A Rebuttal to MEDC Letter in The Wall Street Journal

On Sept. 4, The Wall Street Journal published an editorial titled “The Michigan Example,” excoriating the state’s reliance on government central planning to “create” jobs, rather than undertake genuine overall business climate reform. The editorial was based in part on research published a few days earlier by myself and James Hohman.

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On Sept. 18, Michigan Economic Development Corp. CEO Greg Main responded (“Michigan is Working Hard to Attract Competitive Jobs”). Main’s brief missive is an excellent illustration of the MEDC’s modus operandi when confronted with legitimate criticism of its work: divert or distract the reader with irrelevancies, ignore the substance of the criticism, mislead, rely on anecdotes, and laud your own perceived value. Our study referenced by the Journal (“Michigan Economic Development Corporation: A Review and Analysis”) has deconstructed the various items from the MEDC’s rhetorical tool box illustrated by the Main letter.

Here’s the first:

Main: “Your editorial ‘The Michigan Example’ (Sept 4) widely misses the mark with its failure to recognize that Michigan’s loss of nearly 500,000 manufacturing jobs is due to global competition, productivity improvements and the credit collapse of last year.”

LaFaive: Main’s opening argument is an effort to divert readers’ attention from the specific substantive points in the editorial, including its reference to statistical measures of the impact of the state’s MEGA program on manufacturing by economist Michael Hicks, Ph.D., who found that for every $1 million worth of manufacturing tax credits claimed by MEGA tax break recipients, 95 jobs were lost in the county where the facility was located. Moreover, Main knows or should know that the techniques used by Hicks to measure this impact controlled for the effects of national and even state economic effects on manufacturing to ensure that such things as “global competition” or a “credit collapse” would not generate spurious conclusions.

The relevant issue that Main seeks to distract readers from is how Michigan's doing compared to other states, not the rest of the world. Our neighbor Indiana, for example, which is more reliant on auto jobs than Michigan as a percent of the total workforce, yet did not suffer the “one-state recession” endured here for most of this decade. Indiana actually opened a new auto manufacturing plant in 2008. Last month Indiana’s unemployment rate declined by 0.7 percentage points to 9.9 percent while Michigan’s increased 0.2 to 15.2 percent.