The 10 million of us Americans who call these pleasant peninsulas home recently received some very unpleasant news from the US Bureau of Economic Analysis.
Ours was the only state in the union where the real Gross State Product (GSP) – the market value of all goods and services produced in a state — did not grow last year. In fact, that understates the problem. Michigan’s GSP actually declined by 0.5% in 2006.
Of course, lower private sector productivity necessarily means less public sector revenue. And our political leaders are still juggling the books to maintain services with only the $41.7 billion available for the current fiscal year.
Now, some probably think that having $4200 to spend for every man, woman and child in the state ought to be sufficient to cover the services provided by state government. In fact, the more cynical among us might note that state spending alone – leaving aside all costs associated with federal, county and city/township provided services – on a family of four comes within shouting distance of the official, federal poverty line.
Aside from maintaining courts and prisons, I’d guess that dad, mom and a couple of kids would happily provide for themselves any of the other state services, including education, in exchange an annual, $16,800 check.
But any who think that apparently don’t understand the vital importance of everything being done for us by our public servants in Lansing. Expenditures, the politicians noisily aver, have already been “cut to the bone.”
That’s why negotiations between the governor and the legislature are ongoing for $1.8 billion in “revenue enhancement” for next year – probably through an increase in the income tax, expanded application of the sales tax, or both.
But missing in action in the budgetary battle has been any serious talk of the third leg of the putative triad: institutional reform.
Instead of looking for ways to squeeze more of the life-blood out of Michigan’s anemic economy, what might we do to actually restore its health?
Rep. Jack Hoogendyke (R-Kalamazoo) believes there is a way to generate new wealth in the private sector, obviating the need for new taxes to maintain the same level of support for the public sector. He has introduced HB 4454 to make Michigan a “Right to Work” state by legally prohibiting any requirement for workers to join and/or financially support a labor union as a condition of employment.
A 2002 Mackinac Center study – done even before our economy started into its recent death spiral – compared economic development between RTW and non-RTW states, examining a broad cross-section of state economic statistics from the preceding three decades. Among the hard-number, on average, advantages of Right to Work states:
- Gross State Product increased 0.5% faster. (Michigan’s GSP grew at half that rate.)
- Employment grew almost 1% faster each year; manufacturing employment 1.7% faster. (Employment in Michigan grew only half as fast.)
- Annual unemployment was 0.5% lower. (Unemployment in Michigan was 2.3% higher.)
- Increase in per-capita, disposable income was 0.2% higher. (Michigan matched the average for other non-RTW states.)
Being a political realist about the sway labor unions have in Lansing, Rep. Hoogendyke is also talking seriously about the alternative of sidestepping state government entirely by launching a petition drive to bring his proposal directly to the 2008 ballot.
Should such a citizen initiative succeed, Michigan would actually become the 23rd Right to Work state in the union, but the first in the industrial Midwest.
Although one might assume that prospects for such a proposal in the birthplace of the UAW are remote at best, in fact a recent poll commissioned by the Small Government Alliance and conducted June 10-13 by EPIC-MRA indicates otherwise.
62% of the 600 likely voters surveyed said they support the basic idea of Right to Work. 59% said they would vote in favor of a proposal to make Michigan a Right to Work state – with only 30% answering that they would vote against it. And that nearly 2-1 margin is barely affected (going to 55%-29%) even after voters heard 150-word arguments for both sides.
It appears that nearly two-thirds of voters think it’s time to move beyond dewy-eyed nostalgia for the days when grandpa stood should-to-shoulder with Walter Reuther at the Battle of the Overpass.
If the good people of these pleasant peninsulas hope to ever become competitive in the global economy of the new millennium, we must begin by polishing the rust off the belt.
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More on economic regulation:
- Throwing our money down a rabbit hole
- Government as venture capitalist
- Wholesale whining
- Michigan’s titanic business climate
- Downtown disaster areas
- Prescription for controlling drug costs
- Brave new diversity
