Governor Engler has led Michigan to stellar economic success in the first four years of his administration, a feat accomplished by pursuing an ambitious policy of government streamlining and downsizing aimed at lowering the overall costs of doing business in Michigan. MEGA is a departure from this proven free-market economic development approach toward an industrial policy model of government economic planning, with political appointees picking the winners and losers. If passed, MEGA would not only fail to achieve its primary objective, but also increase the size and cost of state government, subject the state to litigation, discriminate against certain types of business, hinder future efforts to reduce the overall tax burden, cause economic dislocation and inefficiency, and set a poor precedent of state-level discretionary tax policy.

In order to attract and retain industry, state government should concentrate on creating an environment that produces the specialized infrastructure and human capital that will make it unreasonable for firms to even think about locating in another state. Good infrastructure, a highly skilled labor force, and a reasonable business climate will retain high-wage, high-skill jobs in this state and countervail lowball subsidy packages from states that have to buy jobs. Other states' project-specific incentives will not overcome the disincentives associated with a poor business climate or an unstable tax environment; nor will they do so in Michigan.7

Politicians don't create jobs, and they shouldn't count them either. The objective of economic activity is the accumulation of wealth and an improved standard of living, not just jobs. Everybody in the Soviet Union worked: unemployment was a crime. It is not enough to have jobs as the objective of a development strategy.

The State of Michigan does not have to micromanage economic development through legislative committees or economic development agencies. Government should create an economic policy environment that fosters overall productivity growth, technical change, and high quality private capital accumulation rather than subsidize particular labor-intensive ventures. Government also supports private enterprise by supplying long-term public goods. The free-market economy has built-in incentives for job creation and wealth accumulation, and doesn't require government meddling. Economic prosperity depends on a free economy, not on government industrial policy.

Today, with Michigan unemployment at a 25-year low of 4.1 percent and a track record of sound and courageous fiscal management, Michigan is heading in the right direction. The 1988 Engler report properly noted, "Incentives are ephemeral. Efforts to improve business climate, and tax climate in particular, on the other hand, are more intrinsic and tend to work."

MEGA is not "state of the art" economic development strategy as its proponents claim. It is a giant step backward on Michigan's road to a world competitive free-market economy. Making Michigan more competitive by reducing the business tax burden is a laudable goal, but we don't need a new state bureaucracy to do it.