State "economic development" programs, long criticized as unfair and ineffective by the Mackinac Center for Public Policy, suffered an embarrassing series of blows to their credibility in July and August.

These programs include the Michigan Economic Growth Authority (MEGA), a four-year-old program that state officials claim creates tens of thousands of jobs by handing out tax incentives to select businesses that promise to locate or expand in Michigan.

To emphasize the unfairness of bestowing government favors on some companies and not on others—and to refute the inaccurate claims of MEGA's job creation—"Mackinac Center Policy Analyst Michael LaFaive fired off a Viewpoint to newspapers throughout the state. It arrived on reporters' desks July 6, the same day that Governor Engler held a press conference announcing a four-year extension of MEGA.

A Lansing State Journal reporter publicly questioned the governor about LaFaive's data and wrote a front-page story on the controversy. Soon, a Detroit News columnist credited the Center with "solid scholarship and research" in a column entitled "Center Disputes Engler Job Tally," and the Associated Press picked up the story. The News then asked LaFaive to go head-to-head with MEGA chief Doug Rothwell on the paper's commentary page. A July 11 News editorial and numerous letters to the editor all supported the Mackinac Center's conclusions.

On August 5, Rothwell threatened to resign over Mackinac Center and public scrutiny of his just-announced 75-percent salary increase from $108,000 to $189,600, which put his pay well above that of the governor and every other state employee. Quoted in The Detroit News as saying he was "an idiot" for taking a government job when he could make more in the private sector, Rothwell—the only state department head who uses the title "CEO"—later apologized for his outburst.

On August 13, the News published an essay by Mackinac Center President Lawrence Reed that illustrated the dangers inherent in allowing government to pick marketplace winners and losers. Reed exposed a $650,000 state subsidy to the city of Muskegon that will help a Wisconsin businessman plagued by debt and lawsuits unfairly compete with Lake Michigan Carferry, an unsubsidized Michigan business.