Big picture themes

As we start the new year I thought it would be helpful to take a step back from the specifics I normally write about to delineate the themes that these posts are about. For the past several years––no matter who was in office in Lansing or Washington––I have written about 100 posts per year. Each is about animating six main ideas that we think matter most to our efforts to be a catalyst for Michigan prosperity. Recreating a Michigan with a broad middle class.

Globalization and technology are mega forces––more powerful by far than politics or policy––that are constantly reshaping the economy. Machines increasingly can do more and more of the work humans use to plus help create new industries that make old industries obsolete. And globalization keeps spreading so that more and more folks compete with us for work. No one can predict what changes will occur and when. But the new reality is the job you have, the company you worked for and even the occupation you are in are less stable today than yesterday and almost certainly will be less stable tomorrow than today. The people and places that align with––rather than resist––these new realities will do best.

The places with the greatest concentration of talent win. The new path to prosperity is the broad knowledge-based economy. High prosperity is occurring chiefly in those places where knowledge-based enterprises across many sectors are concentrating. Increasingly that is states and regions with a high proportion of adults with a bachelor’s degree or more. Michigan’s fundamental economic challenge is that we rank 34th in the proportion of adults with a four-year degree.

Factory-based economies no longer support a broad middle class. The high paid, lower education attainment factory jobs that made Michigan one of the most prosperous places on the planet in the 20th Century, won’t in the 21st. Manufacturing will continue to be an important part of the American economy, but it is now a source of, at best, slow job growth (as machines do more and more of the work) and no longer a sustainable source of high paid jobs.

Quality education matters most. The evidence is overwhelming: the individuals and places that are the most prosperous––have the highest income––are those with the most education. Particularly a four year degree. So that a high quality p-20 education system (from early childhood through undergraduate college) matters most to Michiganders success. In addition to its economic power, education also is the foundation of the American belief that all children should have an equal opportunity to live the American Dream. Michigan seems to be moving away from that commitment as policy makers push to (1) decrease investment in both k-12 and higher education, (2) move away from providing every student with a real opportunity to leave high school ready, if they choose, to pursue a four year degree or more in favor of schools preparing students for immediate job openings with Michigan employers and (3) allow anyone, without quality standards, to access public funding to educate our kids.

Strategic public investments are the policy priority. Economic growth priority #1 is preparing, retaining and attracting talent. The policy priorities to create a knowledge-based Michigan are 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 increasingly is choosing big metros anchored by vibrant central cities.

Low business cost states and regions don’t win. Conventional wisdom is that so-called business friendly places have the best economies. That the way to grow a state’s or region’s economy is to lower business costs with lower taxes, less regulation and weaker unions. Don’t believe it. On just about every measure that matters to people––whether you have a job and how much you earn––low business costs either don’t predict better outcomes or so-called high costs states and regions do better.

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