A recent University of Michigan
report suggests that the solution to Michigan’s economic malaise is to produce
more college-educated citizens, which will then attract more job providers. Much like the "Cool Cities" scheme promoted by Gov. Jennifer Granholm, the idea is that potential employers make plant location choices based on which states have the "coolest" cities and coolest "knowledge" workers.
This premise is deeply flawed.
The reality is that capital goes where it’s welcome, and an unfavorable tax and
regulatory environment has shredded this state’s welcome mat. Businesses do not
exist to pay taxes or even to provide jobs, but to make a profit for their
owners. If an unfriendly tax and regulatory climate makes it impossible to
accomplish that here, enterprises will move or never start up in the first
place. The number of college graduates is irrelevant to that bottom-line
reality. Michigan has plenty of qualified workers, but they are increasingly
forced to move to places that do make capital welcome.
In addition, newly minted
college graduates are highly mobile. Most haven’t started a family, don’t own
property and have already been living away from home. Their friends may have
moved and they’re eager to try new things. If forced to choose between
underemployment here and a flourishing career elsewhere, those with "get up and
go" will do so.
More state spending on higher
education won’t change that. Indeed, research by Mackinac Center adjunct scholar
Dr. Richard Vedder shows that because higher tax burdens are associated with
such spending, the result may be slower economic growth. That would mean even
fewer job opportunities for college graduates in their home state.
This is happening here already:
A few weeks after the University of Michigan report, a Michigan State University
survey found that Michigan employers plan to hire 43 percent fewer new college
graduates next year than they did this year. However, the survey found that
nationwide such hiring is expected to grow between 5 and 8 percent.
Remarkably, the University of
Michigan report ignores these realities, choosing instead to promote the dual
myths that more diplomas will boost Michigan’s economy and increased public
spending on university research will create technological innovations that yield
long-term economic growth.
The latter proposition is as
fallacious as the first. It ignores the fact that almost all growth-generating
technological innovations came about in the private sector, unsubsidized by
government. The steam locomotive, the radio, the light bulb, the automobile, the
airplane, the telephone (and later the cell phone), the personal computer, the
iPod — all were developed because private investors saw the promise of gain.
This is not surprising: Why would anyone believe that the clumsy and myopic
institutions of government, including public universities, can divine the next
new thing better than private investors and entrepreneurs putting their own
precious time and capital to work?
Examples are legion. A century
ago, the Smithsonian Institute wasted the equivalent of millions of today’s
dollars to subsidize an absurdly impractical flying machine developed by Samuel Pierpont Langley, its director. Nine days after
his "aerodrome" splashed ignominiously into the Potomac River, two brilliant
bicycle sellers named Wright flew the first real airplane, developed
without any government money. Here’s another: Almost a century later, a
multi-billion dollar, multi-decade government "human genome project" was made
irrelevant when a private entrepreneur mapped the human genome sequence in just
a few years at a fraction of the cost.
The reality is that Michigan’s
economic malaise has nothing to do with a qualified worker "supply shortage."
Instead, excessive regulatory and tax burdens have created a shortfall in demand
for the services of those qualified workers. Self-serving calls for more
spending on ivory tower research, or for increasing the number of college
graduates, won’t reverse that trend. In fact, if these practices make our tax
burden even less competitive, the effect will be just the opposite.
Here’s a better idea: Increase
the demand for skilled workers by reducing burdensome business regulations and
passing significant supply-side tax relief. When this state becomes a hotbed of
job opportunities, able youngsters will have ample incentive to make themselves
qualified and will successfully do so. On the other hand, if bad public policies
wreck job opportunities here, it won’t matter how many qualified applicants our
educational system cranks out — they’ll just leave anyway.
Jack McHugh is a legislative analyst for 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.