Choosing a Model for Michigan II

As I wrote in my last post, being a low tax and spending state and/or right to work state has little to do with how well a state’s economy performs. But they remain popular “answers” to reviving the Michigan economy. The Grand Rapids Press did a terrific article on Kia coming to Georgia. Their claim – almost certainly right – is that Georgia being a right to work state was essential to landing the plant. But what the article doesn’t deal with – and what is most important – is “how well is the Georgia economy doing?” And at the West Michigan policy forum, economist Brain Wesbury made the case that Michigan needs to emulate the low tax and spending policies of Texas. Why? Because Texas has higher per capita income and lower unemployment than Michigan. But that is true of most states in America. We are next to last in unemployment and 36th in per capita income. So the more relevant question is “how does Texas measure up compared to the states with the best economies?”

The answer for both Georgia and Texas is not so good. Georgia’s per capita income is a just below Michigan’s at $35,000 and its July unemployment rate is 9.9%.  For Texas it’s $38,000 (below the national average) and 8.2%. Once again both far below  Minnesota which is neither a low tax and spending state nor a right to work state. The Minnesota stats: per capita income of $43,000 and a July unemployment rate of 6.8%. Once again if you care about economic results – as we and most Michiganians do – you want Michigan to be like Minnesota, not Georgia and Texas. And Minnesota, Georgia and Texas are not outliers. They follow the national pattern which is most right to work states and low tax and spending states are below the national average in per capita income.

It’s time that we reject the notion that there are some predetermined right answers to how to restore Michigan to high prosperity and really take the time to learn what are the characteristics of those places across the country that are the most prosperous.

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