If you are like Mitch Albom and still find yourself star-struck and sold on saving Michigan’s 42 percent film welfare program, then consider a hypothetical: The natural gas industry proposes to spend $325 million in Detroit, but on the condition that other businesses and taxpayers be forced to subsidize $136.5 million of that cost.

Does this still sound like a good deal?

There is a difference, of course. When superstar actor George Clooney waltzed through Niles, Mich., last November to scope out a location for a new film, he was well-recognized, and the local media covered it. The potential of his film happening in that town was easy for anyone to imagine – “Look, it’s George Clooney!”  – so the prospect of paying  42 percent of his bills was apparently easier to swallow. Similar events in other Michigan towns have happened with other celebrities throughout the short life of Michigan’s film welfare program, though some of those "non-core" communities bring only a 40 percent payback to films shot there.

Would those people be so eager to fork over their tax dollars to help out Aubrey McClendon if he showed up looking to do business in a small Michigan town?

Would they even know who he is?

Do you?

McClendon is the CEO of Chesapeake Energy, one of the nation’s largest natural gas producers. Rather than take money from Michigan taxpayers, Chesapeake has reportedly paid $325 million to some of them in just the last few years for the mineral rights to pump natural gas from underneath their property.  

Like George Clooney, McClendon is an extraordinarily wealthy businessman in a very large, well-established and profitable industry. If Clooney shoots his movie in a Michigan town and spends $1,000 on catering in a local restaurant, Michigan taxpayers pay $420 of his bill. If McClendon were to open one of his gas fields in the same town and uses the same restaurant to cater an event for his employees … he pays the full $1,000.

Excepting the celebrity megawattage, what is the difference?

Bringing films to theaters and natural gas out of the ground each requires a century-old industry that provides good-paying jobs deploying state-of-the-art technology. The money flowing into local restaurants and shops spends just as well whether it comes from a gas well or a film set.  The so-called “multiplier effects" on other businesses and jobs is beneficial either way.

The situations are not identical only because no politician in his right mind would offer to pay 42 percent of Chesapeake’s spending when they start pulling gas out of the ground in Michigan. This wouldn’t happen because, absent the star power, few taxpayers would be blinded into support for it and would likely crucify their lawmakers for such massive corporate welfare payments to the natural gas industry. Substitute most other large profitable multinational corporations for Chesapeake, and the same political and economic math applies.

And the math applies even more profoundly for businessmen and women less well-off than Clooney and McClendon – or even Mitch Albom. And in this it is easy to see how morally repugnant the film welfare program really is.

Starting a small business that spends a million bucks a year is a risky and nerve-wracking enterprise for a Michigan entrepreneur – but it isn’t that extraordinary nor even a very large business. A million-dollar enterprise might fork over $10,000 in business taxes to state government, and the rest of the million gets eaten up in payroll for employees, inventory purchases, rent, utilities and other overhead. If the small businessman or woman is very lucky, some small fraction comes back as a profit. Most startups are not so lucky and end up running a deficit or closing their doors.

What does a 42 percent film welfare program mean to our entrepreneur?

Consider just one film: Have a Little Faith – a soon-to-be-aired Hallmark Channel adaptation of a Mitch Albom book. In May, the Michigan Film Office announced that it had awarded the film an “incentive” (i.e., subsidy) of $2,355,945.

Now, remember that small businessman or woman who started the million-dollar business?

Assume that this business pays about $10,000 in business taxes to the state. Those taxes are turned around and used to help give a $2,355,945 welfare check to the Mitch Albom movie. So for the state of Michigan’s treasury to break even on just this one film, something equivalent to 235 brand-new million-dollar small businesses needed to be created and paying their business taxes.

The total film welfare program had grown to handing out as much as $100 million annually when Gov. Snyder’s latest budget capped it at just $25 million. That $100 million is the equivalent of 10,000 brand new million-dollar entrepreneurs who must each start businesses that pay $10,000 in taxes just to support state government’s Hollywood welfare plan. It’s also equivalent to more than 18 such businesses being started in every single one of Michigan’s 550 school districts.

There is no question that Michigan desperately needs something akin to the economic impact of 10,000 entrepreneurs starting businesses and paying taxes. And unless you can’t see beyond the glare of the studio lights, it’s equally clear that those taxes should go toward roads, courts, schools and much else that isn’t just another new movie for the Hallmark Channel.

Graduate student research assistants at the University of Michigan who do not want to belong to a union have some high-profile allies who have kept a low profile.

The Mackinac Center has obtained a confidential letter to U of M Provost Philip Hanlon expressing a “deep and collective concern about the potential negative impacts that would result from the unionization of the University’s graduate student research assistants.”

The letter was signed by 18 Deans of the university’s 19 schools and colleges. Also signing was the University Librarian and Dean of Libraries. The lone holdout was Christopher Kendall, Dean of the School of Music, Theatre & Dance.

Kendall, however, told the Mackinac Center in an email that he was on board as well:

"The School of Music, Theatre and Dance strongly supported the position articulated in the deans' letter. We didn't sign it simply because the role of our two GSRAs doesn't correspond precisely with the description in the letter. Again, however, the School was strongly in accord with the principles expressed by the deans."

The union, known as the Graduate Employees Organization (GEO), was founded at U of M in 1970, which, according to its website, makes the GEO ”one of the oldest graduate employee unions in the United States.” The GEO currently represents graduate student instructors and graduate student staff assistants, but earlier this year made moves to expand its membership at the Ann Arbor campus by including graduate student research assistants.

The GEO petitioned the Michigan Employment Relations Commission in April to be allowed to move forward with its unionization attempt. The following month, the U of M Regents voted 6-2 to support the GEO’s effort, saying in a June 2011 statement, “We took this action because GSRAs are employees as well as students.”

This directly contradicted university President Mary Sue Coleman, who told the Regents in May: “I do not see research assistants as our employees but as our students. … When I was a graduate student, I did not see myself as working for the university and I did not see my faculty mentor as my employer. Far from it.”

Coleman went on to suggest the university’s provost agreed with her: “I know I speak for Provost Hanlon as well when I express my concern about characterizing our research assistants as University employees.”

While Coleman’s comments were publicly stated, the similar sentiments expressed the deans of 18 schools and colleges* were not. In a letter dated June 24, 2011, and labeled “Confidential – By Hand Delivery,” the deans told Provost Hanlon that they respect the Regents’ decision, however, “We believe that such a union would put at risk the excellence of our university and the success of our graduate student research assistants.” Further remarks in the letter explain their position:

 “We note that graduate student research assistants are not unionized at the peer institutions against whom the University competes for faculty and graduate students …We worry that a GSRA union would make Michigan an outlier when the best and brightest graduate students compare research opportunities, and when we work to recruit excellent research faculty. A vast majority of the faculty members with whom we have spoken do not support GSRA unionization because of the potential negative impact on their one-on-one relationships with students and the University’s competitive position among its peers.”

For now the deans, along with Coleman and Hanlon, may breathe a little easier.

In response to a motion filed by the Mackinac Center Legal Foundation in July on behalf of Melinda Day, the Michigan Employment Relations Commission stood by its 1981 decision that these GSRAs are not public employees who can be unionized. What this means is MERC essentially refused to grant the public-sector GEO permission to organize this group of graduate students.

This is not to say the matter is entirely finished.

"There is still  time to appeal the MERC decision and the union and the Regents may be concocting another legally dubious plan to work around the 1981 decision," said MCLF Director Patrick Wright. "Regardless, students working towards their dissertations are not 'public employees' and cannot be forced into a government employees union.”

~~~~~

*Editor’s note: Two of the deans’ letter signatories no longer occupy the positions held at the time of this letter. They are Robert Dolan, former Business School Dean and Rosina Bierbaum, former Dean of the School of Natural Resources and Environment.