(Note: Following is an edited version of Michael D. LaFaive’s remarks at a Nov. 3 ceremony to dedicate the Mackinac Center’s Morey Fiscal Policy Initiative, established by a $1 million gift from the Morey Foundation. LaFaive will lead the Morey Initiative.)
I am delighted to be here this afternoon to help dedicate the Morey Fiscal Policy Initiative.
One year ago today, I was first introduced to Lon Morey after a speech I had given about Michigan’s fiscal and economic policy landscape. I had known of the Morey family for years because Mackinac Center President Larry Reed had frequently mentioned the family patriarch, Norval, Lon’s father, in our many early conversations, and, of course, because we dedicated this very conference room to Norval out of respect for him and all that he had done for the Center.
I would like to share with you some words he sent to Larry, along with the Mackinac Center’s very first seven-figure gift of $1 million.
"I am able to assist [the Mackinac Center] financially today because when I started my company, markets were truly free and business was virtually unregulated. This freedom opened the door to opportunity, success, expansion and hundreds of good-paying jobs. I understand what the free enterprise system allowed me to do and I want to help preserve that system."
These words are important to me personally on several levels and to the Mackinac Center as well. I’d like to briefly explain why.
When I read Norval’s words they reminded me of another entrepreneur, but this one from America’s early economic history. Many of you have probably heard of the powerful transportation giant Cornelius J. Vanderbilt. In 1855, Vanderbilt was a successful transporter of goods and people on the New York waterways. He became incensed by the fact that the federal government was subsidizing shipping to England and back for what he considered to be outrageous sums of money. So he challenged the government by providing the same service, but without a dime of taxpayer-funded assistance. Before beginning his business battle on the Atlantic, he said, and I quote:
The share of prosperity that has fallen to my lot is a direct result of unfettered trade and unrestrained competition. It is my wish that those who are to come after me shall have the same field open before them.
Thankfully, entrepreneurs like Vanderbilt and Morey had a vision for the future that went beyond running their own businesses. I often hear the mainstream media and others talk about entrepreneurs who "gave back" to their communities after years of operating successful businesses or series of investments, but I would suggest it is not a matter of giving back, as much as giving more.
Entrepreneurs, be they Vanderbilt or Morey, give every day. They produce quality products that people want to purchase voluntarily — all while meeting a payroll, paying taxes and adhering to often Byzantine rules and regulations. That they then often choose to donate even more of their precious resources by way of time, or financial gifts, makes such contributions all the more powerful.
The Morey family is today — through its foundation and through its president, Lon Morey — continuing the tradition of working to see that "those who come after" shall, "have the same field open before them" as Norval had when he founded Morbark in 1957. They are doing this, in part, by supporting the work of the Mackinac Center in general, and of the fiscal policy initiative, specifically.
The generous gift of the Morey Foundation is vital to the Center’s mission, perhaps now more than ever. Even a cursory review shows that Michigan’s economy is in very bad shape. Consider these facts involving Michigan income, gross state product, unemployment and population.
From September 2004 to September 2005, only three states in the country failed to add net new jobs. Those states were Louisiana, Mississippi and Michigan.
From 1994 to 2004, Michigan ranked a low 48th in per-capita income growth.
Finally, between 1994 and 2004 Michigan dropped seven spots among the 50 states in per-capita GSP, from 21st to 28th. Michigan’s rate of per-capita GSP growth ranked 50th among the states from 2003 to 2004.
While these metrics are important, there is an unscientific set of data I would like to share with you to underscore Michigan’s problems.
Every year since 1977, United Van Lines has reported on their customers’ destinations. At the end of 2004 they reported that Michigan’s outbound traffic was at its highest point since 1982, when the state had an unemployment rate of more than 15 percent.
To sum up, Michigan is becoming the economic France of North America — and in France even the chefs are leaving. This has dangerous implications because every car load of people leaving Michigan for states with more economic opportunity potentially carries with it the next Henry Ford, Cornelius Vanderbilt or Norval and Lon Morey.
We at the Mackinac Center for Public Policy believe that it is the state’s poor policy choices that are chasing away its people and their financial and entrepreneurial capital. That is why the Morey Fiscal Policy Initiative is so important.
It gives the Mackinac Center a greater opportunity to be heard on vital matters of economic liberty — to, in the words of Norval Morey, "preserve that system." The generous grant of the Morey Foundation will add a certain gravitas to our work. There are at least two reasons.
First, it is an endorsement from an important Michigan foundation of the Center’s policy prescriptions for creating an environment that will draw people to the state instead of repelling them. Second, it will provide us with the resources we need to expand our work with additional staff, publications and educational programs.
I would like to take a moment to give you a glimpse into our new Morey Fiscal Policy Initiative. The initiative will be based on four primary policy pillars: tax, budget, economic development and privatization. As in the past, we will continue to produce timely studies and commentaries on these subjects, but now we will be able to publish more of them and in greater detail than ever before. Allow me to give you two small examples.
In 2002, Michigan entered an ugly recession along with the rest of the nation. To ensure that legislators would have plenty of ideas for cutting state spending, the Mackinac Center tasked me to come up with recommendations for cutting the budget. There were many, many examples of wasteful spending. Two items we found and publicized involved the Michigan Equestrian Princess Pageant and the Michigan Horse of the Year Ball.
These were some of the very obvious ones. I knew there were more examples of questionable spending, but due to limited resources, I could not delve into every corner of the state budget. I bring these examples to your attention because this is the type of work the Mackinac Center is doing and the type of work you’ll see a lot more of thanks to the Morey Foundation gift.
Consider how time consuming and expensive such research is. The state budget has about 1,200 line items that often contain generic "catch-all" descriptions about how state dollars are spent. Investigating exactly how money is distributed — and what products and services one line-item funds — can take 20 to 30 hours and cost hundreds, if not thousands, of dollars in research funds.
It is the Morey gift that will provide us with the time and resources we need to properly investigate these items, many of which are buried so deep in the state budget that our full-time, highly paid legislators are probably unaware of their existence. And budget items are only one topic covered by the initiative. We will also cover the state’s tax and economic development climate, as well as the subject of privatization. But our work will not be limited to Lansing alone.
Detroit, for example, is facing almost certain bankruptcy if drastic measures are not taken. There is much that could be done to make city government in Detroit smaller and less expensive. We believe that Detroit’s precarious financial situation may force the mayor to adopt our ideas. If so, the Center will be uniquely positioned to make its expertise in privatization and budget matters available to Detroit’s leadership.
I could spend a college semester talking about all of the new and unique things the Mackinac Center for Public Policy can and will do with the generous gift from the Morey Foundation. But we would all be better served if the Mackinac Center simply showed you what we’re going to do when we do it. You can rest assured that you will be hearing much about our work and our influence as we help change Michigan’s economic landscape.
Lon, we are grateful that you are willing to support the continued work of the Mackinac Center, and I want to thank you again for a generous gift that will ultimately make Michigan a better place to live, work and raise a family.
Michael D. LaFaive is director of fiscal policy for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.