(The following is an edited transcript of a Mackinac
Center interview with Center Adjunct Scholar Gary L. Wolfram, a
Hillsdale College professor of political economy. Wolfram is the co-author
Michigan Rep. Rick Baxter of a recent
Wall Street Journal Op-Ed that detailed Michigan’s poor economic
Gov. Jennifer Granholm’s proposed Single Business Tax revisions and
recommended specific state tax cuts to spur economic growth. The governor
responded angrily to the piece,
calling it "treasonous to the state of Michigan.")
MCPP: How did you come to write your Wall Street
Journal column with state Rep. Baxter, and how did it get published in The
Wolfram: Well, first, the Wall Street Journal had
run an editorial a number of weeks ago that had quoted a paper that I had done
on the poor effect on Michigan’s economy that an increase in insurance rates
would cause under the governor’s (Single Business Tax) proposal. Given that the
Journal had already discussed the issue, we thought it would be a good outlet
for a new article.
A former student of mine is chief of staff to Rep. Baxter,
so there was a natural connection through Hillsdale College. He’s an interesting
new state representative, so we thought it would be a good venue, and we both
thought alike on the issue.
MCPP: What was the key message of the piece?
Wolfram: The key message of the piece is that
Michigan’s economic activity is trailing the rest of the nation’s. It’s not a
matter of Michigan’s economy being poor because the rest of the country’s is
poor; it’s a matter of us not doing well relative to other states. Our message
is that the one main thing that government can do to control the cost of
producing is to reduce the state taxes on the cost of producing. That’s
not a real difficult message to get across; people aren’t going to produce if
it’s too costly to produce here.
MCPP: The governor
complains that she'll have a harder time bringing new business to Michigan as a
result of your article appearing in a newspaper with an international
readership. Is there an argument for publishing criticism of state policies only
in in-state newspapers?
Wolfram: Well, no. Her argument is ridiculous when
you think about it. If you were thinking about opening up a Toyota plant in
Michigan, you wouldn’t have to go to an obscure editorial in the Wall Street
Journal to figure out Michigan had the highest unemployment rate in the country.
The idea that we should somehow ignore this is a disservice. The whole point of
the democratic process, as (economist)
Friedrich Hayek talked about, is to expand the state of knowledge through
I think that she should be willing to discuss whether there
are other reasons for Michigan’s lagging economy that the state can deal with.
She ought to talk about that, not try to say that a state representative
of the other party is treasonous because he happens to point out the obvious.
MCPP: What kind of reaction did you hope for when
you wrote the article, and how does it compare to the reaction you received?
Wolfram: We had hoped to further the discussion — to
persuade people that lowering taxes will increase economic growth. Again, it’s
not rocket science here. Basic economics is going to tell you that if it’s more
costly to produce in Michigan than it is in West Virginia, then people will
produce in West Virginia.
So the state government has to try to deal with those
things that it can deal with that increase the cost, and we thought that
this would perhaps stimulate some debate. We did not expect that the
governor would declare us treasonous for doing so. (Laughs.) And in some
sense, it’s slightly humorous, but in another sense — you know, for me, it’s a
little bit different. I’m a professor of economics, and I can have people say
that I’m crazy, or whatever, and it’s not going to affect me that much. But when
the sitting governor calls for the removal of a freshman state legislator, I
think that’s a moderately big deal, and that it’s something you don’t call for
as governor unless you’re willing to follow through with it.
I was totally surprised. In fact, we did a radio interview
on Monday morning, and I had not seen the paper, and we were on
(WJR’s) Paul W. Smith Show, and the first question was, "What’s your
response to the governor calling you treasonous?" And both of us were just
silent for a moment, thinking, "Are you kidding?"
MCPP: It must have been a shock. What did you think
Journal’s editorial response to Granholm’s accusation?
Wolfram: Well, I thought it was on point. The Saint
Joseph-Benton Harbor (Herald-Palladium) also was on point, and the Lansing State
Journal was as well, saying that we have the right to publish our opinion on
things. It wasn’t as if our facts were incorrect, or that we had lied or
committed libel or slander. I thought The Wall Street Journal was absolutely
correct in coming to our defense and to the defense of its editorial page.
MCPP: Any other seditious activities planned for the
Wolfram: I plan to stay in the public policy arena.
I think it’s very important that people do what Sherlock Holmes talked about —
see and observe. For instance, the government trying to pick winners and
losers in the marketplace is a very bad way of doing things, and the experience
of central planning around the world has demonstrated that it didn’t work
empirically. The theoretical writings back from at least
Ludwig von Mises have demonstrated that central planning can’t work, and we
ought to just recognize that.
I’m going to focus the debate on (the idea), "Let’s just
cut taxes and reduce the burdens government places on us in the economic arena."
I think we also need to focus on the structural failure we have in three major
programs: Medicaid, K-12 education and corrections. Those are all driving the
budget, and we need to examine structurally how those services are produced, as
opposed to just putting more money into the current system.
Gary L. Wolfram is an adjunct scholar 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.