“If You Can’t Be a Good Example, Then You’ll Just Have to Serve as a Horrible Warning”
The Post-Dispatch recently published a letter to the editor that applauded the passage of the $150 million Ford Claycomo tax incentive package (link via John Combest):
The GOP should take positive action to keep jobs in Missouri. Look at Michigan. It offers numerous incentives to corporations to move to Michigan. And it works.[…] With unemployment in Missouri at more than 9 percent, what exactly does the GOP have to offer?
From this letter, it is apparent that the writer measures success in terms of job growth. However, the writer ignores the fact that Michigan boasts the second-highest unemployment rate in the union — certainly higher than the rate in Missouri. According to the Local Area Unemployment Statistics (LAUS) from the Bureau of Labor Statistics, the unemployment rate in May 2010 is 13.6 percent in Michigan and 9.3 percent in Missouri.
Moreover, the unemployment rate in Missouri is historically much lower than Michigan’s. Using the Show-Me Institute’s IDEAS application, I produced the following graph:
Trend of Unemployment Rate In Michigan and Missouri
Why are there calls to emulate the public policies in Michigan? Its economy is in terrible shape! To paraphrase Catherine Aird, Michigan would be better viewed as a horrible warning than as a good example.
Furthermore, targeted tax credit programs do not work in Michigan. The Mackinac Center for Public Policy in Michigan has produced many studies that demonstrate this. As Audrey Spalding recently wrote on this blog, tax credits fail to deliver on their promises — particularly in terms of job creation, and particularly in Michigan.