Economic Development

If there is one area where the Engler Revolution is most in danger, it is this one. In his first term, the Governor showed remarkable understanding of the true nature of economic development—something which happens not by design or at the direction of central planners, but which occurs when government stands aside, lightens the burdens it imposes, and allows entrepreneurs in "a fair field with no favor” do their work.

The Governor properly criticized “industrial policy” schemes whereby government attempts to “pick the winners and the losers” and bestow upon them special favors, subsidies, and other public benefits. He understood that Michigan had employed those dubious policy extensively in recent years and had little but stagnation to show for it. Acting on that understanding, he slashed the Commerce Department’s budget by nearly 50 percent in his first year. Michigan’s economy promptly soared without the “help” of the schemes the department previously was famous for.

Now, under the pressure of business interests, the administration shows signs of buckling. The Michigan Economic Growth Authority and the Michigan Jobs Commission are prime examples of a reversal of sound policy. Programs of this nature—which do little more than divert tax money to the politically well-connected with little or no net benefit to the general economy—compromise the Governor's free market agenda as well as the integrity of state government.

Economic development is best encouraged by pursuing a free market approach that liberates the entrepreneurial spirit. Accordingly, the Governor should move to:

  1. Eliminate the state's Single Business Tax and reduce the Income Tax. Few measures the Governor might pursue would do more to spur economic growth than these. To finance the attendant reduction in revenue, the state should enact the spending reductions suggested in this document, allocate future revenue growth from an expanding economy to this purpose, match the Governor's first term reduction of the state bureaucracy with another 8 percent cut and a salary freeze, privatize the operation and management of the state's prison system, and push for deep reductions in state spending within all departments.

  2. Identify and remove all unreasonable barriers to entrepreneurship. All department directors should be instructed to search for any and all instances where needless or overly burdensome licensing requirements and other regulations inhibit enterprise.

  3. Strengthen private property rights. Regulatory "takings" that do not involve appropriate compensation to property owners occur with all too much frequency in Michigan. The Governor should look to an Arizona measure for inspiration on this issue. That state's Proposition 300 would have given every state government agency the authority to prevent state safety or environmental rules from going into effect if officials find that the restrictions would reduce the value of private property or unfairly block its use.

  4. Acknowledge Michigan's historically low unemployment levels, declare victory on the economic front, and abolish the Jobs Commission and similar Department of Commerce "industrial policy" schemes. Other subsidy programs for the arts (which Governor Engler once promised to eliminate), foreign offices, local development projects, and associated pork within the Department of Commerce budget should be cleared away, and its liquor distribution system finally privatized, for a potential savings approaching $ 100 million.


In politics, unambiguous mandates from the electorate do not occur with great frequency. Ratification of Governor Engler's first term performance by an historic 22-point margin and GOP majorities in both houses of the legislature certainly constitute a mandate for putting government in its proper place and updating its functions to fit the times. These recommendations, taken together, would go a long way to fulfilling that mandate.

—November 14, 1994