We are likely to hear in the coming weeks that restoring the Michigan Economic Development Corporation (MEDC) to its pre Granholm incarnation is a key to the state’s economic turnaround. Don’t believe it! In the 30 months prior to Granholm’s election – when the MEDC supposedly was one of the nation’s best economic development agencies – the state lost more than 200,000 jobs.

That’s right, the state’s lost decade started years before the election of Governor Granholm. And how the state organized and delivered its economic development programming in the Granholm years had almost nothing to do with the decline.

This is one area where we are in basic agreement with the Mackinac Center. They too believe that providing special incentives to nurture, retain and attract business investment yields little. In an interesting column the Center points out that Michigan is regularly cited as “leading the nation in business expansions” at the same time that our economy lags the nation.

The Kalamazoo Gazette did a terrific story on the MEDC and local incentives that have been given to the life sciences company MPI Research. The commitment was for 3,300 new jobs. So far, the company has shed jobs. Market forces – not state and local incentives – determine whether a company add jobs or not.

Our lost decade overwhelmingly was caused by the collapse of our dominant industry – the Detroit Three. And, more broadly, on our lagging the nation in the transition away from a factory-based economy to one that is knowledge-based. Our prosperity in the past century was anchored by high paid, largely low education jobs, an economy that no longer exists.

So to reposition Michigan for economic success in a flattening world requires that we focus on the fundamentals. We can debate whether that means lower business taxes and less regulation or more investments in education and quality of place. Our guess is that it is some combination of all. But those are the public policy levers that matter most. Getting our economic development programming right is at best the icing on the cake. Fix that and ignore the fundamentals and we will continue to lag the nation.

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