Talent Mercantilists Resurrected in Michigan

More college graduates won’t improve state's economy

Two different columns recently called on Michigan to bolster its college graduate population. Unfortunately, this is unlikely to improve the state’s economic situation.

However, it shows that the state has an oversupply of talent mercantilists.

Mercantilism is the discredited idea that all a country needs to do to grow wealthy is to increase its supply of gold and other precious metals. The new talent mercantilists focus not on gold and silver, but instead on increasing a state’s supply of college graduates.

While it’s certainly true that people with college degrees tend to be more employable and have higher incomes, it does not follow that states increasing their college graduate populations will itself lead to greater state prosperity. The chart nearby (click to enlarge) looks at the relationship between increasing a state’s graduate population (on the x-axis) and whether this led to increased personal income (lagged and placed of the y-axis).

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Despite the theory espoused by the talent mercantilists, there is no clear connection between grads and growth. (The possibility is further explored here.)

Even if there were a connection between grads and growth, it’s unclear what state policy can do to increase its graduate population. Seeing a degree through to completion is the student’s choice and many choose to drop out (often with large debt). The students who make it to graduation are some of the most mobile people in America. With difficulty in developing and retaining graduates, there seems to be little that policy can do to influence this directly.

It’s better to use tried and true ways of increasing the state’s economic growth: lowering tax burdens, lessening regulation, securing property rights and providing adequate cost-effective infrastructure. These are the basics of the state’s interaction with the private economy. And unlike the ability to develop, attract and retain college graduates, state policymakers directly control these levers.

 


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Renting out the family summer cottage is a common practice in Michigan, and with today’s technologies, it’s easier than ever, empowered by services like AirBnB, HomeAway, VRBO and more. These short-term rentals mean vacationers can find a place much more easily and inexpensively, while owners can earn some extra money. It seems like a win-win. Not everyone agrees. Some in the accommodations and tourism industries aren’t happy with the increased competition and are advocating for limiting people’s rights to rent out their homes. Some homeowner associations are pushing back as well. And while cities like Detroit and Grand Rapids have mostly embraced home sharing, some local governments have restricted and even banned the practice.

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