Michigan's Legislature vs. That Democracy Thing

One of Gov. Snyder's comments that caught my attention was, in essence, "I supported cramming a 'right to work' law through the legislature to punish unions for trying to put collective bargaining rights into the state constitution."

When asked about right to work, Snyder said he was never working on the legislation and it was not a top priority of his. He said he asked proponents of Proposition 2 not to continue their efforts and warned them right to work could be an issue if their ballot initiative failed.

“But when it comes down to it, if it’s controversial, you hired me to make decisions, and I’m not going to walk away from an issue that’s on the table,” he said.

“It was my view that it was clear, that this was the right thing. It’s about workers rights, it’s about standing up for workers… but we’ve made that decision so let’s put the issue behind us and move on to the next issues we have to work on.”

Obvious reactions include the obvious: Reducing the rights of workers is pretty close to the opposite of "standing up for workers" and, if you're going to tout the notion of running government like a business, making dramatic policy changes that you would not otherwise support in order to punish an outside group is about as far from what you would want a business (or a government) to do as you can get. But the greatest concern is the means by which Snyder helped cram the law through the legislature:

As virtually everyone knows, a bill making Michigan a Right-to-Work state was rammed through the legislature in a single day during a so-called lame-duck session last December.

Not only were there were no committee hearings and no real debate: The Capitol Building in Lansing was closed to the public for what were said to be “safety reasons.”

The way in which this bill was passed has sparked a great deal of outrage, not all of it from groups automatically opposed to right to work legislation. The law, by the way, outlaws the so-called union shop, and means no worker can be forced to join or pay a fee to be represented by a union, in any public or private industry....

The aim of Michigan’s Open Meetings Act is simple: To protect our right to know what government is doing by opening to full public view the processes by which both elected and non-elected officials make decisions for the people.

After all, we elected them, and they work for us. Korobkin says that didn’t happen here. He told me, as other people have, that the public galleries were deliberately packed that day with assistants to Republican officeholders to squeeze out the general public. The ACLU also says closing the Capitol building was outrageous.

Indeed, nobody can ever remember this happening on any other piece of legislation.

If you like democracy, you have to dislike the process that the legislature and governor followed.

Rick Snyder's Missing "C"

Gov. Snyder believes that the state needs to make an effort to attract talented workers to Michigan:

"There are three 'Cs' that are critically important. Collaboration, creation and connection. Collaboration is about working with the private sector to say 'what are your needs today and tomorrow?' The second 'C' is about creating talent, that's the education sector, about giving people the tools to be successful. Finally, connecting those tools."

First and foremost, in terms of attracting and keeping talent, Snyder is missing the most important "C" - compensation. Instead he substitutes determining the needs of the private sector - which I expect translates roughly into, "Getting whatever workers we need for the lowest possible compensation," the opposite of what attracts and retains talented workers. He draws on Econ 101, picturing the job of government as changing the point at which the supply curve (workers) crosses the demand curve (what employers want) - but doesn't really explain what he would do to change the point at which the two lines intersect beyond mentioning a state-run jobs bulletin board. I'm no economist, but here's a nice refresher course on supply, demand and market equilibrium, and the importance of price in eliminating a market shortfall.

Snyder comments on the jobs board, "we have over 60,000 open jobs... and these are good jobs". Not that it's a scientific test, but here's what I just found on that board:

Asparagus Harvester
Todd Greiner Farms Packing, Llc

Job Code Number: 4015674

Job Description: Involves hand-harvesting the asparagus crop while riding a self-propelled personnel carrier. Employer needs 5-7 workers per group. Asparagus harvest will begin around May 1st, and will continue through approximately mid-to-late June. Hours vary between 45-55 hours per week (based on weather and other occurrences beyond employers control). Wages: Piece rate= $0.14 p/lb. for processing and $0.16 p/lb for fresh market. Employer guarantees Michigan minimum wage or $7.40 p/hr. Some licensed housing is available depending on group size. No bonus.

Here's the thing: I didn't go searching through the jobs board for the worst job listed at the worst pay.¹ That job was featured on the front page of the website, the very first job listing under the heading "Featured Jobs".

Other featured jobs include driving a truck for an apple orchard, working as a quality inspector (high school diploma or GED required) with no corresponding job listed through the opportunities section of the company's website, working contracts through a staffing company that sends workers to companies throughout the nation, working as a project manner for a technology company that has a broken job search function on its own website.... I ran a few searches, attempting to filter for the better jobs, but didn't see much that hinted at Michigan's future, let alone a large number of job openings that are unlikely to be filled if the employer is willing to pay the compensation the market demands.

Snyder came out of Gateway computers, so he should have a pretty good sense that even with the best "account management" or "collaboration", no government can save a company from itself. No doubt, Gateway could have used better talent in its later years - but in management, not on the assembly line. Snyder continued to serve on the Gateway board during its final decade of decline, prior to its acquisition by Acer, and briefly served as interim CEO during that period, so he should have a pretty good idea of what a poor job even talented, motivated managers and bean counters can do in terms of anticipating a company's future needs and turning around a declining company. When we talk about running government like a business I'm not sure what business we have in mind, but it's not Gateway.

It's also fair to ask, what can the state actually do in terms of boosting the education sector. Under Synder's tenure the primary "education" focus of the legislature has appeared to be, "How to weaken teacher's unions, reduce their compensation and benefits, and boost for-profit charter schools," which to me doesn't appear to reflect deep concern for the quality of public education. State colleges continue to feel a budget squeeze. If I look at his actions, the governor appears to share the philosophy of the state legislature. How will Michigan's present education policies create talent and, to the extent that it does, why would that talent want to stay in the state? Even if they can find a job on the job search board, many talented graduates going to do what Snyder did - chase the best job, even if it means moving to another state.

Snynder has not fully unveiled his plans, but he did say this:

“We have a number of action items that we’re still putting together and will be rolled out soon. Particularly we’re looking at working within regions at talent connection and making sure that skilled trades are an emphasis.”

That suggests to me that Snyder seeks Michigan's future as involving lower-paid factory jobs. That interpretation seems consistent with the actions of Snyder and the legislature, from its treatment of schools and teachers to the legislative shenanigans behind making Michigan a "right to work" state, but it's the sort of emphasis that seems likely to keep Michigan's most talented graduates looking for jobs in other states, and will keep the best-paying jobs in those other states.
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1. Before you accuse me of cherry picking, I'll note - that job is listed as well, and it also guarantees no more than minimum wage. If you want me to cherry pick, we need to move up to the type of salary John McCain once suggested.

Michigan Voters - Preview Your Ballot

Go to Publius and find out exactly what's on your local ballot.

The ballot is ridiculously long this year - if you're going to try to work through the lesser-known offices and the nonpartisan ballot, and don't want to spend a lot of time at your polling place trying to figure out what each of the ballot initiatives is about, Publius allows you to do all of your thinking in advance.

Working With The Other Party is Only "Bipartisanship" When You Have a Choice

Jamelle Bouie takes a look at one of the themes of the Romney campaign, that he has "proved" himself capable of working in a bipartisan manner because he was a Republican governor working with a Democratically controlled legislature. While Bouie explores the fundamental dishonesty of using this theme to attack President Obama, there's something else that we should note:

It's not "bipartisan" to work with the other party when you have no choice. When a Democratic legislative majority passes a bill, the Republican governor who signs it cannot claim that in doing so he is "reaching across the aisle". The compromise of the governor's agenda is inevitable. The same is true when party control is flipped - Jennifer Granholm doesn't have a proud history of bipartisan accomplishment, but instead struggled for eight years to push back against a Republican-controlled legislature. It's what the people voted for, but I would not argue that the result was good for the state, nor would I accept a Romney-type argument that Granholm proved her ability to reach across the aisle merely by showing up for work and signing bills that were invariably passed by Republican majorities, no matter how many state Democrats also signed on.

It's difficult to address these issues without inviting a glib response, "You're right, I had to work with the other party, and I did, successfully, time and time again." But when you cannot pass a single piece of legislation without the support of a large number of legislatures from the other party, that is simply not evidence of how you would work in a polarized environment, where your party shares or holds control of the legislature.

Lady Parts!

Please note, I am fully prepared to concede that these people are "immeasurably superior to"... David Brooks.

Romney Must Not Get to Michigan Very Often....

Via TPM,

This feels good being back in Michigan. Um, you know the trees are the right height. The, uh, the streets are just right.

This for a state in which people joke that that there are two seasons: Winter and "orange barrel" season. If potholes, crumbling cement and detours are your thing, yeah, "just right".

Romney's Dishonest Pitch to Michigan Voters

Mitt Romney has a problem in Michigan. Four years ago, part of his case for his candidacy was that he could deliver Michigan for the Republican Party. He won the primary, but with less than 40% of the vote. Now he's the presumed nominee, and he may lose Michigan to, of all people, Rick Santorum. Then, as now, Romney claimed a form of inherited connection with the state and auto industry that, like pretty much everything else he claims, just doesn't ring true for a lot of the voters he expects to support him.

Four years ago, Romney argued that we should "let Detroit go bankrupt."

If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Can you feel his brilliant business insight at work? He follows that up with a number of observations that range from the trite (the need to renegotiate labor contracts for lower wages and benefits, the need to replace bad management, the need to focus on a long-term strategy and not simply he next quarter's financials), and suggests that the auto industry is the wrong place to spend government money,

I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration.

Yes, that's right, Romney was for massive public investment in companies like Solyndra before, with the benefit of hindsight, he was against them. It's astonishing that a guy who claims to be a genius venture capitalist believes that you can invest $20 billion in research without taking any losses. Most good venture capitalists have a success rate of what, one in three?

Let's start with my 1/3, 1/3, 1/3 assumption that regular readers will be familiar with. This says that 1/3 of an early stage venture portfolio will be losers, 1/3 will get your money back or make a little money, and only 1/3 will deliver the kind of performance you expect when you make an investment (5-10x).

Romney complains when people criticize his record at Bain, and point to the companies that ended up failing, but he predictably applies a very different standard when going after the President. Solyndra obtained almost a billion dollars in private equity - money from companies like Bain - prior to its collapse. Romney can argue that the scale is different, an argument undermined by his own assertion that the federal government should push $20 billion into alternative energy research, but as others have pointed out the entire effort resembles a push Romney made as governor of Massachusetts, with some of his administration's selections for the receipt of millions in grants ultimately failing. By the time he was criticizing Solyndra, Romney had either forgotten or flip-flopped on his proposed $20 billion budget for energy research, with a campaign spokesperson arguing, "Gov. Romney worked to limit the role of the state as venture capitalist". As a former head of the Massachusetts fund argues,

"[Romney's] administration was certainly at that point willing to support the establishment of a fund that was going to be in the business of giving money to individual companies and in effect picking winners," Leon said. "This is true. In some ways, it's a question of on what basis one wants to be critical of his position now."

Romney's other arguments about Solyndra seems remarkably detached from reality,

"When they put $500 million into Solyndra, they thought they were encouraging solar energy in this country," Mr. Romney told a friendly audience packed with business executives. "They did the opposite. Because when they put $500 million into Solyndra, the other 100 entrepreneurs in America working on solar energy just lost any potential to get capital."

He added: "When the government chooses to put in $500 million, who wants to put $2 million in some idea from this person in Montana? No one."

Seriously, not one venture capitalist in the country will invest in alternative energy if the U.S. government is providing loan guarantees to large ventures that have been vetted and funded by large venture capital firms? And his evidence for this is... that it makes for a great, if mendacious, sound bite in his speech?

You could argue that the U.S. government was following Romney's advice, creating a program that offered a total of about $20 billion in loan guarantees, and that it has a pretty remarkable record, having only one company (Solyndra) default. Perhaps Romney would like to bring out a panel of working venture capitalists, and have them explain how a 2.5% default rate on their investments would bring their companies to their knees. And while Romney likes to bandy about phrases like "crony capitalism" for why the Obama administration (like the V.C. firms that invested the $billion) thought Solyndra was an appropriate recipient for government support, he omits mention of the fact that Solyndra started to receive loan guarantees during the Bush Presidency.

What critics fail to mention is that the Solyndra deal is more than three years old, started under the Bush Administration, which tried to conditionally approve the loan right before Obama took office. Rather than “pushing funds out the door too quickly,” the Obama Administration restructured the original loan when it came into office to further protect the taxpayers’ investment.

If Romney is a brilliant businessman and investor, he knows all of this.

Moving back to Detroit, Romney whines that when the government restructured G.M. it gave a block of shares to the union,

Instead of doing the right thing and standing up to union bosses, Obama rewarded them.

A labor union that had contributed millions to Democrats and his election campaign was granted an ownership share of Chrysler and a major stake in GM, two flagships of the industry.

The first statement is an outright lie. Unions had to make significant concessions as part of the restructuring deal. The "ownership share" was part of the negotiation between the unions and the failing auto companies, and was designed to ensure at least partial continuation of medical benefits to retirees.

In virtually every respect, the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded in its loan agreement with GM. Among other things, the UAW’s existing VEBA – to which GM has a $20bn obligation – will be replaced by a new VEBA as described below....

This new GM will establish an independent trust (VEBA) that will provide health care benefits for GM’s retirees. The VEBA will be funded by a note of $2.5 billion payable in three installments ending in 2017 and $6.5 billion in 9% perpetual preferred stock. The VEBA will also receive 17.5% of the equity of New GM and warrants to purchase an additional 2.5% of the company. The VEBA will have the right to select one independent director and will have no right to vote its shares or ther governance rights.

Let's contrast the type of private investment that Romney implicitly argues is superior, and which he practiced back in his days with Bain,

The [investors] who ran Harry and David into the ground have a defense: economic conditions changed in unforeseeable ways. But that’s precisely why loading firms with debt in order to reap short-term benefits is bad. It leaves companies unable to weather tough times, and allows private-equity firms to make money even if things go wrong.

As if this weren’t galling enough, taxpayers are left on the hook. Interest payments on all that debt are tax-deductible; when pensions are dumped, a federal agency called the Pension Benefit Guaranty Corporation picks up the tab; and the money that the dealmakers earn is taxed at a much lower rate than normal income would be, thanks to the so-called “carried interest” loophole. The money that Mitt Romney made when he was at Bain Capital was compensation for his (apparently excellent) work, but, instead of being taxed as income, it was taxed as a capital gain. It’s a very cozy arrangement.

Recall also that before the government stepped in, Chrysler was not a publicly traded company. It was privately held by Cerberus Capital Management, a company that appeared adept only at running the company into the ground. In Romney's book, it appears to be a very good thing for a corporate raider to be able to pick the meat off a company's bones, leaving it to the taxpayer to cover defaults on pensions and retiree medical benefits. Surely he understands that the calculus is different when you're a government actor and you care less about profit than the survival of the company and the avoidance of an additional burden on the taxpayer. If Romney doesn't understand the difference between being President and running Bain, he has no business running for President.

Romney is now purporting that everything good about the government bailout of G.M. and Chrysler was his idea, and that everything else about the bailout was bad. Well before this speech was made, Paul Krugman gave an apt assessment:

So what the story of Romney and the auto bailout actually shows is something we already knew from health care: he’s a smart guy who is also a moral coward. His original proposal for the auto industry, like his health reform, bore considerable resemblance to what Obama actually did. But when the deed took place, Romney — rather than having the courage to say that the president was actually doing something reasonable — joined the rest of his party in whining and denouncing the plan.

And now he wants to claim credit for the very policy he trashed when it hung in the balance.

Romney he wants us to imagine that in private hands a company like Chrysler could have survived and thrived, ignoring the fact that Chrysler had spent years in the tends of people like Romney who were either indifferent to its survival or beyond incompetent in their effort to engineer a turnaround. He wants us to believe that G.M. and Chrysler could have survived a private bankruptcy, despite the far that credit markets were frozen and nobody was going to finance the companies' operations over the course of a traditional bankruptcy, even if expedited. He wants us to imagine that GM's bondholders, and Chrysler's private owners, were somehow duped or tricked into believing that they would do as well or better through the Obama Administration's plan that they approved, as opposed to rejecting the deal and pursuing a traditional bankruptcy. And, as a brilliant investor, Romney now encourages the Obama Administration to inflict a massive financial loss on the taxpayer, apparently because this will somehow punish the UAW.

American taxpayers have been left on the hook for billions to benefit unions and the union bosses who contributed millions to Barack Obama's election campaign. Such a state of affairs is intolerable, and as president I would not tolerate it. The Obama administration needs to act now to divest itself of its ownership position in GM.

The shares need to be sold in a responsible fashion and the proceeds turned over to the nation's taxpayers.

I recognize that anti-union demagoguery is par for the course for the Romney campaign, but you would think that in using the word he would have some sense of what it means to be responsible. The numbers are pretty basic: To recoup its 'investment' the government needs to sell its stake in G.M. at $53 per share. The present value of G.M. is $25.33 per share. Were the Obama Administration to follow Romney's advice, they would be "turning over" to the taxpayer a loss of about $20 billion. How can you view Romney's pressure for divestment as anything but dishonesty, demagoguery - a single (albeit very large) company's failure that results in a $500 million default on loan guarantees is government at its worst, but inflicting a $20 billion loss on taxpayers would be "responsible".

Do Right-To-Work Laws Hurt State Economies

We all know the conventional wisdom on right-to-work laws:

"Proponents argue that it creates jobs, on the theory that there are a bunch of anti-union employers who will flock to whatever state passes the law ... Opponents dispute that claim, and argue that all it does it allow employers in those states to pay workers less and give them fewer health and pension benefits. They claim it is part of the race to the bottom that corporations encourage and that Republican politicians are more than happy to implement in exchange for the huge political contributions to their campaigns."

Under either philosophy, the idea is that jobs shift from union to non-union states, and for decades that pattern was beyond dispute. But in this post-NAFTA, internationalized era, might the story have changed?

Only one state has passed right to work since NAFTA: Oklahoma in 2001. (Before that, the most recent was Idaho in 1985.) About a year ago, Lafer and economist Sylvia Allegretto published a report for the Economic Policy Institute* exploring just what had happened in the decade since Oklahomans got their "right to work." The results weren't pretty.

Rather than increasing job opportunities, the state saw companies relocate out of Oklahoma. In high-tech industries and those service industries "dependent on consumer spending in the local economy" the laws appear to have actually damaged growth. At the end of the decade, 50,000 fewer Oklahoma residents had jobs in manufacturing. Perhaps most damning, Lafer and Allegretto could find no evidence that the legislation had a positive impact on employment rates.

Given that the U.S. can no longer win a "race to the bottom" in terms of wages, perhaps we've moved into an era in which it's more important to offer communities sufficiently attractive to professionals and skilled labor than to offer the cheapest domestic wage for factory line workers. A company that has so little loyalty to state and community that it will relocate half-way around the country to save money on labor will have no more regard for the new community when the total cost of production is cheaper outside of the United States. Whether or not you believe there is a moral factor involved, that's the story of modern manufacturing and a company that doesn't shave production costs is apt to be undersold by cheaper imported goods.

For a state like Michigan, my approach might be to try to create an environment in which certain hub communities, offering a good lifestyle to workers, a highly educated and highly skilled workforce, and other factors that could attract workers at the top of the market, are at the center of a manufacturing hub, such that manufacturers can have a reasonable expectation of being able to find local (or near-local) suppliers, labor, and support. I don't know if it will work, but it seems to beat trying to drive down labor costs to compete with other states, starving communities of the tax base they need to fund schools, recreation, roads (already bad enough in Michigan), and other factors that make for an appealing community. If the effort fails, it all falls apart anyway, so why not try?

You Didn't Expect Him To Keep His Promises?

Governor Rick Snyder ran for office on a platform of offering a massive tax cut to Michigan businesses while otherwise slashing government spending in order to balance the state's budget, which faced a massive shortfall even before business tax reform. And now he's doing what he promised. Is the surprise that a politician is keeping his promises?

I was discussing Snyder after the recent election with somebody who was concerned about the Republican monopoly on the state's three branches of government. I argued that the Republicans have no impediments to implementing their reforms and thus can be fairly judged by whether or note the reforms they promise will turn around the state's persistent downward slide in fact work. If they bring about disaster for the state, at least in theory they should face disaster in the next election. The reply, "But what if they succeed?" Well, it's hard to argue with success.

But....

Right now a lot of people are upset about Snyder's proposed budget. You see, it turns out that when you have a massive budget deficit, add a major tax cut to the mix and rule out any tax increases... except for senior citizens who receive pensions (they're probably icky people anyway, like retired union workers, teachers and public employees)... you have to do a lot of cutting. And people who believed that they were immune from budget cuts because it's only other people who benefit from government spending are finding out, in a hurry, that they in fact did receive benefit.

If Snyder's business tax cuts inspire more businesses to locate in Michigan or help existing businesses grow, that would be good news for the state. One of the things that has been lost in the avalanche of analysis over the federal deficit is how much of the deficit is attributable to the recession. How much better off we would be if and when the economy rebounds, and how much better it is to close a budget gap through growth than through cuts - how ill-considered cuts can actually worsen the employment situation and prolong a recession.

But if that business income doesn't start pouring into Michigan, I'm not sure that low corporate taxes will do much for the state. If you slash spending on education, while school districts remain hampered in their ability to raise money through local taxes, you will see deterioration of schools: physical deterioration, a narrowed curriculum and a greater difficulty finding and retaining teachers. If you cut state support for colleges, you'll see similar things happen in higher education - and Michigan, which already bleeds talent to other states, will see more of its capable high school seniors leave the state before college as opposed to after graduating. Large businesses looking to enter a state can be expected to consider if the state will be attractive to employees. Many employees will tolerate a Michigan winter, but how many will also tolerate crappy schools? Despite a substantially higher cost of living, how many businesses will choose to locate in Snyder's hometown of Ann Arbor, as opposed to, let's say, Willow Run schools? Similarly, what of road conditions, availability of skilled workers, public spaces and cultural opportunities?

Snyder also claims to want an even playing field. That's how he justifies the proposal for taxing pensions - to quote Snyder's Chief of Staff, "A young, unmarried mother of two gets taxed on her earnings. Why should any other group be exempted?" The same "fairness"¹ logic, apparently, is being used to justify cutting tax credits for the film industry. Why should the state issue tax credits that favor one type of business over another? All business are created equal, right?

Except, of course, some businesses aren't like the others. A film production company may look more ore less like any other company, but each film it produces is a creature unto itself. I read an interview with a producer who made a joke to the effect that every script he reads "Fade in: A tax incentive state." Because that's the number one consideration when choosing where to shoot a film. It may not be "fair" but as a businessman Snyder should be fully aware by now that, even though it's been very good to him, life isn't fair. Film productions are like tourists, and if two hotels look pretty much the same they're going to pick the one that costs less.

Snyder shouldn't attempt to be cagey about it - he should be prepared to admit, flat-out, that he knows his budget proposal is likely to kill Michigan's film industry. I personally don't want to hear that we have to kill a nascent industry because it's "unfair" that the state is subsidizing its development. I want to hear the cost-benefit analysis of how a mature film industry will benefit the state, or how due to high subsidies the state will be better off even if it throws away the jobs and spending associated with film productions.

Snyder has the idea that tax credits should be replaced with "incentive grants" that can be evaluated on a year-to-year basis, and in many ways such an approach is superior to making optimistic projections about tax credits in order to get them into the budget with little subsequent regard for whether they work. But conventional brick-and-mortar businesses aren't simply looking at the coming year, and transient businesses like major film productions aren't likely to be choosing a shooting location at the last minute, so that approach can actually create considerable uncertainty. Besides, whether you offer tax credits or "incentive grants", you won't be offering them to every business so the "playing field" remains unequal. From a bean counting perspective this may make sense, and perhaps some inefficient grants will be ended as a result of annual review, but from any other perspective the proposed policy seems as bad as or worse than the status quo.

As I initially suggested, though, this is what Snyder promised. Nobody who voted for him should be complaining about getting exactly what they ordered. The shame is that we don't have a time machine, as I suspect the better time for Snyder to have been governor would have been during Engler's years, when the state was put on the receiving end of tax "reforms" that helped lock in place its ongoing decline. I don't know that Snyder would have done better, but if there is something to this "put a businessman in charge" thing, we at least had some room to play around with the budget without wreaking havoc.

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1. Seriously, fairness? When did Snyder become a Democrat?

With Victory Comes Responsibility

For decades, although voting Democratic for the President and, more often than not, for the governor, Michigan has been a Republican-dominated state. Governor Granholm had a Democratic majority in the State House for only the past two years. Even with that, Senate Republicans stymied any meaningful Democratic initiatives. Assuming there were any....

One of the frustrations of living in Michigan is seeing the dearth of ideas for "fixing" the state's problems. Things started to go south before many of the state's sitting politicians were born, and have been on a serious downward track for decades, but it often seems like there's been no change in state "policy" - wait long enough and things will get better on their own. Yes, Michigan is attempting to subsidize its way into being a new home for TV and movie production, but even if that effort succeeds it will do little for the state's economy as a whole.

Now, with the 2010 election, Michigan has a Republican governor, a Republican House, a Republican Senate with a supermajority, and will have a Republican-dominated state Supreme Court. A friend lamented this state of affairs, and the inevitable gerrymandering that will soon occur to try to cement a Republican advantage into the state's electoral districts. And yes, if you're a Democrat, I can't say there's much to cheer in any of that.

At the same time, victory - and victory of a magnitude that it can really be called ownership - carries responsibility. I know that many Congressional Republicans hope to shirk that responsibility, sabotaging the Senate and the White House such that the government seems ineffective and they can gain additional power in the next election. But Michigan's Republican Party has no scapegoats, and is pretty close to maximum power. If it does not deliver, it is safe to say that it cannot deliver.

If the recession continues, or if Michigan remains in recession while the rest of the nation recovers, it will be perfectly reasonable for voters to hold the state's Republican Party responsible. After all, unless they're going to throw up their hands and admit that they have no solutions to the state's problems, they are implicitly responsible. And if they do make such an admission I'm not sure that it helps them, as it would effectively be an admission of incompetence. That is to say, in two, four, six years... however long it takes... if the Republicans don't deliver something they're likely to experience what G.W. Bush and the Republicans went through during the 2006 and 2008 elections. Gerrymandering may be enough to get some of their seats back if things don't immediately get better (as we just saw, nationally, with Democrats losing most Republican-leaning seats won during the prior two elections) but it won't save a party from a backlash against its ineffectiveness.

My friend asked, "But what if the Republicans succeed?" Um... well, then, no backlash. But I'll take a vibrant state economy over either the ineffective governance of the past decade, and certainly over the type of yo-yo elections that effectively just held the President responsible for his predecessor's incompetence. (Which isn't to say that, particularly in retrospect, there aren't a lot of things the President and the Democrats, particularly a self-serving, party-sabotaging faction in the Senate, couldn't have done differently to potentially avoid or diminish this outcome.) In simple terms, when you control everything there's nobody for voters to blame but you.

The Michigan Democratic Primary

Look, I understand the reasons why the political parties adhere to the ridiculous custom of letting Iowa and New Hampshire "go first" (even in violation of party rules). But if you want to disenfranchise me, make the defender of your decision somebody less self-interested, myopic, and obtuse than Carrie Giddins. Okay? Be honest about what you are doing.

Michigan's Weak Economy

I've been in Michigan a lot longer than George Will. In fact, I'm not sure that he's ever been to Michigan. But for some reason he felt obligated to discuss Michigan in his latest column:

Tuesday's Republican primary is in one of the nation's worst-governed states. Under a Democratic governor, Michigan has been taxed into a one-state recession. Native son Mitt Romney, the Republican candidate who best understands how wealth is created, might revive his campaign by asking: Whom do you want to be president in 2010 when the Bush tax cuts, which McCain opposed, expire?

I'm no defender of Jennifer Granholm, but her administration did not occur in a vacuum. She inherited a disaster left by John Engler, both in the form of a massive budget deficit and an ill-considered tax policy that was made part of the state constitution. Between that and the fact that during most of her tenure the Republicans have controlled both chambers of the State House, it's a child's game to put the blame on the governor or her party. In this particular game, as played by the likes of Will, when roles are reversed (a Republican governor and a Democratic House) all failures are still assigned to the Democrats as "they control the budget." I would personally argue that Michigan's economy has been badly managed for decades, by governors and legislators on both sides of the aisle.

If Michigan has been "taxed into a one-state recession", it is not because of the amount of taxes. The Tax Foundation recently ranked Michigan's "State Business Tax Climate" twenty-seventh out of the fifty states. Given Will's love of Mitt Romney, it is perhaps worth noting that Massachusetts ranked thirty-sixth. So maybe there's more to the picture than taxes. Maybe there's a lot more.

That's not to say that nothing about Michigan's tax policy hurts its future. Consider, for example, the fact that so much revenue is poured into corrections. In the 80's and 90's, legislatures had lots of fun being "tough on crime" - but all that toughness carries a huge price tag. The fact that if you move to Michigan, you'll pay a lot more in property taxes than your neighbor who has lived in the same house for a few years. Say what you want about businesses moving to California (49/50 for tax climate) anyway - Michigan is not California. Paring back public services and funding of state universities to avoid a tax increase? I'm not convinced that many people look at the quality of education available in the state, and the quality of education likely to be available in the future, then say, "I would rather have bad schools than slightly higher (or progressive) state income taxes." I am convinced that many people look at the quality of schools in a lot of the areas where they might locate their businesses, and worry that employees won't want to move there with their families. Oh yes - and the nearest big city is Detroit. (Chicago has the Magnificent Mile, but move to Michigan and you get Eight Mile....)

As for Mitt Romney being the candidate who "best understands how wealth is created"... well, yes. Romney was born into a wealthy, powerful family, so he would have a pretty good idea of how effective that can be at generating wealth and power. (Will provides some of the history, but I'm looking forward to having Bill Kristol fill in the details in his next column on "well-born" Americans.)

Let's close with an explanation of Michigan's budget woes that is somewhat more... competent than George Will's.

Michigan's seemingly perennial budget shortfall, now approaching a five-year run, is rooted in two fundamental issues: a cyclical economic downturn made worse by an endemic, structural deficit. ... Simply put, as its own economic recovery lags behind the rest of the nation, Michigan finds itself faced with the challenge of funding programs with costs that rise faster than available revenues, even in economic boom times. ...

The state's record 1.43 million Medicaid recipients are seeing cuts in services that could grow worse - and, ultimately, more costly to individual patients - if proposed cuts in federal funding are approved by Congress. Michigan's cities and townships have 1,100 fewer police patrolling streets since the terrorist attacks of Sept. 11, 2001, and communities are struggling to provide services like fire protection and road and infrastructure maintenance. And as other programs such as corrections swell, more tax dollars are diverted away from higher education, leading to steep increases in tuition and other fees that many say are putting college educations farther out of reach at a time when a changing economy most demands the degrees.

A perfect fiscal storm.

In Michigan's case, steady increases in corrections, Medicaid and K-12 expenditures and what Clay calls an antiquated revenue structure created for a yesteryear economy are leaving the state in a persistent hole....

In balancing annual budgets, Granholm and state lawmakers so far have combined more than $3 billion in cuts, the transfer of nearly $6.5 billion in one-time resources - including draining the state's $1.36 billion rainy day fund - over four years and selective tax increases and shifts to balance annual budgets.

The article also discusses the consequences of the state's failure to invest in education and infrastructure. Almost three years later, things look... no better, probably worse.

MySpace Sex Offender Lists - Avoiding Confusion

I received a call from somebody who shares a name with a sex offender listed by the Michigan Attorney General's office as having a MySpace account. He told me that he had called the AG's office and asked that they include information, such as age, location of residence, or a link to the offender's listing in the sex offender registry, which would reduce or eliminate any possible confusion. He was rebuffed.

Personally, I believe that at a minimum the AG's office should incorporate a disclaimer reminding people that listed names may not be unique, and that they should check the registry to identify the specific individual named. I think it is quite reasonable that they add additional identifying information, and links to the sex offender registry.

A Michigan "What If"?

What if a school bus driver got tired of the kids in her bus, pulled over on the inside shoulder of I-94 without turning on her overhead red flashing lights or extending her stop sign, told the kids to "get off and cross the road", then sat on the shoulder blocking oncoming traffic from seeing the children. The kids, intimidated by the many lanes of high speed traffic, wait for a while before one finally tries to cross. Would the school district or bus driver have any potential liability if that child was struck by a car - the driver of which could not see the child prior to impact because his line of sight was blocked by the school bus? According to the Michigan Supreme Court... absolutely not.

The school district would enjoy governmental immunity. Although there is a motor vehicle exception to governmental immunity, the exception would not apply because there was no direct physical contact between the bus and the vehicle that hit the child, nor was there direct contact between the child and the bus.

The bus driver would be deemed grossly negligent for such an act - that's obvious - and normally an act of gross negligence would prevent a claim of governmental immunity. But it wouldn't be "the one most immediate, efficient, and direct cause preceding" the child's injury. The child's "decision to cross the street at the moment when she did" would be "the immediate, efficient, and direct cause of her injury." Thus the school bus driver would also be immune from liability.

Note, the school bus driver in the actual case did not stop on the highway - she stopped at an intersection and, with her overhead lights off, told a child to get off the bus and cross the road. The dissenting judge in the Court of Appeals, after expressly reciting the rule that the facts in a summary disposition case are to be taken in the light most favorable to the non-moving party, observed that there was "testimony indicat[ing] that [the child] failed to immediately heed this instruction". This appears to reference testimony from a witness who was not even at the scene, and was applied to somehow free the court to ignore witness testimony that the child immediately crossed. The I-94 scenario is not an exaggeration - this decision would grant immunity given those facts.

Just ask the folks at "Overlawyered" where you are unlikely to read about this case - as long as the atrocity favors the defendant, atrocious outcomes in tort cases are fine. Right? (Helfer v Center Line Public Schools - Court of Appeals Decision; Supreme Court Reversal)

Flint Passes a Budget

I read in the news today that Flint has passed a budget - $305.5 million for the next fiscal year. Less than $600 per minute? That seems kind of low....