Top Democrats are being inconsistent on whether paying for teacher retirement benefits qualifies as a classroom expense.

Their position seems to depend upon the political circumstance of the moment.

In May 2012, Robert McCann, spokesman for the Senate Democrats, criticized Republicans for asking teachers to pay more to cover their retirement costs. He said the pensions were earned by teachers with "a lifetime of hard work in the classrooms."

In 2012, Sen. Gretchen Whitmer, D-East Lansing, talked about retirement costs of teachers and described teachers as "the same people who played by the rules, negotiated for their compensation, which included retirement."

However, Democrats now claim the $404.4 million applied in 2013-14 to pay the cost of Michigan Public School Employees Retirement System benefits is not a classroom expense.

A number of notable Democrats originally claimed Gov. Rick Snyder cut funding to K-12 education. But once it was pointed out they were ignoring the $564 million in 2012-13 and 2013-14 the state paid to cover MPSERS costs, Democrats shifted to say those weren't classroom expenses. 

But a teacher's overall compensation, which includes pension benefits, most certainly is a classroom expense, said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

"To the extent that the funding is going to catch up on underfunding, MPSERS contributions are paying for yesterday's classroom,” Hohman said. “Funding a retirement system is clearly part of an employee's compensation.”

House Democratic Leader Tim Greimel of Auburn Hills told the Associated Press that even though Gov. Snyder put more money into retirement funds, "We need more money in the classroom, where it improves the quality of student education, where it lowers class sizes."

In a Detroit Free Press article, Birmingham Public Schools Spokeswoman Marcia Wilkinson said the MPSERS contribution doesn't get to the classroom because it's "matched by a bill from the Office of Retirement Services."

Hohman said that bill from the Office of Retirement Service covers increased compensation for public school employees, including teachers, who are in the classroom.

Even representatives of the Michigan Education Association agreed in 2012 that retiree benefits were part of a teacher's overall compensation.

In 2012, Stu Skauge, the MEA's Uniserve director for Marquette and Alger counties, told a local newspaper about how retirement benefits fit in with overall compensation.

Skauge said teachers had been consistently taking lower wages so districts could offer them better retirement and health benefits. 

There is only one conclusion to be drawn from a broader analysis of Michigan’s place in the world in the year 2001 — never before have we been so economically strong. Never before should we be so confident about our future. – Doug Rothwell, then president and CEO (and current Chair of MEDC Executive Committee) of the Michigan Economic Development Corp., March 2001.

This might be called Mr. Rothwell's, "Prosperity in Our Time," speech (or perhaps his "Blown Away" one): Over the following 153 months, Michigan's unemployment rate was never lower than the 4.7 percent rate prevailing on the day he spoke.

Instead, the trend was decidedly bad with unemployment eventually topping out at 14.2 percent in 2009. Today, Michigan's unemployment rate remains a troublesome 8.4 percent.

This state's corporate welfare complex has gone through various permutations in past decades, but the more it appears to change the more it seems to stay the same. The bureau in charge of selective business favor-granting — the Michigan Economic Development Corp. — still takes money from very many people and gives it to a tiny few. The systematic empirical evidence that exists (none from the MEDC) offers little evidence that this generates any net gains in employment.

So why do it? The reality of government "economic development" programs is that they are in fact political development programs — gaudy public relations exercises mainly intended to let politicians boast about a steady flow of shimmery but ultimately meaningless job promises. Seen through this lens, MEDC operations make far more sense. The agency is essentially a publicity machine for politicians.

Nothing illustrates this better than the grand promises made over the years by the state's "jobs" program apologists, including many variations on Mr. Rothwell's prediction above.

For at least 19 years, the Mackinac Center for Public Policy has examined the promises and the reality of this operation. Year after year, the gap between the two is simply stunning — as is their ability to get away with it.

The Mackinac Center has frequently documented this discrepancy (see: "Transparent Failures"). The recent 10-year anniversary of a wonderfully illustrative series of high-profile legislative hearings on the subject provides an opportunity to add to this record. Here’s a taste:

In this clip, MEDC Executive Committee member Paul Hillegonds argues that the Legislature should keep the MEDC and the Michigan Economic Growth Authority intact. MEGA selectively granted special tax breaks to particular companies, which Hillegonds described as the state's most important incentive program.

Ironically, Hillegonds was reappointed to the MEDC's executive committee in 2012 by the man who killed MEGA — Gov. Rick Snyder. (The program was promptly replaced by a scaled down version that skips the "tax credit" device and simply writes checks to companies, which at least is more transparent.)

Those hearings were triggered by a September 2003 Detroit News expose by Mark Hornbeck titled, "Tax breaks shortchange state: $1.4 billion business program gets minimal payback in jobs." In response, Lansing's political class orchestrated a public review to defend their political development programs.

Altogether, 28 speakers were supposed to give testimony during the four weeks of hearings. Many were brought in by the MEDC itself, not to bury the agency but to praise it. Of those 28, I was the only one opposed to state corporate welfare programs.

I did not speak, however — my slot was canceled for lack of time. Scheduling conflicts prohibited a second three-hour round-trip to Lansing and so I submitted testimony in written form. Sessions held after my testimony was submitted strongly suggest it was pre-emptively delivered to MEDC officials so they could prepare rejoinders.

The event more than justified suspicions that it would be mere political theater rather than an honest effort to assess the state's jobs programs. Recordings of the event show one participant after another describing the doom that would befall Michigan if the MEDC were not preserved and or even expanded.

It was preserved and expanded and Michigan's ensuing "lost decade" shows what happens when politicians substitute "economic development" PR and spin for public policies that actually make Michigan an attractive place to invest and grow a business.

To put it bluntly, the Michigan Economic Development Corp. presided over what was arguably the most significant decline in the state's economic fortunes in its history. From 2000 through 2009, when the MEDC and its programs were in full flower, Michigan was the only state in the union with a negative economic growth rate, as measured by state Gross Domestic Product.

With this as backdrop, and with countless examples of bad choices — not to mention scholarly empirical evidence demonstrating program failures — it's worth asking why this counterproductive and expensive bureaucracy still exists. It persists even though corporate welfare is unpopular with the public. You will never hear any candidate for public office proclaim: "If elected, I will protect and expand our precious corporate subsidy programs."

Given all that, it doesn't take Sherlock Holmes to induce the influence of countless special interests who want to keep the money flowing regardless of whether the MEDC is actually effective.

Consider all of the developers and corporate insiders who enjoy special treatment in the form of discriminatory tax breaks and cash subsidies (plus the well paid consultants and lobbyists who guide them). Add to their ranks the political appointees and bureaucrats who get paid to redistribute other people's money. And of course the politicians themselves, who benefit from the MEDC's spin machine while the press plays into their hands.

Naturally, none of those politicians or political appointees ever land cushy jobs with the companies they helped obtain favors. Like gambling in Rick's Café, that sort of thing would be shocking.

Those four weeks of political theater in the fall of 2003 were recorded, complete with their full cast of political actors. They provide a valuable window on the true nature of government "economic development" schemes. If any are interested, this record provides today's lawmakers with plenty of good reasons to draw the curtain on this production’s long and failed existence.

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Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in part or in whole is hereby granted, provided that the author and the Center are properly cited.

While Democrats in Michigan are calling for business owners to pay a higher minimum wage, those same politicians are paying their own workers far below that amount.

In fact, some of their workers are paid nothing.

Former Congressman Mark Schauer is running for governor, partially on a platform of increasing the minimum wage 25 percent up to $9.25 per hour. Schauer said in a story on the Huffington Post that mandating higher wages is "simple economics" that "creates demand in the economy."

"It's long overdue," Schauer was quoted as saying in an article on MLive. "At $7.40 an hour, a full-time minimum wage worker earns just $15,392 a year before taxes. We need to raise the minimum wage to $9.25 … because no one working a full-time job should have to live in poverty. It's time to do what's right for our families, our businesses, and our economy by raising the minimum wage."

Yet, on his gubernatorial campaign, as when he was in Congress, Schauer uses unpaid interns.

The political science department at Michigan State University posts information on its website on how to apply for internships for "Mark Schauer For Governor." Internships.com says there are five part-time, unpaid positions.

And according to information put out when he was in Congress, then-Rep. Schauer offered several full- or part-time internships that were unpaid. Tasks included: "answering phones, processing mail, assisting constituent service representatives with resolving constituent inquiries and problems with government agencies, attending various district events, data entry and various additional clerical support assistance for members of the staff."

The Schauer campaign did not respond to a request for comment.

Using unpaid interns in politics is not unique among Democrats, and Gov. Rick Snyder and some legislative Republicans have used them, but thus far, the GOP in Michigan have not gone on record as supporting or actively promoting a higher minimum wage.

In 2010, under directives from the Obama administration, the U.S. Department of Labor announced that it was cracking down on unpaid internships offered by businesses. The department has not gone after non-paying internships offered by non-profits, politicians or government agencies.

From President Obama down to local Democrats, calls for a higher minimum wage have become a popular campaign issue this election year. Unions and other left-leaning groups are pushing a ballot proposal in Michigan, in what many see as a get-out-the-vote effort.

Lon Johnson, chairman of the Michigan Democratic Party, said in a recent statement, "Democrats at all levels are fighting to increase the minimum wage because we believe that people who work hard and play by the rules deserve a fair shot at supporting themselves and their families."

But that doesn't include doing so inside the Democratic caucus. The Michigan Democratic Party has unpaid positions open working part-time 10-20 hours per week, or full-time 20-30 hours per week. And the Michigan Senate Democrats, in a jobs postings category on its website, is advertising for research intern positions that are unpaid. College credit and carpooling may be available, the site says.

Schauer isn't the only Democrat vying for election or in office calling for higher mandated wages for the private sector while neglecting to pay their own workers.

Sen. Bert Johnson, D-Detroit, Rep. Rashida Tlaib, D-Detroit, and Rep. Jon Switalski, D-Warren, are all sponsoring separate bills that would make it illegal for businesses to employ people for less than a set amount. The minimum wage in the state would be increased to $9 or $10 per hour for full- or part-time workers at businesses.

But each of these politicians also are looking for employees who will get paid $0 per hour for their work (see the positions here and here). It appears that most or all of the Democratic caucus have interns to which they do not offer a salary. See a listing here.

None of these politicians returned a request for comment on the issue.

Michael LaFaive, the director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, called this practice a "double standard." He said workers see jobs as a way to gain money or experience to set themselves up for success in the future, whether done for a politician, a non-profit organization, or a for-profit business.

"There is little actual difference between a person willing to accept a wage below some legal mandate and an intern willing to take $0 in exchange for work experience," he said. "Why should politicians force anyone in the private sector to forgo such a voluntary relationship if they are willing to be party to such a transaction themselves?"

LaFaive also pointed out that offering no wages limits the pool of applicants to those who can afford to work for no salary. And since the only benefit offered besides experience is college credit, young people not attending university are less likely to apply.

"What makes the politicians' hypocrisy all the more rank is that their free labor may already be stacked with advantages, such as the direct financial support of loving parents and formal university training," LaFaive added. "At a minimum, it makes the minimum wage mandate foisted on poor workers with little access to college all the more elitist and wrong."

Antony Davies, an economics professor at Duquesne University, said the bulk of the evidence suggests that government wage mandates are harmful.

"The minimum wage is our national game of musical chairs," Davies said. "As the minimum rises, lesser educated workers are priced out of the job market. Their empty jobs go to better educated workers and to machines. Raising the minimum wage doesn't make workers more valuable, it makes them more expensive."

A Michigan Capitol Confidential article from 2010 showed that all nine of Michigan's congressional delegation who supported an increase in the minimum wage had unpaid interns. A new report from the Employment Policies Institute shows that 96 percent of the congressional sponsors of a new law that would increase the federal wage floor do not pay their interns.

The people of Detroit, including its retirees and bondholders, are justifiably nervous about how the city's bankruptcy will disturb their bottom lines.

Kevyn Orr, Detroit's emergency manager, has taken sound steps to fix Detroit's financial fundamentals through spending cuts, management fixes and asset sales, but bolder action is required to protect citizens and improve public services.

To do so, Detroit should look to the city of Pontiac, whose revolutionized government has recovered decades of lost fiscal ground through sound economic reform.

In the last four years, two governors appointed three emergency managers for the city of Pontiac. Lou Schimmel, the third EM appointed in the city, completed his tenure in August. Schimmel worked under laws that gave him far more power far longer than previous EMs, which made it easier to make important fiscal changes and improve services, too.

When the state began appointing EMs in 2009, Pontiac's 2008 audited General Fund budget was $54.2 million. By the time Schimmel took over in 2011, it had dropped to $42 million. His efforts lowered that figure again for fiscal 2013 to an audited budget projected to be just $30.6 million; a total decline of 43.5 percent.

Schimmel sold off and monetized other assets to reduce debt and avoid a court imposed property tax increase. Some of the sales included ($55 million) for unused water and sewer capacity; a city-owned theatre ($135,000); a golf course ($700,000); old public works equipment ($1.5 million) and assorted vacant lots. Most of the sold property now produce tax revenue for the city. Schimmel previously was director of municipal finance at the Mackinac Center.

Public safety was improved through competitive contracting of police, fire, 911-dispatch and ambulance services. The contract for policing with Oakland County and fire with Waterford Twp. is saving $5.8 million each year while improving response times.

According to Undersheriff McCabe of the Oakland County Sheriff's office, police response times in Pontiac plummeted from longer than 76 minutes in 2010 to 6 minutes, 22 seconds in 2013. There are 25 more police officers patrolling Pontiac now, too. Waterford has also invested $548,000 from its own resources improving Pontiac fire stations, according to Fire Chief Ron Spears.

The city of Pontiac now also is contracting out for trash collection, cemetery management, insurance administration, animal control, street light maintenance and more. In effect, Schimmel has turned Pontiac into a contract city, where most services are provided under contract instead of through city staff. Since fiscal year 2009, official city employment dropped from 495 to a proposed 20, excluding district court employees.

Detroit presents unique challenges and implementing all of Pontiac's reforms may not be possible, but it is worth exploring. After all, Detroit has unique opportunities, too, such as its great location, access to engineering talent, history, generous foundations and saleable assets.

So what would the savings look like in Detroit if they shaved the budget like in Pontiac? If Kevyn Orr, through aggressive asset sales, competitive contracting and ending unnecessary services, could reduce the city's $1.1 billion general fund spending by
43.5 percent, the city would save $478.5 million.

The city dedicated $461.6 million to debt service and pension contributions in 2012, according to Orr's 2013 Proposal to Creditors. In other words, the savings listed above would cover recent costs, at least theoretically. The total costs for pensions and creditors are scheduled to grow, but that increase could be offset with proceeds from asset sales, especially over time.

Pontiac's reforms cannot simply be superimposed on Detroit, and Orr may well be prepared to sell assets and contract out. But by adopting Pontiac's strategy to analyze the city's unique opportunities for privatizing potential tax revenue, as well as dousing waste and neglect, Orr can help leave no stone unturned in revitalizing the city.

Orr's report to creditors listed the possibility of selling some city assets such as parking garages, but more could be done. The sale of Belle Isle alone could have generated hundreds of millions to the city if only the idea had been taken up. Competitive contracting needs to be done more aggressively, too.

To Orr's credit, his team has negotiated a new collective bargaining agreement with Detroit's emergency medical (ambulance) services. Why not just contract out with a private vendor as is now done in Pontiac? There does not seem to be an interest in intergovernmental contracting for police or fire services, either, but these could represent tremendous areas for saving.

Pontiac isn't far away from Detroit geographically. It shouldn't be so distant on Detroit's reform idea agenda either.

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Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

A few years ago, a major worldwide poll found that a majority or plurality of people in most countries surveyed believe that the world is getting worse. Indeed, there seems to be a tendency for those concerned about the size and scope of government to feel like everything is getting perpetually worse. But a full look at the evidence worldwide shows this just isn’t so.

While many critics claim that free trade and globalization are merely a “race to the bottom,” the world as a whole has been quietly reducing poverty, disease, famines and war by embracing the free market.

New wealth and mosquito control has meant the plummeting of malaria deaths. The spread of vaccines has reduced or eliminated other health issues like smallpox, diphtheria, rubella and typhoid fever. At the rate the continent of Africa has been improving crop production, the UN predicts an end to famine in Africa by 2025. War and battle deaths are near an all-time low as countries that trade and interact commercially tend to not attack each other.

All of the above positive trends are happening because of an increase in prosperity. The rise in wealth globally, leading to a remarkable decrease in the world poverty rate, is key to understanding much of this progress. University of Michigan-Flint economist Mark Perry has a chart showing this drop in poverty from 26.8 percent in 1970 to 5.4 percent in 2006.

Much of this is the result of formerly Communist and Socialist economies becoming more market-based. China, India and most of South America have been embracing capitalism for decades, while Africa also is moving towards freer markets in more recent years, according to the “Economic Freedom of the World” reports.

The most noteworthy country is China: In the late 1970s, the country began shifting away from its strict model of economic central planning and began freeing up its markets. From 1981 until 2010, over 600 million people climbed out of extreme poverty, at a time when the population increased by 330 million citizens. That’s an average of 1.7 million people every month, or, as a comparison, like a population the size of Idahos’ moving up into the middle-class every month.

In Africa, led by some of the countries in the southern part of the continent, taxes and regulations are being rolled back, private property is being respected, and state-dominated industries are being privatized, shifting to the private sector. Botswana, Zambia and even Uganda (one of the “very least-free” countries 20 years ago) have all become freer in the past few decades — and been rewarded with a steadily growing middle-class.

There are concerns, both domestically and abroad. Several South American countries have elected former or current Socialist leaders in recent years. The latest recessions, which hit most of the world hard, have meant some previous reforms in nations are now being rolled back. And the United States has fallen behind many countries in economic freedom as the regulatory state has greatly expanded.

By their nature, think tanks are supposed to see beyond the momentary political battles which dominate the news headlines every day and focus on the big picture. That’s why the Mackinac Center has been advocating for a right-to-work law for over 20 years — at a time when the idea was ridiculed across the political spectrum. The dynamism of the world economy is evidence enough of the importance of long-term thinking — countries once written off as lost causes are embracing good ideas and helping their people.

While we should cheer this progress, it is important for those of us wishing for a more limited state to be ever-vigilant, because more freedom leads to a better world. The opening up of markets has resulted in an amazing 80 percent reduction in extreme poverty — undoubtedly one of the greatest achievements in human history.

As Arthur Brooks, president of the American Enterprise Institute, recently said, “I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.”

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Jarrett Skorup is a research associate for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

You may be a criminal without even knowing it.

Centuries ago, there were only nine felonies under English Common Law. The common law dealt with behavior that is widely understood to be culpable — murder, theft, rape, etc. — but in today's state legislatures and in Congress, innocuous behavior is too often criminalized. In Michigan, a person can be convicted of a crime for betting in an office March Madness pool, or mocking a person who refuses to duel.

Accompanying this overcriminalization is the failure of legislatures to define the intent necessary for a prosecutor to prove a crime has occurred. A fundamental principle of our legal system, rooted in centuries of tradition, is that a crime occurs only when there is both a wrongful act and wrongful intent.

William Blackstone, an 18th-century English jurist, wrote: "[A]n unwarrantable act without a vicious will is no crime at all." Thus, a person could only be convicted if he committed an unlawful act and knew (or should have known) that the conduct was illegal. 

Notable exceptions include strict liability crimes, which don't require the proof of criminal intent to secure a conviction. In certain instances it is an effective means of regulating criminal behavior: Statutory rape, for example, penalizes a person regardless of their belief about the age of the minor.

Since the mid-19th century, however, the number of strict liability crimes has skyrocketed. Due in part to industrialization and urbanization, legislatures began enacting new criminal prohibitions to promote public health and safety: traffic laws, selling alcohol on Sundays, sale of adulterated foods and workplace regulations. Many early strict liability laws were aimed at promoting social order. These laws were also favored because of the ease of conviction — there was no need for prosecutors to prove criminal intent.

The skyrocketing continues. A study by The Heritage Foundation and the National Association of Criminal Defense Lawyers determined that of the new laws creating nonviolent offenses adopted by Congress in 2005 and 2006, 64 percent of those laws contained inadequate intent provisions. This is not an indication that Congress necessarily wished to create strict liability crimes; a bill's mere silence on the element of intent can be interpreted as imposing liability.

Michigan has dozens of strict liability crimes on the books. It is a misdemeanor for a person to cause a pet ferret "discomfort." Transportation of a Christmas tree without a bill of sale is illegal. It is a crime to sell poultry without maintaining detailed records. Dancing during a performance of "The Star Spangled Banner" is prohibited. Intent is not a necessary element to win a conviction of any of these crimes.

The problem isn't confined to petty crimes with minor penalties. The area of environmental regulation is especially dense with strict liability offenses that carry significant penalties. In a recent case, a man convicted of improperly disposing scrap tires was sentenced to 270 days in jail and a $10,000 fine.

The Michigan Legislature could greatly improve the clarity and frequency of criminal statutes by adopting a provision that establishes a default standard of intent. Terms like "purposely," "knowingly" or "recklessly" define what must be proven in court. If a criminal law is silent on intent, the default level of intent would apply. The Legislature could still adopt strict liability crimes, but would need to explicitly state its desire to do so.

Fourteen states have acted to improve criminal intent standards; Michigan should be next. Such a reform would improve the administration of justice, protect individuals from unwarranted prosecutions and concentrate the potency of criminal sanctions on truly objectionable behavior.

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Michael Reitz is the executive vice president of the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.