News Story

Michigan's Economy Best In Midwest, And It's Not Just Cars

Hillsdale College Professor: Michigan benefiting from move to more certain tax and regulatory environment

Michigan’s economy had the fastest growth in the Midwest in the second quarter of 2016 and ranked in the top 10 nationally, according to the federal Bureau of Economic Analysis. The state’s real gross domestic product was up 2.3 percent, which ranks eighth nationally.

Trailing Michigan in the Great Lakes region, Ohio grew by 1.9 percent, followed by Wisconsin at 1.6 percent. Indiana grew by 1.2 percent, and Illinois increased its GDP by 1 percent.

Gary Wolfram, a professor of economics at Hillsdale College and a member of the board of scholars for the Mackinac Center for Public Policy, attributed Michigan’s growth to further diversification of the state economy.

“Michigan’s economy has become more diversified as the national economy has slowly recovered,” he said. Wolfram also noted that states that rely heavily on oil and gas had the slowest growth in the last quarter since oil prices fell.

GDP increased in 41 states and the District of Columbia in the second quarter of the year, according to the bureau. Nebraska had the most growth at 4.3 percent, followed by Utah at 3.3 percent. Idaho had a GDP growth of 2.8 percent and Arizona at 2.7 percent. Washington, Kansas, and Florida also had 2.3 percent GDP growth.

Wolfram also said that Michigan’s tax policy and regulatory environment has become more business-friendly.

“Michigan is benefiting from its movement toward a more certain tax and regulatory environment,” he said. “Markets dislike uncertainty with regard to government intervention in the economy, and the rewards of getting rid of the Michigan Business Tax and the consistent election of legislators that understand the importance of letting people act according to their own plan are being felt and will continue to be felt.”

The transportation and warehousing sector was the largest contributor to growth across the country. Real estate industries, health care, and “professional, scientific and technical services,” also did well.

“The auto industry was not the largest driver. But it was broad-based growth,” said James Hohman, assistant director of fiscal policy at the Mackinac Center.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

Commentary

Critic Still Misses Mark on Detroit Charter Research

The trouble with doubling down on anti-DeVos criticism

In a recent New York Times op-ed, economics professor and Brookings Institution fellow Douglas Harris declared that Secretary of Education-Designate Betsy DeVos “devised Detroit’s [charter] system to run like the Wild West.” He interpreted the best available research on Detroit charters to say they “performed at about the same dismal level as [the city’s] traditional public schools.”

Critics, including the Manhattan Institute’s Max Eden, sharply challenged the claim. The 2015 CREDO study actually cites Detroit as one of four urban charter sectors that “provide essential examples of school-level and system-level commitments to quality that can serve as models to other communities.”

Impelled to respond to the criticism, Harris revised and extended his remarks. He conceded in the second piece that, according to the 2015 CREDO study, Detroit charters “do look somewhat better than the comparison traditional public schools.” He then sought to explain why the empirically tested finding should not be trusted.

The University of Arkansas’s Dr. Jay Greene wasted little time in thoroughly exposing most of the assumptions in Harris’s follow-up piece. But a couple points deserve further elaboration.

First, not only does Harris speculate Detroit charters “cherry-pick” the best students from the local district with no evidence, but that speculation assumes charters are willingly breaking the law. No Michigan charter is allowed to “discriminate in its pupil admissions policies or practices on the basis of intellectual or athletic ability, measures of achievement or aptitude.” Meanwhile, traditional schools in Detroit can and do: four DPS schools have selective admissions based on academic ability.

Second, Harris suggests that not operating under a proposed system that would have given city leaders the power to restrict choice means Detroit charters operate without accountability. In fact, the legislative package that accompanied bailout dollars to Detroit requires the adoption of an A-to-F school grading system, national accreditation for authorizers to open charter schools in the city and more stringent closure guidelines for failing charter schools.

In terms of raw scores, too many students in the Motor City still lag behind. But CREDO’s measures show that enrolling in a charter school on average yields two to three months of extra learning in math and reading. By the time Detroit school district leaders expect to see any academic progress, a student who opts to enroll in just an average-performing charter today should expect to be years ahead of their peers by the time they’re ready to graduate.

Forthcoming publications from the University of Michigan’s Charter School Research Project may shed further light on the results of educational choice in the city. But for now, the current evidence gives every reason to believe that charter schools provide a net benefit for children and families in Detroit.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.