Both gubernatorial candidates have criticized the state’s economic development administrators. But neither Democrat Jocelyn Benson nor Republican John James has promised to stop writing checks to select private businesses. Would that Michigan had a candidate who recognized that corporate welfare is a bad economic strategy.

James criticized excessive state spending that has generated few jobs, and he pledged better oversight of taxpayer funding for favored companies. But he said the state should not end its selective subsidies, arguing that Michigan must compete with other states that offer corporate welfare.

Benson says she will bring transparency and provide accountability to the state’s business subsidy programs. She has said she will ensure that companies don’t get money unless they create jobs.

Lawmakers can improve the transparency of the state’s economic development programs. The current administration refuses to disclose how much recipients of the state’s development subsidies have collected from taxpayers. This is a clear violation of the state’s constitution, which makes the state’s financial information public records open to inspection. The Mackinac Center has brought this problem to court. The state’s practice breaks basic rules of good governance to keep secret how much money has changed hands.

The state’s business subsidy programs also deserve more accountability. They routinely fail to produce the jobs announced when deals are made. Just 9% of the jobs lawmakers claimed would be created in major deals inked from 2000 to 2020 materialized. Gov. Whitmer’s record is especially bad. None of her major job deals will deliver what was announced; deals that haven’t been cancelled have been reduced.

Administrators defend their record by pointing out that some of the deals may create more jobs in the future. “I was reminded of the story of a man hired for a job with an advertised salary of $100,000. He opens his first paycheck after the first pay period and stomps into his supervisor’s office. ‘I was promised a hundred thousand, but this check is only a few grand! Where’s my money? I quit!,’” said Michigan Economic Development CEO Quentin Messer Jr.

The state pledged that these deals cumulatively would create 20,595 jobs. So far they’ve created 602 jobs, according to the latest state reports. Even if the uncancelled deals do create future jobs, as Messer suggests, that would only get us to around 5,000 jobs. This is actually like being promised a $100,000 salary and then taking a 75% pay cut once you start working. Anyone would feel cheated.

Both candidates criticize corporate welfare, but they don’t want it to stop. Benson wants to do more to diversify the economy. James says he will take a regional approach. Such thoughts are not unique to these candidates and have been tried in the past.

Lawmakers have spent decades trying to do the same thing. The state law section that authorizes business subsidies was created in 1984 and asserts that it is there “to revitalize and diversify the Michigan economy.” An alphabet soup of subsidy programs in the years since have mostly come up empty.

The state spent half a billion dollars chasing film productions, hoping to land a film industry that was sustainable without subsidies. That didn’t work.

The state put billions into the 21st Century Jobs Fund. It is now 2026, and I’d be surprised if even one percent of Michigan jobs in this century were supported by the 21st Century Jobs Fund. Administrators don’t seem to be interested in saying how much the fund has spent nor how many jobs it delivered.

It’s unsurprising that attempts to foster job growth by writing checks to select business fails to deliver on expectations. The country didn’t become prosperous because politicians bet on the right companies. Our success came from bottom-up efforts by entrepreneurs and business managers who find better ways to use resources to serve customers. Growth emerges out of equality under law and good administration of that law. The proper economic development strategy is to improve those laws.

Industrial favoritism, on the other hand, is fool’s gold.

Lawmakers in Michigan and around the country have been enticed by the idea that they can make headlines about jobs if they hand out taxpayer cash to select businesses. Both gubernatorial candidates — as well as everyone else running for office in the state government — ought to notice that it’s all ineffective and expensive. They should stop.

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