Often times authors and speakers spend a great deal of time building the case for why whatever topic they are addressing is important, they provide examples and stories to illustrate. I don't believe any anecdotal evidence for Michigan's suffering economy should be necessary.

First, it is completely unfair to assign the blame for Michigan's sputtering economy on the current Governor even though the malaise started and has continued on her watch, but let me not give credit either. It is clear to me she has a faulty vision and philosophy in business regards.

A Crucial Misdiagnosis

The Governor has stated many times that Michigan is on the front edge of the effects of globalization, this is, in fact the pole of the truth. The auto industry is one of the last industries to feel globalization's impact, failing to realize this is a crucial misdiagnosis. In doing so she ignores Pennsylvania, Ohio, Indiana, etc., all of whom suffered greatly in the 1970s due to the steel industry. Another example would be the textile industry of the Northeast. The Mills of the Northeast were legendary before they recognized a cheaper calculus of manufacturing in the South. The Southeast has in recent years felt the effects of globalization with the further migration of textile and carpet production to lower cost producers outside the US.

The largest slice of blame is to be apportioned to auto industry management, who agreed to economically unsustainable deals with labor union bosses, and the unions themselves. Domestic auto industry leaders now claim competitive disadvantage due to their legacy benefits, specifically their pension and health care benefits for retirees (***recall that while pensions must be funded and are subject to audits, health care benefits are unfunded and paid as they are incurred***).

The vision for regaining Michigan's preeminence amongst growth rates and economic dominance is underway. It appears in early 2008 that some members of the auto industry are bringing themselves to economically sustainably sized firms, this will help.

Critique of Governors Plan

It is unclear to me as to what the Governor's plan really is--she has highlighted four specific industries/areas of commerce for targeted in-migration to Michigan, but also stated that she is focused on the 50 fastest growing industries.

Regardless, it is my view that such attempts of central planning are a mistake. Her 21st century jobs ideas and her ideas to diversify Michigan's economy are ill-advised. Simply stated, government at any level should not be involved in the business of picking winners and losers in the marketplace. Providing special attention and tax breaks to specific industries is unfair (particularly to non-target businesses),unwise and potentially corrupting.

The unfairness should be self evident, regardless of what benefits may come to the community or state. The unwise comes because companies intra-industry tend to congregate near each other. It is the economic and business principles that result in this congregation, examples abound:

1. Silicon Valley
2. Durham-Chapel Hill- Raleigh Research Triangle in North Carolina
3. Motor City
4. The steel industry was and still has strong ties to Gary, IN, Pennsylvania, and Ohio
5. Many surgical instruments makers have made Warsaw Indiana and its vicinity home.

The list and the phenomena can be extended much further. Be assured, though, that these congregations did not occur primarily because of government planning.

Piece by Piece

The Governor has focused on bringing and developing four specific industries to Michigan:
1. Life Sciences
2. Alternative Energy
3. Advanced Manufacturing
4. Homeland Security

1. Life Sciences
It would seem to be a fit given its history and background in greater Kalamazoo: Pfizer, Stryker, MPI Research, Bronson, Borgess, etc. Life Sciences is clearly a growth industry and one that should be pursued by private enterprise, not with public dollars. Private companies are best equipped to make location decisions, the best thing government can provide life sciences and every other industry with is an ultra competitive low tax structure, reasonable and definable environmental standards, and a climate that will boost talent recruitment efforts.

2. Alternative Energy
This movement is such a mess I hardly know where to begin. We went through this same phenomena about 30 years ago and found that "green" could not be sustained. The energy produced by "green sources" is not even close to being competitive on a per kilowatt hour basis with today's most efficient power sources (coal, nuclear, natural gas, oil, etc.) "Green Energy" is not sustainable if it is not economically sustainable. Does that mean that seeking alternative energy is unwise? No, but let the private sector take the lead, absent the public subsidies and credits.

The "energy crisis" we see today is not a crisis at all. Commodities, which include energy components, are at record levels due in large part to the debasing of your currency--the same condition that existed in the 1970s.

3. Advanced Manufacturing
Great idea, I love it. It seems to fit in very naturally with Michigan's blue collar background and the high number of engineering graduates that our state, particularly on the West side, produces. However, I do not feel it appropriate to favor, through special abatement and goodies, one industry over another.

My vision for making Michigan a top 5 destination for industry and business in-migration is to head the list of lowest tax, lowest regulation, and highest worker freedom states in the Union. Accomplishment of these objectives will put Michigan in the running for corporate office, new plant migrations and resident expansion projects.

4. Homeland Security
No comment at this time.