Wednesday, December 29, 2010

Granholm: Capitalist failure, progressive success

Jeniffer Granholm's tenure as Governor is coming to a close. What her legacy will be is somewhat tenuous as she was elected 1st female governor 8 years ago, won re-election in a landslide despite economic turmoil, and she is the 1st Governor in Michigan's 173 year history to leave office with fewer citizens.

The Grand Rapids Press, "The Granhold years: An economy wrenched by change, opportunities missed to transform," (Sunday. Deceber 26, 2010), writes a great article about the tenure of Michigan's first female Governor.

The article notes had to face tough times:
  • An auto market transition
  • National banking mortgage crisis that hit hard
And the authors note that no matter who would have been governor during these times would have faced hardships. I'm not sure I agree with the editorial here. I think a more economically responsible governor could have waded through the hardships, and prevented much of the market collapse and job loss.

Consider the following:
  • Michigan lost 163,000 jobs during her tenure.
  • Unemployment was above the national average (now over 10%)
  • Until this year, Michigan's unemployment ranked worse in the nation (the past 4 years)
  • Michigan ranked worse in nation regarding joblessness
  • Per capita income fell
Now, I say much of the above could have been prevented if we had a good governor who knew how to stimulate an economy.

Consider what Granholm did:
  • She tried to create jobs by the government (i.e. green jobs)
  • She raised taxes to pay for more government programs for the needy
  • She increased regulations requiring 10% of state's power to come from renewable sources by 2015
She succeeded at what she believed in. She wanted to prevent the auto industry from collapse, and argued effectively on national television for a bailout. She was a very nice person.

Yet she could not persuade citizens from leaving Michigan. Perhaps she did not quite understand how capitalism works. She didn't understand the lessons of history, that the government cannot create jobs. In fact, government intrusion can only make the job market worse.

Instead of tailoring her economic policies toward the entire state, most of which is conservative, she tailored them toward Detroit, much of which is liberal. She was not, in essence, a good state governor. She was a regional governor.

And not a good one at that either. And it's not as though this were not expected. One should not be surprised at the collapse of Michigan during economy. Granholm did nothing to create an economic environment where industries wanted to stay in Michigan, or come to Michigan. Or to expand and invest their industries.

Instead, she raised taxes, created more government, and created an incentive to close shop. She created an incentive to wait for another governor who might do what is needed in a state to encourage economic growth and thus create jobs.

Yes there would have been an economic hit in Michigan regardless, because since liberals took over Congress in 2006 the economy in the nation as a whole has started its decline. Yet there have been state governors that made the right decisions and moved their states forward, or at least stagnant.

She continued to argue for tax increases to pay off the state debt, when what she should have realized is tax increases to not raise more money for the government long term. In fact, history shows tax increases above a certain point (and Lord knows we are at that point) reach a point of no return.

She did not argue for benefits cuts, pension cuts, and other cuts that would have saved the auto industry from the embarrassment of the need for a bailout. Instead, she failed. She failed all the way around.

It's not surprise. She performed all the Keynesian economic activities she championed for when she ran for election of Detroit's Governor of Michigan.

Actually, as far as the progressive movement is concerned, she succeeded. Yet for those of us in Michigan who are capitalists and want the State of Michigan to prosper, she was a failure. For that, we thank God she cannot run for office again.

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