The headline of a story in today's Detroit Free Press characterizes Gov. Jennifer Granholm's understanding of the state film production subsidies: "Goal of film tax credit is jobs, not more revenue."
There's a story from the 1960s about the late economist Milton Friedman visiting a large public works project in a third world country that was funded by U.S. foreign aid. Given the substantial investment, the famous economist was surprised to see thousands of men with shovels moving dirt one spadeful at a time. He asked his host, "Why don't they use bulldozers?"
"It creates more employment this way," came the response.
"Ah, it's a jobs program," said Friedman, who had imagined the taxpayer dollars were being provided to improve productivity and living standards.
One suspects that the great man's host was surprised by his follow-up question:
"Then why not give them spoons instead of shovels?"
Perhaps the economics courses given to Harvard law students don't explain that any project with a negative return on investment is by definition an unsustainable loser.
Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.
Get insightful commentary and the most reliable research on Michigan issues sent straight to your inbox.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
Please consider contributing to our work to advance a freer and more prosperous state.