Archive for November, 2011

The Michigan-Indiana Border War

November 27, 2011

For the past 35+years I have been witness to the Michigan-Indiana economic development border war. It seems that Michigan has always sought a “one-better” economic development incentive over Indiana to offer businesses comparing the two states for location of a new facility.

Today we have the ability to gain a better understanding of the state policy underpinning economic development efforts of the State of Indiana. 

INDIANA

In Governors Mitch Daniels book Keeping the Republic: Saving America by Trusting Americans we have the opportunity to study the current Indiana economic development policy of lower taxes, downsized government bureaucracy, government fiscal solvency and organized labor cooperation in an attempt to understand economic development competitiveness between these two states.

Yes – this is a read about the Republican Party economic development platform playing out on the national election stage.  But the facts are clear; Indiana’s economic future relies on reinvention of the manufacturing economy – especially the automotive sector. 

Once decimated communities of Andersen, Kokomo, and Fort Wayne are today noted as “come-back” communities now hosting new jobs for Hoosiers – former “out of work” auto workers.

Daniels philosophy is quite clear.  He believes that “a properly conceived and restrained federal government [and for that matter, state government] must be aimed in every way possible at the growth of the private sector economy”.

MICHIGAN

For comparison – we have the recent past Michigan economic development philosophy fostered by Michigan Governor Jennifer Granhom, documented in her book A Governor’s Story: The Fight for Jobs and America’s Economic Future.

Granhom’s Democratic Party philosophy of increased government intervention and economic planning (think green jobs, solar panels, battery manufacturing, and movie film production) is in direct opposition to the Mitch Daniels philosophy.

The belief that the private sector is a jungle of predators again which Michigan government must safeguard its economy through government programs to compete for jobs and investment has up to recently times been the foundation of Michigan’s economic development program.

SO WHAT?

For Michigan’s economic development policy makers, for the first time, we have two national leaders detailing very different agendas for reinventing national and state economies.   

In Michigan change is necessary and underway –a philosophy being clearly communicated by current Governor Rick Snyder, some changes even based on Mitch Daniels successes.

For local governmental officials and economic development practitioners we have the responsibility to offer guidance to state economic development policy – policies that will play out in the media during the next 12-month election period.

The stakes are quite high for the economic development practitioners who are held accountable for the creation of new jobs and investment in their local communities.

Reading both the Granhom and Daniels book will go a long way in helping understand the national and state economic revitalization discussion forthcoming.

A Governor’s Story – Jennifer Granholm

November 14, 2011

  A Governor’s Story

The Fight for Jobs and America’s Economic Future

 Recommended reading for everyone with interest in economic development and America’s quest for jobs in a global competitive economy. 

    Enlarged Book Jacket 

I guess it should be come as no surprise that former Michigan Governor Granholm calls for “active [economic] strategic planning led by government”.

She’s an FDR Progressive at heart that truly blames “big business” for taking advantage of tax breaks offered by local and state government and then “using the savings not to invest in American business infrastructure but to create off-shore investments which create employment in other countries”.

Granholm citing Michigan’s accomplishments in reducing business taxes relative to other states in the search of economic growth dispels the belief “that lower taxes will inevitability increase investment, growth & jobs and generate more tax revenue”.

She credits the lack of government involvement for the Michigan economic malaise – specifically the lack of federal action to “defend American business from unfair trade, lack of partnering with global economies to create good jobs here, and [the absence] of strategic investment in education and training to prepare for the knowledge economy”.

Her position, like FDR, Is that “hands-off laissez-fair free market economics will only ensure that other governments step into the void”…her solution being more and bigger government investment in planning and managing the economy.

With this said, she provides an interesting historical account of her term in office, to seek amidst a somewhat immobile government, unionized employment preference and automaker management bias against change and reinvention, to prevent  past history from being the future economic structure of the State of Michigan. 

Her efforts to retool Michigan’s economy on a green energy platform cobbled together all available funding sources, especially those of the Obama administration, to lessen the personal and financial impact upon individual Michigan residents, should be acknowledged.

CHAPTRER 10 – CRACKING THE CODE: KEYS TO CREATING AMERICAN JOBS IN A GLOBAL ECONOMY is a must read and offers eight strategies tried in Michigan during her term that portends to be solutions to reinvent the American economy.

Her recommendations for economic revival include:

1.  Government Must Get in the Game – allowing government to design and implement competitive global economic policies picking winners and losers to foster job growth.

2. Cut Government Where We Can to Invest Where We Must – to redirect financial resources to education and training for “targeted” chosen new growth businesses that will create jobs.

3.  Develop National Strategies for Economic Growth – to level the global “job creation playing field “by picking “targeted industries” and incentivizing them to attract investment and create jobs.

4.  Educate or Die – make public policy changes that prepare individuals for the knowledge based economy of the 21st Century recognizing that education is the top priority to stimulate job creation resulting in personal income growth.

5.  Create Fairer, More Flexible Labor – Management Partnerships – changing current practices whereby labor and business have greater flexibility to harness cost saving competitive on a global scale.

6.  Make Smart Government Investments in Industries Crucial to Growth – incentivize and invest government funding to economic sectors that align with important national or regional economic development goals via national economic development planning.

7.  Face Down Threats – Become the Change – by discontinuing avoidance – the inability to take action – favoring change opposed to reliance on past economic practices and policies.

8.  Practice Do-It-Yourself Leadership – accepting the responsibility to take individual action to form new for profit and nonprofit business enterprises that create jobs and investment in local communities.

Only time will tell whether the Granholm strategies will successfully reinvent Michigan’s economy and return Michigan to its “historical powerful position” in the US economy.

Highly recommend reading for anyone interested in economic development and reinvention of older manufacturing based economies.