Mackinac Center Commentaries

"Light Pollution" = Law Polution

Sat, 21 Nov 2009 00:00:00 -0500

Friday's Wall Street Journal has a piece by Eric Felten on a "dark skies" movement seeking to define outdoor lighting as a form of "pollution," and pass laws to boss people around regarding their choices on lighting up their own property. The piece characterizes those promoting such coercion as "trendy types touting natural lifestyles," and notes that, "for municipal busybodies, no cause is complete until it has been imposed on all one's neighbors."

Fortunately, Michigan's political class is immune to such misguided notions.

Oh, wait a minute . . .

2004 Senate Bill 1250 (Create light pollution study board )

Introduced by Sen. Liz Brater (D-Ann Arbor) on May 19, 2004, to create a state outdoor lighting study board to investigate the establishment and likely effect of new laws to limit "light pollution," which is "excessive and misdirected outdoor lighting" that deprives "residents of the beauty of the starry night sky and of nighttime cloud patterns."

http://www.mackinac.org/11397

MEGA Madness and Big Labor Contradictions

Fri, 20 Nov 2009 17:00:00 -0500

The Michigan Economic Growth Authority is a discriminatory tax credit program sold as a way for Michigan government to "create or retain" jobs here. This week it even offered a special deal to a for-profit arm of the SEIU labor union. Ironically, the MEGA deal was offered in part to address the union's complaint that it is at a disadvantage due to Michigan's "high labor costs," compared to two other states SEIU was supposedly considering (one of them with a "Right to Work" law reviled by the union). This according to a document obtained by Detroit News business writer Daniel Howes (State tax credit to labor union is baffling, November 20).

Apparently lost on state officials is that labor unions exist to artificially raise labor costs by wresting higher worker pay from employers - regardless of whether the productivity of their union employees justifies the increased compensation. This is yet another example of Michigan's so-called "economic development" programs working at cross-purposes with the stated goal of expanding our economy.

Several years ago the Mackinac Center categorized the reasons listed by MEGA beneficiaries for considering locations in other states. The summarizing graphic below is instructive. A full 30 percent cited uncompetitive labor costs in Michigan - more than any other reason

Every time the state hands out targeted tax credits or subsidies to a particular business or industry it is implicitly admitting that Michigan's costs for employers are too high. If that is true for a lucky handful of corporate welfare recipients, it's also true for all the other 100,000-plus Michigan job providers on the hook for the this state's burdensome business taxes, including the Michigan Business Tax and its 22 percent surcharge.

Granting these "targeted incentives" is demonstrably a failed policy. Systematic research shows these "targeted incentives don't work, but that hasn't stopped the state from picking ever more "winner" corporations as the beneficiaries of MEGA tax break deals. It would be far better to eliminate the MBT and surcharge for all Michigan businesses, thus making MEGA superfluous. The lost tax revenues could be easily replaced with any number of ideas for savings advanced by the Mackinac Center.

http://www.mackinac.org/11396

MEGA Madness and Big Labor Contradictions

Fri, 20 Nov 2009 16:26:00 -0500

The Michigan Economic Growth Authority is a discriminatory tax credit program sold as a way for Michigan government to "create or retain" jobs here. Systematic research shows it doesn't work, but that hasn't stopped the state from picking ever more "winner" corporations as the beneficiaries of MEGA tax break deals.

This week it even offered a special deal to a for-profit arm of the Service Employees International Union. According to a document obtained by Detroit News business writer Daniel Howes (State tax credit to labor union is baffling, November 20), the MEGA tax break was offered in part to address the disadvantage of Michigan's "high labor costs" compared to two other states SEIU was supposedly considering (one of them with a right-to-work law reviled by the union).

Apparently lost on state officials is that labor unions exist to artificially raise labor costs by wresting higher wages from employers - regardless of whether the productivity of their union employees justifies the increased compensation. This is yet another example of Michigan's so-called "economic development" programs working at cross-purposes with the stated goal of expanding our economy.

Every time the state hands out targeted tax credits or subsidies to a particular business or industry, it is implicitly admitting that Michigan's costs for employers are too high. If that is true for a lucky handful of corporate welfare recipients, it's also true for all the other 100,000-plus Michigan job providers on the hook for this state's burdensome business taxes, including the Michigan Business Tax and its 22 percent surcharge.

Granting these "targeted incentives" is demonstrably a failed policy. It would be far better to eliminate the MBT and surcharge for all Michigan businesses, thus making MEGA superfluous. The lost tax revenues could be easily replaced with any number of ideas for savings advanced by Mackinac Center scholars.

http://www.mackinac.org/11395

No Tax Dollar Left Behind

Fri, 20 Nov 2009 00:00:00 -0500

"No Worker Left Behind" is a taxpayer-financed, "free" tuition program created to retrain Michigan residents who have been laid off or whose jobs have been terminated. According to a July 6, 2009, New York Times profile, NWLB is just one of many comparable programs nationwide that are being criticized by researchers as ineffective because — despite the cost to taxpayers — they fail to measurably improve the job and earnings prospects for the retrained workers. A decision by state politicians to increase funding for NWLB was the subject of "Wasteful and Wrongheaded," the top story in the September/October 2008 edition of Michigan Capitol Confidential. MCC noted that a 59.9 percent general fund spending increase for the 2009 Michigan Department of Energy, Labor and Economic Growth budget had been approved and signed by the governor, and that more than half of the increase was due to additional funding for NWLB.

Despite assertions by Gov. Jennifer Granholm and many Lansing politicians that state spending has been "cut to the bone," NWLB is a relatively new spending creation, having been first proposed by the governor during her 2007 State of the State Address. Shortly thereafter, in her 2008 executive budget, the governor recommended spending $77 million for the first year of NWLB, proposing that $37 million would come from federal dollars and $40 million would be taken from the state's general fund (i.e., directly from Michigan taxpayers).

That year, the Legislature was unwilling to appropriate the $40 million portion, leaving the program with only the $37 million in federal spending. Through a spokesperson, Sen. Majority Leader Mike Bishop, R-Rochester, noted that creating a new program such as NWLB "just shows again that the state doesn't have a taxing problem, it has a spending problem." State Rep. Jack Brandenburg, R-Harrison Twp., was more direct: "I truly believe this program should be left behind."

But after a $1.4 billion tax hike was approved for 2008, and after passing the largest state budget in Michigan history for that same year, the Legislature became more agreeable toward NWLB when it was time to write the 2009 state budget. The governor again requested the full $40 million state general fund contribution, and the Legislature compromised with her and agreed to commit Michigan taxpayers to paying $15 million as part of the aforementioned 59.9 percent general fund spending increase.

Dozens of lawmakers — 34 in the House and three in the Senate — still voted against the 2009 DELEG budget, some of them specifically because of the NWLB funding. One of them, state Rep. Jack Hoogendyk, R-Portage, called the program "wasteful and wrongheaded." Suggesting that cutting taxes and regulatory burdens was a clearer path to prosperity than increasing government spending, he observed that funding NWLB was like "trimming the front hedges while the house is on fire."

There is much to confirm Rep. Hoogendyk's assertion in the recent New York Times article titled "Job Retraining May Fall Short of High Hopes." The Times noted a recent study released by the U.S. Department of Labor that found the benefits of programs like NWLB were "small or nonexistent." The newspaper did its own survey by looking at 36 laid-off Michigan workers who completed NWLB retraining at Macomb Community College between May and August of 2008. At least 60 percent "appeared to be not working or in jobs unrelated to their training."

One, a 58-year-old laid-off auto engineer, was on his second attempt at NWLB job retraining. The first effort, in which he completed a program for computer-aided design, failed to lead to work in that field, despite its being what the DELEG calls a "demand occupation." Though NWLB is supposed to be offered on a "one time only" basis, the man's wife wrote to Gov. Granholm about his continued unemployment and he was eventually re-admitted to the program for another try.

A 55-year-old woman attending the courses examined in the article selected job training for a field expected to experience "robust growth." The Times reports that this is a requirement if a student hopes to get the $10,000 maximum in tuition assistance from Michigan's NWLB program. After graduating with an associate degree and a 3.45 grade-point average, she eventually secured part-time work — driving a school bus.

Training workers for fields where there may not be jobs would appear to be a too-frequent problem. The Times story says that the case workers at a career center in Michigan are often left mystified and scratching their heads over what the state's labor market experts define as "high growth" occupations. One of the authors of the U.S. Department of Labor report mentioned above, an economist from the University of Kentucky, confirmed to the reporter that such ignorance is baked into the system: "I can't tell you with any degree of certainty, and I've been doing it for 20 years, what the hot jobs are going to be."

But in Michigan, the biggest problem is probably what Rep. Hoogendyk was getting at when he asserted that "hundreds of thousands" of jobs would be created if the state overhauled its tax and regulatory burden, rather than produced new programs to spend tax dollars on. At the time he said this, Michigan had already lost more than 300,000 jobs during the previous decade. "Job training," said the Times article, paraphrasing concerns expressed by several economists interviewed for the story, "is also ineffective without job creation."

The MichiganVotes.org vote tally for the 2009 DELEG budget that included the $15 million Michigan taxpayer subsidy for NWLB is below. This vote took place during 2008, and several lawmakers listed are no longer serving in the Michigan Legislature. Those still serving are noted in red. The contact information for all lawmakers now serving is here. Some of those no longer serving have moved on to other elected offices or are announced candidates for the same. Official Web sites and campaign Web sites that could be located for these politicians are provided below.

Available Web sites for politicians who cast a vote regarding this issue but are no longer serving in the Legislature:

Former state Rep. Judy Emmons, R-Sheridan, is running for Secretary of State: www.judyemmons.com.

Former state Rep. Joe Hune, R-Fowlerville, is running for state Senate: www.joehune.com.

Former state Rep. Bill Huizenga, R-Zeeland, is running for Congress: www.huizengaforcongress.com.

Former state Rep. Andy Meisner, D-Ferndale, is the Oakland County Treasurer: www.oakgov.com/treasurer/.

Former state Rep. John Moolenaar, R-Midland, is running for state Senate: www.moolenaarforsenate.com.

Former state Rep. Mike Nofs, R-Battle Creek, is running for state Senate: www.mikenofs.com.

Former state Sen. Mark Schauer, D-Battle Creek, is now a member of Congress: < http://www.mackinac.org/10864

MEDC-SEIU Arrangement Still Raising Questions

Thu, 19 Nov 2009 15:50:00 -0500

Paul Kersey, director of labor policy, was a guest on "The Frank Beckmann Show" today on WJR AM760. Kersey discussed a $2 million refundable tax credit the Michigan Economic Development Corp. awarded to the Service Employees International Union.

Kersey blogged about the issue yesterday, raising several questions that legislators and taxpayers should be asking about this unique deal.

http://www.mackinac.org/11387

Who Can You Trust?

Thu, 19 Nov 2009 01:00:00 -0500

When politicians talk about placing natural resources in public trust, landowners should be worried. The right to own and use private property is a bedrock principle of a free people. These rights are threatened by House Bill 5319, which would place groundwater in public trust and require landowners to secure a permit from the state of Michigan in order to use that water. The bill would essentially overturn more than a century of Michigan water law.

Property rights are often compared to a bundle of sticks. Philosopher John Locke was an early proponent of this idea, which holds that the sticks that make up the bundle are a compilation of the various rights that come with owning private property, including the rights to live on or bequeath it. Water rights are a significant "stick" in that bundle. With the introduction of House Bill 5319, Michigan property owners are threatened by government action that would steal a stick from that bundle and give it to the state.

Like most states east of the Mississippi River, Michigan is a riparian water-use state. In Michigan, if you own the land, you own the water and have a legal right to use that water as long as you do not interfere with the reasonable use of water by your neighbors. This has been true since the state was first settled.

Riparian water law has worked well in Michigan for the simple reason that Michigan has abundant water. In fact, Michigan groundwater tables are so high that many homeowners have to install sump pumps just to keep water out of their basements.

The proposed public trust legislation treats groundwater as if we lived in an arid Western state, where water tables can be 1,000 feet or more beneath the surface. In many of these states, water is appropriated by the government, leading to endless conflicts and lawsuits. Mark Twain, who spent time in Nevada, famously quipped about the situation: "Whiskey is for drinking and water is for fighting."

The Michigan Legislature dealt with recent groundwater concerns with the passage of Public Act 33 of 2006. That law requires a landowner to obtain a groundwater permit in certain circumstances, such as proximity to a trout stream. Public Act 33 was a compromise between landowners and business groups that wanted to preserve private property water rights, and environmental groups that believed that all water should belong to the government. That law has already made it more difficult to use water in the state, removing a competitive advantage Michigan once enjoyed and turning it into a minor liability.

Increasing government control of water in the state would not only be a taking of private property, but would be a serious threat to future economic growth. Access to abundant water in the state is a key advantage Michigan has in attracting much-needed jobs in energy, agriculture and manufacturing, including the so-called green jobs Gov. Jennifer Granholm seeks. The state cannot afford to throw that advantage away, especially since Michigan is not threatened by a shortage of water.

Rather than threatening water rights, Michigan needs to follow the example of Ohio. A ballot initiative amending the Ohio Constitution and protecting the rights of landowners to use groundwater was approved by an impressive 72 percent of the voters in the November 2008 election. The constitutional amendment in Ohio merely codified existing riparian water law, which was similar to the kind used successfully in Michigan for the past century.

Many Michigan officials seem more interested in taking away existing rights of property owners rather than protecting them. It may be time to take the critical issue of property rights directly to the voters, bypassing the political class. As the Ohio example shows, residents understand the importance of property rights better than do many politicians.

#####

Russ Harding is senior environmental analyst and director of the Property Rights Network 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.

http://www.mackinac.org/11292

News Release: Schools, Legislator Embrace Transparency

Thu, 19 Nov 2009 00:00:00 -0500

For Immediate Release
Thursday, Nov. 19, 2009
Contact: Ken Braun
Policy Analyst
989-631-0900

MIDLAND - Almost half of the 25 largest public school districts in Michigan now post their checkbook registers online, according to Ken Braun, director of the Mackinac Center's "Show Michigan the Money" project.

"With the posting of its checkbook register by Bay City Public Schools, another one of Michigan's largest districts has made public its finances," Braun said.

Other recent districts to embrace transparency include Clio, Swan Valley and Pinconning. Braun has been encouraging all 551 public school districts, every charter public school, each municipality and every state legislator in Michigan to regularly provide this data on their Web sites.

Though many districts began posting after being prompted by Braun, the Livingston ESA has been posting its register for several years.

"Since 2007, I have made sure our board financial reports and our check registers were posted on our Web site," said Assistant Superintendent Michael Hubert. "Although I don't think many people access what we have posted, I am glad that when people do need the information, it is available." Hubert added that the district is looking to make even more information available.

Officials from another one of the state's largest school districts, Lansing, have stated that they are working on posting their register. All told, there are 64 public school districts and three intermediate school districts providing this information on the Internet. More than one in five public school students attend a district that has an online check register. Links to these school district checkbook registers are available at www.showmichigan themoney.org/9329.

In other transparency news, a state legislator has taken his commitment to openness a step further.

During the recent crafting of the state budget, Rep. Tom McMillin, R-Rochester Hills, helped to insert a provision into the K-12 School Aid Fund that will require public school districts to disclose more financial details on their official Web pages, such as the price they pay for health care and other benefits. As an extension of this, McMillin is voluntarily using his official state Web page to post the cost and details of the benefit package he receives. Earlier this year, McMillin became the first state-level politician in Michigan to post the names and salaries of his office staff on the Internet.

"Greater public access to public records is now advancing so quickly that we can't report the progress fast enough," said Braun. "Unfortunately, for every Livingston ESA that does the job before they're asked, there are other districts that are falling behind this fast-growing transparency trend."

Though 12 of the 25 largest districts provide online check registers (and one is in the process), Braun listed those that do not yet appear to be doing so: Detroit Public Schools, Grand Rapids Public Schools, Ann Arbor Public Schools, Flint City School District, Warren Consolidated Schools, Wayne-Westland Community Schools, L'Anse Creuse Public Schools, Kalamazoo Public Schools, Port Huron Area School District, Huron Valley Schools, Forest Hills Public Schools and Saginaw Public Schools.

#####

http://www.mackinac.org/11385

A MEGA Delusion

Thu, 19 Nov 2009 00:00:00 -0500

At a press conference Tuesday announcing several new recipients of discriminatory state tax breaks granted by the Michigan Economic Growth Authority, Gov. Jennifer Granholm repeated a number of false or misleading statements about this state government's policy of picking winners and losers, and its effects as a substitute for genuine labor, regulatory and tax law reforms.

Here is a closer look at Gov. Granholm's comments (quotes taken from the MIRS Capitol Capsule, subscription required):

Gov. Granholm: "First of all, what everybody needs to remember is that these are all performance-based, that we would not be paying a credit if it were not for the fact that the company's going to be hiring people. If they don't hire the people, they don't get the credit."

Score: Misleading. See "MEGA Tax Credits Are Not Without Cost" to discover seven reasons this program imposes large burdens.

Gov. Granholm: "The studies demonstrate that the return on the investment is far greater than the tax credit that is given."

Score: False. There are no such "studies." There has not been any systematic, independent research demonstrating that MEGA tax breaks create jobs or improve the economy. The independent research that does exist shows the credits either have no effect or actually generate declines in employment. MEGA's "parent," the Michigan Economic Development Corporation, has not even attempted to rebut these studies.

Gov. Granholm: "The people who are hired pay income tax; there is a spinoff effect. So the benefit of having these incentives, as you can see from today, these would not happen if not for these incentives."

Score: Irrelevant. What matters is the net effect of the program — whether it creates more jobs than it costs. The existing research indicates that it does not.

Gov. Granholm: "Every state is doing it."

Score: True.

Gov. Granholm: "There's no doubt that we need to restructure our tax system, but the decline in revenues is not attributable to the MEGA grants. The decline in revenues is clearly attributable to the overall, structural changes in our economy."

Score: False. The decline in Michigan tax revenues is due to overall economic decline fueled by state government having adopted policies that make firms located here unable to effectively compete with ones in other states. In fact, Michigan's tax system has shown itself to be more resilient than other states'.

http://www.mackinac.org/11383

New Tax on Garbage Should Be Trashed

Wed, 18 Nov 2009 16:40:00 -0500

Michigan legislators have introduced two bills (HB5558, HB5559) that would increase tipping fees to place trash in landfills. If passed, the current fee of seven cents per cubic yard will rise to $7.50 per ton. The increased fees are estimated to raise $145 million, according to Gongwer News Service. This could not come at a worse time for economically struggling Michigan households. Any increase in tipping fees would of course be passed on to consumers and businesses in the state already in the worst economy in Michigan since the Great Depression. The money raised by fee increases would go to local governments for recycling programs.

Democratic lawmakers in the House (no Republicans supported the legislation) argue that Michigan households and businesses should take the economic hit to help keep Canadian trash out of the state. There is no indication, however, that inflicting additional economic hardship on our residents will prevent Canadian trash from crossing the border into Michigan. It would most likely require a considerably higher fee than $7.50 a ton to make it uneconomical for Canadian trash haulers to use Michigan landfills. In fact, waste has historically crossed Michigan borders in both directions between Canada and surrounding states. Michigan is a net importer of solid waste from Canada while at the same time a net exporter of hazardous waste to Canada.

Contrary to rhetoric often heard, Michigan has no shortage of landfill space. Many local communities welcome local landfills in their area due to the jobs they bring as well as tax revenue generated from the facilities.

Many local governments in the state are complaining they have insufficient revenues to provide basic services such as police, fire, and maintaining roads. Receiving additional money for recycling would seem to be low on the priority list for most local government managers.

This suggests any such tax should be recycled to the trash bin.

http://www.mackinac.org/11382

Auto Industry a “Bit Player” in State Fiscal Woes

Wed, 18 Nov 2009 13:53:00 -0500

Michigan politicians are fond of blaming the domestic auto industry's decline for all the state's problems. But "auto industry" just doesn't mean what it used to here. For example, domestic auto sales have fallen by 49.8 percent since their 1999 peak. Over the same period, however, inflation-adjusted state tax and fee revenues have only declined by 15.9 percent.

If the auto industry were the 800-pound gorilla of the Michigan economy the politicians try to convey, the revenue loss would have been much greater. Apparently, this gorilla weighs less than advertized.

Perversely, the same politicians who promote auto declines as the source of Michigan's travails also cite this as a reason to raise taxes. They imply that state tax revenues are disproportionately based on a single "old economy" source, and so our tax system is "out of sync" with the current economy.

They are wrong. Tax revenues are down in Michigan, but in proportion to the decline in overall employment here — not just automaker employment. In fact, Michigan tax revenues are tracking the state's economy much more closely than in most states. Our tax system has actually shown itself to be more resilient than other states'.

http://www.mackinac.org/11380

Alabama Blows Away School Funding "Crisis" Smoke

Wed, 18 Nov 2009 13:05:00 -0500

While Michigan's school funding "crisis" rages on, the Alabama Board of Education just came up with a plan to balance the state's education budget in one day.

Unlike Michigan, Alabama's state Board has the tools needed to contain the out-of-control labor costs that generate our public school establishment's perpetual and self-imposed funding debacles. Last week, they came up with two ways to balance the state education budget:

Implement a modest increase in the amount school employees contribute (6 percent) to the Alabama Teacher Retirement System.

Freeze the amount of the state's contribution for employee health insurance benefits.

With these two steps Alabama's education funding problems will be solved. If Michigan's state Board of Education had comparable powers, it could similarly resolve our school funding issues with two simple steps:

Require salaried school employees to contribute 2 percent of their pay to the Michigan Public School Employee Retirement System. This would save school districts approximately $144 million annually, or about $90 per pupil, according to data from the Center for Educational Performance and Information.

Require school employees to contribute 15 percent to the cost of insurance premiums. This would save $290 million, or $180 per pupil. (The 2008 average private-sector employee health insurance contribution in Michigan was 22 percent for a family plan premium.)

Of course, if Michigan's state Board of Education had similar powers, there's no reason to imagine it wouldn't be just as much a captive of school employee unions as most local school boards. In the final analysis, the real difference between the two states is the outsized political power of public employee unions here.

Nevertheless, viewing our problems through this lens does clarify them.

http://www.mackinac.org/11378

Center Scholars Discuss Dollar, State Spending

Wed, 18 Nov 2009 11:28:00 -0500

A Detroit News editorial cites David Littmann, senior economist for the Center, on what can be done to strengthen the dollar.

Jack McHugh, senior legislative analyst, participated in a panel discussion recently where a representative sampling of Michigan residents addressed issues ranging from education reform to welfare spending, according to the Lansing City Pulse.

http://www.mackinac.org/11377

What The...?

Wed, 18 Nov 2009 11:10:00 -0500

The MEDC's decision to extend a $2,000,000 refundable tax credit to the Service Employees International Union is, to put it mildly, very questionable. This is a deal that warrants the strictest of scrutiny from the media and the public. The following are just a few of the questions relating to this grant for which the public deserves answers:

SEIU is the collective bargaining agent for more than 12,000 state employees. Will this grant affect the relationship between the state as employer and the SEIU as a union? Was there a quid-pro-quo involved?

In 2008 the SEIU received close to $6.4 million from the state of Michigan in the form of union dues and agency fees, to which the union is entitled under the terms of collective bargaining agreements it negotiated from the state. While final figures are not available, they should receive close to that amount in union dues and agency fees again this year. Hasn't the SEIU received enough from taxpayers already?

Our own study of union financial reports indicates that only 47.2 percent of SEIU dues are spent on representation. A typical non-profit spends close to two-thirds of its budget on its core programs. Is it wise for the state to subsidize such an inefficient organization?

In our recent report on public-sector labor law we showed that as a government employee union, the SEIU is in a position to affect government operations through collective bargaining. The negotiation process empowers SEIU to impact the state's budget and operations. Is it appropriate for the state to provide funds to an organization with such particular influence over state government itself?

SEIU itself is a very politicized organization. At the national level it is allied with the discredited Association of Community Organizations for Reform Now (ACORN), which has been accused of voter registration fraud in several states. A quick check of the SEIU's Michigan State Council Website (MEDC's own announcement links here!) shows SEIU support for insurance regulation, the federal stimulus package, state tax increases and national health care legislation. Can MEDC guarantee that the "Member Action Service Center" that its funds are to be used for will not be a political operation itself? Can MEDC guarantee that the facility will not be used for political activities after hours? Shouldn't such a heavily politicized group be barred from receiving any discretionary grants from the state?

Rightly or wrongly, many employers see unionization as damaging to their economic prospects. Will this facility be used by SEIU or other unions as a base of operation for organizing? As employers learn that the state is using economic development funds to subsidize union activity, will this have a negative effect on the state's efforts to attract other employers?

Even if the state's motivations are entirely pure, there are numerous ways that SEIU could abuse this grant. The value of MEDC itself is dubious and this grant is especially so. We will be examining this decision very closely, and urge Michigan taxpayers to pay close attention as well.

http://www.mackinac.org/11375

Film Subsidy Is Political, not Economic

Wed, 18 Nov 2009 10:30:00 -0500

An unusual joint hearing occurring right now of two state House committees on Michigan's film subsidy program brought to mind a letter received last summer from Janet Lockwood, director of the Michigan Film Office. The letter was in response to a Mackinac Center press release describing how the subsidy program may actually destroy jobs.

Lockwood's arguments were without economic merit, but perhaps one point deserves to be rebutted.

At issue was the Mackinac Center's critique of the Michigan State University report that claimed the film subsidy program had "created" 1,102 year-round equivalent jobs since April 2008, and yet excluded 100 percent of the $48 million worth of associated costs. Including the costs would dramatically reduce the supposed jobs. In response Lockwood argued:

"Furthermore, as the (movie industry) infrastructure in Michigan grows over time, a larger portion of such rebated funds will remain in the state's economy. This is the primary reason that the REMI analysis conducted by Michigan State University did not deduct the cost of the incentive from the spending that occurred as a result of these film projects."

This claim is specious. A hypothetical possibility that a greater proportion of future subsidies will remain in Michigan (as opposed to being "repatriated" back to Hollywood, presumably) provides no rationale for excluding current costs.

In addition, one of the MSU authors told me on April 27 that their purpose was simply to measure the "economic impact of the film industry expenditures, not necessarily the incentive program." While pointless, that exercise does not encompass any part of Lockwood's byzantine rationale for why hypothetical future benefits justify ignoring real current costs.

Here's the bottom line: No economic (vs. political) case can be made for robbing taxpayer Peter of $48 million, giving it to filmmaker Paul, and expecting both to be better off. The state should stop trying, and stop pretending that this is about "economic" rather than political development.

http://www.mackinac.org/11376

State Legislators Need All the Facts on Film Subsidies

Wed, 18 Nov 2009 08:45:00 -0500

(Editor's note: The House Tax Committee and House New Economy and Quality of Life Committee will hold a joint session at 9 a.m. today in Room 352 of the State Capitol Building. This text was e-mailed to all members.)

Dear Joint House Committee Members:

It has come to my attention that you will be meeting today to discuss the Michigan film incentive program. As you consider the testimony and documents presented by various parties, be advised that certain items with seemingly pristine pedigrees may be deeply flawed.

For example, a Michigan State University film subsidy "impact" study (funded by the Michigan Economic Development Corp.) published last winter had some merits, but these are overbalanced by the fact that its model excluded 100 percent of the costs associated with the program. This is analogous to an accountant leaving the liabilities off a company's balance sheet and concluding it has a high net worth. (For details refer to "Special Effects: Flawed Report on Film Incentives Provides Distorted Lens," published by the Mackinac Center.)

A valid study would have shown not only the program's costs, but also would have recognized how the higher tax burden those costs impose may contribute to Michigan job losses, especially since this film subsidy program came hard on the heels of the October 2007 $1.4 billion tax hike. Including such costs would not only be more intellectually honest, it would help make the program more transparent.

One more thing: It's confusing and misleading to refer to this as a "tax credit" program. It is in fact a cash subsidy in the form of a tax credit program. Sadly, the Michigan Film Office's secrecy prevents us from calculating the amount of cash subsidies vs. tax breaks. At least one Senate Fiscal Agency analysis, however, suggests they are largely cash handouts.

http://www.mackinac.org/11367

Michigan Education Digest

Wed, 18 Nov 2009 01:00:00 -0500

Contents of this issue:

Charters gain market share
Flanagan: Solve your differences
Panel would advise on consolidation
New life for school vouchers?
Health insurance holds up contracts

CHARTERS GAIN MARKET SHARE

FLINT, Mich. - More than one-third of the students who live within Detroit Public Schools boundaries attended a public charter school in 2008-2009, a national report shows. In Flint, about 25 percent of the students attended charters and in Grand Rapids, 17 percent.

Writing about The National Alliance for Public Charters annual report, The Flint Journal noted that Flint ranks eighth in the nation in terms of the percentage of students attending charters. Detroit is third, according to the report, and Grand Rapids ranked 14th, tied with four districts in other states.

New Orleans was No. 1, the report said, where 57 percent of students assigned to the New Orleans Public School System attend charter schools instead.

A Flint Journal review of enrollment at the 10 charter public schools in Genesee County showed a combined increase of 500 students over the previous year. International Academy of Flint gained 100 students alone, and no charter school lost enrollment, The Journal reported.

Enrollment in Flint Community Schools dropped by nearly 1,500 students during the same time period, according to The Journal.

A Flint Community Schools spokesman told The Journal that enrollment did not drop as much as expected and that the district is focusing on delivering a high-quality education as a way of attracting parents.

SOURCES:
The Flint Journal, "Flint ranked No. 8 in nation for percentage of students who live within Flint School District boundaries but attend charter schools," Nov. 12, 2009

National Alliance for Public Charter Schools, "Top 10 Charter Communities by Market Share," October 2009

FURTHER READING:
Michigan Education Report, "When we're done with you, you will have options," Sept. 23, 2009

FLANAGAN: SOLVE YOUR DIFFERENCES

LANSING, Mich. - State school Superintendent Michael Flanagan asked lawmakers and teachers unions Thursday to settle their differences and clear the way for Michigan to apply for up to $400 million in federal funding for public schools, The Detroit News reported.

To do that, Michigan must open the door to more charter public schools, make it easier for qualified people to become teachers, and connect the dots between individual teachers and their students' performance on standardized tests, The News reported.

The state has until January to submit an application for federal Race to the Top funds, which will be allocated to states primarily on the grounds of how ready they are to implement measures to improve teacher quality, expand use of data and address failing schools.

"We have to have a number of pieces of legislation or we will not win Race to the Top," Flanagan told the House Education Committee, according to The News. "Colorado and some other states are exceeding the requirements."

The Michigan Education Association opposes some of the reform ideas, The News reported.

MEA lobbyist Dave Stafford told the committee that if teachers are evaluated on the basis of student scores, some teachers will be reluctant to take on hard-to-educate students, The News reported.

SOURCE:
The Detroit News, "State schools head urges compromise on reforms," Nov. 13, 2009

FURTHER READING:
Michigan Education Report, "State Ignores $600 Million for Schools," Nov. 13, 2009

PANEL WOULD ADVISE ON CONSOLIDATION

LANSING, Mich. - A state representative wants to create an advisory panel to review public school district boundaries and recommend where consolidation or division makes financial sense, according to the (Oakland County) Spinal Column Newsweekly.

Rep. Fred Miller, D-Mount Clemens, said that House Bill 5561 would establish a non-partisan, temporary "School District Modernization Advisory Commission" similar to the advisory panels that recommended military base closings in 2005, Spinal Column reported.

The commission would consist of 15 members representing such stakeholder groups as parents, administrators, teacher unions, school boards and others, the report said.

"This (School District Modernization Advisory) commission is designed to take politics out of the discussion of school district boundaries," Miller said, the Spinal Column reported.

"Some should be consolidated, some annexed, some perhaps even subdivided."

Now in the House Education Committee, the bill would require the panel to report by Aug. 1, 2010.

SOURCE:
(Oakland County) Spinal Column Newsweekly, "Lawmaker wants study on school district changes," Nov. 11, 2009

FURTHER READING:
Mackinac Center for Public Policy, "School District Consolidation, Size and Spending: An Evaluation," May 22, 2007

MichiganVotes, "House Bill 5561 (Establish school consolidation study commission)," Oct. 28, 2009

NEW LIFE FOR SCHOOL VOUCHERS?

LANSING, Mich. - The former state superintendent of schools says that taxpayers fed up with status quo in education might be willing to support a school voucher program in Michigan.

Writing in Dome magazine, Tom Watkins said that while voters turned down a voucher initiative in Michigan in 2000, they will have the chance in November 2010 to vote on holding a constitutional convention and rewriting the state Constitution.

That could include amending the prohibition on using government tax support for private or religious schools.

Watkins was state superintendent of public instruction from 2001 to 2005 and now is an education and business consultant in the United States and China.

Michigan residents are willing to invest in public education, Watkins said, but they question whether the current system turns out students prepared to compete in a global economy.

Watkins has called for varied reforms in public education and education funding at least since 2004, among them health care and pension reform, school district consolidation and shared services.

He also has suggested eliminating 12th grade, reducing college tuition rates for students going into high-demand jobs and offering the equivalent of a freshman or sophomore year of college through e-learning, according to a series of reform ideas published by The Detroit News.

SOURCES:
The Detroit News, "50 Ideas to Fix Michigan," Nov. 17, 2009

Dome, "New opening for school vouchers," Nov. 13, 2009

FURTHER READING:
Michigan Education Report, "Retirement fund losses will cost schools, but how much?" April 20, 2009

HEALTH INSURANCE HOLDS UP CONTRACTS

HARPER WOODS, Mich. - Health insurance is a sticking point in contract negotiations for at http://www.mackinac.org/11371

News Release: Testimony False

Wed, 18 Nov 2009 00:00:00 -0500

For Immediate Release
Wednesday, Nov. 18, 2009
Contacts:
David L. Littmann
Senior Economist
989-631-0900
or
Michael D. LaFaive
Director of Fiscal Policy
989-631-0900

MIDLAND - Mackinac Center Senior Economist David Littmann described as "false" the testimony delivered this morning to a House committee hearing in which Harvey Grace, chairman of Grace & Wild Studios, stated that Littmann supports the Michigan film incentive program and other incentives.

Grace's statement included the following:

" ... (The) senior economist at the Mackinac Center has been active in talking about the incentives, and in the packet that I've given to you I have an e-mail from him that he allowed me to use ... basically saying they believe in incentives. They're not against incentives. They're not against the film incentive. What they're against is targeting and picking and choosing favorites. So this is ... when you put it in the global spirit and scheme of things, no one is against incentives."

Later, Grace added, "even the people at the Mackinac Center are agreeing with what I'm saying."

Neither Littmann nor the Mackinac Center has ever supported the political definition of "incentives" that denotes politicians and government bureaucrats playing favorites in the market. As an economist, Littmann's career has been devoted to studying and explaining the role of market-based incentives, not the politically contrived ones that were the subject of this hearing.

"This was at best a distortion of my remarks," said Littmann. "I very clearly stated that incentives should be broad-based, including all factors of production and regions, and include no politically contrived favoritism. For example, the incentive I recommend is the elimination of the job-killing Michigan business tax and the related surcharge. This obviates the need for targeted film subsidies."

In the e-mail Grace cited, Littmann stated the following:

What's called for? We must now play leapfrog in the game of incentives to re-establish our business climate as a magnet. Well, that implies incentifying:

All factors of production: land, labor, capital, entrepreneurship, venture [capital]

All regions geographically (no pick and choose) (no political favoritism)

All age groups

All income categories

In short, INCENTIVES must be ethical, legitimate, durable, predictable, and ubiquitous ... market driven, not politically contrived as a political favor to some at the expense of others.

The two-hour hearing, conducted by the House Tax Policy Committee and the Committee on New Economy and Quality of Life, included speakers who were current and aspiring beneficiaries of the film subsidy program. No critics of the program spoke.

"The hearing was the legislative equivalent of the Theatre of the Absurd: A show piece designed to redirect and obscure, rather than to enlighten," said Michael D. LaFaive, director of the Mackinac Center's Morey Fiscal Policy Initiative. "Our list of studies and articles opposing political 'incentives' is so extensive that it would be inconceivable for a fair-minded, disinterested party to mistake our position on this issue."

#####

http://www.mackinac.org/11381

Politically Powerful Special Interest Gets Special State Tax Break

Tue, 17 Nov 2009 17:05:00 -0500

At its monthly board meeting today, the Michigan Economic Growth Authority voted to give a state business tax credit worth $2 million over five years to the corporate subsidiary of the Service Employees International Union for an operation that will provide administrative services for the SEIU and other local unions. MEGA is considered the "flagship" of the state's growing empire of "economic development" programs and authorities.

The MEGA board's action was included in a press release posted on the website of the Michigan Economic Development Corp., which says the union will invest $3 million in this entity, to be located in Wayne County's Redford Township, and was given the selective tax break "to help convince the company to expand in Michigan over competing sites in Missouri and Florida."

The press release explains that the purpose of this union arm is "to provide administrative services for ... local labor organizations" (which probably means labor union locals around the country). It does not explain why the board considered the union's "competing locations" threat to be credible given that one is in a "Right to Work" state, rather than the kind of gamesmanship common when governments play the "picking winners and losers" game. Nor did it explain whether the tax break is merely a political payoff to one of the state's most politically powerful special interests — a union representing many government employees.

Supposedly, this union operation will create "322 new jobs, including 224 directly by the company ... (and) an additional 108 indirect jobs," according to the MEDC.

It is certainly just a coincidence that the new union operation will be located in (or immediately adjacent to) the district represented by the speaker of the Michigan House. (Redford Township is also expected to give a property tax break to the union entity.) It is also certainly a coincidence that the recipient of this discriminatory tax break is considered a leading sponsor of the Association of Community Organizations for Reform Now (ACORN), and that the union and ACORN are deeply engaged in political campaign-related activities in Michigan.

H/T — James Hohman, for quickly spotting the item soon after the press release was posted.

http://www.mackinac.org/11373

The Luckiest ZIP Code in Michigan

Tue, 17 Nov 2009 16:04:00 -0500

Apparently in terms of federal stimulus money and thousands of new jobs allegedly created, the luckiest place to live in Michigan is in the 48933 zip code. According to the U.S. Postal Service Web site, 48933 is none other than Lansing, our state capital.

The federal recovery reporting Web site, recovery.gov, lists this Lansing ZIP code as receiving $1,217,275,548 and creating 17,966.9 jobs. Recovery.gov credits Michigan with "creating/saving" 22,514 total jobs. By my math, Lansing accounts for almost 80 percent of the jobs "created" statewide.

If you go by the state's calculations of 19,190 jobs "created/retained," ZIP code 48933 would account for nearly 94 percent of the state's stimulus job creation.

See the screenshot below for the top jobs created/saved in Michigan by ZIP code or view the complete list here.

The second highest ZIP code on this list, 48909, is also Lansing. With a combined jobs total of 19,021, federal stimulus awards break down to $100,580.71 per job in these two Lansing ZIP codes.

If one uses money for nothing as a gauge, however, the sixth ZIP code on this list may indeed be the luckiest. ZIP code 48183, for Trenton, is getting $109,648,796. Jobs created or saved? Zero.

The unluckiest in both areas would be poor little 49819 of the central Upper Peninsula town of Arnold. Like dozens of other ZIP codes on this list, 49819 also logged zero jobs created or saved, but also came in dead last. Its federal award amount: $230.

http://www.mackinac.org/11370

'Pirate Radio' Capsizes From Lack of Weight

Tue, 17 Nov 2009 15:05:00 -0500

"Pirate Radio," in theaters now, is a silly and inconsequential movie that represents a missed opportunity to show the negative impacts of government overreaching into what should be a private enterprise. In this instance, British government bureaucrats stymie a broadcast outlet for rock music in the mid-1960s.

The film is set in the North Sea waters off the coast of England in 1966 and 1967, which were watershed years for rock'n'roll as The Rolling Stones, The Kinks, The Who, the Small Faces and a plethora of British and American acts were exploring sonic and artistic breakthroughs. Unfortunately for Britain, however, the state-controlled BBC - the only licensed radio in the United Kingdom - only played 20 minutes of rock music each day.

As a result, pop music fans had to rely on broadcasts from Radio Luxembourg or from ships anchored in international waters - thereby generating a large audience for new music and creating a market for advertisers eager to capture young mod listeners. Readers seeking a reasonable facsimile of what real pirate radio might've sounded like should buy a copy of The Who's 1967 masterpiece, "The Who Sell Out," which is complete with radio drop-ins, station jingles, advertisements and killer tunes.

Rather than focusing on how governments can overreach beyond their justifiable role in regulating, among other things, broadcast frequencies for radio stations, "Pirate Radio" succumbs to the cinematic credo of sex, drugs and rock'n'roll while simplistically depicting its government antagonists (including actors Kenneth Branagh and Jack Davenport, the latter sophomorically given an obscene name,) as driven by nothing more complicated than sexual repression and inexperience with chemical inebriants. In the meantime, the radio disc jockeys and their hangers-on party like rock stars in between ponderous pronouncements that the music they play - rather than the innate human need for creative freedom and the liberty to express it espoused therein - represents their primary reason for being.

One last cavil: One doesn't have to be a boater, former disc jockey or even editor of a science magazine to know that it's impossible to play vinyl records on a choppy sea, especially when a boat is three-quarters submerged. While this might guarantee more songs to market on a bestselling soundtrack - despite the inclusion of many songs that were released well after the 1966-67 timeframe - the film as a whole leaves a free-market, small-government advocate with little to appreciate.

http://www.mackinac.org/11369

From South Detroit to Shockandawe

Tue, 17 Nov 2009 12:20:00 -0500

A pattern of sorts is starting to emerge: When one hears numbers of “jobs created or saved” by various government programs, it appears to be more and more likely that such numbers were pulled by someone out of the vicinity of his or her own back pocket. Consider:

Three weeks ago, Gov. Granholm touted the success of her “No Worker Left Behind Program." According to the state, 72 percent of participants managed to either find a job or retain their existing job. But without a comparison group of non-participants, it is impossible to say whether or not NWLB really helped workers find or keep jobs.

At about the same time, our Mike LaFaive noted that the Michigan Economic Growth Authority’s job creation figures were wildly inflated; at best, actual job creation by MEGA amounts to only 29 percent of the numbers claimed by the state agency. LaFaive found evidence that MEGA spending actually had a negative effect on jobs: For every $1 million in MEGA credits dished out, employment appeared to decline by 95 jobs in counties where the MEGA projects were located.

Now we see evidence suggesting that many of the jobs claimed to have been preserved or created under the federal stimulus program were entirely fanciful. We suspect this is so because a listing of the jobs by congressional district has listings for districts numbered from 00 (I believe that would be South Detroit, which was made famous by that Journey song) to 83 (it’s in the Upper Peninsula somewhere around Shockandawe).

As the economy continues to struggle, both nationally and especially in Michigan, it will be tempting for politicians who have promised to boost employment through government spending to resort to statistical tricks to make their programs look like they are working better than they actually are. As always, such statistics should be viewed with extreme skepticism. Making up job numbers is starting to become a habit for the defenders of big government.

http://www.mackinac.org/11368

Stimulating! Ten New Congressional Districts in Michigan!

Tue, 17 Nov 2009 09:15:00 -0500

My colleagues at Watchdog.org and its state-level affiliates were the first in the nation to break the story that the $787 billion federal stimulus package "has doubled the size of the House of Representatives, according to Recovery.gov, which says that funds were distributed to 440 congressional districts that do not exist."

This includes Michigan. In its first installment of promised quarterly online reports, Recovery.gov lists 10 new districts to the Great Lake State's phalanx of 15 U.S. House seats (the center column, by the way, is the number of "new jobs" reported):

31st congressional district	0	$1,650,890
00 congressional district	26	$880,855
21st congressional district	17	$810,000
22nd congressional district	0	$722,192
16th congressional district	1.5	$465,898
28th congressional district	0	$418,186
23rd congressional district	2	$214,843
83rd congressional district	1	$156,820
60th congressional district	0	$56,328
37th congressional district	2	$11,933

Interestingly, a closer look at the stimulus awards in these non-existent congressional districts (see spreadsheet here) includes a community policing grant of $29,507 for the city of Midland, in congressional district "00." Midland is home to the Mackinac Center, whose office building is within a stone's throw of the district headquarters of Congressman Dave Camp. Rep. Camp serves Michigan's 4^th Congressional district. Stimulus awards totaling more than $810,000 reported in the "21st" district were given to recipients in Mount Pleasant, Alma and Shepherd, cities which are also technically in Rep. Camp's district. (Incidentally, one person representing more than one congressional district may be a constitutionally questionable practice.)

"I guess we know why Michigan's unemployment rate is going up despite all these claims of new jobs. They're being created out of thin air," said Camp's spokesman, Sage Eastman.

Judging by some of the comments included by the local-level folks, inputting this information was not easy, many getting their reporting instructions at the last minute. Writes one seemingly frustrated award recipient in Rapid River:

"Impossible registration process. Unable to reach help desk in less than 2 hours, registration process ultimately took an extra week to accomplish."

And this entry from a recipient in Sand Lake:

"Process to register was not clear. We did not even know we received ARRA funds until October 7, 2009. Each registration area required 24 - 48 hours to activate. This entire process is convoluted and should have been a seamless process. Had some type of notification been sent when the funds were awarded the report would not have been late. There were many technical error(s) with the registration process."

According to Watchdog.org, the federal recovery Web site operates on an $84 million budget. One would think such hefty price tag would ensure more accurate reporting. Instead, it says nearly $6.4 billion was used to "create or save" fewer than 30,000 jobs in these 440 "phantom" congressional districts. That's almost $225,000 per job.

Just don't tell us we need to fill those congressional seats.

http://www.mackinac.org/11365

LaFaive 'Has Plenty of Ideas,' According to NRO

Tue, 17 Nov 2009 08:30:00 -0500

John Hood at National Review Online yesterday called Michigan the "epicenter of the fiscal earthquake," referring to the overspending crisis created by Gov. Jennifer Granholm and the Legislature.

Hood said there are alternatives to using tax increases and more federal bailout money to solve Michigan's budget problems, and that Michael LaFaive, director of the Center's Morey Fiscal Policy Initiative, "has plenty of ideas." Hood also linked to LaFaive's bio, which gives access to every article, commentary and study LaFaive has authored during his time with the Center.

http://www.mackinac.org/11366

Risky Business

Tue, 17 Nov 2009 00:00:00 -0500

THIS IS THE first in a series of four MichiganScience articles on risk assessment. These articles will be designed to acquaint and provide the reader with information that will allow him or her to understand and evaluate potential risks to human health resulting from exposures to chemicals, including drugs. In other words, this series of papers on risk assessment will not be designed to present the reader with an in-depth treatise on the complexities of risk assessment, but rather will provide a high-level overview of the process. The hope is that enough information will be presented such that the reader, when faced with having to understand and make decisions relative to risk, will have the basic tools necessary to make an informed decision.

The question of whether and to what degree chemicals present in air, food, drinking water, pharmaceuticals, consumer products and occupational settings pose a threat to human health is obviously of enormous social and medical importance. Many chemicals, such as asbestos, arsenic and dioxin, have a bad name. On the other hand, many chemicals have clearly transformed modern life in extremely beneficial ways. We have drugs to prevent and cure disease, pesticides to protect and increase crop production, preservatives to protect our food, as well as plastics, fibers, metals and thousands of other chemicals that enhance the pleasures and safety of life as we know it today.

Assessing potential risk resulting from chemical exposure is a complex scientific process and involves the following four steps:

Hazard identification: the determination of whether a particular chemical is or is not causally related to particular health effects.

Dose-response: the determination of the relation between the magnitude of exposure and the probability of occurrence of health effects in question.

Exposure assessment: the determination of the extent of human exposure from all sources. It includes the population(s) that may be exposed and the pathways of exposure, i.e. the potential for exposure via a particular pathway, such as ingestion, inhalation or skin contact.

Risk characterization: the description of the nature and often the magnitude of human risk, including all sources of uncertainty implicit in the above steps.

HAZARD IDENTIFICATION

The first step in understanding the risk assessment process is hazard identification, which requires a basic understanding of the field of toxicology. Quite simply, the science of toxicology is defined as the study of the adverse health effects of chemicals (including drugs) on health and of the conditions under which those effects occur.

All chemicals, whether they are man-made or naturally occurring, can be toxic, and therefore have the potential to cause adverse health effects in humans. To assess the toxicity of a chemical, we need to develop an understanding of the dose or concentration that can cause the effect. The hazards of chemicals are not equal. Some chemicals are much more toxic than others. To illustrate, Table 1 presents a conventional rating scheme for lethal doses in humans following oral ingestion. This table clearly shows that toxicity can be rated from practically non-toxic to supertoxic based on the dose. An example of something that is supertoxic is botulinum toxin and something that is practically non-toxic is water.

In addition to dose, we need a fundamental understanding of how much of the chemical to which we are exposed gets into the body, where it goes and what it does, how long it stays in the body and how it leaves. These processes are referred to in toxicology as absorption, distribution, metabolism and elimination (ADME).

There are three primary routes by which a chemical can enter the body: ingestion, inhalation and skin contact. If the chemical is ingested, then it can be absorbed into the body from the stomach. If inhaled, then the chemical can be absorbed from the airways or the lungs. If exposure is by skin contact, then the material must be absorbed through the outer layers of the skin into the underlying blood supply. Quite often, it is observed that the dose required to produce a toxic effect will vary according to the exposure route. Once the toxin is inside the body, the question becomes: Where does it go while it is there? Usually, the material can distribute itself equally throughout the body depending on the blood supply to any given site. However, if the chemical in question happens to be lipophilic (prone to sequester itself in fat tissue), it can stay in the fat for long periods of time and slowly be released back into the blood stream.

As the blood containing the chemical passes through the liver, there are enzymes present that can convert or metabolize the chemical to a different form. The products of metabolism (i.e., metabolites) are generally more soluble in water so that they can be eliminated from the body in the urine. It should be noted, however, that some chemicals can be readily excreted from the body unmetabolized because they are already water-soluble enough when they enter the body. While the process of metabolism is primarily a process to convert a chemical to a form that can be eliminated from the body, cells in the skin, lungs, intestines and kidneys can also play a role in metabolism. This whole process of ADME can be summarized in Figure 1.

While the chemical resides in the body, the question becomes what dose level has the potential to cause harm. Some chemicals can cause damage to organ systems such as the liver, lungs, kidneys, spleen, etc. Other chemicals can cause damage to the reproductive, immune, nervous and other systems and can cause birth defects and cancer. But again, whether or not a chemical causes toxicity is dependent on the dose or concentration of the chemical that makes it into the body. A central paradigm of toxicology comes from Paracelsus (c. 1493-1541), a Swiss physician and alchemist. He is noted for his recognition that "all substances are poisonous, there is none which is not a poison. The right dose differentiates a poison and a remedy." In short, the dose makes the poison.

This brings us to the concept of dose-response. Many individuals have experienced or are familiar with this phenomenon in a mild way (consider the relationship between the amount of alcohol consumed and the various stages of intoxication). It is a well-documented principle of toxicology that for all chemicals, there is a range of doses over which no apparent toxicity can be identified in exposed individuals (No Effect Level, or NOEL) and there is a higher range of doses over which the toxic properties begin to appear. This is shown in Figure 2.

The region of the dose-response curve that makes the transition from "no-toxicity" to http://www.mackinac.org/11312

Will Michigan Sit Out This Race?

Mon, 16 Nov 2009 13:15:00 -0500

A Detroit Examiner columnist Friday cited Michael Van Beek, the Center's director of education policy, on Michigan's refusal to pursue school reforms that could help the state secure federal funding.

Van Beek detailed the situation here.

http://www.mackinac.org/11363

The First Raindrops Fall

Mon, 16 Nov 2009 12:45:00 -0500

A Mackinac Center July Viewpoint was prescient, to say the least.

The piece, written by Oakland County Deputy Executive Robert Daddow, an adjunct scholar with the Center, was titled "A Perfect Storm: Batten Down the Hatches or Drown," and detailed the need for local governments to address falling property values, home foreclosures and property taxes when budgeting for the future.

The Oakland Press Saturday reported that industrial and commercial property values in Oakland County could be 40 to 70 percent lower in two years and that some school districts could shut down as a result of the revenue drop.

http://www.mackinac.org/11362

Bad Policy Doesn't Taste Better With Tea

Mon, 16 Nov 2009 11:39:00 -0500

Thursday's Wall Street Journal carried an article about Republican candidates for federal offices who are favored by establishment GOP power brokers, and how these candidates are suddenly finding themselves on the business end of the grassroots "Tea Party" opposition in many states. The article notes that this is creating heartburn for the National Republican Senatorial Campaign Committee because the GOP was behind finding these more establishment-minded politicians in the first place and now can't sell them to even the GOP primary voters.

There are two interesting dots to connect here.

First, remember when the tea parties and the health care town hall protests first sprung up and how this led to accusations from Nancy Pelosi and others that these were not real grassroots people, but instead political puppets of the GOP?

Hard to square that with what has happened now that these people are looking around for candidates they can support, isn't it?

The big lesson for the politicians to draw from this is that these droves of people are not taking time away from their busy lives to help out (or hurt) any particular political establishment. Nancy Pelosi and Paul Krugman are now learning this. But are the Republicans?

The Journal notes that those NRSCC-chosen candidates are trying to make peace with the Tea Party types. The establishment candidates in Connecticut and Illinois, each former supporters of cap and trade, have reversed their position on this matter in an effort to "reintroduce themselves as fiscal conservatives." One of them, former Congressman Rob Simmons in Connecticut, is trying to drive home the point by parading around the state with a tea bag in his pocket.

So, Mr. Simmons, you once supported a dubious global warming policy that would stunt the nation's economic growth and kill jobs, but now you've got a tea bag in your pocket. This means people should now trust you over somebody who didn't have such bad judgment in the first place?

Does that tea bag just fix everything?

While it is always nice to be pandered to, the lesson for the Tea Party movement is not to get fooled again by ANY party or candidate. As Jack McHugh and I noted in our "Tea Party Toolkit":

An experienced patriot treats the promises of politicians and political parties with equal (and substantial) skepticism. Use political parties only as tools toward your ends, not theirs. Your loyalty is too valuable to sell so cheaply.

In other words: Putting a teabag in your pocket doesn't make bad ideas taste any better.

The whole toolkit may be found at www.mackinac.org/10508.

http://www.mackinac.org/11356

Cigarette Taxes and Smuggling

Mon, 16 Nov 2009 11:30:00 -0500

A study co-authored almost a year ago by Michael D. LaFaive, director of the Morey Fiscal Policy Initiative at the Center, continues to garner media attention.

"Cigarette Taxes and Smuggling," released Dec. 2, 2008, and LaFaive were cited Friday in Chicago Talks and Saturday by NBC Chicago. Both media outlets addressed two major points in the study: higher cigarette taxes do not increase government revenue, and those higher taxes can also lead to more cigarette smuggling.

http://www.mackinac.org/11360

Dear Tax Raisers: Please Tell Us Where to Cut

Mon, 16 Nov 2009 00:01:00 -0500

Although the fiscal 2010 Michigan budget requires no new taxes, Gov. Jennifer Granholm nevertheless has been trying to gin up support for a $600 million tax hike. This would be on top of the $1.4 billion tax hike she orchestrated in 2007, and would break a promise she made soon after that episode to never raise taxes again.

If Michigan's governor and Legislature insist on taking more from families to solve the state's self-created overspending crisis, they should at least tell those families where to trim their budgets. To help, the graphic below shows the median budget of your prototypical Midwestern individual or family, according to the federal government.

So help us, Madame Governor and legislators. Where exactly should we diminish our own lifestyles to accommodate your needs? Should we cut back on health care for the kids? Consume less food or clothing? Remove ourselves to meaner habitations? Eat out less? Take in fewer of the Hollywood films we're helping to bankroll?

No doubt tax hike proponents will point to the need for tax revenues to pay for core government functions like police and fire protection, yet the Mackinac Center and others have identified countless examples of how to provide services at a lower cost. To cite just one, is it really necessary for state and local governments here to provide their employees with fringe benefits whose value exceeds private-sector averages by some $5.7 billion annually?

Beyond following private-sector examples of providing more for less, before reaching deeper into taxpayer pockets, state and local government should eliminate all nonessential spending, such as for golf courses and state conference centers.

The politicians' itch to reach deeper into people's pockets to prop up the state's unsustainable bureaucratic machine is unnecessary and unfair to the millions of taxpayers here who struggle daily to keep their own budgets in balance.

http://www.mackinac.org/11355

Court Is in Session

Mon, 16 Nov 2009 00:00:00 -0500

(Editor's note: The following is an edited version of a commentary by Joseph G. Lehman, Mackinac Center president, that appeared in the Fall 2009 issue of Impact, the Center's quarterly newsletter.)

The Mackinac Center has never been an ivory tower think tank. Historically our work has been aimed at public policy formulated in the legislative and executive branches. Our newest venture, the Mackinac Center Legal Foundation, will place free-market ideas squarely in the judicial branch.

The Center's entrepreneurial founders saw a void in the marketplace of ideas and filled it. Until they formed the Mackinac Center, no Michigan institution existed solely to develop comprehensive, free-market solutions and put them on the policymaking table.

That entrepreneurial spark still burns. The newly launched Mackinac Center Legal Foundation fills a void in judicial decision making. We will represent clients, free of charge, in strategic cases with the potential to set strong legal precedents that protect economic liberty.

This approach, called "public interest law," focuses beyond the narrow interests of particular litigants and their specific cases. Public interest litigation champions the client's interest and advances a broad social goal at the same time. For example, Brown vs. Board of Education wasn't just about a handful of children's right to attend particular schools in 1954. It was about the right of millions of people to equal treatment.

We've come to understand that litigation capacity is necessary to achieve our mission. Big government advocates have used the courts for years to achieve their policy goals — either undoing what legislatures have done or doing what legislatures would not do. Ceding the field of strategic litigation to them is one way we can fail to accomplish our mission.

Public interest litigation gives us more ways to succeed. We will always try to win in courts of law, but we'll also take every opportunity to win in the court of public opinion through strong media relations.

Litigation produces yea-or-nay decisions while many legislative ideas never get a vote. Litigation coupled with effective publicity can stop bad legislation in its tracks. And sometimes litigation is the only way to force government to comply with laws already on the books.

Strategic litigation augments our public policy work without compromising our principles or changing our identity as a research institute. Our priorities remain the same — education, labor, property rights, tax and budget, economic development, political speech and government transparency.

In our first case we're representing home-based day care owners who were illegally dragooned into a union along with 40,000 others. If we're successful, the union will lose their hold on these business owners and the state will have to stop diverting $3.7 million in child assistance funds to the union each year.

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Joseph G. Lehman is president of 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.

http://www.mackinac.org/11353