Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
State of the State 2007 leaves me shaking my head
Published on February 10, 2007 By Draginol In Democrat

I like Gov Granholm. She's the kind of politican that few states are lucky to have -- honest, friendly, reasonable. I also think she's intelligent.

But it is, IMO, her intelligence that had led her economic policies to disaster. Simply put, when she doesn't know something, she relies on her intelligence to function as a form of intuition. And for whatever reason, she just has some sort of block when it comes to business.

In her 2007 state of the state speech, she advocates raising taxes to help make Michigan more competitive.

"The tax changes I will prpose are simple, fair, and progressive."

Which is a recipe for disaster. Words like fairness and progressive send up red flags.

If I have $100 to invest and I have 100 companies to invest it in, should I be "fair" and invest equally in all 100 companies?  Should I be progressive and give it to the poorer companies?  Or should I base my investment based on merit and capability?

Granholm's administration has be not-quite hostile to business as much as not understanding the role of business in the success or failure of a state.

To be "simple" about it, business is everything.  Busineses are the ones who employ people and people (and businesses) pay the taxes. Without those businesses, everything else collapses.

Politicians tend to get stuck on things like "better education for our children". That's nice. But the skills necessary to function in our society are remarkably cheap to acquire.  They do not require spending $10,000 per student per year. 

I don't know what the exact amount is necessary to adequately educate a child only that $10,000 per student is far too high.  You get into diminishing returns pretty quickly.  My sons attend public school. And of the 180 days they are in attendance, they lose a solid 10 on various "parties". They lose another 3 or 4 to "field trips" that have no educational value (I should know, I have gone with them on some).  Their curriculum is full of fluffy nonsense that does nothing to help them acquire basic math and reading skills.  The teachers have assistants who have assistants.  At a certain point, money is just a metric used by politicans and Michigan has far exceeded that metric.

Here are the two basic problems with Jennifer Granholm's political philosophy:

  1. She doesn't understand the role of business in a state's prosperity
  2. She thinks education has a significant role in making a state successful

Both are incorrect.  When I hire people (or as politicians call it -- when I "create" jobs) if I can't find someone locally, I bring someone from out of state. About half the people at our office are from outside Michigan. 

Bringing talented people from outside of Michigan isn't a "bug" IMO, it's a feature. Politicians should be glad when businesses recruit talented people from out of state.  Obviously you want a hard working, educated local work force. But once you have that, goodies like free tuition and such are counter productive. They do nothing for your state other than encourage moochers to move in. Is that the goal?

If Ms. Granhom really wants to make Michigan successful here are a few things I'd recommend:

  1. Lower taxes, especially on businesses.
  2. Eliminate thing likes Single Business Tax now (The itself SBT was finally removed in a referendum)
  3. Keep on top of the roads. It's humiliating to bring someone in where the roads are a total joke (they're getting better though - thank you!)

That's pretty much it.  She should also use the tight budget as an excuse to cut educational spending. The problem with schools (whether it be suburban or inner city) is not a lack of money but a lack of self-reliance and accountability. Throwing money at public schools when they can't even fire incompetent teachers is wasteful.

Making it easy for every child in Michigan to go to college sure is nice. And as they move off to Texas or Arizona or South Carolina to get a job, I'm sure they'll be faintly appreciative (though not likely) of Ms. Granholm's commitment to education.

The mantra politicans need to remember is that businesses create jobs.  What's good for them is good for your state.


Comments
on Feb 10, 2007

I dont have the advantage of being a resident of Ms. Granholm's fiefdom.  But from what I have read, and seen, of Michigan, is how I judge her.  And in that regard, I see a failure, and your post, while eloquent, just kind of serves to drive home that point.

What made Reagan great?  Was he the smartest cookie in the box?  no.  But he knew who was and hired them.  That is what makes a great administration.  Not the supersmart of the leader, but in the leadership skills and knowing when to call on the smartest cookie for answers.

on Feb 10, 2007

Sounds like your Governor is a bit like the new Governor in Maryland, one Martin O'Malley.  Former mayor of Baltimore.

His approach to winning the election was to promise the world, and now that he's having to deliver it he is looking for more revenue wherever possible.  He's threatening to withhold funds from the state college system if the system doesn't hold down tuition.  Great idea except that when those threats are removed the tuition will shoot up in huge amounts because of the need to catch up to the expenses that have gone up while funding didn't.

Raising spending without raising revenue isn't possible, that part of economics is easily understood.  What the politicians don't understand is that we haven't asked them to raise spending in all areas -- we ask them to raise spending in some areas and we imply that spending should be cut in other areas.  It is the cuts that never happen, and because of that the pols come back looking for more revenue to deliver their pandering handouts.

on Feb 10, 2007
I agree with your statements with regard to business, but disagree with your statement that education isn't important. Yes, schools waste money on crap that they shouldn't, and I have no problem with cutting those idiotic things, but education most certainly is important. But when I say education I mean actual education. Reading, mathematics, science, history, etc.

I know it wasn't your intention to say that education isn't important, but that is actually what you wound up saying. It's all well and good to bring in talent from other places, but if the local population isn't educated enough to be productive you wind up with even more tax money being spent on entitlement programs to support them. I'm sure you'd agree that's a very bad way to spend tax dollars, and let's face it the entitlement programs aren't going away any time soon. Better to education them so they can support themselves so that those who are productive aren't over taxed in order to support them instead.
on Feb 10, 2007

I'm not saying education isn't important.

I am saying that you get to a certain point and then you have diminishing returns.

If your choice is to make your state competitive for attracting businesses (such as getting rid of ridiculous things like the SBT) versus whether the First grade teacher has only 2 assistants instead of 1, I think the choice is clear.

And as much as I, as a parent, appreciate the resources lavished on my children, I don't think it's better for the citizens of the state overall.

Michigan is uniquely hostile to businesses and I am not sure the governor even understands why.

on Feb 10, 2007
Michigan is uniquely hostile to businesses and I am not sure the governor even understands why.


Which is kind of funny given their nationwide ads! But then Payday says they are really great too. To some I guess.
on Feb 11, 2007

Any state that has a special tax on business where you cannot deduct your labor and is an EXTRA tax cannot say they're friendly to business.

The SBT is a ridiculous, insane tax. Here's a brief description of it.

I remember when we were switching from OS/2 to Windows and we were losing money like crazy and STILL had to pay this tax to the state. It was absolutely insane. It definitely is a deterrent to choosing Michigan to have your business in.

on Feb 11, 2007
How can you say the SBT doesn't let you deduct labor? Just look at credit provision #24:

3.9% of the compensation paid to employees at a facility in Troy that is engaged in research and development of a two-mode hybrid car engine.


"We're business friendly. Here's the business."

I had no idea you were in Michigan. I totally assumed Washington. You're like right next door to me in Wisconsin!
on Feb 12, 2007
Draginol waves at Noumenon!
on Feb 12, 2007
Draginol,
Hi from around the block.... Haggerty and and Ann Arbor Trail to be relatively exact. I understand where you are coming from concerning much of your post. I want to know why you are harping on the SBT when it has already been eliminated? It was eliminated in a public referendum last year. There has been much debate on what kind of tax should replace it and if it should be revenue neutral or essentially cut the tax rate. From what I know, even the Governor believes that we should tax profit and not headcount. I just don't understand why your main thrust is to complain about a tax that has already been eliminated... As far as education...that is a whole different beast, and I do think she took the right approach in forcing them to consolidate. The next thing we need to tackle is the outrageous benefits that state workers and teachers still think they are entitled too.
on Feb 12, 2007

jdkeeps - My point about the SBT is that it was already being phased out when Grandholm was elected and she brought it back. It took a referendum to make it go away.