Tag Archives: granholm

Detroit Charter Schools

Posted on by sjcammenga
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Detroit Public Schools appear to be taking steps to improve its performance at last, starting with a change in the leadership of failing schools. DPS has reported a 58 percent graduation rate, compared with the state average of 89 percent, and in 2009 the district recorded the lowest scores ever in the 21-year history of the national math proficiency test.

Back when Gov. Granholm was left to deal with this, she proposed increasing the dropout age and creating smaller high schools to boost graduation. This could be difficult however, as the district also has a $327 million budget deficit. To combat this, closing 50 percent of its buildings was suggested. The new emergency solution for both of these problems is to convert about 40 of DPS’s 142 schools into charters. This would result in the estimated savings of between $75 and $99 million, as well as avoiding costs related to closing schools. DPS alumni who gathered for the meeting explaining the plan couldn’t understand the rationale behind this. “Why can’t traditional schools do these things?” one questioned.

I’m glad they asked! The answer in brief is because it all comes down to money. While charter schools don’t get as much per-pupil funding as conventional school districts receive, they also have more flexibility when it comes to dealing with unions. That allows school leadership to devote more time to educating students, including the ability to work with the staff to determine which teachers are performing up to expectations. Opponents worry that charters will reject struggling students, but state law requires charters to accept all students if space is available. Critics also argue that charters in Detroit have not historically scored better than the public schools, but even if this is true they have certainly not scored worse, and marginal improvements for less money is still a good option. It just shows that every system has room to grow.

Though charters are not a guarantee of academic success, they provide competition and alternates to improve the chances of finding a school which is a good fit for any student. There are currently 174 charter schools in the Detroit metropolitan area. Converting these new charters would make Detroit one of the districts with the highest percentage of students in charter schools.

Kids in a Candy Store

Posted on by razma766
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Here is a letter I recently sent to the Midland Daily News:

Dana Saxton is troubled by Granholm’s proposal to slash the agricultural extension program (Support Extension, November 12).  She lists several benefits, and concludes by stating: “We need to act now! If we don’t act, we will regret it for a long time… Don’t let this happen!  Support MSU and 4-H. Contact your government representatives now!”

Amongst the lofty benefits of the program, Dana fails to make even a single mention of the costs.  Lacking any idea of its cost, she then urges her readers to contact their representatives in support of the program.  This is akin to entrusting a child with his parent’s credit card at the local candy store.

Kurt Bouwhuis

Lay Your Weapons Down

Posted on by adamrule
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Last Friday Governor Granholm focused her weekly radio address on the Michigan Economic Development Authority (MEGA), and called for help in keeping the program running. MEGA, which offers tax breaks as an incentive to draw employment to Michigan, has already reached its legal limit, and cannot offer additional tax breaks for the remainder of the year. Speaking of MEGA Granholm said:

Their efforts have been so fruitful that they’ve used up almost all the MEGA tax credits available this year under present law.  If Michigan can’t award more credits until next year, we could miss out on tens of thousands of new jobs and even lose existing jobs.

How much one can give away is not a good measure of economic effectiveness. I could walk outside right now and hand out money from my own wallet to people walking by on the street, but I have not made the economy more ‘fruitful’. I have not gained any goods or services from this transaction. I could have used that money to commission a new piece of furniture, and not only would I have given money away, one more chair would have come into the world.

MEGA has proven to be unfruitful and inefficient. A 2007 report by the Mackinac Center found that for every $123,000 in MEGA tax incentives, only one construction job was produced – jobs that lasted only two years.

Gov. Granholm also stated:

MEGA tax credits are performance-based. That means that a business can use the credit only if it creates or retains a certain number of jobs.

Again, the Governor has fallen for a fallacy. Creating jobs is not economic performance. It is the creation of goods and services that increases wealth. Simply creating, or retaining jobs does not increase wealth.  MEGA has not been creating very many jobs either. The Mackinac Center found that over a ten year period of operation, only 13,541 jobs could be attributed to MEGA; very different from the 62,000 Governor Granholm is claiming it created or retained in just this past year.

The Governor concluded:

Expanding the number of MEGA tax credits will enable us to bring thousands of new jobs to Michigan, which we need right now obviously.  I urge the state Senate to quickly pass House Bill 4922.  Virtually every other state is out there competing for these companies with incentives.  With the competition for jobs so fierce, Michigan can’t afford to be without one of its key economic development tools for very long.

This gets at the heart of the issue. States across the nation are taking taxpayer money and using it to entice businesses to shuffle around the country. State governments need to stop wasting our money by building bigger and bigger programs to fight with each other. Its time to disarm.

Adam Rule – MCPP Intern

Central Planning

Posted on by adamrule
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Despite evidence of entrepreneurship, Michigan’s government is still looking to plan the economy, and for Granholm, the future looks green.  The Governor, citing a 7.7% growth in “green companies”, has announced her Green Jobs Initiative to expand the green sector.  This $6 million program seeks to promote green sector education.  $3 million of the funds are to be set aside specifically for underemployed and unemployed workers.  Granholm also noted that:

Back-to-back visits from national leaders focusing on the changing auto industry and green jobs seem fitting

Fitting?  In short, what the governor is doing is economic planning. She is noting that there will be a number of workers displaced by auto industry downsizing who will need employment, and is trying to coax them into the sector she thinks Michigan needs to become competitive in.

What Granholm does not realize is that, one, she is fighting the private sector, and two, she has already been doing economic planning in a different direction.  Note today’s Detroit News column on plans for GM’s Centerpoint Complex.  Real estate investor A Alfred Taubman and Linden Nelson of Nelson Ventures are teaming up with Hollywood’s Raleigh Studios to buy and convert a portion of the Centerpoint Complex into a film studio training ground for the laid-off and unemployed. 

Why the investment?  Michigan’s tax credits to those making movies in the state, and the surplus of workers.  Said Taubman,

You look out at these spaces and wonder what happened to the people who worked here

Granholm’s initiative is working in direct competition with entrepreneurs and even her own tax break incentives.  This will lead to disaster as those industries that Michigan does have an advantage in will be abandoned for those given a false government advantage.  This is only creating more economic woes for the future.

Adam Rule – MCPP Intern

The Bigger The Unproductive Firm, The More Vital It Is To Let It Fail

Posted on by razma766
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Editor, Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

Countless flaws infect the arguments – offered in your pages today by both Jeffrey Sachs and Robert Samuelson – for a government bailout of GM, Ford, and Chrysler. Not least among these flaws is the common presumption that these firms are too big to be allowed to fail.

These firms certainly are big, meaning that they use unusually large amounts of productive resources. If they have reasonable potential to put these resources to good use in the future, Chapter 11 bankruptcy will likely uncover this fact and ensure that these firms are not disassembled. But if the only way to keep these firms operating is a government bailout, then taxpayers will be subsidizing the continued employment of gargantuan quantities of productive resources in unproductive pursuits. That’s a recipe for economic stagnation.

Popular sentiment has it backward: the bigger the unproductive firm, the more vital it is to let it fail.

Sincerely,

Donald J. Boudreaux

Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.

Bailout the “Big” Three?

Posted on by razma766
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Governor Granholm with the Chevrolet Volt Electric Concept VehicKurt Bouwhuis, Mackinac Center Intern

“In the United States alone, U.S. automakers directly employ about 355,000 workers, and another 4.5 million Americans work in sectors that are supported by the auto industry. Auto manufacturers are the largest purchasers of U.S. manufactured steel, aluminum, iron, copper, plastics, rubber, electronics and computer chips. Hundreds of automotive suppliers in all 50 states rely on U.S. automakers for their core business. Last year, the auto industry purchased $156 billion from U.S. auto parts suppliers. This industry is vital to millions of citizens in our states and across the country.”– Jennifer Granholm

Would all those jobs vanish off the face of the earth if the big three went under?  Would consumers instantaneously demand less cars?  Absolutely not!  Another automotive manufacturer would need to fill in for the decrease in supply of automobiles.  Foreign automotive manufacturers currently employ United States auto workers and would continue to do so if the big three went under.  There would be an abundance of unemployed automotive labor in the United States, which one of the many foreign manufacturers would surely utilize.

Let’s suppose the worst happens and all these jobs vanish entirely.  In the short run, the economic impact would be catastrophic.  We would have a large spike in unemployment, as individuals reallocate resources in the economy.  In the long run, however, would be much better off?  We would be better off because we would be eliminating entities that do not create wealth.  The big three currently combines raw materials, labor, and capital in such a way that the outcome is a good that is valued less then the sum of it parts.  Growing such a business model hinders economic growth.  I’ll illustrate this point with a simple example:

Suppose I directly employ 5 million people in the process of making encyclopedias.  Before I know it, this new technology emerges called the Internet.  This new technology delivers infinitely more information that is dynamically updates at a much lower costs.  Over the next couple years, my sales begin to decline.  I start laying people off, and cutting back on production.  My company begins to show losses.  But wait!  I have numerous suppliers across the country, with business models that depend almost entirely on my encyclopedia production.  Should the government bail me out?

Why not?  The United States Government seems to have a fancy for investing in failing entities.  In fact, Jennifer Granholm, has made a new friend who can save the American automotive industry. “The bottom line is (Obama) is committed to this industry surviving and thriving,” Granholm told the Free Press in Lansing, Mich. “It is a great statement of confidence in his belief in the industry and it’s importance, not just to Michigan but to the rest of the country.” — Jennifer Granholm

Michigan’s #1 Planner “Creates” New Jobs!

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern.

I logged onto Jennifer Granholm’s personal website today searching for something to write about.  Her homepage was plastered with announcements of all the new jobs she will be creating for Michigan.  At first glance, this job creation would appear to generate positive results for Michigan’s economy.  After some additional thinking, however, I drew much different conclusions.

First off, does anyone have the power to create jobs?  Can Jennifer Granholm wave a magic wand, instantly creating over 40,000 new jobs that did not exist the moment before?  I would argue that she can (whether it be through tax incentives, subsidies, etc…).  She could even pass a law that forces 100% employment!  The real question is whether or not the creation of jobs generates wealth.  Wealth can be viewed as goods and services that people demand.  Here an example: 100% of Michigan citizens are employed in a process of combining $2 of resources and $5 of labor to create an end product selling for $3.  It is easy to see the longevity of this economy may not look too promising.

How can an economy create wealth?  Entrepreneurs are the heart and soul of this business.  They see opportunities for combining resources, labor, capital and technology to create goods and services to sell in the market and make a profit.  Why isn’t the free market in Michigan venturing into the alternative energy industry?  The answer is very simple – The costs of producing alternative energy are too great to compete with conventional energy production.  Alternative energy will NOT create wealth.  It will require more costly and scarce resources and sell at a higher prices, which people will not be willing to pay voluntarily.  The burden of this misallocation of resources will be covered by tax dollars.  In other words – citizens will be forced to pay for a process that is inefficient and not demanded.

How do we attract these entrepreneurs (wealth creators) to Michigan?  Put yourself in the shoes of an entrepreneur.  What would you be looking for?  Good infrastructure, cheap resources, low taxes, and low regulation are probably near the top of their list (I wonder why Michigan has a poorly functioning economy with high unemployment).  If Granholm is already using tax incentives to bring select industries to Michigan, why not lower taxes for everyone?  Do we really believe that Granholm is smarter than all the entrepreneurs of the world combined?  What is so special about the specific industries that Granholm chooses?

The next time you see articles related to job creation, you may want to question whether or not those jobs will benefit anyone other than the few individuals who are being employed.

Granholm Going to Japan

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

“Governor Granholm leaves Monday, September 15 for a three-day jobs and investment mission in Japan. She will visit 22 companies in three different cities, highlighting all Michigan has to offer as a great place to do business.”

I thought Michigan’s business climate was so attractive that there would be no need to go searching overseas for people to invest in Michigan.  I’m glad to see that our tax dollars continue to be put to good use.

Mayor rated low, but DPS worse

Posted on by lmruhland
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–Lauren Ruhland, 2008 MCPP intern

If you didn’t get one of the 25 seats reserved for members of the public at the governor’s removal hearing for Detroit mayor Kwame Kilpatrick this morning, the whole thing is being streamed on the Free Press’s website.

To coincide with the hearing, the business organization Detroit Renaissance released a poll of city voters’opinions on different current and potential governmental leaders and city institutions.  A whopping 80% of Detroiters are dissatisfied with the direction the city is heading, and almost as many (73%) view the mayor unfavorably.  69 percent of respondents think Kilpatrick ought to resign.

Despite their largely unfavorable impression of the mayor, only 69.5% consider his performance to be “fair” or “poor.”  Contrast that with their rating of the performance of Detroit Public School board– 89.5% place it in those two categories.

In other words, an alleged perjurer, facing ten felony counts ranging from obstruction of justice to assault, who is being called to resign by two out of three constituents, is still percieved to be doing his job more effectively than the city’s school board.

Is Bringing jobs to Michigan a Worthy Goal?

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

In Michigan, it seems that all we hear about on the news is the great jobs Jennifer Granholm brings to Michigan.  I find it puzzling, however, that we still have an unemployment rate that is significantly higher than the national average.  If Governor Granholm actually brought jobs to Michigan, I would expect our unemployment rates to fall, not rise.

This “creation” of jobs reminded me of an article I recently read by Isaac Morehouse.  It goes to show that perhaps Granholm (and others like her) do not wield the magic power to create jobs out of thin air.  Perhaps she is using scarce resources (tax money) that could be used more efficiently elsewhere.  The article shows that we should not be focused on the creation of jobs, as it does not create wealth.  Wealth is what raises every citizens standard of living and provides what is demanded.  Wealth, in its simplest form, is goods and services.  If Michigan were to produce what was actually demanded by the market, we would be much better off.

Thoughts on Michigan’s Unemployment Rate

Posted on by razma766
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Much of Michigan’s political establishment believes (or pretends) that the state’s unemployment rate rose to more than 8 percent last month because of high gas prices and the entry of young workers into the labor market. That begs the question, though: How is it that in previous years Michigan unemployment rate wasn’t similarly affected by the entry of young workers into the market? And how is that, although the whole nation is experiencing high gas prices, the national unemployment rate rose just  0.5 percent last month, compared to Michigan’s 1.6 percent? What’s the matter with Michigan?

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