seems pointless. Moral arguments aside, why amend the state constitution to allow one specific form of scientific research? Several other states have already done so and there's got to be only so much embryonic stem cell research to go around. It seems extremely doubtful that any significant new "business" would choose to reside in Michigan if this passes. Prop 2 seems like a poor reason to amend the constitution. Many other forms of stem cell research continue to show promise. Why single out only embryonic research?

Friday, October 31, 2008

Michigan Proposal 1: Medical Marijuana: YES!

Next week, the Michigan ballot will contain an initiative piece of legislation that asks voters to approve a new state law to de-criminalize the medical use of marijuana. It is important to note that this is not a constitutional amendment, as many ballot proposals are. Approval of this proposal would put a new law on the books that would prevent state and local authorities from enforcing anti-marijuana laws against anyone who has a debilitating disease and is approved by the sate. Here is the preamble to the proposed law:
Sec. 2. The people of the State of Michigan find and declare that:

(a) Modern medical research, including as found by the National Academy of Sciences' Institute of Medicine in a March 1999 report, has discovered beneficial uses for marihuana in treating or alleviating the pain, nausea, and other symptoms associated with a variety of debilitating medical conditions.

(b) Data from the Federal Bureau of Investigation Uniform Crime Reports and the Compendium of Federal Justice Statistics show that approximately 99 out of every 100 marihuana arrests in the United States are made under state law, rather than under federal law. Consequently, changing state law will have the practical effect of protecting from arrest the vast majority of seriously ill people who have a medical need to use marihuana.

(c) Although federal law currently prohibits any use of marihuana except under very limited circumstances, states are not required to enforce federal law or prosecute people for engaging in activities prohibited by federal law. The laws of Alaska, California, Colorado, Hawaii, Maine, Montana, Nevada, New Mexico, Oregon, Vermont, Rhode Island, and Washington do not penalize the medical use and cultivation of marihuana. Michigan joins in this effort for the health and welfare of its citizens.

You can read the entire text of the proposal here.

Of course, the people opposing this law are invoking families and public safety, with names such as Citizens Protecting Michigan's Kids and No Pot Shops. This is the same sort of jibberish that the anti-gun people pulled back in 2001 when they tried to repeal Michigan's concealed carry laws.

Does anyone remember the group called People Who Care About Kids? This was the group that opposed the CCW laws. Thanks to the Internet Archive, you can take a look at their web site by clicking here. It's humorous to read their dire predictions:
We need 151,356 signatures by March 27, otherwise the lead will start flying on July 1 [2001].


One of out 50 residents carry a gun on them at all times. In the shopping malls, movie theaters, parks or even in courtrooms. You're at your kid's soccer game, and a bunch of people around could be packing heat.


Violent crimes like murder, rape and robbery will skyrocket.

Well, of course, none of these dire predictions came to fruition. In fact, as the state police are required to report each year, concealed carry licensees are in fact much less likely to commit a crime than a non-licensee.

The same sort of, well, just plain stupid arguments are used against medical marijuana in Michigan. The opponents fret about "pot shops" and the harm to children. I suppose the opponents prefer drug houses and dealers. But that is beside the point, because this law requires state approval to get the marijuana.

This is a simple matter of freedom and common sense. Marijuana is harmless. No one has ever overdosed on marijuana. If someone is ill and can't keep food down because of chemo, cancer, or AIDS, then why not let them help themselves in this way? The process would be regulated by the state and drug dealers would not be involved.

It's time to continue expanding personal freedom in Michigan by approving 2008's Proposal 1!

Thursday, October 30, 2008

History Will Frown on West Michigan Bigots

An article in Monday's Grand Rapids Press outlined the hundreds of thousands of dollars being donated by local doctrinaires to oppose gay marriage proposals in Florida and California. According to the article, Rich DeVos has donated $100,000 to support a ban on gay marriage that will appear on the ballot in Florida. Elsa Prince Broekhuizen, Betsy DeVos' mother, has donated $450,000 to support a gay marriage ban in California. It's sad to see so much zealous bigotry in one family.

This is why, in our opinion, the Republican Party is on the wane. They thrive on anti-gay bigotry. This site has been accused of having a conservative bias, but that couldn't be farther from the truth. We are solidly libertarian. We believe that government should stay out of the marriage issue in general. However, since government does recognize marriages and confers special rights on those who are married, we believe that marriage should be inclusive. Gay people shouldn't have any different right to get married to the person they love than a non-gay person. Unless and until the Republican Party gets on board with equal rights for gays, they will have a hard time gaining majorities again in the United States. It's just a simple case of freedom and civil rights.

The point of this article is not the Republican Party, however. We wanted to point out how many people (including the donors mentioned above) use the Bible to support their bigotry. We believe that the DeVoses of the world will fade into history and be remembered as those people who opposed equal rights. The Bible has been used many times in the past to justify bigotry and hatred.

Thanks to the fantastic Google Books service, we can search old books for the people who debated in favor of slavery and against women's suffrage. We look at these arguments today as curiosities, but at the time, they were extremely influential.

For instance, one book from 1852, called Bible Defense of Slavery lays out a biblical justification of slavery. This book purportedly traces the origin of the "negro race" to Ham, Noah's son, who Noah cursed for looking at him naked while he was sleeping in a drunken stupor (See pages 90-91).

Another, from 1861, called Slavery Sanctioned by the Bible, examines both Old Testament and New Testament arguments in favor of slavery. For instance:
As a starting point I cite the Apostle's code of reciprocal duties for masters and slaves as we may fairly call it which is found in chapter sixth of Ephesians:

5 Servants be obedient to them that are your masters according to the flesh with fear and trembling in singleness of your heart as unto Christ

6 No with eye service as men pleasers but as servants of Christ doing the will of God from the heart

7 With good will doing service as to the Lord and not to men

8 Knowing that whatsoever good thing any man doeth the same shall he receive of the Lord whether he be bond or free

9 And ye masters do the same things unto them forbearing threatening knowing that your master also is in heaven neither is there any respect of person with him.

An 1869 book, called Women's Suffrage - a Reform Against Nature, makes the argument that women should not be able to vote because, basically, it's against nature (sound familiar?):
As "the head of every man is Christ," so "the head of the woman is the man;" as "he is the image and reflected glory of God," so "the woman is the glory of the man." "For the man is not of the woman, but the woman of the man. Neither was the man created for the woman, but the woman for the man." "The woman is to learn in silence with all subjection not to teach nor to usurp authority over the man but to be in silence."

What's the point of this demonstration? the Bible has been and is used to justify all sorts of cruel, oppressive, and bigoted behavior. But what these people forget is probably one of the most important passages of the New Testament - "Therefore all things whatsoever ye would that men should do to you," Jesus said, "do ye even so to them…"

It's easy to dismiss those who argue against equal treatment, but there are real consqeuences. We've seen a recent videotaped beating of a student who was speaking out against bigotry. Students are bullied and verbally and physically abused because they are gay. Suicide is the number one cause of death amongst gay teens. Yeah, right. It's a choice.

Friday, October 3, 2008

Socialism in America

Pelosi blubbers with glee over the bailout bill

Republics are created by the virtue, public spirit, and intelligence of the citizens. They fall, when the wise are banished from the public councils, because they dare to be honest, and the profligate are rewarded, because they flatter the people, in order to betray them.

-Joseph Story, Commentaries on the Constitution, 1833

If ye love wealth better than liberty and the tranquility of servitude better than the animated contest of freedom, then crouch down and lick the hands which feed you. May your chains sit lightly on you and may posterity forget that ye were our countrymen…go from us in peace, we ask not your counsel or your arms.

- Samuel Adams

Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone.

The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.

-Frederic Bastiat

Thursday, October 2, 2008

Where Does the $700 Billion Bailout Size Come From?

Here's an example of the absolute recklessness of the current bailout mess. An article from Forbes ought to make all Americans go berserk on the members of Congress that are voting in favor of this thing:
In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Tuesday. "We just wanted to choose a really large number."

Are you &*#%@%^ kidding me?!?!


Giant Socialist Bailout: Levin YES, Stabenow NO

The giant socialist bailout bill passed the Senate yesterday 75 to 24. Senator Carl Levin voted YES, Senator Debbie Stabenow noted NO.

Call Senator Stabenow and say thanks! 202-224-4822. Email her here.

Call/write Senator Levin now and tell him that Josef Stalin would be proud! (202) 224-6221 (Fax him at 202-224-1388) Email him here.

Call the US House's switchboard at (202) 224-3121 and ask to speak with your Congressperson's office. Tell him or her to vote no on this monstrosity.

Josef Stalin would be proud of the US Senate today. Hopefully it's not too late to stop the statist/socialist cabal in Washington that is governing by fear and ignorance.

Further reading:

Monday, September 29, 2008

Bailout Reader

(Note: this post is taken from the Ludwig von Mises Institute's economic blog)

The events taking place in the financial market offer an illustration of the soundness of the Austrian theory of money, banking, and credit cycles, and is your source not only for analysis of these events but also the economic theory that helps explain what is happening and what to do about it. There are many thousands of articles available, and also the full text of thousands of books as well as journal articles. It is impossible to draw attention to the full range of literature one can use to understand the crisis.

However, below we offer a brief look into the topics most discussed in these times, with extended treatments of each in the sidebar. also offers both a blog and a community forum for reading and discussing them all.

It's never been more important to spread a sound view of money and banking, not only as a protection against the fallacies of "stabilization" and "reflation" but also as way to see what kind of reforms are essential now.

Fannie Mae and Freddie Mac

The Housing Bubble

Inflationary Finance

Community Reinvestment Act

Short Selling

The Austrian Theory of the Business Cycle

Who Predicted This?

What To Do

Books to Distribute

Who Voted For/Against the Bailout

  • Democrats -- Conyers, N; Dingell, Y; Kildee, Y; Kilpatrick, N; Levin, Y; Stupak, N.

  • Republicans -- Camp, Y; Ehlers, Y; Hoekstra, N; Knollenberg, N; McCotter, N; Miller, N; Rogers, N; Upton, Y; Walberg, N.

Wednesday, September 24, 2008

Failure of Capitalism, or Failure of Government?

We here at GR Pundit have made it a general policy to comment and report on local issues only. However, the extent and scope of the current market crisis requires that we break that policy.

What is the origin of the current economic crisis? Is it capitalism run amok? No. It is government run amok. As with so many economic failures, this crisis has its roots in two government programs - Fannie Mae and Freddie Mac. We will say this categorically: this economic crisis would not be happening if those two entities had not been created by (and implicitly guaranteed by) the federal government. This is not a failure of capitalism, it is a failure of government. This is what happens when the government interferes with the market.

Read a New York Times article from 1999 to understand exactly what started this mess.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''


Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

A few more resources on this gigantic destructive government failure:

Just remember - it is government (the Federal Reserve) that created the Great Depression, it is government (FDR's "New Deal") that extended the Depression to last over 15 years, it is government that created this credit crisis. The government needs to get out of the way and allow the market to correct. Fannie Mae and Freedie Mac need to be liquidated and terminated. It is only when true market mechanisms are allowed to work will we come out of this crisis. "A bailout in every pot" will only prolong the pain.

Saturday, August 23, 2008

Exclusive: Grand Rapids Teacher's Union Planning an Illegal Strike

Exclusive to Grand Rapids Pundit:

GR Pundit has come in to possession of a letter being sent to teachers and substitute teachers, preparing them for an impending illegal strike against Grand Rapids Public Schools. View the GREA Strike Letter. The letter, signed by Grand Rapids Education Association president Paul Helder on August 5th, laments the fact that Grand Rapids Public Schools teachers have worked without a contract for a year, and that no other teachers in Kent County are facing this "difficulty." They claim that their contract demands are "minimal" and that there is "no end in sight" for the end to the negotiations. They further warn that the school district "...may impose its will on us, taking away rights and benefits..."

What is the difference between what GRPS is proposing and that the GREA is demanding, with the threat of strike?

According to the Grand Rapids Press, the union is demanding that teachers receive a raise of between 6.85% and 9.05%, with a retroactive increase of an additional 2% for the prior school year. In addition, the union is fighting a health insurance contribution increase of $40 a month. In contrast, the the school district is proposing raises of between 5.1% and 7.31%. The district wants teachers to pay $90 per month for health insurance, up from $50 a month now.

The union's proposals would add $8.5 million to the school district's budget, despite the fact that the district is losing around 850 students a year.

As we can see, the school district's offer is imposing "difficulty" on teachers. When's the last time you received a minimum 5.1% annual increase, no matter how well (or poorly) you did your job?

The letter is directed at those who would potentially cross the picket lines, mostly substitute teachers. It asks the letter's recipient to "honor our picket lines," and to "reject a call to substitute, if a strike occurs." In other words, the union is clearly planning an illegal teacher strike, and asking substitute teachers to participate in their illegal activity.

Finally, the letter states that the recipient will "receive a telephone call from a GREA member..." No doubt, this phone call will consist of a "friendly" reminder of the consequences of breaking a picket line.

The state's attorney general should investigate this matter immediately. The union is obviously spending money, received from taxpayers, to prepare to break state laws.

The union is doing everything it can to drive even more students and parents out of Grand Rapids. When will the popular media and the politicians stand up and end this fiasco? The lack of a decent education available from GRPS, along with an increasingly militant union, only makes our economic situation worse.

Monday, July 28, 2008

Grand Rapids: The Next Stop for the Light Rail Boondoggle Train

This weekend's Grand Rapids Press had an article about the ballooning cost of a potential "light rail" system that is in the works for Grand Rapids. The project hasn't actually even begun, but already the potential cost has jumped from $69 million to $79 million - in the span of one year. The Rapid is ready to spend $800,000 of taxpayer dollars just on studying the concept.

What would this light rail system look like? The plan is to have one rail route, from the Sixth Street/Monroe intersection, south on Monroe Avenue, to the Rapid bus depot. That's a grand total of about 3 miles. $24.8 million per mile.

The plan also calls for up to 2,900 passengers per day. The $1.30 cost of riding the streetcar would cover only about one third of the annual $1.75 million cost to continue operations.

Never mind the rediculous re-engineering that Monroe would need to build this thing (seven lanes wide?), why can't buses accomplish the same thing? We're no fan of the inefficient fixed route bus system that The Rapid employs, but good God, anything would be better than the joke that this light rail system would be.

Of course, the magical benefits of this system are touted, such as $5 in development growth for each $1 spent on the system. Where do they get that number? They often point to Portland's light rail system, which supposedly spurred so much development. But did it really? A recent report from the Cato Institute looks at just that question. A couple of telling excerpts:
[W]hen Portland’s first light-rail line opened for business in 1986, the city zoned much of the land near light-rail stations for high-density development. Ten years later, city planner Mike Saba sadly reported to the Portland city council, “we have not seen any of the kind of development—of a mid-rise, higher-density, mixed use, mixed-income type—that we would’ve liked to have seen” along the light-rail line.


Over the next decade, the city experienced a boom in high-density developments, virtually all of which were [taxpayer] subsidized.


Measured by value, the vast majority of the $1 billion of investments supposedly stimulated by the [Portland] light rail consists of government buildings, some built in response to executive orders by President Clinton and Oregon’s Governor Barbara Roberts that all federal and state agencies should relocate to downtown areas.44 One government-funded building supposedly stimulated by the lightrail line was a $5 million downtown parking garage. If light-rail works so well, why is a new garage needed and in what sense did light rail stimulate the construction of that garage?

Laughably, The Rapid's web site has on its FAQ page the following item:

  • Why not change the current bus system instead of spending new money on streetcars?

  • Streetcars have several desirable features for downtown areas. First, with metro dwellers and workers nationwide demonstrating a strong preference for rail transit, streetcar systems draw more riders than equivalent bus systems.

  • Second, streetcars have no vehicle emissions and therefore help improve air quality.

  • Third, while streetcars have a higher initial investment, their operating cost is typically lower than equivalent bus systems. Higher operating cost for buses is attributed to escalating diesel costs, and shorter service life. The average life span for streetcars is 25 to 40 years and 12 years for buses. This trade-off will be part of the feasibility study evaluation. Is it worth a higher initial cost to provide increased benefits for many years to come?

First, the idea that more people like streetcars because they are cooler than buses has got to be the worst possible reason to spend $79 million. Second, the idea that streetcars don't pollute is false, since they use electricity, and since much of our nation's electricity is generated by coal power plants (or natural gas), there certainly are emissions. And third, as we've demonstrated previously, the Rapid loses about $5.82 per passenger when they ride a traditional bus. The Rapid will lose approximately $2.60 per passenger when they use the light rail, and that doesn't include the capital costs. When you factor in a 30 year usable life for the initial capital costs, the loss per passenger rises to about $8.39 each. Where do you think that subsidy comes from? You guessed it... us, the taxpayers! That's hardly more efficient than a traditional bus.

What are these people thinking? Can they see the forest from the trees?

You can read more excellent points debunking the value of the Portland light rail system at the Antiplanner web site.

Friday, July 25, 2008

Charter School News for Grand Rapids and Detroit

There's some good news in regards to charter schools to report for both Grand Rapids and Detroit.

For some quick background - state laws define a "first class" school district, which only Detroit Public Schools qualifies for. This special status allows Detroit's school system some privileges in terms of funding, but also the state school code limits the types of charter schools that can operate in Detroit only to those chartered by public universities. As our readers may know, the number of university-chartered schools is capped at 150 statewide. However, a few other entities are able to issue charters as well, and that includes community colleges, intermediate school districts, and regular school districts. One of the privileges of "first class" status that Detroit Public Schools has enjoyed is a prohibition on any schools chartered by community colleges, intermediate school districts, and school districts. However, this is about to change.

The definition, in the school code, of "first class" district is any district that has over 100,000 students. However, because of the exodus of students out of DPS, the enrollment is expected to drop below 100,000 this year, meaning that community colleges, such as Bay Mills, will be able to finally open more charters in Detroit.

There was some confusion with the budget that was just passed for schools. At first it looked like the budget changed the definition of "first class" district in all state laws. The budget did change the definition of "first class" district to any district over 60,000 students, but that change in the law only applies to the School Aid Act, and not the school code. According to the Michigan Association of Public School Academies:
The newly defined "first class school district", at over 60,000 students, effects only those provisions of the school aid act.  At the same time, first class district provisions within the school code -- including chartering options for community colleges -- remains defined as a district with 100,000 students.  Also, a provision that Detroit Public Schools can stop other traditional school districts from operation within the city limits was stripped from the bill.

This means that, finally, more charter schools can operate in Detroit (soon). More students will finally have a choice, other than being stuck in perhaps the worst school district in the nation.

In another bit of good news, Grand Rapids is getting its first general-education charter high school.  Grand River Prepatory High School will open up this fall. It will be operated by National Heritage Academies and is an extension of Excel Charter Academy. Excel's eight grade students will get enrollment preference, but the enrollment process is open to all ninth-grade level students. The charter school detractors always harp on organizations like National Heritage for not operating high schools, but that's about to change. Hopefully this will not be the only charter high school in Grand Rapids. The parents of GR deserve to have more choices. Well, they are already choosing - to leave Grand Rapids. Maybe more charter schools in the City would retain young couples with school-age children. Yes yes, I know, the new High School isn't inside the city limits of Grand Rapids, but it's a good start.

Friday, July 18, 2008

Destroy Michigan Government Now!

As our readers probably already know, a state ballot proposal has been submitted to "reform" Michigan government. It has the title of the "Reform Michigan Government Now" proposal. It may or make not make it to the ballot, depending on how many signatures are validated. The interesting thing about this proposal is that it crept up out of nowhere and it's rather mysterious. No one's talking about who is backing it financially, and campaign finance reports aren't available yet. However, it has become clear who the proposal will benefit.

The proposal, which consists of 11 pages of fine print, sprinkles in a few items that most people support with items that start to look a little too targeted. For instance, the proposal would "strengthen the ban on illegal aliens’ ability to register and vote," "require post-election audits of election procedures," and "enact anti-fraud measures to protect the integrity of Michigan’s election process." Those sound like reasonable reforms, and they are probably added into the proposal to make it easier to support. However, when one starts looking at the other legislative and judicial reforms, one sees that governmental representation is dramatically decreased. For instance, the Senate would be reduced from 38 members (1 Senator per 260,000 Michigan residents) to 28 members (1 Senator per 353,000 Michigan residents). In addition, it would decrease the state House from 110 members to 82. This would further strengthen the political party machinery grip on state elective positions, making it even harder for newcomers and non-politicians to get elected. Not to mention that this is a clearly anti-democratic step in the wrong direction. We would prefer to see an increase in both houses of the legislature, so that there are fewer citizens per representative, making for a truly citizen-oriented elected body.

Next comes the axe drop on the Judicial branch. The proposal would reduce the number of Supreme Court justices from seven to five and the number of appeals court judges from 28 to 21. As though the courts weren't clogged enough already, this would make it even harder to work a case up through the appeals process.

If this all seems strangely targeted... well, it is. The Michigan Democratic party is solidly behind this measure and we're finding out more about the motivations behind this measure every day.

What sort of motivations? This week, the Mackinac Center, a free-market think tank in Midland, uncovered the plan on the United Auto Workers' web site. They had posted a PowerPoint presentation explaining the proposal and its effects. Check out the link for the full report, but here are some highlights:

Essentially, this is a proposal to ensure total Democratic Party control over the legislative, executive, and judicial branches of state government. We here at Grand Rapids Pundit want to be quick to point out that we are not Republicans. We do not think that this would be a good idea if it worked in the Republicans' favor. Instead, we prefer split government, where no one party controls all the branches of government. This proposal is a thinly-veiled attempt by the Democratic Party of Michigan, in heavy collaboration with the United Auto Workers, to fundamentally change the structure of state government in their favor.

Hopefully voters will do their research before voting on this proposal, should it make it to the ballot.

Tuesday, July 15, 2008

More Jobs NOT Coming to Michigan

Today Volkswagen announced that they will not be building a new car factory in Michigan. They opted to Tennessee instead. According to the article:

Chattanooga won the site because of incentives and tax breaks offered by Tennessee and better infrastructure, the person said. Alabama was a close second while Michigan had been out of the running for some time, according to the person. (Emphasis ours)

Does this surprise anyone? With Michigan's newly-formed business tax mess, the strangling environment of unionization, and a dismally-performing public school system, no wonder jobs, people, and businesses are not choosing Michigan. When will Lansing wake up and tackle the real economic challenges in this state?

Just for fun, we compared state population growth in the United States with state tax burden levels. The top 20 states that had the highest population growth between 2000 and 2007 are below:

State            Percent  Rank

Nevada 28.41 1
Arizona 23.5 2
Utah 18.5 3
Georgia 16.6 4
Idaho 15.9 5
Texas 14.6 6
Florida 14.2 7
Colorado 13.0 8
North Carolina 12.6 9
Delaware 10.4 10
South Carolina 9.9 11
Washington 9.7 12
Oregon 9.5 13
Alaska 9.0 14
Virginia 8.9 15
New Mexico 8.3 16
Tennessee 8.2 17
California 7.9 18
New Hampshire 6.5 19
Montana 6.2 20

Below are the 20 states with the lowest tax burdens:

State           Tax Burden    Rank
Alaska 6.58% 1
New Hampshire 8.01% 2
Tennessee 8.49% 3
Delaware 8.75% 4
Alabama 8.83% 5
Oklahoma 9.00% 6
South Dakota 9.02% 7
Texas 9.30% 8
Wyoming 9.46% 9
Montana 9.74% 10
New Mexico 9.80% 11
North Dakota 9.90% 12
Florida 9.96% 13
Oregon 10.03% 14
Nevada 10.09% 15
Idaho 10.12% 16
Missouri 10.12% 17
Virginia 10.20% 18
Georgia 10.27% 19
Arizona 10.34% 20

Surprise! 14 of the 20 states with the lowest tax burdens are in the top 20 states for population (and job) growth. Conversely, the five states with the highest tax burdens are in the bottom 15 states for population growth.

For your information, Michigan is number 45 in population growth between 2000 and 2007 (1.3%), and has the 14th highest tax burden in the United States. That was calculated before last year's gigantic tax hike, so I'm sure our state has climbed up the list since then.

Discuss this post (and other topics) in the GR Pundit forums.

Tuesday, July 1, 2008

Michigan Economy Update

The latest House Fiscal Agency revenue consensus report paints a grim picture for Michigan. Here are a few important bits of information:

Although the US has gained more than 480,000 jobs over [the last year], employment in Michigan fell by more than 78,000 jobs.

That's right - Michigan has had a net loss of over 78,000 jobs in the last year alone. What's the total damage? According to page 6, Michigan has lost a total of 474,000 jobs since 2001.

It's time to get serious about fixing our state. Taxes need to be cut dramatically. Right to work legislation must be passed to attract new employers. The nickle and dime "job creation" that the Michigan Economic Development Corporation claims is a corporate welfare joke. The only way to turn this state around is to make it attractive to employers. With the choking union-dominated atmosphere and choking tax rates, Michigan will continue to bleed jobs.

Wednesday, June 18, 2008

Michigan Unemployment Rate Surpasses France

It was announced today that the May unemployment rate in Michigan has jumped to 8.5%, from April's 6.9%. As the big three continue to face big problems from the jump in gas prices, and of course the gigantic tax increase last year starts to take its toll, employers are cutting back.

By contrast, France, which historically has always had extremely high unemployment due to bloated government, high taxes, and constantly-striking unions, has an unemployment rate of 7.5%. That's right. We've beat France.