The Michigan Economic Development Corp., state Legislature, governor and other supporters of government “jobs” programs have adopted an almost pop-culture idolatry for all things environmental by showering taxpayer subsidies upon corporations claiming to bring purportedly “earth friendly” products to market. It has a shiny, new green paint job, but in fact this is just the latest in a long line of failed state economic development program fads.
Consider these bills introduced by Michigan legislators, as described on Michiganvotes.org
• House Bill 5275, introduced by Rep. Lisa Brown (D), to give a four-year, $100 million subsidy to a joint venture of the “Xtreme Power” and “Clairvoyant Energy” corporations, which would employ 300 at the former Ford Wixom assembly plant.
• Senate Bill 466 (Increase electric car subsidies ), introduced by Sen. Wayne Kuipers (R), to authorize a $100 million refundable Michigan Business Tax credit and other subsidies that would go to a subsidiary of the Korea-based LG Chem battery company for a plant in Michigan.
• Senate Bill 622, introduced by Sen. Gerald Van Woerkom (R), to give a subsidy to gas stations that increase ethanol sales above certain thresholds specified in the bill.
• House Bill 4485, introduced by Rep. Mary Valentine (D) to authorize a “refundable” income tax credit (cash subsidy) equivalent to 50 percent of the amount spent on a wind, water, biomass or solar energy system in a residence.
But before handing out checks from state taxpayers to an electric car maker here or ethanol-booster there, perhaps voters should ask, what were the outcomes of the litany of other state government central-planning programs that for 60 years have been promising gobs of new jobs?
One of these was AutoWorld, which in the 1980s became the symbol of government jobs planning run amok. The $50 million amusement park was closed within 12 months.
In the 1990s Governor John Engler’s Broadband Development Authority promised 500,000 new jobs by 2010; after just a few years of operation it went belly-up, costing the Michigan State Housing Development Authority $14.5 million.
Gov. Jennifer Granholm created the Michigan film subsidy program, which in 2008 cost taxpayers $48 million to get a meager 1,100 new jobs, or $43,600 per job. If similar bribes were required for the rest of the state’s employers, the cost would be almost $200 billion, or half the state Gross Domestic Product. So it’s hard to imagine how anyone could call this program a “success.”
In fact, every Michigan governor back to Kim Sigler in the 1940s has pursued the supposed shortcut of government “economic development” subsidies, preferences, discriminatory tax breaks and more. Rigorous reviews of such programs show they are all ineffective at reinvigorating an economy.
The latest fad – subsidies for politically sexy “earth friendly” activities - shows no more promise. At great cost Spain has already experienced this disappointment, discovering that government efforts to artificially generate “green jobs” actually cost the nation two real jobs for every one created.
In Michigan, this is just the “economic development” flavor-of-the-month for legislators and bureaucrats, and unlikely to have any net impact on our job creation climate. Like its predecessors, this latest fad will create job announcements, not real jobs.