Insightful column from Nathan Bomey of annarbor.com. It’s a reaction to a California venture capitalist’s comments that Michigan is better in supporting innovative businesses than California. Yes you read that right. The case: Michigan state government provides higher subsidies for venture capital than California. What nonsense!
How is it that we have come to believe that it is state government programing that drives the economy? Or that it is state government’s responsibility to provide venture capital? As Bomey points out California innovation is driven – as it should be – by nearly $9 billion in private venture capital investments in 2009 compared to something like $700 million in all of the midwest. Michigan needs to figure out how to grow private sector investments for innovation, not grow it’s subsidies. We want to be like California where the subsidies are not needed. The subsidies are a reflection of our weakness, not strength.
Unfortunately it’s not just in venture capital where most folks seem to believe that state policies are the key to regrowing the Michigan economy. There is a widespread belief if only we get the right leaders in Lansing – chiefly the Governor – we wouldn’t have had our decade long slide or looking forward we will boom again. Don’t believe it! The levers available to states to influence the economy are weak, particularly in the short term. Tax and regulatory policy as well as programs to nurture, retain or attract business investment – the two preeminent ways states try to grow the economy – are too small to make much difference. A more honest assessment is that if any of the candidates in either party who ran against Governor Granholm in the last two elections had been elected instead of her the unemployment rate in Michigan today would still be 13% and our per capita income decline would still be the steepest in the nation.
More realistic is to ask state policy makers to put in place policies that better position the people of Michigan to succeed in a flattening world. To align with – rather than resist – new realities. That means focusing on education, creating places where talented people want to live and work and a place where entrepreneurs and enterprises want to set up shop. Then it is up to us to take advantage of those opportunities. As we have written before this is one of those times when voting for someone to change others, so we don’t have to, won’t work. It is up to us, not them. Bomey ends his column with the right conclusion: “the government can’t revive an economy. Only we can revive our economy.”