Tag Archives: Michigan

Smoked Out

Posted on by adamrule
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tennesseeguy.wordpress.com
tennesseeguy.wordpress.com

Tobacco, once the sustainer of American business may soon find itself thrown from the workplace altogether.  Last week the Michigan House voted 73-31 to ban smoking in workplaces, with the exception of cigar bars, smoke shops, and three Detroit Casinos.  This comes in the wake of recent bans passed by Wisconsin and the tobacco giant North Carolina.  Altogether, over 30 states have passed similar legislation.  The Michigan Senate has yet to approve the current bill before the state goes smoke free.

Though this legislation seems to be in the interest of public health, it is advancing at a great cost to society.  There are market incentives in place to encourage employers to ban smoking without the government needing to intervene.  Many businesses have already opted to ban workplace smoking to keep the cost of health care benefits down.  The government mandates are weakening those motivations businesses do have to look after the welfare of their customers and employees.  By using force to achieve their ends, state governments across the nation are sending the message that they will look after even the smallest issue of social welfare, relieving businesses of personal responsibility.

Interestingly enough, the Michigan legislation recognizes personal choice in the same bill that restrains it.  By allowing smoking in certain tobacco retailers and casinos the state realizes that the employees of and visitors to these establishments have chosen to expose themselves to smoke, regardless of the effects on their health.  There seems to be some disconnect in realizing that these same people have to make the exact same choice with every business, whether it be a smoke shop or a restaurant.  Those people who want to eat dinner in a smoke free environment will seek one out, and those restaurants that want their business will provide one.  No government assistance needed. 

Adam Rule – MCPP Intern

Another Stonehenge Discovered Under Lake Michigan?

Posted on by razma766
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sonarmichiganstonehengeA group of researchers using sonar to find shipwrecks on the bottom of Lake Michigan have found something far older than crashed cargo ships. They believe they’ve found a 10-thousand-year-old stone structure like Stonehenge, including a rock carved with the image of a mastodon. io9 pal Geoff Manaugh reports over at BLDG BLOG that the researchers’ report (with cool sonar images) was released last year to surprisingly little fanfare. And yet the possibility of a Stonehenge-esque worship site wouldn’t be out of place at the bottom of Lake Michigan. The region already has its share of petroglyphs from ancient tribes and other standing stone sites. These submerged stones could have been raised by local populations at a time when the lake bed was dry, in the late Ice Age. More research is needed to determine whether these stones were arranged by humans, or merely look that way.

Link to article here

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.

“Poor governance creates poor policy. That’s what we have.”

Posted on by lmruhland
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–Lauren Ruhland, 2008 MCPP intern

It doesn’t get much more explicit than that.  From the Associated Press via Mlive:

Michigan’s economy suffers not from a dependance on auto manufacturing but from poor governance, said Robert Genetski, an economist from Chicago.

Genetski, Heartland Institute policy adviser, offered research that showed Michigan’s decline from being one of the healthiest economies in the nation in the 1960s to the poorest in the nation the past five years.

“Michigan ranks 50 out of 50 states,” he said.

Although many blame the state of the manufacturing industry for the state’s tough economic position, Genetski disagrees.

“Poor governance creates poor policy. That’s what we have,” he said.

He said Michigan governance is moving away from classic principles of a strong economy: low tax rates, free markets, protecting individual property rights and stable prices.

In addition to the article linked above, there’s more from Robert Genetski here.

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.

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.

Granholm and MEGA Announce 9,495 New Michigan Jobs

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

Yesterday, I came across this headline while reading a blog. The author of the blog post was so proud of the Gov. Jennifer Granholm for bringing all these great jobs to Michigan. I have no problem with attracting new jobs to Michigan, as long as no coercion involved. Sadly, in this instance, the government arbitrarily taxes businesses at different to create an uneven playing field.

Why allow government to decide which businesses will develop in Michigan? Why not allow the market and entrepreneurs decide? It seems odd that we accept the notion of allowing government to manipulate the business playing field, offering unfair advantages to selected businesses.
Continue reading →

Taxes and Terrorism

Posted on by rombachk
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John Hancock is perhaps best known for his bold flourish of a signature on our Declaration of Independence. But not all of his bravery was applied toward objectively noble ends.  In addition to his general refusal to pay taxes, Hancock smuggled cheap sugar and 1.5 million gallons of molasses per year from the French West Indies to his home in the North American colonies – costing the British empire more than 36,000 pounds annually.

The goods were legal, so Hancock is often fondly remembered for his fearlessness in providing these commodities at a time when a brutal monarch’s taxes rendered them so expensive. Today, cash-strapped Michigan provides job security for a new generation of smugglers by taxing the butt off cigarettes and tobacco products. But we’re not learning from history, here. What were the implications of Hancock’s audacity? His actions strengthened the nation which later took premeditated action against a country they didn’t like. What are the implications for today’s John Hancock? Who among the smugglers roaming the streets today is the strengthening another system -  who will play cat-and-mouse here in order to strengthen a nation preparing to move against us? Continue reading →

When it’s time to change…

Posted on by lmruhland
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–Lauren Ruhland, 2008 MCPP intern

A survey conducted by the Glengariff Group last month indicates that the people of Michigan are interested in making big reforms to save the state money.  Among the findings mentioned in the Detroit News:

  • Nearly 80 percent support finding means of punishment for nonviolent offenders, other than prison. It costs $5 million a day, or $2 billion a year, to run Michigan’s prison system, but leaders in Lansing have been at odds on how to reduce costs and the inmate population — expected to top 56,000 within five years.
  • Nearly 75 percent said they would support increasing health care premiums for state employees. State employees pay between 5 percent and 10 percent of the cost of their health care premium, whereas private sector employees typically pay between 16 and 28 percent of their premiums, according to the survey.
  • About 74 percent said they support changing retirement benefits for new teachers. Michigan teachers have a defined benefit system, which requires school districts to pay a specific amount into the retirement system each year. Those surveyed favored a 401(k)-type individual contribution plan for new teachers.

Many respondents also expressed their desire for wordy ballot initiatives with the intention of creating sweeping changes in the government structure in order to shift the balance of power. (Just kidding.)

Mackinac Center Current Comment :: 29 July 2008

Posted on by jsrule
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<>< Josh Rule : : 2008 MCPP Intern

Today’s Current Comment was written by Jack McHugh.  He writes about the tax climate in Michigan and how increasing the tax burden for an already stumbling economy is a poor idea.  Fundamentally, McHugh reminds readers that economics is the study of people and their decision-making.  So, when the legislators in Michigan’s congress choose to enact higher taxes, businesses who were planning to move into Michigan decide not to come after all.  Families who were barely scraping by before the tax hike simply cannot make it anymore, so they move away.  People are not static objects, but thinking, feeling subjects.  Changing the rules of the game, by increasing taxes for example, changes the very way people play the game itself.  The same old game becomes an entirely new and different game.  But, new may not necessarily mean better.

Another way to communicate this truth is to realize that institutions are important.  Why?  Well, they are important because they can enforce rules and rules are important.  Why?  Well, rules are important because they create incentives, and incentives are important.  Why?  Well, incentives guide people’s behavior, and understanding how people act is the goal of economics.

For the most part, though, the problem is not in the institution itself.  Government, by most people’s account, is a valid institution with a legitimate place in society.  There are problems, though, with the rules.  The current rule set that governs Michigan residents, its current laws, are creating the wrong incentives.  They are, for instance, encouraging people to stay away from Michigan business and even to leave if they are already here.  Economic growth cannot happen this way, no matter how many tax credits are granted to filmmakers or other specialty enterprises.  Instead, these poor rules must be repealed, and different rules must be established to govern the game of Michigan’s economic health.  Remember though, that we might not need as many rules as we have currently.  We need just enough to create the right incentives, and no more.  In fact, creating extra incentives will only serve to make the game less fun for everyone involved.

Michigan needs serious revision to the rules governing the game, and until that happens, situations such as the one outlined by Jack McHugh in his Current Comment will only become more and more depressing.  The solution is simple, even if it may be hard to exercise the restraint to implement.  It is worth it though, for the millions of grateful people who will make Michigan prosper for decades to come.

Mackinac Center Current Comment : : 15 July 2008

Posted on by jsrule
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<>< Josh Rule : : 2008 MCPP Intern

Mackinac Center Director of Communications Michael Jahr wrote about the proposed Reform Michigan Government Now constitutional amendment in today’s Current Comment.  The new amendment seeks to make at least 30 significant changes to the way state government operates in Michigan, including changing the number of justices on its Supreme Court and eliminating several seats in the legislatures.  Wanting to change government to make it smaller and more accountable to the people is a wonderful desire.  It must be tempered, though, by reason and realism.

Perhaps it would be better to propose these changes in smaller, more manageable amendments, rather than trying to cram everything in at once.  Taking small bites takes a bit longer to eat the full meal, but it is often more enjoyable and certainly easier to stomach.  Trying to eat the entire meal in one gigantic bite is not only inadvisable in most cases, but often impossible.  So, while we should continue to dream great dreams about freedom and the respect of human intelligence, we must also be shrewd in achieving them.

Mackinac Center Current Comment :: 7 July 2008

Posted on by jsrule
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<>< Josh Rule : : 2008 MCPP Intern

Today’s Current Comment at the Mackinac Center is actually a great article by Lorie Shane over at Michigan Education Report.  In it, Shane talks about the 24 school districts in Michigan who operated on a deficit for the 2007-2008 school year.  She looks at the consequences of the deficits – which could be as severe as a complete withdrawal of state funding – as well as the solutions – including the ‘lean thinking’ advocated by the Pawley Learning Institute at Oakland University.  The article only mentions, however, the districts currently projecting deficits for the 2008-2009 school year, which includes the projected $408M shortfall the Detroit Public Schools are predicting.  Check it out.

Partisan Politics at Its Worst

Posted on by jimvote
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Jim Vote- 2008 MCPP Intern

 

While conducting some research recently, I came across this candid document on a UAW web site:  “Government Reform Proposal to Help Democrats.” It gave me a laugh, and I brushed it off, given the lack of sources and the overtly partisan nature of the presentation.

 

But now this proposal is gaining strength, and according to the Detroit Free Press, it will probably be on the ballot in November (“Voters may be asked to downsize Lansing”).  There are so many things wrong with it that I’m not really sure where to begin.  We’re all for ”right-sizing” and reforming state government, but the blatantly partisan nature of what this measure does to make that happen in disturbing. The redistricting provision, for example: A truly fair way would  be to have a Senate with a representative from every county, and a House that is districted based on population, not along partisan lines as proposed by RMGN. Yes this would create a larger Senate, but at least it would be fair and reasonable. 

 

The proposed Executive Branch cuts appear to be a response to the absence of a strong candidate to succeed Gov. Granholm.  The cuts in the Judiciary are a blatant response to the strict constructionist court Michigan currently enjoys.  The only “non-GOP” Justice position proposed for removal is a new appointee of the Bush Administration who is moving to the federal bench anyway.

 

Partisan politics has its place, but restructuring state government to play this game is wrong, regardless of who’s doing it.  Taking advantage of an angry and defeated population is unprincipled.  The truly scary part is that this proposal really could become law.  Michigan’s population is angry, but if their backlash assumes this form it will do nothing to solve the state’s real problems.