Commentary

So Long Film Subsidies

Other 'economic development' programs should be next

The state will no longer offer new film productions taxpayer money to shoot movies in Michigan. This is an incredible development considering that film incentives passed with only one dissenting vote just seven years ago. Now that policymakers have acknowledged some limits on profligacy in the name of economic development, there are other programs that ought to be reviewed as well.

A few contenders immediately come to mind.

The 21st Century Jobs Fund programs have constantly changed strategies since its creation in 2005. The programs have made early-stage company grants, battery plant subsidies, matching fund grants, incubator assistance, mezzanine financing and others. The state’s current programs include developing an “entrepreneurship eco-system.”

Results have never met expectations — former Governor Jennifer Granholm mentioned that we’d “be blown away” — and these programs continue to drain state cash.

While those Pure Michigan commercials might instill some sense of state pride among our residents, they represent the state purchasing an entire advertisement campaign for a single industry. The beneficiaries get free marketing, but taxpayers stuck with the bills get no returns.

The Michigan Community Revitalization Program offers grants to real estate development. These projects already involve private money and legislators should be skeptical that giving tax money to develop residential and retail space is an effective way to grow the economy.

The state is no longer offering Michigan Economic Growth Authority credits, but the deals that were made will continue to cost state taxpayers billions. Legislators ought to investigate ways to roll back those liabilities, like revisiting whether these credits should remain refundable. The refundability of these credits when the credits are worth more than the company’s tax liability makes these credits a subsidy from other taxpayers.

At its core, the economy is about people working together to meet their wants and needs. The state government sometimes intervenes by taking money from some and giving it to others under the guise that it knows best how to generate greater economic effects. Policymakers acknowledged that this was ineffective for the film industry and should apply that same thought to other areas where the state decides whose money should go where.

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

Labor Reform Not a Death Knell for Legislators After All

Timeline shows reformer success in later elections

"There will be blood. There will be repercussions." Such is the common threat made against those who dare take on the union juggernaut.

Michigan’s State Rep. Shenelle Jackson (D-Detroit) made the threat clear in 2012 during the passage of that state’s law on worker freedom. "What you're doing today will only serve to empower [Democrats]. We will win back this chamber, possibly take the Senate back and certainly win the governorship.”

Unfortunately for Rep. Jackson and her allies, the exact opposite happened. Not a single state representative or senator who voted for right-to-work lost in the general election and the Republican governor, Rick Snyder won re-election.

Since Michigan has the ballot initiative, unions could have gone straight to the voters with a canvassing campaign to put a repeal on the ballot. They did not. And right-to-work was such a nonissue in the 2014 election that during the one debate that happened, neither candidate brought it up, and the only time it was mentioned, it was as a sub-part of another issue.

A new interactive timeline from the Mackinac Center for Public Policy, “Labor Reform in the States,” shows that Michigan’s experience is common to the states that have recently passed reforms. 

The timeline examines labor reforms from 2011 to 2014 as well as the subsequent elections in Midwestern states long considered union strongholds.

Despite massive protests and threats from unions and the politicians they support, brave elected officials that backed reforms almost universally won re-election.

The election after Indiana passed right-to-work, Republicans picked up nine seats in the Senate and did not lose any in the House. Gov. Mitch Daniels, who signed the worker-freedom law into effect, did not return to office; being term-limited, he could not be on the ballot. Another Republican, Mike Pence, replaced him.

Wisconsin saw perhaps the largest protests against government union reforms when, in 2011, Gov. Scott Walker signed Act 10, which strongly curtailed government union privileges. State and national union attempts to undo the reforms and unseat Walker failed miserably.

From 2012-2014, Walker won both a recall and general election. Republicans keep majorities in both the Wisconsin State Assembly and the Wisconsin Senate. In several smaller elections that were considered referendums on Act 10, voters refused to send politicians to Madison to undo it.

In Ohio, the same voters who repealed Gov. John Kasich’s Senate Bill 5, another bill that would have curtailed government union privileges, re-elected him, and kept Republican majorities in both the House and Senate.

Reformers winning cannot be dismissed as Republicans getting lucky in a few wave elections.  For at the same time voters were siding with reformers and electing Republicans to state offices, they were also sending Democrats to Washington and supporting President Obama.

The lesson from the victories of elected officials who took on big labor over the last few years is clear: Voters will side with those that support pro-worker and pro-taxpayer policies.

 (Editor’s note: A version of this article appeared on the Illinois Policy Institute Blog.)

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.