What State Government Can’t Do

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.”

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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

This Post Has 2 Comments

  1. If you donot have factory experience then you have no right to push for michigan’s knowledge based economy. These workers that are in the factories come first. Not the highschool grads. the people in the workforce on the factory floors should get the option first. Advancement of Michigan can only come from within the population working. We need to change back to get some experience working move forward a little. Rung by rung. Not lay every one off and force them back to school. Everyone who left Michigan is being considered for UN resolution 260 III violations and US chapter 50A resolutions. which constitutes a 20year prison sentence and a 1billion dollar fine. Get the knowledge based skills to the level that the slowet mental challenged person can understand and then talk about moving forward. The idea of a New World Order is a prison sentence in a gulag.

    1. If there were a way to recreate a factory based economy, believe me we would be in favor of it. Clearly lots of folks are getting hurt – through no fault of theirs – by the decline in manufacturing. The point we are trying to make is that this is not about right and wrong, it is about what is possible. Half of Americans used to earn a living on farms.Today it is 2%. Lots of folks got hurt when their farm job disappeared. But no matter how hard governments tried to help farming, those jobs never came back. Unfortunately the same in true for factory jobs. In large part because machines are now doing the work factory workers used to. We are not pro knowledge based industries or anti factory based industries. We don’t think government should pick any industry for special treatment. What we are in favor of is Michigan helping it people get ready for the jobs of today and tomorrow. It is something state government can do, it can’t turn the clock back.

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