Michael LaFaive on the MEDC Study (1:44)
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The Policy Brief discussed in this interview — "The Michigan Economic Development Corporation: A Review and Analysis" — is available here.
This study was designed for the public, the press and the Legislature, to give them an overview of the Michigan Economic Development Corp., which is a 10-year-old institute, or quasi-public agency, in the state of Michigan. It is essentially designed to administer the state’s economic development programs for creating or retaining jobs in the state of Michigan.
We focused in on one program in particular, a program called the Michigan Economic Growth Authority — the MEDC administers this program. We did so because MEGA is perhaps the highest profile, most aggressive and most generous of the programs designed to create and retain jobs in Michigan.
We found in our analysis specifically that about 71 percent of the jobs that they claim are going to come to Michigan and be located directly at a particular facility never appear. So every time you hear the MEDC say, “1,000 new jobs are coming to Michigan, and it’s going to be in this particular location,” you should automatically think, “OK, that means 290 jobs.”
We have for the second time done an empirical, statistical analysis of MEGA data using a different technique this time, and we actually found that there was an empirical link between the MEGA program and manufacturing jobs — but it was negative. In other words, we found an empirical link between the MEGA program and job declines in the manufacturing industry in the counties we looked at, on net balance.
If this program can’t succeed, then it’s unlikely that all the other economic development programs administered by the MEDC [are] succeeding as well.
When you consider the broad economic statistics in Michigan — our unemployment rate of 15 percent, the dramatic drop in per-capita gross state product, a measure of our economic output, or our outbound migration rate, for instance — the solution here, we think, is to eliminate the Michigan Economic Development Corp. wholesale and all of its programs.
If you can’t bring yourself to put the MEDC out of business, then it should be at least dramatically reined in. It should receive less appropriations from the general fund, and it should run fewer programs. Lastly, with whatever size the Legislature decides to keep the MEDC, even if it kept it at its current size today, it should be far more transparent to investigators — individuals, institutions — that want to review its job claim numbers, among other things; [they] should have access to the proper documents.
Michael D. LaFaive is director of the Morey Fiscal Policy Initiative and James M. Hohman is a fiscal policy analyst 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.