The MC: The Mackinac Center Blog

New Study Shows Positive Effects of Ridesharing

Introduction of Uber decreases crash rates and DUIs

Uber has long suggested that the introduction of its service correlates with a decrease in drunk driving arrests. In Seattle, for example, DUI arrests dropped by 10 percent after Uber launched. But the company acknowledged that a more detailed analysis would be necessary to show causation.

That analysis has arrived in the form of a recently published paper by Angela Dills of Providence College and Sean Mulholland of Stonehill College, who conducted a broad study of Uber in over 150 cities. “Ride-Sharing, Fatal Crashes, and Crime” addresses not just incidences of drunk driving, but also crash rates and certain other types of crime.

The study found that fatal crash rates were reduced by six percent on average after the introduction of Uber in a city. Nighttime fatal crashes also dropped by 18 percent. Overall, the authors find that for each year Uber is operational in a city, auto fatalities decline by 16.6 percent.

The decline in fatal crash rates alone presents a compelling argument for expanding ridesharing services to a broader audience, but the drunk driving statistics are even more impressive:

[W]e find a large and robust decline in the arrest rate for DUIs. Depending upon specification, DUIs are 15 to 62 percent lower after the entry of Uber. The average annual rate of decline after the introduction of Uber is 51.3 percent per year for DUIs.

These numbers back up the anecdotal evidence Uber drivers have told through their stories. This new evidence suggests that allowing ridesharing to grow and expand in Michigan wouldn’t just benefit drivers and passengers, it would benefit everyone else on the road by cutting back on fatal traffic accidents, drunk driving and other related crimes.

The Michigan Legislature is currently considering a package of bills that would create a statewide regulatory framework for ridesharing and allow more Michiganders to drive for the likes of Uber and Lyft. Ridesharing is great for the Michigan economy, but this new research suggests that passing those bills would improve the safety of the state’s roads, as well.

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For more information, read the full study or visit mackinac.org/ridesharing.

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Related Articles:

The Many Benefits of Ridesharing

Ridesharing Drivers Tell Their Stories

Ann Arbor Crackdown Illustrates Need for Statewide Ridesharing Framework

An Uber Driver Shares His Story

Can I Catch a Ride?: Regulating Uber and Lyft in Michigan

House Refuses to Ration School Choice for Detroit Parents, Children

Let parents, not a new bureaucracy, choose schools

The Michigan House narrowly passed a revised plan to aid the financially distressed and academically disastrous Detroit Public Schools, agreeing to send much more money to the reconstituted school district but drawing the line to defend parental choice. Former Gov. John Engler weighing in against a “morally wrong” Detroit Education Commission proposal may have helped make the difference.

The House significantly closed the gap between its initial DPS bailout offer of $500 million and the Senate’s more generous $715 million, settling on a total of $617 million. More importantly, though, Speaker Kevin Cotter and 54 other House members withstood the pressure to limit charter schools in Detroit. They saw through a plan that would have constrained educational choice, a scheme focused on protecting a school district plagued by financial scandal and bearing the nation’s worst academic record.

Instead of a seven-member commission, appointed by the mayor of Detroit and having a veto power over opening new charter schools, the new House plan establishes an advisory council with the task of providing annual recommendations on school facilities and locations in the city. As approved, the council would consist of the new DPS superintendent and school board president, as well as four additional members appointed by the state’s School Reform Office: a DPS parent, a charter parent, a charter administrator or board member, and a representative of charter authorizers.

There have been some strong reactions to the House’s approval of the new plan. MIRS News Service reports that Rep. Adam Zemke, D-Ann Arbor, described it as a “handout to criminals.” Detroit Free Press editor Stephen Henderson wished a drastic fate on supportive lawmakers: “sew them into burlap sacks with rabid animals, and toss them into the Straits of Mackinac,” he wrote.

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Such responses are as misguided as they are inappropriate. The Detroit Education Commission would not solve DPS’ deep-seated woes. But for many students, it would limit future avenues of opportunity.

Though no proposal is perfect, the House compromise package mostly fulfills five principles of a sound legislative solution for DPS. If the Senate joins the House in approving this no-DEC compromise, that makes it a worthy cause for celebration. But it also leads directly to a call for action.

As a whole, Detroit charter schools have achieved better results than district schools. But students need more quality seats their families can access. And parents need information that will enable them to make the best decisions, along with capable school leaders who are primarily accountable to them, rather than to bureaucrats or politicians. These will require new options, and new partnerships.

The House majority merits kudos for standing tall on principle — parents, not bureaucrats, are better at choosing schools that work for their kids. In fighting hard to ensure no harm is done, it also has preserved the conditions that best allow for future success. It’s time to stop fretting over saving a failed institution, and time to start creating and pursuing more hopeful opportunities.

Note: Since the initial publication of this article, both chambers of the Michigan Legislature agreed on a bailout package that does not create a Detroit Education Commission.

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Detroit Charter Schools Spend Way Less Money and Get Way Better Results

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Cut Corporate Welfare to Help Balance State Budget

Tenuous relationship between corporate welfare and economic health

Michigan will collect more taxes next year, but not as much as predicted a few months ago, leaving members of the Legislature looking at a sizable gap between what they want to spend and the money available to pay for it. The most constructive and efficient way to balance the budget is to eliminate the state’s corporate welfare programs and supporting bureaucracy.

The budget the Legislature enacted for fiscal year 2016 included almost $178 million in six major items over which the Michigan Economic Development Corporation controls. Cutting this would not only help balance the budget, but could improve Michigan’s economy. Lawmakers may also be able to redirect an additional $39 million from Indian gaming monies that currently flow directly to the state’s corporate-welfare bureaucracy.

The MEDC takes money from many people and businesses and gives it to a few. The logic that government can create more jobs than would otherwise exist is wrong according to both experience and empirical evidence.

One of the reasons cited publicly for the budget shortfall is the need to pay out on an old, targeted business subsidy program called “Michigan Economic Growth Authority.” Five scholarly analyses of MEGA have been performed since 2005, and three of them found the program had, at best, no impact on job creation and at worst, a negative one. A fourth found a positive but tiny impact.

The fifth study, published in 2014, reports, “There are no relationships between the use of MEGA and economic health.” The author, Michigan State University scholar Laura Reese, looked at more state programs than MEGA and concluded, “The wisest course of action for most cities would be to eschew particularized development incentives, especially those that require tax incentives.”

The state’s auditor general found that Michigan’s 21st Century Jobs Fund program could only show that roughly 19 percent of the jobs promised actually materialized. That doesn’t take into account the costs of running the program.

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The Michigan film incentive program paid out more than $500 million in taxpayer money before it was canceled in 2015. Even one of the MEDC’s own paid consultants found that the program cost the state treasury more money than it generated.

The Mackinac Center recently discovered the same to be true of the state’s tourism promotion efforts, such as the Pure Michigan campaign. The Center looked at efforts of 48 states to promote tourism over nearly 40 years and found a negative result. For every $1 million increase spending, hotels and motels saw an additional $20,000 in extra economic activity. Eliminating this program alone would save the state $34 million in fiscal 2017 alone.

There is more evidence that programs like these don’t work, in Michigan and nationally. Economists Peter Fisher and Alan Peters conducted a literature review, looking at the work other scholars had done. In their paper, “The Failures of Economic Development Incentives,” they concluded the tens of billions dedicated nationwide each year to incentive programs are probably ineffective.

Worse, the MEDC may actually harm economic growth. A study published in the Cato Journal argues that states that encourage “rent seeking” may stunt their real rate of economic growth considerably. In rent seeking, private parties, like businesses, go to the government in search of favors, like subsidies. The MEDC hands out such favors.

The state needs to scale back its plans for spending. It should start with eliminating corporate welfare spending.

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Lawmakers Must Preserve Choice in DPS Bailout

Op-eds in The Detroit News and Midland Daily News

As lawmakers in Lansing consider the best way to deal with the insolvent Detroit Public Schools, the Mackinac Center for Public Policy’s Director of Education Policy Ben DeGrow has urged them to preserve and expand school choice.

In an op-ed published in The Detroit News, DeGrow explains why limiting charter schools in the city — as the Senate’s plan would effectively do — is the wrong answer for students and parents.

Legislatures across the country have been expanding the freedom of more parents to choose the school they think is best for their children. A retrenchment on this bipartisan effort would be a blow to the larger school choice movement that has swept across this country.

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DeGrow explains that establishing a Detroit Education Commission, which would have the authority to put a moratorium on new charters and close existing ones, would protect institutions at the expense of children.

Providing school options for low-income parents has become a political issue, because parents often choose nonunionized charter or private schools. So unions are pushing back, urging politicians to ban these choices for low-income families. Unions and their anti-choice allies are essentially trying to ensure that only the rich should be able to choose schools for their children.

In a separate op-ed published in the Midland Daily News, DeGrow writes about the need for a transparent statewide academic reporting system that considers not only students’ success, but their socioeconomic background. In Detroit and throughout the state, it’s important to consider the number of low-income students a school serves when ranking them, DeGrow said.

The ongoing challenge is to promote high standards without discouraging schools from taking on students who need serious remedial help after languishing elsewhere in the system. Following Florida’s lead, other states have developed ways to measure the year-to-year learning progress of individual students — including a schoolwide student average and subgroups of students.

DeGrow notes that permitting the proposed Detroit Education Commission to create such a grading system and rule on the fate of schools that do not perform to its standards could tilt the playing field against charter schools and cut off options for students who need them most.

The commission could bolster its own power and limit competition from charters by setting the bar high enough that few or no charter schools could earn an A or B.

Read the full op-ed in The Detroit News.

Read the full Midland Daily News op-ed.

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Related Articles:

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Detroit Mayor Says His Commission Will Be Independent While His City Discriminates

Four Questions About the Detroit Public Schools Plan

Right now, if a Michigan citizen goes to get a car repaired, it is fairly simple for the owner of the vehicle and a mechanic to decide what kind of parts to use to provide the fix. Unless a bill that has passed the Michigan Legislature is vetoed by Gov. Snyder, that process is about to get a lot more complicated.

There are two main types of auto parts: Those made by original equipment manufacturers (OEM) or those made by other companies (aftermarket). By and large, insurance companies, crash tests and research findings do not find a safety difference between the two — but OEM parts are usually significantly more expensive.

The makers of OEM parts, the large automakers, want a larger share of the auto repair parts market and have convinced a majority of Michigan legislators to make it harder for people to choose aftermarket parts. Despite the fact that there’s been no evidence provided that there is a systemic problem with aftermarket parts, House Bill 4344 has passed the Michigan Legislature and is on its way to the governor.

For the first five years of a car’s warranty, should the bill become law, mechanics could not use aftermarket parts on many components unless directed by the owner of the vehicle in writing. Parts manufacturers say this will harm and perhaps even cripple their industry and are urging a veto.

“The legislation discourages the use of aftermarket and remanufactured components in vehicle repairs, and in doing so will have a negative impact on Michigan companies, sales, and jobs,” Steve Handschuh, president and CEO of the Motor and Equipment Manufacturers Association, wrote to the governor. “In addition, consumers will have fewer repair choices presented to them, resulting in higher prices for parts needed for their vehicle repairs. We urge you to veto this legislation in support of the Michigan aftermarket industry and to preserve consumer choice in recognition of the high-quality and cost-effective repair options for their vehicles.”

Competition between parts manufacturers is good for consumers and repair facilities. It makes parts better, helps keep down the costs for consumers and can even put downward pressure on the cost of auto insurance. Legislators should be encouraging more competition, not less.

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June 3, 2016 MichiganVotes Weekly Roll Call Report

School recreation taxes, raises some speed limits, disclose pension liabilities

Note: Due to a House session that ran late, this report does not include votes from Thursday. These will be reported in the next Roll Call Report.

House Bill 4578, Authorize school recreation taxes: Passed 37 to 0 in the Senate

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To add school districts to a law that lets several local governments organize a recreational authority with the power to levy up to one-mill of property tax for swimming pools, recreation centers, public auditoriums, public conference centers and parks. The law is silent on whether the recreational facilities could be school facilities if the bill becomes law, but does require them to be open to the public. It also requires voters in each municipality to approve one of these tax levies.

Who Voted “Yes” and Who Voted “No”


Senate Bill 189, Ease certain lawsuit against the state restrictions: Passed 34 to 3 in the Senate

To remove certain restrictions on a person who successfully sues the state collecting costs and fees in addition to any court-ordered damage awards. Under current law, the winning plaintiff must prove a state agency's position was "frivolous" to collect costs and fees.

Who Voted “Yes” and Who Voted “No”


Senate Bill 292, Disclose unfunded pension liabilities costs in state budget: Passed 109 to 0 in the House

To require the executive budget the governor must submit each year to include an accounting by department of how much is needed pay the annual "catch up" costs on unfunded liabilities. These liabilities are incurred to pay future pension and post-retirement health benefits promised to retired state employees.

Who Voted “Yes” and Who Voted “No”


House Bill 4344, Remove Big 3 protectionism from auto repair shop licensure bill. Passed 86 to 23 in the House

To remove a provision from a previously passed auto repair shop licensure bill that would have prohibited a repair shop from replacing a major part on a newer vehicle with one not made by the vehicle's maker. Under this bill, shops would be able to use parts from a different manufacturer if the customer directs this to be done in writing.

Who Voted “Yes” and Who Voted “No”


House Bill 4136, Add civics to high school graduation requirements: Passed 82 to 27 in the House

To add a civics component to the state high school graduation requirements. Students would be required to pass a test comprised of questions identical to some or all those of those on the civics portion of the U.S. citizenship naturalization test.

Who Voted “Yes” and Who Voted “No”


House Bill 4426, Reduce points for barely speeding: Passed 75 to 34 in the House

To reduce the drivers license points imposed for exceeding speed limits by 5 mph or less to one point from two points. The current two points would still apply to speeds above 5 mph and not more than 10 mph.

Who Voted “Yes” and Who Voted “No”


House Bill 4423, Increase speed limits: Passed 56 to 53 in the House

To increase speed limits on rural freeways to 75 mph where engineering studies and traffic patterns indicate this is safe. General speed limits elsewhere would be 70 mph on other freeways, 65 mph on state "trunkline" highways with light traffic, 55 mph on county roads, and 55 mph on unpaved roads except in Oakland and Wayne Counties, where they would be 45 mph. The speed limit on subdivision streets would remain at 25 mph.

Who Voted “Yes” and Who Voted “No”


SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.

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July 1, 2016 MichiganVotes Weekly Roll Call Report

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Rumors of Taxpayer Spending

State job funds are expensive and underwhelming

There are rumors on Mackinac Island that there is an attempt to create a new state venture capital fund. It seems like these ideas pop up every couple of years. The results, though, have been expensive and underwhelming.

A 2003 program, the Venture Michigan Fund, is coming back to bite state taxpayers right now. The state issued a bunch of tax vouchers that would zap the budget if the deals behind them didn’t work out. Some did not, and the state was on the hook for an expected $140 million. Worse, the program may end up costing another $310 million. If the program was successful in creating jobs, the results were unreported. There are bills to wind this program down.

The 2005 21st Century Jobs Fund is still ongoing. Over the years, the fund has been used to support a number of high-risk investments. Unfortunately, more than $1 billion of taxpayer money has probably been spent, and what the state has received in return is uncertain. Feel free to scan the reports and see if you can determine whether the program justified its costs in an economy that gains and loses hundreds of thousands of jobs each year.

Success is something that gets trumpeted. Failures tend to be ignored. Lawmakers should be skeptical of another round of support for venture capital.

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Municipal Revenues Up Despite Arguments to the Contrary

Bridge Magazine article misses the big picture

In Bridge Magazine, former state House Fiscal Agency director Mitch Bean writes:

In addition to property tax cuts, changes to the sales tax base have reduced constitutional revenue sharing payments to cities, villages and townships (CVT) by $27.3 million in FY 2014 and by $181.2 million cumulatively since Proposal A in 1994.

He is not the only one judging that the state’s local government revenue system is “broken.”

You might think this is a terrible situation that local governments find themselves in. But Bean’s numbers don’t really tell the whole story about constitutional local government revenue sharing nor property tax trends. The annual constitutional revenue sharing payment is up $134.6 million over its 2001 level and payments to local governments increased $670.1 million cumulatively since then. Constitutional revenue sharing payments continued to increase regardless of what happened to the sales tax base.

And property tax revenue increased above inflation from 2000 to 2015 as well, suggesting that there weren’t really any meaningful property tax cuts to speak of. Local property tax revenue even grew above inflation from 2000 to 2007, a period when Michigan was suffering from a one-state recession.

Michigan Property Tax Revenue

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Bean deserves credit for pointing out the problems associated with the accumulation of retirement system debt in local governments. But blaming municipal financial struggles exclusively on nonexistent property tax cuts and inadequate constitutional revenue sharing funds misses the big picture.

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Freedom for Nations, States and Cities

Economic freedom increases human well-being

The stated purpose of the Mackinac Center for Public Policy is to improve the quality of life for all Michigan citizens by advancing the principles of a free-market economy, limited government and respect for private property. To many people, these seem like abstractions, and to those who believe in a larger and more intrusive state, they are obstacles to be overcome.

But as time passes and evidence accumulates, the link between liberty and human well-being increasingly becomes less a matter of philosophy and more a reasonable conclusion based on simple observation (South Korea vs. North Korea) and supported by a growing body of data and empirical evidence.

One of the foremost authorities on the data and evidence side is the Fraser Institute, a research organization based in Canada. Since 1996, Fraser has compiled economic freedom indexes comparing all the nations of the world. It also creates indexes that examine nations and states in various parts of the world. The goal is to measure economic liberty. This has enabled Fraser and other researchers to examine the relationship between that freedom and economic well-being — and see whether and how closely they are associated in different countries, states and provinces.

The indexes examine variables that indicate the extent to which the governments of a given region forbid or permit voluntary association in economic matters. For Fraser’s World Index, the relevant variables include “freedom to trade internationally” and “access to sound money.” At the state level, they include labor market freedom, taxes, and the magnitude of government spending.

The economic outcome factors are more straightforward — mostly rates of economic growth and average incomes. Spoiler alert: Most people won’t be surprised to learn that more economic freedom is strongly associated with faster economic growth and higher incomes.

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While Fraser focuses most of its efforts on collecting data measuring economic freedom, other researchers have used this data to drill down to economic outcomes. They have found, among other things, that liberty is also associated with a more equal distribution of wealth and income in a society.

In the latest 2015 edition of Fraser’s Economic Freedom of the World, the U.S. ranked only 16th — a lamentable position for the putative land of the free. Given this nation’s history and traditions, we should be the freest country in the world — No. 1 by a wide margin.

In the 2015 Economic Freedom of North America report, Michigan ranked 27th among the 50 states. That’s not good, but it’s a lot better than our ranking in 2010, which was 40th.

These things matter, and in ways that are life-changing for real people. The 10 freest states in the North American index enjoy per capita personal incomes that are 7 percent higher than the national average. Incomes in the 10 least-free states are 8 percent below the national average, a 15 percent difference between the top and bottom.

What would a 15 percent gain or loss in household income mean to your family?

Some try to write off the association between economic freedom and well-being as mere coincidence, but that is becoming an ever-greater stretch given the totality of a growing body of evidence. The people of North Korea, Zimbabwe and Nicaragua weren’t pauperized by coincidences, but by their governments crushing economic liberty at every turn.

It’s worth noting that the opponents of economic liberty do not appear to have any comparable indexes showing that people are better off where their preferred policies prevail. Where, for example, does one find empirical evidence that price controls and the suppression of property rights in Venezuela or Cuba have improved their people’s well-being?

The index methodology developed by Fraser has recently been extended by economist Dean Stansel to another level, municipal regions. In a fascinating report from SMU’s O’Neil Center, “The Wealth of Cities: Pursuing Economic Freedom Closer to Home,” the authors examine Stansel’s work.

Stansel examined 384 “Metropolitan Statistical Areas” in the U.S., including Detroit. The Motor City and its region ranked 345th. Looking at just the 30 largest areas by population, the Tampa Bay region in Florida is the most economically free. New York City’s MSA ranked last. Detroit’s MSA was 23rd out of 30 largest.

Again, this matters for the well-being of the people who live in these areas. According to The Wealth of Cities, the 100 MSAs with greater economic freedom experienced faster economic growth, more jobs, higher pay and less income inequality.

That there are opponents of the policies and ideas that make people more prosperous and free is disappointing but not surprising. But the work of the Fraser Institute is making the work of those opponents more difficult.

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Economic Freedom in Michigan and Beyond

The best research on school choice in Detroit shows that it leads to better results at a much lower cost to taxpayers. As Mackinac Center’s Director of Education Policy Ben DeGrow writes in The Detroit News:

The best study on charter schools in Michigan is from the Center for Research on Education Outcomes at Stanford University. This study paired individual students in charter schools with their “virtual twins” in district-run schools, based on their gender, race, grade level, family income, and academic ability as measured by standardized tests. It then compared the gains that these students in charter schools made compared to their “control group,” students just like them enrolled in district-run schools.

The study found that charters did better than conventional public schools in 52 of the 56 different outcomes tested and that Detroit charters gave students an extra two to three months of learning each year. The study called Detroit charters a “model” for other cities.

Meanwhile, on every test since 2009, Detroit’s traditional public school students scored the worst in the nation among big cities on the nation’s report card.

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According to the state, in total funding (local, state and federal), Detroit Public Schools spend an average of $18,602 per student while Detroit charter schools spend an average of $10,668 per student.

Much of the Detroit establishment — politicians, interest groups, and unions — want to give the mayor the ability to name members to a Detroit Education Commission that would restrict school choice in the city. The State Senate has given in, and included a $700 million bailout. But the State House has resisted and stood up for taxpayers and Detroit parents, who are saving money and receiving better education opportunities.

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Related Articles:

Detroit Public Schools' Collapse Preceded Charter School Expansion

Detroit Children Need Choice, Not Bureaucracy

House Refuses to Ration School Choice for Detroit Parents, Children

Detroit Charters Face All of the Obstacles of Detroit Public Schools – And Overcome Them

Detroit Charter School Parents: Don’t Take Away Our Freedom to Choose