The MC: The Mackinac Center Blog

Read This: FEE Interview With Larry Reed

Former Mackinac Center president shares stories of his world travels

Our friends at the Foundation for Economic Education recently published an interview with their current president, Lawrence W. Reed. Friends of the Mackinac Center will know Larry as the first president of this organization. He currently is president emeritus at the Center and a member of our Board of Scholars.

The interview is fascinating and highly recommended. Larry tells several stories about his travels around the country and world. He's visited 49 states (just North Dakota left!) and an astonishing 81 countries. How he had the time and energy to build one of the nation's premier state-based, free-market think tanks and travel the world is beyond me.

Perhaps my favorite story has Larry and the Mackinac Center's late former senior vice president, Joe Overton, in the middle of a civil war in Mozambique:

In 1991, my late friend and then-senior vice president at the Mackinac Center Joe Overton and I flew at treetop level in broad daylight 150 miles into Mozambique from neighboring Malawi. We were there for a couple of weeks with the anti-communist rebels during the Mozambique civil war. The plane was piloted by a Christian missionary who knew where to go: a makeshift runway the guerrillas quickly camouflaged with small trees and brush. If the regime had known of our plans, it would have put MIGs in the air to shoot us down. A year later, we were back in Mozambique, courtesy of the regime itself, to see things from their perspective. We even had dinner with the president, Joaqhim Chissano, at the presidential palace. I asked him, “How are we to believe you’re no longer Marxist when the streets here in Maputo are named for thugs like Ho Chi Minh, Mao Zedong, Karl Marx, and Vladimir Lenin?” He replied with a smile, “We are going to change the names of the streets.” I don’t know that he ever did.

Well, I have some bad news for Larry. Using Google Maps, I confimed that those streets  can still be found in Maputo. But I'm sure Larry won't be too surprised at being misled by a politician. There's good news too, though, because I also found a supermarket at the corner of Avenida Karl Marx and Avenida Ho Chi Min. Even on streets named for communists, markets at work!

Read the rest of the interview here.

Coalition's Vision for Detroit: More Bureaucracy; Less Innovation

Doubling down on what doesn't work won't fix Detroit schools

A Detroit coalition has released its long-awaited recommendations on education policy for Detroit. Though the coalition characterizes its recommendations as a way to improve the "education landscape" for all Detroit students, the coalition's main apparent goal is preserving the institution of Detroit Public Schools.

DPS Bailout: To that end, the coalition recommends that taxpayers from the rest of the state pay off some of DPS' debt, take on some of DPS' employee retirement costs, increase school funding and remove the district's emergency manager to hand back control to a local school board. The coalition does not mention how much all of this will cost. But with the coalition's recommended $53-million-per-year in debt payments from state taxpayers, combined with a very conservative estimate of retirement costs, these two moves alone could easily cost more than $100 million each year.

While certainly expensive, the policies listed above won't keep students from leaving. Families are seeking a better education for their children and are enrolling them in public charter schools or other nearby school districts. The Detroit News recently reported that thousands of students leave Detroit for other conventional districts. As many as 50,000 Detroit children choose to attend public charter schools instead of DPS.

There are too many families benefiting from educational choice for any group to reasonably suggest taking those choices away. Instead, the coalition suggests creating a powerful commission, effectively giving an education czar broad power over all Detroit schools.

Bureaucratic Limitations: The coalition's plan would create a "Detroit Education Commission." The DEC would be more powerful than any other education bureaucracy in the state when it comes to controlling parents’ educational choices: The DEC would have the power to close DPS schools and Detroit-area charter schools, determine which new schools are allowed to open, and where those new schools are physically located. The coalition envisions a future where this super commission would even have power over shared city services, including transportation and special education services.

The DEC might even have the authority to override parent preferences when it comes to picking the best school for their child. According to the coalition's report, parents will get their first choice "when available." What that will look like in practice is unclear.

In a potential organizational chart, the coalition envisions the DEC overseeing an office that would cost $4.6 million per year to operate. The bill is a tough one to swallow, since the DEC will be a bureaucratic entity charged with, essentially, slowing the growth of educational options in Detroit.

Many of the DEC's powers, such as deciding whether a new school can open, are a duplication of existing processes. Charter schools already have to be approved by a public authorizer. Further, the DEC's ability to close schools is a duplication of powers already in state law and ignores the fact that charter schools are already routinely closed for poor performance.

The coalition is proposing limiting the growth of educational choice in Detroit, less than two weeks after Stanford University highlighted Detroit's system of charter schools as a "model" for other communities to follow. If policy makers decide to restrict choice, Detroit parents will have every right to question that move.

Detroit public charter school students post higher learning gains than their DPS counterparts. And yet, the coalition’s recommendations strive to preserve the institution that has a long history of failing its students, while limiting new options that hold promise for Detroit families.

Spalding Quoted in The Detroit News

Article highlights school choice in Detroit

The Detroit News quotes Audrey Spalding, director of education policy, on school choice in Detroit.

According to the article, 25,000 Detroit students have chosen to use school choice to attend schools in the suburban areas, with 17,000 of those students attending charters.

“The point of our public education system is to serve the kids. There are reasons kids and families are traveling so far away to go to another school,” Spalding said.

The Detroit Public Schools district seems to agree. A Detroit Public Schools spokesman said the district is working to improve its system in order to attract students and keep current students from leaving.

The many friends and admirers of Robert P. (“Bob”) Crowner mourn his passing, which occurred this week at the age of 87, after a long bout with cancer.

Bob was an exemplar of the balanced life. He was successful in business before he taught the subject at the university level. He believed in the education of youth, devoting his attentions to enhancing it in both the public and private sectors. He knew a lot about a lot of things but never felt he knew enough that he could crow about it. He was an engineer who knew there was another engineer who towered over all others, the Creator who made us all. He worked hard at every job he held, but still found time to work a lot more as a volunteer for worthy causes. As a long-time member of the Mackinac Center’s Board of Scholars, his bio spells out some of the details:

Prior to teaching, Crowner worked for four companies in engineering and manufacturing management, culminating in a role as vice president of manufacturing. He also consulted for private companies, a public school district, and city and provincial governments.

Crowner was a Registered Professional Engineer in Indiana, Michigan and Ohio. He held a Bachelor of Mechanical Engineering from Purdue University, a Master of Science in Business Administration from Butler University and a Certificate for the Middle Management Program from Harvard Business School.

He did extensive volunteer work, including 34 years on the Lodi Township Planning Commission and 12 years on the Lodi Township Board of Trustees. He served as the director of the Center for Entrepreneurial Stewardship for the Acton Institute. He served on two private Christian school boards and a charter high school board. He also did volunteer counseling for SCORE, an organization which provides free consulting for small businesses.

Bob was an early friend of the Mackinac Center. In the very early 1990s, I met both Bob and his delightful English wife, Christine, and became instant friends. My assistant at the time, Kendra Shrode (now assistant to my successor Joe Lehman), and I enjoyed the many opportunities we had for lunch or dinner with the Crowners. The conversation, graced by Christine’s English accent, was always lively and uplifting. Bob’s broad smile, twinkling eyes and generous wisdom left a memorable impression every time.

I share with my former Mackinac colleagues a sadness at the news of Bob’s passing, but with the knowledge that he left the world a better place and left it for a better place. We extend our heartfelt condolences to his widow and our friend, Christine.

The Proposal 1 road funding initiative on Michigan’s May 5 ballot has excited strong feelings on both sides, but one provision has raised more quizzical eyebrows than passions. This is to initially use most of the new transportation revenue to repay past road repair debt, rather than immediately start pouring concrete and laying asphalt.

Specifically, if voters approve Proposal 1’s $2 billion tax increase (and if as expected legislators pass a necessary “clean up” bill), then most of the revenue from the measure’s $1.2 billion fuel tax will initially go to repay debt on past road repairs. In the first year $815 million will be used to repay debt. In the second year, this falls to $456 million. Only in the third year will the full gas tax amount go to current transportation funding, rather than paying for road repairs that politicians put on the state’s credit card years ago.

This actually makes a lot of sense. It gives time to allocate new road tax dollars effectively and rationally, and would remove the drain on current road funding caused by past politicians’ desire to spend now and let their successors pay for it later. The result of those choices has been persistent erosion of current Michigan road funding revenues.

The drain began in the 1990s and early 2000s, when Governors John Engler and Jennifer Granholm both chose to increase the amount of state borrowing for routine road maintenance projects. The political goal was to get a lot of orange barrels out and road repairs underway in a hurry. Various rationales were promoted for why borrowing made sense, but when the cement dust had settled it left a debt service overhang that persists.

In essence, Michigan is still paying today for routine road repairs done 10 years ago and more, which means less money is available to fix today’s roads.

A 2013 House Fiscal Agency report quantified the ongoing debt service drain on the annual transportation budget. The borrowing came in several installments. In the 2000-2001 fiscal year, debt incurred for road repairs increased from $633 million to $1.328 billion. Between 2002 and 2011 additional money was borrowed, and by the close of the 2012 fiscal year the state owed $2.046 billion for past road work.

Principal and interest payments increased apace, taking an ever larger bite out of annual road funding budgets. The House Fiscal Agency reports that annual debt service rose from $47.2 million in 2001 to $187.6 million by 2006. Between September 2009 and October of 2011 this debt consumed around $215 million each year, and it is expected to stay at that level until 2020, when presumably the amount will begin to fall off.

Love Proposal 1 or hate it, clearing away the burden of debt that continues to eat away Michigan’s annual state road budget would be a good thing. Taxpayers and motorists can only hope that a future crop of politicians won’t have to be taught the same lesson.

Gov. Snyder recently sent a letter to Michigan House Speaker Kevin Cotter and Senate Majority Leader Arlan Meekhof explaining some of the problems of occupational licensure.

The governor summarizes some of the good work the Legislature has done, and outlines the principles he'll use in "determining whether to support any legislation providing for additional occupation regulation.” Below are these principles:

  1. There must be a substantial harm or danger to the public health, safety, or welfare as a result of unregulated practice, which will be abated through licensure.
  2. The practice of the occupation must require highly specialized education or training.
  3. The cost to state government of regulating the occupation must be revenue neutral.
  4. There must be no alternatives to state regulation of the occupation (such as national or third-party accreditation) which adequately protect the public.
  5. The scope of practice must be clearly distinguishable from other licensed, certified, and registered occupations.
  6. Regulation through registration or listing (as opposed to licensure) does little to protect public health and welfare, and is not an appropriate use of government resources.

Occupational licensure laws require people to pay a fee and complete state-approved training before they are legally allowed to practice a trade. The public benefits of these laws are dubious, and when they are proposed, the Legislature almost never requires evidence of how licensing laws will actually protect public health and safety. Usually, these mandates are initiated and supported by special interest groups who benefit directly when their competition is limited.

Gov. Snyder recognizes that licensing serves to protect groups from competition, which drives up prices for consumers and harms the poor the most. He should be applauded for his efforts and the Legislature should move forward with eliminating these barriers to, as Gov. Snyder put it, the "pursuit of happiness."

Mackinac Analyst on Frank Beckman Show

James Hohman talks about Proposal 1 study findings

Assistant Director of Fiscal Policy James Hohman discusses his Proposal 1 study on "The Frank Beckman Show" on WJR AM760.

The May 5 ballot proposal raises revenue to fix the roads by increasing the sales tax from 6 percent to 7 percent and changing the way gas is taxed. The study shows the proposal will cost taxpayers $2 billion and the average household approximately $500 more per year. At the Energy Information Administration’s estimate average gas price for 2015 of $2.39, Proposal 1 would increase the price per gallon by 10 cents.

Most of the revenue raised under this proposal goes to road construction and maintenance, however, the proposal does include additional spending such as increased funding for public schools and increased earned income tax credits.

March 27, 2015, MichiganVotes Weekly Roll Call

A raise for judges; welfare truants; legalized scalping

Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!


Senate Bill 56, Give judges a raise: Passed 33 to 3 in the Senate

To increase judges’ salaries around $12,000, and index them going forward to increases in the salaries paid to unionized state “civil service” employees. After the change salaries would range from around $150,000 to $163,000 depending on which level of court.

Who Voted “Yes” and Who Voted “No”


Senate Bill 85, Extend preemption of local gun control to air guns: Passed 29 to 8 in the Senate

To revise the state law preempting restrictive local gun control ordinances so it applies to “pneumatic” guns, defined as ones that shoot “a BB or pellet by spring, gas, or air.” Locals could adopt restrictions on possession of these by minors, prohibit “brandishing” them to induce fear, or shooting in a heavily populated area.

Who Voted “Yes” and Who Voted “No”


Senate Bill 54, Ban using a drone to interfere with hunter: Passed 110 to 0 in the House

To prohibit using an aerial drone to interfere with or harass a person who is hunting. This would expand an existing law that bans interfering with or harassing hunters. Senate Bill 55 bans using a drone for hunting and also passed the House unanimously.

Who Voted “Yes” and Who Voted “No”


House Bill 4193, Allow electronic “proof of vehicle insurance”: Passed 108 to 2 in the House

To revise the state’s no-fault insurance law to allow “proof of insurance” documents motorists are required to have when driving to be an electronic communication from the insurance company visible on a mobile device. If asked a driver could be required to forward the information to a designated site.

Who Voted “Yes” and Who Voted “No”


House Bill 4041, Ban welfare for persistent truancy: Passed 74 to 36 in the House

To withhold welfare benefits from a household with children who are persistently truant from school. A truant child age 16 and above could be removed from the household for this.

Who Voted “Yes” and Who Voted “No”


House Bill 4015, Repeal ticket scalping ban: Passed 70 to 40 in the House

To repeal a state law that bans ticket “scalping” at sports and entertainment events, or selling tickets at a higher price through a service or agency.

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.

An article by American Enterprise Institute scholar Andrew Biggs in the Wall Street Journal (subscription required) explains how the bogus “transition costs” argument against reforming government pension systems recently became even more bogus.

To refresh, this was the argument used in 2012 by teachers unions and state pension bureaucrats to scuttle a transformational school pension reform bill that had passed the Michigan Senate. The measure would have closed the system to new hires, instead granting them generous 401(k) benefits.

Biggs writes:

But the public-pension industry—government unions and the various financial and actuarial consultants employed by pension-plan managers—claims that ‘transition costs’ make switching employees to defined-contribution pensions prohibitively expensive...

The argument goes as follows: The Governmental Accounting Standards Board’s rules require that a pension plan closed to new hires pay off its unfunded liabilities more aggressively, causing a short-term increase in costs.

But GASB standards don’t have the force of law; nearly 60% of plan sponsors failed to pay GASB’s supposedly required pension contributions last year…GASB standards are for disclosure purposes and not intended to guide funding. New standards issued in 2014, GASB says, “mark a definitive separation of accounting and financial reporting from funding.”

In fact, nothing requires a closed pension plan to pay off its unfunded liabilities rapidly, and there’s no reason it should…Whether new hires are in a defined-contribution pension or the old defined-benefit plan, the size of the unfunded liability and the payer of that liability are the same.

Michigan’s school pension system is among those “60 percent of plan sponsors” who failed to meet “annual required contributions” last year, and thus it broke a GASB “rule.” This means the state did not contribute the amount the system’s own accountants estimated is needed to both cover the cost of another year’s pension credit earned by school employees, and start “catching up” on the past underfunding that has generated a $26 billion unfunded liability. (The estimate was $2.1 billion, and the state only put in $1.6 billion.)

Rule number one of getting out of a hole is to stop digging it deeper. The bill passed by the Michigan Senate in 2012 was potentially transformational because it would have closed the defined-benefit school pension system to new hires, placing the state on a glide path to eventually getting out from under employee legacy costs.

The signs are hopeful that the current House and Senate may complete the work begun by Gov. John Engler and the 1996 Legislature when they closed the state employee pension system to new hires, a reform that saved taxpayers between $2.3 and $4.3 billion.

Right-to-work is not for or against unions. In fact, the only effect of right-to-work on collective bargaining is that it takes away a union’s ability to get a worker fired for not paying them.

In 1999 Robert P. Hunter, a Senior Fellow in Labor Policy for the Mackinac Center for Public Policy, created the Spectrum of Government Intervention in Organized Labor. On one side of the spectrum was government outlawing unions, labeling them a criminal conspiracy. On the other side was forcing all workers to be members of a union.

click to enlarge

Hunter, taking a Goldilocks approach, said that the preferred place for government intervention in organized labor was in the middle: neutrality. Hunter maintained that government should not force or forbid anyone from joining (or associating with) a union.

While right-to-work is not completely neutral — workers can still be forced to accept representation from a union and employers are still obligated to negotiate with a union — it is a step closer to Hunter’s ideal.

With right-to-work, unions, workers and employers can still bargain over wages, hours, working conditions and everything else they typically bargain over.

The difference is that with right-to-work a union must earn the dues of its members.

By proving their worth to their membership and making them compete, right-to-work can make unions stronger. Combine this competition with right-to-work states adding more jobs — meaning there is more opportunity for union jobs — and the result is that union membership may grow faster in right-to-work states compared to non-right-to-work states.

In 2014, the right-to-work state of Indiana tied with the non-right-to-work state of Colorado for adding the most union members in the country. Both states added 50,000 new union members each, according to data from the Bureau of Labor Statistics. The state that lost the most union members was the non-right-to-work state of Washington, which lost 55,000 members.

The ratio of which group of states adds more union members varies each year. In 2012, right-to-work states added 39,000 new members and non-right-to-work states lost 390,000. Other years, like last year, forced-unionism states come out ahead.

Even union officials are starting to take notice of the fact that right-to-work can help unions thrive.

As Gary Casteel, secretary-treasurer for the United Auto Workers recently noted:

“I've never understood [why] people think right to work hurts unions … To me, it helps them. You don't have to belong if you don't want to. So if I go to an organizing drive, I can tell these workers, 'If you don't like this arrangement, you don't have to belong.' Versus, 'If we get 50 percent of you, then all of you have to belong, whether you like to or not.' I don't even like the way that sounds, because it's a voluntary system, and if you don't think the system's earning its keep, then you don't have to pay.”

A year after Michigan passed its right-to-work law, Doug Pratt, director of member and political engagement for the Michigan Education Association, said that right-to-work caused his union to increase their efforts to “explain to our members why membership is of value,” and that “We’re stronger because of it …”

Likewise John Beck, an associate professor in Michigan State University’s School of Human Resources and Labor Relations told the Livingston Daily:

“There’s an imperative now that really demands that unions pay more attention to [member engagement] than they have in the past. In that way, I don’t think that, by its very nature, [right-to-work is] the death knell. In fact, some would argue that it’s actually going to be kind of a needed shot in the arm.”

Right-to-work has little effect on collective bargaining, but can have major effects on the efficacy of union representation.

(Editor’s note: A version of this article first appeared on the Web site of the Illinois Policy Institute.)