The Magazine

The Mania of Central Planning

Thinking big is killing Michigan's economy.

Oct 12, 2009, Vol. 15, No. 04 • By ELI LEHRER
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Plenty of the industries and projects Michigan favors seem quite likely to divert resources from other, more productive pursuits. For example, so-called "growth" industries--a list that somehow includes "automotive engineering"--get the most help even when they aren't necessarily growing. Although the state's only arguable strength lies in a growing health care sector, only targeted "life sciences" firms (mostly drug makers) get the biggest handouts. Likewise, Michigan offers America's most generous tax credits for film production, but doesn't have a single full-scale film school to train people for a business that requires enormous technical knowledge. For all the talk about a Great Lakes Hollywood, the credit has mostly brought in forgettable productions like Buddy BeBop vs. the Living Dead.

Granholm has presided over some of this system's worst excesses, but she didn't invent it. Jack McHugh, a senior analyst at the Mackinac Center in Midland (responsible for chronicling many of the state's central planning failures), told me that the fault lies with both parties over several decades. "The legislature is politically incapable of doing genuine business climate reform," he says. Economic development subsidies, he says, are "a cover story the legislature can use while ignoring the real dysfunctions and the sources of those dysfunctions," namely, unions and a dysfunctional political class in both parties.

In fact, it may be possible to go even further: The state's desire to plan growth and invest in big projects has made a bad situation worse.

Eli Lehrer is a senior fellow at the Competitive Enterprise Institute.