We don’t need to be 49th for another decade

By • on January 9, 2014

Ron French writes in his terrific Bridge article on projected Michigan job growth from 2013-2023: “Bridge Magazine economic projections paint a Scrooge-like portrait of the state economy over the coming decade. But that’s just one possible future. In the Charles Dickens story, Scrooge is scared enough to change his ways. Is Michigan prepared to change?”

Exactly the right conclusion–– Michigan doesn’t have to be one of the worse states for job growth the next decade––and the right question. Because we won’t do better unless we dramatically change the course we are on.

French continues with what the needed change looks like to him: “It won’t be easy. For Snyder and other state leaders, it means facing some uncomfortable truths about Michigan’s future, and taking steps that might not always be popular in the short run. More money for education, starting with toddlers’ first steps and continuing until they walk across a stage with a college diploma. More money to repair and replace our crumbling roads and bridges over which new business and new residents must travel. More of a willingness to invest in the present, to stave off a Dickensian future.”

French interviewed Michigan State University economics professor Charles Ballard on the changes we need. The answer:

To Ballard, it includes investment in roads and schools. And by investment, he means taxes. “Tax cuts have overwhelmed all other policies for the past 20 years,” Ballard said. “You certainly don’t want to raise taxes and throw the money away. Nobody loves to pay taxes. But I’d be willing to pay more taxes for better roads. The expansion of early childhood (education), that’s one success. Education and fixing roads and bridges are very important in positioning ourselves for economic growth. But we have continued to have massive disinvestment in higher education.”

More public investments, which require higher taxes, is at the core of Michigan Future’s policy framework. (With being welcoming to all.) Three years ago in a post on what was likely to happen in 2011 I wrote:

… If 2011 is to be a start of a long term Michigan economic recovery it will be because Governor-elect Snyder gets us on the path to the Michigan 3.0 he promised in his campaign. The challenge is that most of the legislature that got elected with him campaigned on restoring Michigan 2.0. The decision we make on which direction to go is what matters most in 2011. It will go a long ways towards defining our economic future.

Move towards Michigan 3.0 and we can once again be one of the most prosperous places on the planet. Stay as Michigan 2.0 and we will continue to lag the nation. What appears to be the preeminent vision of a successful future Michigan is an economy still anchored by factories, farms and tourism. And a policy agenda to get us back to our past success largely through smaller government and weaker unions. If I had to predict where we will go in 2011 it is towards that vision and agenda.

But if we go in that direction I also predict it won’t work.

There are some hard truths that Michiganders needs to confront: Michigan’s prosperity in the last century was built primarily on good-paying, lower-education attainment jobs. Those jobs are gone forever. …  If the Michigan economy of the future is built on a base of factories, farms and tourism we will be a low-prosperity state. The world has changed fundamentally. We either adjust to the changes or we will continue to get poorer compared to the nation.

The alternative – Michigan 3.0 – is a Michigan concentrated in the knowledge-based sectors of the economy: health care, education, finance and insurance, professional and technical service and information. These are the fast growing and high wage sectors of the American economy today and tomorrow.

To get there requires first and foremost that Michiganders get better educated. Nearly all the states and regions with the highest incomes will be those with the highest proportion of adults with a four-year degree or more. The policy agenda to create Michigan 3.0 is focused on public investments in education and quality of place. With a particular emphasis on higher education and central cities. The first to prepare Michiganders for the economy of the future, the second to retain and attract mobile talent which increasing is choosing big metros anchored by vibrant central cities.

The Michigan turnaround, compared to the nation, will start only when we focus on improving our ranking of thirty fourth in college attainment. That is our fundamental challenge. Low education attainment regions and states will be low prosperity regions and states. We can do better! But it will require us letting go of what made us prosperous in the past and getting on a new path: one that is aligned with new realities.

Unfortunately the prediction that policy makers (Administration and legislature) would choose 2.0 and a policy agenda “to get us back to our past success largely through smaller government and weaker unions” turned out to be true. And by choosing that vision and agenda they have chosen to take us in the direction of slow job and personal income growth. Staying on that path is what leads to being 49th for another decade. Its time to get on a new path.

 

 

 

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