MEDC's Magic Act: Make Taxpayer Money Disappear With Little Return

Magicians distract the audience’s attention from what really takes place on the stage. In a similar fashion, the Michigan Economic Development Corporation fosters an illusion that its accomplishments are substantive when they are primarily hokum. One would think at some point those who should know better, especially members of the news media, would figure this out.

What is written here is not about the debate over whether MEDC should be eliminated. Chances of that happening seem so remote that discussing it is little more than an academic exercise. The purpose here is to probe beneath its facade and encourage recognition of what MEDC actually is.

As the state’s corporate welfare arm, MEDC is supposedly tasked with enhancing Michigan’s economy. In reality, MEDC is an advertising and promotional agency supported by public dollars. Its primary function is to use corporate welfare to make government officials look good. Anything of real value it contributes to the economy — if it adds anything of value at all — would be a relatively minuscule byproduct.

MEDC spends the public’s money, in one form or another, to entice or encourage businesses to either locate or start-up in the state or convince already existing businesses not to move elsewhere. The shiny gold-tinted carrot it dangles before the eyes of the public and news media is the promise of jobs. Based on state audits, the actual number of jobs created by MEDC runs about 19 percent of what it has claimed.

To be fair, much of those abysmal audit figures reflect jobs claims from the days of former Gov. Jennifer Granholm. During that era, MEDC press releases proclaimed sky-high job creation figures even the news media stopped taking seriously. Of course, as the audits later showed, the press releases were indeed fairy tales.

“It’s not like that anymore,” supporters of MEDC now insist. “Stop bringing up the past.”

Gov. Rick Snyder has significantly reined in MEDC’s excesses. So let’s concede that MEDC may not be “as bad” as it once was. Nonetheless, it remains what it has always been — an entity long on public relations and very short on solid economic benefit. A pretty accurate MEDC mission statement would read: to make government officials and the agency itself look good and the public — at least temporarily — feel good.” This is the stuff of image, within which the artificial is transcendent. Incidentally, that’s precisely why it is so unlikely that government and politicians would ever agree to get rid of MEDC.

Obviously, the fact that a business is opening in an area, or has decided not to leave, is good news locally whether MEDC has had anything to do with it. And most of the time it doesn’t.

Each quarter there are roughly 200,000 jobs created in Michigan and about 200,000 jobs lost. If more are created than lost, then the state has experienced a net job gain; if the number lost is greater than the amount created, it experiences a net job loss.  Pointing out that headlines and press releases do not accompany the vast majority of those approximately 200,000 jobs created each quarter in Michigan hardly seems necessary.

Though virtually insignificant in the context of the roughly 400,000 jobs created and lost statewide each year, when an MEDC project is involved the number of jobs created — or projected to be created — is ballyhooed far and wide. These jobs arrive with MEDC as a built-in press agent to assure the news media is made aware of them and that local and state officials are on hand to lap up the inevitable positive press coverage.

Typically, the job creation numbers projected for MEDC projects can run anywhere from less than 50 to a few hundred. Clearly amid a Michigan economy in which 400,000 jobs are turned over (created and lost) annually, the MEDC projects are like a few piles of sand being tossed on the Sleeping Bear sand dunes. Well, in point of fact they aren’t even that important. This is because significant portions of MEDC-created jobs are like sand that never settles on the dunes and is relatively quickly blown away by the wind.

Here is the classic “vanishing lady” trick in MEDC’s magic act. Proclaiming a project has produced X-number of jobs is closely akin to an advertising stunt. That’s because the number of jobs created has meaning only when they are tracked to establish how long they were sustained. There is a huge difference between X-number of jobs being created that last two or three months and those created that last three to four years, or longer. MEDC wasn’t designed to publicly chart its projects’ success rate in terms of jobs created and sustained — and you can bet your wooly winter socks that was no accident.

If MEDC publicly tracked the jobs its projects produce in a manner focused on sustained jobs, instead of the superficial classification of “jobs created,” then the agency would be a very different creature. Can there be any doubt that MEDC would keep score in this fashion if it believed the results would produce positive publicity? Of course not. MEDC officials know doing so would reveal facts about their projects they’d prefer remain obscured. Therein lays the proof of what MEDC actually is.