Opinion | Michigan’s future: No flying cars, but plenty of corporate welfare
Human beings are terrible at predicting what the distant future will look like, but that’s not stopping Michigan’s economic development bureaucrats from betting taxpayers’ dollars and communities’ futures on their ability to do just that.
A proposed multi-billion-dollar, 30-year subsidy deal for Chinese battery manufacturer Gotion’s plant in Big Rapids is the latest example of government officials making decades-long bets that commit our cities, counties and state to a particular future that’s far past their ability to predict.
In the real world, economists who aren’t employed by economic development bureaucracies may make guesses and predictions about what tomorrow may hold, but they’re careful not to claim the ability to accurately model a particular economy more than a few years away. Even five years into the future is generally considered a stretch among academic researchers using the same modeling tools that economic development agencies use to generate the “economic impact” predictions on which subsidy deals are based. Economies are simply too complex, and too many unpredictable things can happen, to trust efforts to model them much further out into the future than you’d sign a car lease.
That’s not a concern that seems to be shared by our elected officials and economic development agency employees, who can make one prediction for 30 years into the future with high confidence: They themselves will be long gone by the time the bills come due. Michigan’s history is full of cautionary tales where the next governor or mayor, or the one after that, ended up having to deal with the fallout of bad economic development bets.
To see how this works in practice, consider what we thought today would look like in the past. Here in Michigan, we would be hard-pressed to find examples from 30 years ago of economic developers in the administration of Gov. John Engler accurately predicting that by 2022, Michigan would have lost 185,000 manufacturing jobs; General Motors would have gone bankrupt; Chrysler would have had a succession of German, Italian and French owners and that Chinese and South Korean companies would be manufacturing rechargeable batteries to power cars and trucks here.
It would have been especially hard for them to make that final prediction, given that the lithium-ion rechargeable battery had just been invented the year before. And they certainly couldn’t have looked at the corporate landscape and chosen Gotion as a company to watch for future success, since the company wouldn’t be founded for another three years.
Our tendency of assuming the future will be like the present, just fancier, has been nicknamed the “Jetsons Effect,” after the 1960s’ TV show that offered a comedic view of what everyday family life would be like a century in the future in 2062. Today, that future is now just four decades away. It's possible, of course, that within 40 years we could make it to the Jetsons’ portrayal of flying cars that fold up into suitcases, “work weeks” of one hour a day on two days a week at a space sprocket manufacturer and apartment buildings perched on stilts above the clouds.
But it’s also worth noting that when the Jetsons’ daughter Judy is born in 2047, the one thing we know for sure is that multi-decade tax breaks being made this year for “economic development” purposes will still be in place in Michigan, shifting the burden of providing public services onto other taxpayers and limiting communities’ ability to respond to unforeseen future challenges.
Of course, we don’t need to be making big speculative bets on a specific company or technology to improve the state’s economy and the quality of life of the people who live and work here. Rather than making it easier for that one company to do business in Michigan, why not redirect our efforts into making it easier for every company? For instance, we know that one of the best predictors for a region’s economic vitality in the future is the small business formation rate today. Rather than going all-in on a few speculative megadeals, let’s make it as simple and affordable as possible to start and run a good business that creates good jobs in Michigan.
That’s a future we can bet on.
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