“Pay no attention to that man behind the curtain. The great Oz has spoken,” thundered the Wizard in the 1939 classic movie “The Wizard of Oz.” Lansing’s economic development wizards want the public to simply take their job count claims at face value, but we should not. It’s time to pull back the curtain with a full audit of the MEDC and its job creation claims.
©2005 Turner Entertainment Co.
Since 1999, Michigan has operated its Economic Development
Corporation and a litany of other expensive programs designed to create or keep
jobs in the state. According to Gov. Jennifer Granholm’s 2008 State of the State
Address, more such programs are in the offing. These efforts call to mind two
popular tales — "The Wizard of Oz" and "The Emperor’s New Clothes" — because
they represent a marriage of blustery theater and a deliberate disregard for
For instance, MEDC officials and their apologists want us to
believe that these programs "create" jobs. The truth is that while the MEDC was
appropriated more than $1.6 billion in federal, state and other dollars to
facilitate its mission, Michigan between 1999 and 2006 shed 244,000 jobs and our unemployment rate is the highest in the nation at 7.6 percent. Scrutiny of MEDC job creation claims may lead the public to wonder why the department even
exists. Perhaps this is why legislators have tweaked language in the state
budget guiding audits of MEDC job creation
The answer is simple: Politicians don’t care about job creation as much as they care about the perception of it.
Prior to 2008, boilerplate budget language read that the MEDC
"shall work with the office of the auditor general to implement procedures to
annually audit the number of jobs claimed to be created by firms." For some
reason the text was changed for the current state budget, which reads that the
MEDC "may implement procedures to annually audit the number of jobs claimed to
be created by firms." What had been mandated is now optional, and the reference
to working with the auditor general was stripped away.
One has to question the wisdom of allowing the MEDC to audit job
creation it claims to have influenced. In fact, March 16 marks the beginning of
"Sunshine Week" — which represents a commitment to more transparent government —
and seems a perfect time for Michigan residents to ask what their state
legislators are doing behind the curtain. If they’re hiding the fact that these
development programs fail to create net new jobs, it would not be the first time
such claims did not square with reality.
In 1993 and 2003, Michigan’s state auditors criticized the
state’s development agencies for their job creation claims. For instance, in
2003 the auditor general reported that recipients of MEDC job training grants
were supposed to have created 635 jobs, though only 222 were verifiable.
In 2004, it was claimed that the Michigan Economic Growth
Authority created more than 28,000 jobs. Finding those numbers suspect, I made
repeated attempts to obtain an explanation from the MEDC. Those requests were
either ignored or rebuffed until several state legislators practically compelled
the MEDC to explain itself. Once it did, it was clear that the jobs numbers were
practically pulled out of thin air.
This was not the only example of the agency trying to take
credit for jobs that did not exist. The Hemlock Semiconductor Corp. in 2004
actually disavowed jobs creation claims made by the MEDC on a project for which
it had received a MEGA deal.
In 2003, state Republican leaders argued in a press release and
conference that they would "fight for every Michigan job," in part by extending
the MEGA program. The Mackinac Center ultimately acquired the GOP’s internal
strategy plan for their jobs fight. It contained descriptions of the "political
value" and "press value" of their ideas, but little about the economic value.
This undermines their claim to caring about every job, giving the impression
that they cared more about jobs-related public relations.
If such programs are little more than public relations
opportunities whose actual impact must be hidden, why do they continue?
The answer is simple: Politicians don’t care about job creation
as much as they care about the perception of it. That is why it is so important
for the political class to quash any reasonable accounting of job-creation
claims. The naked truth is that the public might realize lawmakers are not
job-creating wizards capable of great feats, but are more like the tired old man
trying to distract his audience with fire and smoke, praying there are no "Totos"
around to pull back the curtain.
In honor of Sunshine Week, the state Legislature should pass a
supplemental appropriation for the auditor general to conduct a thorough audit
of the MEDC and its job creation claims. Doing so will make the department’s
work more transparent at a time when the governor wants to expand its
Michael D. LaFaive is director of the Morey Fiscal Policy
Initiative 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.
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