(Note: On July 31, 2009, the Mackinac Center's Students for a Free Economy is partnering with the Milton and Rose D. Friedman Foundation to celebrate what would have been Milton Friedman's 97th Birthday. SFE will be taking 20 college students to Detroit to discuss the role of entrepreneurship and free markets in the creation of Motown. Previous celebrations included a visit to Chicago in 2008 and a baseball game in 2007.)
It was not so long ago that Detroit was a beacon to the nation. Capitalizing on the ingenuity and the perseverance of entrepreneurs, the city housed some of the best and the brightest. Berry Gordy, founder of Motown Records, was just such an entrepreneur. In such troubling times as these, it would be worthwhile to revisit where his success stemmed from, and what we might glean from his ideas.
Motown was not the result of massive amounts of incentives or subsidies, conspiring central planners or government grants for the arts. On the contrary, Gordy created his highly successful enterprise in his home working with his father and his sister. Contrast this to today, where home-based businesses in Detroit are regulated so fully that it's nearly impossible to start one. Gordy was able to use his initiative as far as his creativity would take him. He saw the opportunity to bring African-American music to the nation and make a living for himself outside of the automotive assembly plants.
Compare this to the recent fiasco with bureaucratically designated artists in Paradise Valley, as written by Bruce Edward Walker of the Mackinac Center:
"After commissioning three artists to create pieces commemorating the once artistically vibrant area of downtown Detroit — now the site of Comerica Park and Ford Field — council members deemed the works 'too abstract' and pulled the plug on their installation."
As Walker notes later, "there can be no objective standard applied to something for which its appreciation is strictly subjective." As is the case with any government-funded project, inevitably someone tries to put a box around something truly amorphous.
This is the fundamental problem with top down initiatives. Regardless of stimulus money and planning, sustainable growth always stems from the minds of entrepreneurs. They are the individuals that notice some human longing, and seek to fulfill it. Politicians should be wary of this pitfall when finding sectors to invest in and attempting to engineer Michigan's next economy. In honor of Milton Friedman Legacy Day, here is advice that Friedman gave to Balbir Talwar, a young entrepreneur in India:
"You say, 'The need of the hour is to identify fields in which India has the natural advantage.' There is no need to identify such fields; they will emerge on their own if they are allowed to. What is necessary is to remove the obstacles that now prevent the emergence of such industries. I gather from your note that one of those obstacles is regulations pertaining to labor, and certainly an essential condition for a free market to operate is that you have a flexible labor market in which wages and terms of employment can be whatever is mutually agreeable to employers and employees."
Michigan lawmakers would be wise to take note and act accordingly.
Christopher Deming is director of campus leadership at 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.