Michigan can feel like it’s full of shakers, but there are still many movers. In a scene that could be straight out of “Atlas Shrugged,” an amateur metallurgist in Detroit has created his own version of Rearden Metal called Flash Bainite. Flash Bainite has been proven at six ballistic testing labs to be pound for pound the strongest, most ballistically resistant, readily weldable metal known to man. The process produces steel that is 7 percent stronger than the other forms of steel and even some titanium alloys. In addition, it is more ductile than other steels, which allows it to crumple more before breaking and better absorb impacts. If it sounds like this incredible process would be too expensive to be viable, think again. The process to give steel this strength takes around 10 seconds and is more energy efficient and cheaper than traditional steel making. It is even environmentally friendly as it uses water instead of polluting oils or molten salt and only one Kwatt of energy. The best part is that this amazing metal was created by a DIY American’s ingenuity without an ounce of government funding for his tinkering. I want the first bracelet!
As a student trying to pay my way through school, I know I have been blessed to land a summer job at all, much less somewhere I am passionate about. Last year (2010), youth employment was lowest since 1949, having dropped 17.5% from the year before (2009). Interesting to note is that the minimum wage was last raised in the summer before, in 2008. Earlier in history, data from shows that at least 20,000 jobs were eliminated by the 1996 hike. This appears to be a pattern.
Minimum wage is definitely not the sole cause of the terrible unemployment numbers in the state today; the whole of Michigan has been suffering, especially after the collapse of the auto industry. The key to moving beyond failing industries is to support Michigan’s other businesses and encourage the establishment of new ones. When minimum wage is raised, the effects reach these businesses. Common summer employers, like farmers or resort owners, will readily admit to relying on the kids they employ in the summer to keep the business going. A higher minimum wage can discourage them from hiring too many employees or even be enough the shut them for good if they cannot afford the extra pay.
Interestingly enough, Michigan is one of the few states which allow younger workers to be paid less than minimum wage. When a business is paying less, it is able to afford more workers. If less pay seems unfair, another beauty of a free market is the ability to walk away from a job if one doesn’t wish to live off its pay.
As a student, I am often willing to work cheaper. My younger brother who is looking for a job is willing to work for cheaper. I know students who have happily worked for a stipend less than minimum wage. I understand the importance of being able to support a family on a wage; this was the intent of the first wage law. However, I don’t think it would be all bad to have the freedom to choose to work for less if that is what it takes to be competitive and earn money for college.
This post is part of a new series which explores the freedom-loving mindset and the pursuit of a classically liberal lifestyle in Michigan. Comments are welcome.
I’ve been learning a lot about gratitude recently, and in a particular way from two of conservatives’ favorite books, Hannah Coulter and Love and Responsibility. Both of these books discuss giving thanks and the importance of doing so. This message resonates a little more today, given that we observed Memorial Day yesterday.
My family and I love the scenery of Michigan and have thoroughly enjoyed visits to Sleeping Bear Dunes, Pictured Rocks and our annual trip to Ludington State Park. We have seen the disrepair of some parks as well, most notably the collapsed roof of the visitor’s center at Ludington we liked to visit. This is not an isolated incident; many parks in Michigan are struggling for funds. The parks currently get around $52.6 million of the $70 million they name as the minimum needed for the repairs and upkeep. Most of their money is made from campers and visitor fees, but with visiting down by 24%, they are feeling the blow.
Despite the deficit, Gov. Granholm does not want to close any of Michigan’s parks, as they are essential to tourism. To close them would give the impression that Michigan was closing down as well. Suggestions for how to fund the parks are mainly along the lines of adding new or higher fees for admission or vehicle registration and requesting state funding.
A different voice in the blend is the Mackinac Center’s own Russ Harding, who suggests better management of the funds the parks already possess rather than finding new sources of revenue. His suggestions include privatizing the law enforcement and custodial duties of the parks, bidding out food and lodging that will generate revenue, and selling the parks that are not essential. Michigan’s natural beauty is a great asset, but we may need new policies to maintain it.
The shock of Lebron James leaving Cleveland has worn off by now for basketball fans. I don’t know the first thing about basketball and don’t know if in terms of the sport he made the right choice. I do, however, know a thing or two about economics and believe that he made the right choice. Economically speaking that is.
Due to Florida’s friendly tax laws, James stands to take home more of his paycheck. Even though he is earning less than what he made playing in Ohio, he will be able to keep more of what he does earn. What’s not to love about that?
James isn’t the only one moving to a state that has friendlier tax laws. Millions of average Americans are doing the same thing. Many Businesses are also doing the same thing, too. Businesses and people are going to follow the money. States like Ohio and others hit hard by the recent recession, like Michigan, could stand to learn a thing or two from James. If these states want to keep their people, businesses and possibly sport superstars, they need to lower taxes.
Michigan businesses are fighting back on the smoking ban with a lottery boycott and it’s about time. Since the ban went into effect on May 1st many businesses have lost revenue. The smoking ban has had many unintended consequences. There may be less smoking in public due to the ban, but there is also less spending in this already ailing economy because of it.
The ban was done to curb individuals’ bad decisions, but the cure may be worse than the disease. It really isn’t the government’s job to save us from our bad decisions. If an individual chooses to make bad decisions, they have to deal with the consequences alone. When legislators make bad decisions, everybody has to deal with the consequences.
If the Michigan legislators truly cared about protecting people from bad decisions, they would stop making laws that violate people’s rights and pocketbooks.
The unemployment figures for the month of May recently decreased throughout Michigan from 14% to 13.6%. The administration and michigan legislators are pointing to these numbes as proof that intense government action, in the form of stimuli and bailouts, actually improves our standards of living. But nothing could be further from the truth and it is insulting to the intelligence of every Michigander.
The truth is that the numbers are decreasing despite the harmful actions of both the federal and state government, thus illustrating the force of markets and government’s inability to contain them.
If lawmakers both state-wide and federal want to have a more significant impact in encouraging a speedy recovery they would abandon their activist efforts and embrace free market solutions, namely lower taxes, less regulations, and more economic freedom.
The Gulf Oil spill has been a much publicized disaster. While most are aware there will be devastating effects on the offshore drilling in the gulf, not all may be aware of the effects it is having closer to home. Senator Debbie Stabenow has called for a stop to Canada’s drilling in the Great Lakes, and wants to check what safeties are in place.
While Canadians can drill, Michiganders can’t due to a state ban. According to the Petoskey News, Stabenow addressed the question of whether or not the ban would be repealed as the dependence on oil increases: “It’s very good we have a president that understands the Great Lakes. So, I’m confident that the ban on oil and gas drilling in the Great Lakes is going to stay in place.” Oh great, that’s comforting…
In fact, it is possible that instead of being loosened to allow more drilling to respond to the growing demand for oil, the ban may become permanent. This could come to a vote before Michigan voters in November. If it is passed this “no drill” ban would be added to the Michigan Constitution. It would be the first Great Lake state to do so.
Of the seven states Michigan shares the Great Lakes with, only three others prevent drilling. Canada currently has 500 offshore gas wells in Lake Erie and allows both onshore and offshore drilling.
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, Mackinac Center Intern,
This morning, I read an article titled Pontiac opens bidding for Silverdome. The article primarily focuses on the costs of the facility as well as various people’s opinions of the auction.
The article fails to recognize the economic idea of a sunk cost. The initial cost to build the stadium as well as the $1.5 million a year maintenance fee are both unrecoverable. As a result, these costs should be ignored when making decisions about it’s potential future uses. If the stadium sells for a “low” price, it is not a steal – the price someone offers will be based on the future expectations of the value the stadium as well as the next best alternative use of the bidder’s money.
Hat-tip to James Hohman
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
Kurt Bouwhuis, Mackinac Center Intern
I was recently reading the Michigan Liberal blog, and came across an interesting sentence: “I just became aware of this, but it’s worth thinking about while also remembering that the construction of the other proposed coal plants likewise will get passed right along to customers.” Eric B. at Michigan Liberal
I think Eric is on to something. When profitable businesses incur additional expenses, the costs are passed on to the consumer. I wonder if high taxes on businesses have the same effect?
Kurt Bouwhuis, Mackinac Center Intern
“We’ve heard a lot of whining over the last few months that the “cost” of coming climate change legislation will kill jobs, destroy industry, kick puppy dogs, sicken orphans … basically the same old barge filled with scary warnings that have been used since time immemorial about every major piece of environmental legislation (if history is any judge of the efficacy of these warnings, we could pass new climate change bills from today until the end of time and not destroy the economy).” – Eric B. – Michigan Liberal
If climate change bills don’t hinder the economy – why not abolish pollution of any kind all together? Surely, making it illegal to pollute will make production much less costly.
This logic is faulty and here’s why: If environmentally friendly solutions make production so much easier, why are profit seeking individuals not capitalizing on the new opportunities. Additionally, I find it hard to believe that restricting individuals from conducting voluntarily transactions is some how going to make people better off.
Lastly, it would be difficult to measure all the effects of any one piece of legislation. If wind turbines are made mandatory, and GDP goes up by .1%, we cannot say that the wind turbines caused the .1% increase. Each and every year, thousands of new laws are passed, all of which affect the actions of millions of individuals that some call “the economy.”
Kurt Bouwhuis, Mackinac Center Intern
Cuts in Medicaid payments are beginning to place a strain on medical doctors in Michigan. Within the last month, Governor Granholm announced a 4% cut in payments across the board for hospitals, dentists, and doctors who treat Medicaid patients. The last reduction in Medicaid payments was in 2005 when the rates were also cut by 4%.
This leaves the doctors receiving $21 for a new patient visit from Medicaid reimbursements and $46 from Blue Cross Blue Shield for the same treatment. Despite the cuts in benefits, there is a surge of new Medicaid patients. Currently, there are 1.6 million insured through Medicaid – with an average of 15,000 individuals joining every month. Medicaid now accounts for 1/4 of the states general fund.
The result of these cuts in benefits may burden society in more ways than one. Roughly 80% of doctors accepted Medicaid patients in 2006 – In recent times, only 71% accept Medicaid patients. The decreased acceptance of Medicaid patients and the increased enrollment in Medicaid is resulting in increased uses of the emergency room. These emergency room visits are demanding more of the doctors time, resulting in a reduction in quality of service being delivered to all other patients.
The real problem is the flawed assumption that the government can somehow provide anything for free. As Frédéric Bastiat said back in 1848: “The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.” – The State