Rich Lowry has an interesting piece in National Review Online on why Michigan’s economy is one of the worst in the country as a direct consequence of decades of liberal social policies:
Michael LaFaive of the Mackinac Center calls Michigan “the France of North America.” Economically competitive states might have a personal income tax, or corporate income tax, or sales tax — Michigan has all three. It has long been the only state with a European-style, value-added tax — the Single Business Tax. A company can be in bankruptcy and still have a tax liability, making Michigan a bad state even to lose money in. In a 2002 filing for relief from the tax, General Motors explained that it would operate at a loss, but one of its projects would still create a $7 million-a-year tax liability.
Michigan recently repealed the Single Business Tax effective at the end of 2007, but has punted the decision about how to replace it. A relative moderate, Gov. Granholm has resisted general tax increases, but levied new fees, sin taxes and other “revenue enhancers.” The state still insists on trying to target tax incentives and other special breaks to favored businesses, in a doomed replay of 1970s-era industrial policy.
Michigan is one of the states that has no one to blame but itself for its incredible economic failure. Michigan assumed that a single industry would be enough to support its entire economic base — and that’s never true. The combination of technological change and foreign competition has altered the economics of the auto manufacturing industry in fundamental ways. The economic and political control exercised by the unions ensured that Michigan’s government remained largely wedded to that one industry.
Just as only a fool would invest their entire savings into one thing, an economy based on one single industry is constantly under threat. As Lowry points out, Michigan’s high-tax, low-growth policies are now coming home to roost in a state that’s seen massive job losses due to poor public policy. He’s also right in pointing out that Michigan is a state that has done nearly everything that liberals think would make the US economy stronger — and it simply hasn’t worked.
Michigan’s lack of economic diversity, punitive levels of taxation, and incredible inflexibility have caused innumerable suffering as workers lose their jobs and are forced to move to states with more opportunities who don’t embrace the same set of failed policies. The lesson here is obvious: those states that attempt to enact the same set of principles risk coming to the same negative outcomes.