Michigan is Back, No Thanks to Grand Schemes

Michigan’s economy is back from the days of a one-state recession. Job growth is up nine years in a row and fewer people leave the state for better opportunities elsewhere.

The Michigan Economic Development Corporation once claimed credit for a full quarter of all the jobs here, but officials are more modest now, perhaps in part because they got called out. The desire to enact targeted policies continues, however. Lawmakers enacted “Good Jobs” legislation last year, prompted by officials such as Gov. Rick Snyder, who cited the prospect of companies providing employment “in the 2,000 job range,” adding, “We could lose opportunities if this doesn’t take place in the next month or so.” More recently, Snyder and Detroit Mayor Mike Duggan oversaw a coalition marshalling “Amazon Field Generals” which failed to lure the online retailer to the state.

To be fair, lawmakers can and have made some good decisions to help the entire economy. They replaced the Michigan Business Tax in 2012 with a simpler and lower corporate income tax, which had replaced the even worse Single Business Tax. They also enacted right-to-work in 2012, and started a phase-out of the personal property tax on commercial and industrial property in 2014.

A hazard of making policy — in addition to making bad choices — is that advocates of all stripes can easily overplay their hand, focusing on one individual or administration. Supporters of President Trump credit him with last year’s stock market rise. President Obama’s supporters say the former president should get credit for saving the auto industry, and thus, Michigan’s economy. Yet the number of automotive jobs is half of what it was in 2000, so there’s more to the state’s rebound than automakers.

Economic changes are wrenching, especially if it’s your job that’s being disrupted, and it’s easy to look for a single cause and a single solution. The most dangerous political movements start when the people, discontented, look to a single policy or, worse, single leader to solve their problems. At best, they’re soon disappointed. At worst, the desire encourages authoritarians who bypass constitutional processes to fix a problem, which often results in others.

The economy is complex, requiring some intellectual humility. The sum of knowledge required to make an economy run is so dispersed, no committee of experts can understand it, let alone plan it. Globalization continues apace, and through Amazon, Etsy and eBay, people can easily engage in commerce across the world. In short, the planners’ levers for managing the economy are challenged every day.

The economy moves when individuals, including entrepreneurs, solve their own problems and address their own needs through voluntary, cooperative activity. For its part, government can help by tending to boring, broad-based activity. Support the rule of law; keep the peace; oversee the financing of a limited number of public services; and underwrite it all with low, broad-based taxes.

Bureaucrats can find satisfaction — and politicians can find material for their re-election campaigns — by churning out press releases of the latest plan and its promise of new jobs. But our economic well-being depends on factors too dispersed and numerous for politicians, even our favorite ones, to take credit. That’s why we call out elected officials when they push government beyond its competence. Decentralized, voluntary action delivers a better life than any top-down scheme.

Editor’s note: The author thanks John LaPlante, who provided special assistance for this essay.