The MC: The Mackinac Center Blog

Right-to-Work States See Larger Gains

Personal income and population growth numbers released

The 2013 state personal income data was released recently and it has some good news for Michigan.

The state had the 9th best performance among the states from 2012 to 2013. While it's unclear how much of a role the passage of the right-to-work law had in the performance, it is worth a look at the trends between states with a right-to-work law and those without one.

In both personal income and in population growth, right-to-work states clearly have an advantage. From 2012 to 2013, right-to-work states grew their personal incomes by 2.8 percent and their populations by 0.9 percent. Non-right-to-work states grew their personal incomes by 2.4 percent and their populations by 0.4 percent.

Personal Income Growth

Population Growth

When combined, per capita personal income between the two groups of states increased at roughly the same amounts. Michigan's above average per capita personal income growth can be attributed to average personal income growth and below average population growth.

Over the long term, right-to-work laws have been associated with inflation adjusted personal income growth, population increases and job growth.

Right-to-work may or may not be an influence, but Michigan's recent performance has shown improvements in all three measures.

Happy Birthday Norman Borlaug

Credited with saving 1 billion people

Norman Borlaug

I was 21-years-old before I first heard the name Norman Borlaug. It’s a shame it took until my third year of college to learn about one of the greatest humans who ever lived.

Borlaug, who died in 2009, was an Iowa-born scientist who spent his life teaching new farming techniques in third world countries. His movement was eventually called the "Green Revolution."

Borlaug was introduced to me during a discussion about another of my heroes — the late economist Julian Simon. Simon was the author of, "The Ultimate Resource," in which he argued ferociously against Malthusian concerns about overpopulation. One of Simon's main points was that human ingenuity was the greatest of resources, able to overcome problems seemingly caused by finite resources.

This debate still exists, but it was much more strident a few decades ago, culminating with the 1968 bestseller, "The Population Bomb," by Paul Ehrlich. In the book, Ehrlich infamously predicted a coming economic crash resulting from overpopulation:

The battle to feed all of humanity is over ... In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.
He later said, 'I have yet to meet anyone familiar with the situation who thinks India will be self-sufficient in food by 1971,' and 'India couldn't possibly feed two hundred million more people by 1980.'

The book stated that it was "a fantasy" that India would "ever" feed itself.

(Interestingly, I was introduced to Ehrlich’s book as a freshman in high school. What a sad state of education when Ehrlich, who lost a famous bet with Simon, is mandatory reading at many schools while few people are aware of Borlaug.)

In the meantime, Borlaug was putting into place what Ehrlich claimed was impossible. His work began being used in India in the early 1960s and by the mid-1970s (a few years after Ehrlich’s claims) the country was feeding itself. As noted by Ronald Bailey, the science correspondent for Reason:

In Pakistan, wheat yields rose from 4.6 million tons in 1965 to 8.4 million in 1970. In India, they rose from 12.3 million tons to 20 million. And the yields continue to increase. Last year [1999], India harvested a record 73.5 million tons of wheat, up 11.5 percent from 1998. Since Ehrlich's dire predictions in 1968, India's population has more than doubled, its wheat production has more than tripled, and its economy has grown nine-fold.

Equally remarkable feats were happening in Mexico, where the country went from importing half its food to becoming a net exporter in a mere 20 years because of Borlaug's efforts.

Borlaug is the best proof of Simon's belief in humans as "the ultimate resource," as ingenuity leads to technological advances. And this theory has aged well, evidenced by the world poverty rate declining 80 percent since 1970 as things get better and better.

Norman Borlaug lived from March 25, 1914, until Sept. 12, 2009, and is estimated to have saved the lives of 1 billion people. That's news worth spreading.

College Spending Results Questioned

More money doesn't yield better results

In praising Gov. Rick Snyder's proposed $80 million increase in aid to public universities, University of Michigan President Mary Sue Coleman said: "States that do not invest in higher education will not win in the 21st century" and spending more "is investing in job growth."

There is little evidence to back up these statements.

No matter how you look at the data, states that spend more on higher education do not have more college graduates or better economic results. Comparing states by graduate population and economic growth yields no correlation. Additionally, a 2007 study by Richard Vedder, a professor at Ohio University and an adjunct scholar with the Mackinac Center for Public Policy, found there is a negative association with spending on higher education and economic growth.

Skorup

This suggests that the nearly $1.5 billion Michigan spends every year on public universities, which would cover the amount Gov. Snyder wants to increase road funding, is being poorly spent. The massive increase in total public spending on higher education nationwide has left us with a system where the poor are even less likely to obtain a degree and have a student dropout rate near 50 percent. For those who do graduate, their degrees are often in areas unlikely to be used in the workplace.

College graduates are mobile and they will go where there are jobs. But the state should look for ways to attract all people by using the money spent on higher education in ways that will attract more jobs.

More Problems with Ferndale Teacher Contract

Ignores state laws regarding seniority, evaluations

The Ferndale school district's collective bargaining agreement made headlines recently because it gives preference to applicants of "the non-Christian faith."

Under media scrutiny, Ferndale officials said they "somehow missed" the discriminatory language. Fortunately, they have now removed it.

But large portions of Ferndale's contract still appear to be in violation of other state laws. Ferndale is one of an estimated 60 percent of Michigan districts that have worked to preserve collective bargaining language that is prohibited by state law.

A series of recent reforms were passed in an attempt to make it easier for district officials to retain and reward effective teachers. Under Public Act 103, a state law that went into effect in July 2011, districts and their unions may not collectively bargain over teacher placement, layoff, recall and evaluation policies, among other things. Public Act 102 of the same year prohibits using only seniority to make personnel decisions.

When Ferndale extended its contract in February 2014, the district made sure to remove a contract provision that violated Michigan's new right-to-work law for teachers (although it didn't do the same for adult education teachers). But district officials have also "somehow missed" large volumes of the district contract that are in violation of these earlier state laws.

Under Ferndale's contract: 

The question for Ferndale is whether the district will fix all portions of its contract that violate state law, instead of simply addressing the provision that has captured media attention.

Clearly, those negotiating on behalf of Ferndale have failed to consider at least four different state laws, including Michigan's Civil Rights Act, which banned Ferndale's discriminatory language.

By keeping prohibited and unenforceable language, Ferndale, like several other districts, has a contract in place that is effectively a meaningless document. And though district officials sit down every couple of years to renegotiate, it took nearly four decades and a deluge of media attention to spur Ferndale to remove just one of those portions.

What, exactly, will it take to motivate Ferndale and other district officials to comply fully with these other Michigan laws?

Center Research in Time, Washington Post

Tobacco smuggling stats a national story

Research on the relationship between cigarette smuggling and tobacco excise taxes by Mackinac Center scholars was cited recently by Time, CBS News and The Washington Post.

The research was also the focus of this New York Post editorial and was featured on Northwest Public Radio and in Bloomberg and the Arizona Republic.

CapCon Story on Ferndale Draws Attention

State, national, international media respond

A clause in the teachers’ contract at Ferndale Public Schools discriminating against Christian employees that gained national and international media attention has been scrapped. Michigan Capitol Confidential broke the story, and media are now reporting the clause has been removed.

WDIV-TV4, the Detroit Free Press, The Oakland Press, The Detroit News, Hot Air, WOOD Radio in Grand Rapids, The Christian Post, The Washington Times, Canada Free Press, The Daily Caller, Fox News, the Houston Chronicle, the San Francisco Chronicle and The Macomb Daily all covered the incident.

Teacher Who Left MEA Explains Why

Ray Arthur in Detroit News

(Editor’s note: This commentary by Ray Arthur, a 35-year teaching veteran from Petoskey, originally appeared in The Detroit News on March 19, 2014.)

As I studied Michigan’s right-to-work law in March of 2013 and looked ahead to my retirement this coming June, I began to weigh the pros and cons of my 34-year membership in the Michigan Education Association.

Foremost was the thought of formerly being in a closed shop. In all other aspects of my life I had the responsibility of free will and self-determination. Yet in my professional career, I had been locked into an affiliation with an organization that would grow to such size and scope that it lost its original intent and purpose.

Instead of serving members, the MEA became self-serving. The top 10 administrators in the union make more than the governor, and 30 percent of its 400 employees have six-figure salaries. The average teacher in Michigan makes about $55,000.

While our local was asked to take zero pay raises during the great recession of late 2007 through 2011, MEA leadership already making more than $100,000 took double-digit wage increases each year. Those below the $100,000 benchmark garnered single-digit raises.  

Over the years I’ve seen the MEA become far too political. I am not sure if the politicians found the union and the money or the union found them, but this marriage was made and not in heaven. Why would any organization that has a diverse membership wish to divide itself along political party lines? This simple act, in and of itself, serves to alienate half of the membership. There is an endless barrage of political prompting to vote for their candidate or support certain legislation, even if you are soundly opposed.

So, for my 35th and final year of teaching I chose to opt out of the MEA under Michigan’s worker freedom law. I could better use those funds to put toward my retirement, my wife, and my son in his final year of college.

I submitted a letter in September 2013, shortly after the school year began, informing the Petoskey Education Association of my decision. I expected a hand shake and a “thank you” for 34 years of dues. Instead I was threatened and told if I didn’t pay I could be turned over to a collections agency or face legal action.

With the help of the Mackinac Center Legal Foundation, I filed an unfair labor practice complaint against the MEA and the Petoskey Education Association at the Michigan Employment Relations Commission. Several other teachers around the state did the same.

We were told that the union’s bylaws only allow members to opt out during the month of August. In 35 years of teaching that was the first I ever heard of it. There are 365 days in a year and they are only going to give you less than 10 percent of that to decide if you want to be in the union or not?

After much back and forth, the MEA recently agreed to recognize my rights and those of Miriam Chanski, a fellow teacher from West Michigan, to opt out. The other teachers who filed complaints at MERC still face union opposition. But at a MERC hearing recently, the MEA said there are about 8,000 teachers statewide who have not paid their dues for this year. The union developed a policy to go after these people, up to and including trying to ruin their credit.

Throughout my career, I made it a priority to work with my students and give them all the information they needed to make an informed decision. The MEA should do the same and hopefully it will learn this important lesson from its teachers.

Asset Forfeiture Laws Threaten Property Rights

Center statement on House Bills 5230 and 5233

(Editor’s note: The following statement was submitted by Executive Vice President Michael J. Reitz to the Michigan House Committee on Criminal Justice as it begins consideration of House Bills 5230 and 5233.)

The Mackinac Center is well known in Michigan for recommending tax, fiscal, labor and education-related policies that advance the principles of self-government and a free-enterprise economy. The Center is less well known for its scholars’ views on civil and criminal asset forfeiture laws. Among other places these views were articulated in a 1998 study published by the Mackinac Center, “Reforming Property Forfeiture Laws to Protect Citizens’ Rights,” authored by Donald J. Kochan. The study offered a list of specific recommendations, most of which are still relevant. The following excerpt from that report articulates the principles that underlie the Center’s views on this issue:

“No person shall . . . be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

The protection of private property rights is a fundamental condition for freedom and the most sacred obligation of government. The Framers of the United States Constitution strongly embraced such a view. James Madison observed the importance of this obligation when he wrote, "Government is instituted to protect property of every sort. . . . This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own." Madison’s statement of this truth echoed a similar pronouncement by John Locke: "The great and chief end therefore, of men’s uniting into commonwealths, and putting themselves under government, is the preservation of property. To which in the state of nature there are many things wanting." Thus, the government has a negative obligation to refrain from violating property rights as well as an affirmative obligation to ensure their preservation.

Despite the placement of these obligations into America’s constitutional structure, protection of property rights has gradually foundered. Receiving compensation for property taken by the government has become extremely difficult, and the Fifth Amendment prohibition against taking property for non-public uses has essentially disappeared. Furthermore, property rights have been relegated to an inferior position in the scheme of protected freedoms. As the power of the state has grown, those rights that were of primary concern to the Framers have become a secondary concern for contemporary legislatures and courts.

Yet Framers such as Madison understood that property rights could not be excluded from protected freedoms because the protection of property is the foundation of all freedoms. He emphasized this relationship when he wrote, "[A]s a man is said to have a right to his property, he may be equally said to have a property in his rights. Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions."

Given Madison’s warning, each violation of property rights must be carefully scrutinized and guarded against by all who value individual liberty. Violations must be kept in check if our property in liberty is to be preserved. Current policymakers should emulate the Founders’ respect for private property rights whenever making decisions which affect those rights.

Unfortunately, that respect is too often absent in current legislators. The state of property rights law can be, in part, illustrated by the forfeiture laws currently in use by both the federal and Michigan governments.

Two main categories of forfeiture statutes exist in today’s legal system: criminal forfeiture and civil asset forfeiture. Civil asset forfeiture concerns the seizure of property presumed to have a relation to a crime or to be obtained as a consequence of criminal activity. No determination of criminal guilt is necessary to trigger a civil asset forfeiture, which is in rem, or against property, in nature. The bulk of this report will address this category of forfeiture and the constitutional and civil rights problems it poses.

The second category involves criminal forfeitures, which are primarily in personam—against the person—in nature. A criminal forfeiture results after a conviction for the crime to which the forfeited property is related. This can occur upon a showing that the property is contraband (illegally obtained, obtained through the profit from a crime, or involved as an instrument of the underlying offense), as a consequence of sentencing, or as a condition of a plea bargain. Fewer injustices are likely to result in this category of forfeiture, given the more protective procedural safeguards in criminal prosecutions.

Nonetheless, several concerns arise in the analysis of criminal forfeiture laws. Eighth Amendment protections from excessive fines and the implied protection against disproportionate punishments must be considered…

… More than merely altering the procedural requirements of the forfeiture system, we must analyze the underlying concerns of governmental power over individuals, as well as the motives and incentives for governmental action in seeking that power. Individual liberty, property rights, and individual choice must prevail to maintain a free society. The crisis mentality must be lifted, allowing us to create a reasoned and limited system of government based on the protection of individual freedom.

From “Reforming Property Forfeiture Laws to Protect Citizens’ Rights” by Donald J. Kochan; Mackinac Center for Public Policy, 1998

 

Right-to-Work Should be Judged on Economic Data

Corporate welfare inquiries not a good barometer of success

On public television’s weekly Off-the-Record program last week, state Rep. Mike Shirkey, R-Clark Lake, discussed Michigan’s new right-to-work law as being successful based on business expansion inquiries made to the Michigan Economic Development Corp., the state agency that awards special tax breaks and subsidies for corporations and developers. Yet both history and employment data shows that kind of information says little about the economy.

The economy is dynamic, with a vast amount of job creation and loss constantly occurring. In the most recent quarter of data, Michigan’s economy added 217,038 jobs and lost 200,728 jobs. The state added one out of every 16 jobs in the quarter and lost one out of every 17 jobs. Similar rates of job churn occur every month, year-in, year-out, here and all across the country.

Even when Michigan’s economy is improving, there are jobs lost somewhere in the state. It just means more new jobs are being created than are disappearing. Even in bad times, some businesses are opening or expanding, and even in good times some are closing.

For this and other reasons, the number of MEDC announcements claiming credit for jobs moving to Michigan tells us nothing about the state economy. During that three-month period cited above, the agency announced deals accounting for just 2,185 new jobs, or a mere 1 percent of the 217,038 jobs created in the state. Moreover, based on past performance, only 29 percent of those 2,185 jobs will materialize.

The previous decade provides a good case history demonstrating how irrelevant incentive programs targeting particular firms or industries really are to the economy. Michigan saw a massive increase in “economic development” programs during the 2000s. The number of credits awarded by the state’s then-flagship program, MEGA, increased from 33 projects in 2000 to 110 projects in 2010. During this period other programs were created including a “Tech TriCorridor Initiative,” a “21st Century Jobs Fund,” open-ended subsidies for film producers and a myriad of other industry du jour attraction policies.

Despite all this government economic activism, Michigan lost a net 813,100 jobs from 2000 to 2010.

The figures released by government economic development agencies amount to little more than accumulations of anecdotes. They tell us nothing about the direction of a state’s economy or whether certain policies are effective. In contrast, while broader statistical measures don’t give politicians ribbon-cutting success stories to boast about, they do provide reliable indications of where we are heading, and over time, of what works.

An econometric examination of the effects of right-to-work laws in different places over different time periods reveal a significant and positive relationship between this policy and growth in state employment and personal income. This is how economic progress should be measured: In changes to the livelihoods of residents. The number of press releases generated by a state’s economic development agencies tells us nothing about that state’s economy.

 

Moderate Steps for Brewers, Industry Freedom

No reason for Legislature not to do more

Several bills related to brewers, restaurants and bars were recently passed by the Legislature. While all are pushing the rules in the right direction, there is no reason the state should not allow for more freedom on these legal products.

The most significant proposed laws are as follows (all have passed the Legislature nearly unanimously and are headed to the governor):

  • House Bill 4709 would “increase the amount of beer microbrewers can brew from 30,000 to 60,000 barrels per year” (up from 18,000).
  • House Bill 4710 would “allow one brewpub to have a financial interest in up to five other locations” (up from two).
  • House Bill 4711 would “allow a brewer to sell its beer at two tasting rooms instead of just one.”
  • Senate Bill 650 would “allow very small commercial brewers (ones that produce fewer than 1,000 barrels per year) to sell directly to a retail merchant, rather than being mandated (like larger producers) to sell through one of the regional wholesale distribution monopolies that are protected by current liquor control regulations.”
  • Senate Bill 505 would lift some regulations the prevented bars and restaurants from allowing advertisements on trays, coasters, napkins, shirts, hats, pitchers, glasses, bar mats, buckets, bottle openers, stir rods, liquor drink menus, patio umbrellas and packaging used to hold and deliver liquor purchased by the retailer. 

There’s no good reason for the state to limit the amount of beer microbrewers can make or the number of operations and tasting rooms — consuming alcohol is legal and production should be set based on demand. If Michigan businesses are limited, it is likely that the response of consumers is to drink other types of beer, which means capping the brewers serves no purpose other than to hamper successful operations and harm economic growth. And while allowing smaller brewers to avoid the regional wholesale distribution monopoly is a good idea, all enterprises should have the freedom to ship how they want.

We have covered Senate Bill 505 previously, which is a compromise between the old, Prohibition-era rules that prevented any logos on a variety of bar and restaurant items and the idea that establishments should not be limited by government from these types of agreements. Ironically, the craft brewers lobby, which has long had to fight anti-competitive government restrictions, supports the old rule because it limits their competition. The bill is better than the previous law, but the compromise is still a ridiculous regulation hampering businesses.

From a broader public policy standpoint, there is little reason the state should be standing in the way of the expansion of Michigan brewers. The truth is, none of these laws are about public safety, or any other reasonable purpose.

A 2012 study by Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center, and Antony Davies, an associate professor of economics at Duquesne University in Pennsylvania, found that a state’s alcohol regulatory regime has little to do with public health outcomes.

Another study from Donald Boudreaux, a professor of economics at George Mason University, and Julia Williams, with the Regulatory Economics Group, completed in 2010 looked broadly at how tough alcohol regulatory laws were. It found “no statistically significant differences between the 18 control states and the 32 license states (and the District of Columbia) in rates of alcohol-related deaths, drunk-driving fatalities or binge drinking.” They also found “similar results for rates of drunk-driving fatalities and binge drinking among youths.”

The state is moving in the right direction on alcohol regulation, but current laws still enrich a handful of special interests in the alcohol wholesale and distribution business. The Legislature should do more.