Cities and Suburbs Should Grow Together

The fastest growing areas gain residents in both cities and suburbs

There are ongoing squabbles between Detroit and the communities around it. When a business or sports team moves downtown, it’s big news, as it is when a company moves from downtown to elsewhere. But regions don’t grow by reshuffling the work locations between cities and suburbs. (And taxpayers should be skeptical when that shuffling happens with their money.) Instead, the regions that do the best grow together.

From 2010 to 2016, the Census Bureau estimates that Detroit lost 5 percent of its population. The region as a whole coasted, increasing by just 6,244 people — a 0.1 percent gain. That’s the worst record among both the 20 largest regions in the country and their central cities.

While the disparity between city and region was strong in Detroit, it wasn’t the highest in the nation.

Over the same period, Baltimore lost 3.8 percent of its population while the rest of the Baltimore region increased its population by 5.1 percent, a disparity of 8.9 percentage points.

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In some areas, though, city population growth outpaced regional growth. For example, the city of Seattle increased 7.0 points more than its metropolitan statistical area.

The disparity in population growth between cities and their metropolitan statistical areas, 2010 - 2016

Seattle

7.0%

Miami

5.7%

Washington

5.5%

Boston

5.0%

Denver

4.6%

New York

4.0%

Tampa

3.3%

Minneapolis

3.0%

Atlanta

2.9%

Philadelphia

1.9%

Los Angeles

1.8%

San Diego

1.4%

San Francisco

1.3%

Chicago

0.6%

Phoenix

-0.5%

Riverside

-0.6%

Dallas

-2.4%

Detroit

-6.2%

Houston

-6.3%

Baltimore

-8.9%

     

Yet looking at whether cities or suburbs are growing more misses the important point: The regions that are doing the best have increasing numbers of people in both the cities and the suburbs. Denver grew by 15.2 percent over the period and the Denver region grew 11.7 percent. Houston grew by 9.8 percent and its region grew by 13.9 percent.

Growth of Cities and Regions

Detroit and its suburbs will do well together or not at all. A prospering economy will attract people from around the country and the world, and they will land either in the city or the suburbs, depending on their preferences. That dynamic ought to be more important than transferring office locations between cities and suburbs at taxpayer expense.


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Perceptions of how energy can or should be used and generated are changing, and that change is making itself felt in Michigan. While this shift is typically viewed as a move toward clean and efficient energy, it also entails an increasing list of limits on how and when energy will be used. These changes are making the work of the Environmental Policy Initiative at the Mackinac Center ever-more important as a strong voice for balanced energy policy and free-market choices is needed, especially when so many would rather use forced restrictions on energy use and government-mandated efficiency measures.

At its core, improved efficiency is a worthy goal. Doing and accomplishing more with less energy is an essential aspect of bettering human life, reducing costs and improving goods and services. Efficiency improvements have helped to pick humanity up out of the Dark Ages, taken us to space, and have ushered us into the age of cloud computing, smartphones and global interconnectedness. So, someone might reasonably ask, “Who could possibly be opposed to more efficient energy use?”

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But there is more to this shifting energy paradigm than just becoming more efficient. It is one thing for people, freely associating in an open market, to demand improved efficiencies from businesses and products. It is another thing entirely for politicians, government bureaucrats or utility executives to mandate that citizens achieve some official vision of efficiency via government rule, law or mandate.

Centrally planned efficiency measures are antithetical to choice and free markets. The logic behind them — often found in government, academia and the environmental movement — is that the average citizen is incapable of choosing wisely, and therefore, this choice must be made for them.

Steven Chu, energy secretary under President Barack Obama, exemplified this attitude at a 2009 energy conference. In an off-stage comment, he stated, “The American public … just like your teenage kids, aren’t acting in a way that they should act. … The American public has to really understand in their core how important this issue is.”

Michigan’s utilities are clearly buying in to many of the same concepts. In June, Consumers Energy submitted its integrated resource plan to the Michigan Public Service Commission, the public agency that oversees energy generation in the state. That plan demonstrated the company’s desire to reduce customer energy use, “to act as a driving force for good and take the lead on what it means to run a clean and lean energy company.” But “taking the lead,” also requires the company to close its nuclear and coal plants while also drastically reducing its use of natural gas plants. That means Consumers Energy plans to “meet about 65 percent of Michigan’s energy needs with renewable energy, energy efficiency and demand response by 2040.”

Demand response” (in utility-speak) will “benefit the environment by giving [customers] the option to voluntarily reduce their energy use during a few peak times during the year.” In plain English, that means Consumers Energy will automatically cut in half the output of your air conditioning unit — the appliance keeping your family comfortable on hot days — to reduce demand on the electric grid. Of course, Consumers assures customers in their marketing emails that this program will still keep your home comfortable.

But the pressure to implement these programs, where you’re asked to install limiting devices on your air conditioner, is based on the notion that energy users are doing something wrong and they should feel some moral compunction to reduce their energy consumption. Rather than relying on ‘good old American ingenuity’ to build more abundant, more affordable, more clean, and more efficient generation methods, we have too often bought into the notion that we can become a “force for good” by mandating that we do less with less.

With government, special interests, environmental groups, and now, utilities increasing the pressure on households and businesses to use less energy and to have fewer options, it’s essential to remind utility and elected officials that America already leads the world in improved environmental performance and energy efficiency.

In fact, the United States has led the world in reducing greenhouse gas emissions for the past nine years, at the same time as we also led the world in producing natural gas — a fossil fuel. Striving for ever-more efficient means of using and producing energy is a good thing, but only when the freedom to choose those, or other means, remains.


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Money and Justice in West Michigan

Ottawa County prepares programs to improve both funding and offender success

Big changes are underway in Ottawa County’s criminal justice system. The county is poised to approve a pilot program that will test a new fee structure for jail inmates, and it is also about to launch a public defender office.

Like many counties in Michigan, Ottawa County bills inmates for their jail stays. State law limits these fees to $60 per night. The county charges inmates $25 per night, so inmates serving 90 days end up with a $2,250 bill from the jail – on top of whatever restitution, fines, and administrative fees they may have incurred in court. And like many counties with an inmate housing fee, Ottawa County collects only a tiny fraction of what it charges. In 2017, it billed inmates over $3 million but collected only about $100,000. Offenders are frequently indigent, meaning that attempting to collect revenue from inmates is rarely successful, and many leave jail facing the daunting challenge of paying off thousands of dollars in debt to the county.

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The county will test a new fee structure, changing the amount it bills inmates from a daily rate to a flat $60 fee, which it projects will help the jail recover an additional $20,000 per year. But the inmates stand to gain even more. These individuals will be much more likely to get their lives back on track when they leave jail without extra fees that they can rarely afford.

To comply with new mandates from the Michigan Indigent Defense Commission, the county will also apply $1.9 million in state funding to help create a public defender office. The commission has said that each county must submit a plan to it for providing an attorney to poor defendants. The Michigan Indigent Defense Commission Act gives the commission authority to implement standards with which counties must comply; when they submit compliance plans, the state reimburses them for the expenses they anticipate. Until recently, Ottawa County judges worked with a roster of private attorneys, assigning them to indigent defendants on an as-needed basis, but the county will now hire attorneys to provide these services full-time.

MIDC’s standards are designed to remedy the disparity in outcomes between criminal defendants with and without financial means. Those who can afford their own representation are more likely to have advocacy at every step in the trial, including the crucial first appearance, the arraignment. Many defendants are arraigned via videoconferencing in jail, without a lawyer to help represent their interests. The MIDC’s mandates aim to reduce this disparity and address other challenges that are unique to poor defendants.

A rigorous system of public defense is good for the public, too. Like the other branches of government, the court system relies on a system of checks and balances – namely, the defense and prosecution – to advance the interests of both the individual and the public. The prosecutor is one of the most, if not the most, influential actor in a criminal trial, with virtually unfettered authority to decide what charges to bring and whether to bring them, setting the entire stage for every trial. Also, the prosecutor can negotiate a plea with the defendant and advise the judge on the sentence, all the while never lacking the needed resources. But many criminal defendants cannot afford private representation, meaning that they’ll have to rely on a court-appointed lawyer – a public defender – to make their case. And, just as the public is entitled to a well-funded and competent attorney to protect its interests by prosecuting alleged offenders, individual citizens are equally entitled to a rigorous defense against the power of the government. MIDC member and 55th District Chief Judge Thomas Boyd maintains that an improved public defense means that basic constitutional guarantees are respected. “Michigan’s systems fail on a number of criteria to meet that which is required by the US Constitution,” he said. “[Implementing new standards] isn’t to say we’re trading a Chevy for a Cadillac. It’s to say that we’re going to make sure that this vehicle has four wheels.”

There are over 3,000 crimes on the books and more being added every year, so any one of us could become the subject of prosecution. If we happen to be in the majority of Americans who couldn’t afford even $500 in an emergency, we would have to depend on public resources and court rules to ensure that we were effectively represented. Thus it’s in most peoples’ personal interest to ensure that the criminal justice system operates under a policy of fully equipping both sides of the aisle in a criminal case.

Moreover, the majority of criminal defendants are indigent. This means that the defense attorney facing off against most prosecutors in most courts is a public defender. If that attorney lacks the resources to provide effective counsel, it could result in over-punitive outcomes in case after case, potentially overburdening jails, prisons, and budgets, while disrupting the lives of offenders and their communities. So it is in the public’s interest to ensure that the scales are balanced in our courts.

There’s a statewide trend toward reexamining the way that state and local governments can make criminal justice more effective, efficient and equitable. The work that Ottawa County is doing represents a commitment to the sound administration of a core function of government. With these two programs, the county will have a significant impact on the legal outcomes and financial health of its criminal defendants and the safety of its larger community.

 


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The State Budget is Larger Than $10 Billion

State can afford to spend more on roads and cut taxes

In response to a question of whether there’s money in the budget to both cut the state income tax rate (from 4.25 percent to 3.9 percent) and devote more money to roads, state budget director Al Pscholka’s views were summarized like this: “It’s impossible to reduce the state budget by 10 percent – $1 billion – without making cuts to services.” Except the proposed reduction in taxes is affordable.

To make an obvious point, state taxes and fees raise $33 billion, not the $10 billion implied by the statement. The $10 billion figure is for the unrestricted general fund, but the state controls even-larger restricted funds. Income tax revenue, for example, gets divvied up according to state policy into restricted funds for schools and roads. This money is still fungible.

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State tax revenues are growing. The state tax revenue in the budget increased $6.8 billion since 2011, a 10 percent gain above inflation. It’s odd that the hike in spending is considered “affordable” but a tax cut that is a seventh of the size of the increase is not.

Officials expect state revenue to continue to grow, and that growth will make both tax cuts and spending increases possible. The revenue to just two of the state’s funds is expected to increase by another $1.7 billion by fiscal year 2021-22. The future is always uncertain, but those gains throw into doubt that idea that tax reductions need to result in service cuts.

As to devoting more spending to roads, the state is already doing that. In addition to having enacted tax increases for road work, the state has earmarked some of the income tax to roads and has already put another $300 million of its unrestricted revenues to filling potholes. When these and other parts of the 2015 roads package are fully in effect, the state transportation budget will soon be double what it was in fiscal year 2010-2011, or a 68 percent increase above inflation.

Both road funding or tax cuts would be a lot more effective and improving the economy than the hundreds of millions the state is spending on business subsidies.

Or university subsidies for that matter.

So the state really can afford to reduce the state income tax and pay for roads. Lawmakers just have to make it a priority.


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October 5, 2018 MichiganVotes weekly roll call report

House Bill 6064, Authorize new corporate subsidy program: Passed 81 to 25 in the House

To authorize a new program to give up to $50 million in state taxpayer subsidies to some private business owners through a device the bill would create called a “rural development fund.”


Senate Bill 425, Authorize electronic voter registration: Passed 107 to 0 in the House

To require the Secretary of State to develop a system for online voter registration on its website. An individual would have to have a valid driver's license or state identification card to use the proposed system.


House Bill 4224, Repeal ticket scalping ban: Passed 71 to 36 in the House

To repeal a state law that bans ticket “scalping” at sports and entertainment events, but also authorizes jail time for interfering with an internet-based ticket distribution system used by an event's promoter.

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House Bill 6200, Criminalize anchoring in Straits of Mackinac: Passed 106 to 1 in the House

To make a crime to anchor a vessel in the Straits of Mackinac, subject to two years in prison and a $10,000 fine.


House Bill 6379, Allow pension double-dipping by some “retired” legislature employees: Passed 103 to 4

To permit some “retired” individuals formerly employed by the legislature to return to work and collect both a paycheck and a state pension check.


House Bill 6330, Legalize industrial hemp, impose licensure and regulation on growers: Passed 105 to 1 in the House

To establish and impose a comprehensive state licensure and oversight regime for growers and handlers of industrial hemp. The House also passed House Bill 6331, which would legalize the sale of products with CBD oil, which is contained in some food and beverage products, and may have therapeutic uses.


House Bill 6060, Authorize pre-application occupational licensure determinations: Passed 107 to 0 in the House

To establish a “pre-licensure” inquiry process for individuals seeking one of the many occupational licenses that are mandated by the state as a condition of earning a living in a particular profession. This would let an individual get a preliminary determination of whether any criminal convictions or court judgments against him or her would likely result in being denied a license under licensure provisions that require an applicant have “good moral character.”


House Bill 6110, Limit using criminal background to bar occupational licensure: 106 to 1 in the House

To limit the use of criminal records to determine whether an individual is eligible to get an occupational license mandated by the state, which is required to earn a living in many professions. Specifically, a licensing board or agency could not consider past civil judgments or lawsuits against an individual as evidence of a “lack of good moral character;” and also could not consider a criminal conviction, in and of itself, as conclusive evidence of this, unless the individual was convicted of a felony that is explicitly listed in statute as a disqualifying offense for the particular license.


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Don't Put Faith in Class-Size Reduction

Research shows little academic benefit for immense cost

The Detroit News recently offered an extensive look at the size of Michigan public school classrooms. A reader could be excused for coming away from the article with the mistaken impression that class sizes have an enormous effect on student achievement.

"Despite pleas from parents and local school officials who want the class sizes lowered to improve student academic achievement, Michigan still has no cap on the number of students in a classroom in K-12 schools,” the article explains. It continues, noting that there is also no plan to introduce “reduction programs to reduce crowded classrooms," despite the state's well-documented academic struggles.

Much further down in the story, Michigan Department of Education spokesman William DiSessa challenges the thesis: "The research supporting the use of funds for reduced class size as an effective strategy is minimal." He is correct, even if obliquely, about the state of the research. Only a handful of studies have suggested the effectiveness of the popular class-size reduction policy: fewer students in a class leads to improved student performance. But those benefits are mostly limited to certain situations, namely for elementary students of less advantaged backgrounds.

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The research of large-scale initiatives aligns with DiSessa. Two states that set official statewide limits on class sizes saw practically no return from a huge taxpayer investment. Florida has spent more than $40 billion since 2003 to restrict class sizes, even though a rigorous 2010 study found "no detectable benefit" for student learning. In 2013 California gave up its program after 16 years and after spending over $25 billion, finding "no definitive research" to bolster the goal of improving student achievement through smaller class sizes.

The lackluster results can be explained in part by recognizing the tradeoffs that come with class-size reduction. Getting more certified teachers to watch over smaller classrooms entails dipping deeper into labor pools, producing only diminishing returns in terms of quality instructors. That difficulty applies even more here, as many Michigan school district officials say they have a hard time filling teacher vacancies, in part because a strong economy gives potential candidates more appealing job opportunities elsewhere.

But we should be asking if the perception that Michigan's classrooms are becoming more crowded is even realistic.

Cause for confusion in the News article springs from the presentation of the underlying data. Within one section of the story, the number of pupils for every Michigan teacher was separately identified as being 17.5 and then later 23. Both numbers come from the 2016-17 school year, but they rely on different definitions of whether a staff member is considered a teacher.

The narrower definition encompasses only teachers of basic programs in grades K-12. (Presumably, the broader definition also includes teachers in special education and career programs, as well as other licensed specialists assigned to work with students.) Michigan's ratio of 23 students for each teacher has trended down slightly the past five years, after three years of growing in the wake of the recession. The most recent student-teacher ratio is only about 2.5 percent higher than the pre-recession low of 2009.

For at least the last decade, classroom teachers have consistently made up only about one-third of the employees working in Michigan's public schools. In 2016-17 one public school employee represented each 7.7 students enrolled, a number only slightly higher than late last decade.

Consider what would happen if we accepted the article’s assertion and pushed to reach a student-teacher ratio of 20:1. That goal would require hiring more than 10,000 full-time teachers. Based on an average compensation rate, the cost in combined extra salary and benefits would top $900 million.

A more cost-effective approach would be to have schools reallocate dollars spent on other nonteaching staff or other expenses. This option would also benefit from the fact that local education officials don't need to wait for Lansing to do anything to make it happen.

But even if they achieve their goal, they can't count on it to move the needle on student achievement. For that, schools should be less concerned with how many students are sitting in a classroom and more concerned with who’s standing at the front of it. In other words, the research strongly suggests that teacher quality matters much more than class sizes.


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House Bill 4351, Exempt private aircraft owners from sales tax on parts
To exempt owners of private general aviation aircraft from having to pay sales tax on parts. Fiscal agency projections indicate this and a related use tax exemption will save aircraft owners $4 million annually, and reduce state revenue by the same amount.

House Bill 5902, Allow cross-subsidization of utility rates for Dow solar-cell maker: Passed 35 to 1 in the Senate
To allow the indefinite continuation of special discounted electricity rates granted by Consumers Energy to the Hemlock Semiconductor subsidiary of Dow Corning, which under a 2010 law was exempted from a ban on cross-subsidization between residential and commercial/industrial customers.

Senate Bill 704, Protect tourism marketing bureau tax from lawsuit: Passed 27 to 9 in the Senate
To amend and potentially expand a law that authorizes private convention and tourism bureaus in various regions to impose a room tax on local hotel and motel owners to support tourism marketing programs. The bill was introduced after the progress of a Mackinac Center Legal Foundation lawsuit appeared to place the authority of these private bureaus to impose the fees in legal jeopardy.

Senate Bill 919, Clarify that the operator is liable for drone crimes: Passed 36 to 0 in the Senate

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To define unmanned aerial drones as “an extension of the person” for purposes of assigning responsibility for criminal misuse. Bills have been introduced to essentially add "it's also illegal if done with a drone" provisions to various criminal statutes, and this bill would make that presumption automatic.


Senate Bill 1023, Impose training mandate on used (but not new) car dealers: Passed 35 to 1 in the Senate
To mandate that existing and prospective used car dealers - but not new car dealers - complete a training program as a condition of getting a required state license, and also impose a continuing education requirement on used car dealers.

House Bill 5548, Authorize electronic voter registration: Passed 107 to 0 in the House
To require the Secretary of State to develop a system for online voter registration, which would work for individuals who already have a drivers license or state ID card. Individuals who register this way would have to vote in person in their first election (rather than with an absentee ballot).

House Bill 6011, Enroll state in multistate driver license compact: Passed 105 to 2 in the House
To enroll Michigan in a national driver license compact that shares traffic violation records with other states. Under the compact, a traffic violation in another state would generate "points" on a Michigan driver's license, and vice versa.

Senate Bill 477, Mandate 10 mph speed reduction when passing emergency vehicles: Passed 107 to 0 in the House
To require drivers to slow to 10 mph below the posted speed limit when passing police or emergency vehicles on the side of the road, and also require this when passing roadside tow trucks, garbage trucks, maintenance and utility vehicles that have amber lights flashing. Violations would be a civil offense subject to a $400 fine. The bill does not define which posted limit on freeways would apply (the one for cars, for trucks, for work-zones, etc.).

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Michigan Needs to Rethink How it Does Economic Development

Many companies pursue projects the right way

Ideally, states should not be taxing or subsidizing businesses. If they do, every company should pay the same flat rate.

A review of the academic literature from the nonpartisan Tax Foundation finds that it is almost universally agreed that taxes affect growth. After looking at 26 studies going back to 1983, the foundation concluded, “Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.”

In Michigan, the state budget relies very little on taxes from businesses. But it isn’t because we don’t tax our companies – it’s because the state gives tax credits to select companies, handing out almost as much as it brings in from businesses. Business taxes only raise 4 percent of the state’s revenue, and the state also pays out 4 percent of its revenue in business subsidies. If the state had never gotten into the game of giving select tax breaks and subsidies in the mid 1990s, businesses could pay next-to-nothing in taxes and the state budget would be the same.

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Unfortunately, politicians – and too many business managers – are drawn to short-term thinking. They focus on an immediate benefit or helping just a few without considering the long-term costs or how this will hurt the many.

Many businesses do understand this, fortunately. The Michigan chapter of the National Federation of Independent Businesses, or NFIB, consistently opposes programs offering select breaks. The Michigan Chamber of Commerce fights for a flat tax system. And, of course, the bulk of companies across the state start and run their businesses with no special favors.

Two other businesses in the state were willing to act without government favors.

Detroit has reportedly been passed up for major events because it lacks enough hotel rooms. To meet the demand, the Crowne Plaza in downtown Detroit planned on adding another tower with 500 more rooms. Company officials didn’t want subsidies. They didn’t want favors. They just wanted approval from the city to build a new building. But now, they won’t be making the $164 million investment because the city council refused to approve it after the hotel didn’t give in to demands to sign a an agreement that would give an advantage to labor unions.

The mortgage lender United Shore moved to Pontiac this summer, spending $85 million to buy and renovate an old General Motors location. The owner, Mat Ishbia, learned he was eligible for various tax incentives.

"We originally were under the impression that they were going to require us to do more than we had originally planned in environmental things that we didn't think were necessary," Ishbia told the Detroit Free Press. The Free Press notes that “once it was clear he didn't need to spend that extra cash, he saw no point in taking the public's money in tax breaks to do what he was going to do anyway.”

The company declined $1.9 million in special financing from Oakland County. At the ribbon-cutting, Ishbia said business incentive money should go to schools or other causes.

"We didn't take any handout as a business to get to where we are today and we're not starting today. Let them use it for the right thing," he added. "It's not my money. It's the taxpayers' money, and it shouldn't be coming to United Shore. … Hopefully, we kick-start a trend of companies not taking money when it’s not needed. That’s how cities can really grow.”

It’s difficult to successfully start and run a business. Managers shouldn’t be blamed for applying and taking incentives that lawmakers offer. But it’s praiseworthy when they resist them.

The competitiveness of the business environment is precisely why the government does such a bad job trying to pick the “winners.” And without special subsidies, the state could afford to get rid of all business taxes. That would be a better path.


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Most jobs are created without state support

John Gallagher at the Detroit Free Press reports that United Shore, a mortgage wholesaling business, renovated a 600,000 square foot office building in Pontiac without government subsidies. The company was approved to receive funding from property tax revenues that would otherwise have gone to the local school district and local government, but decided to rescind the assistance. "It was disingenuous to take money that we were going to spend anyway," United Shore president and CEO Mat Ishbia said. "It wasn't our place to spend it."

While returning state support is rare, creating jobs without subsidies is not. Most job creation goes on without political deals like what was offered United Shore.

Michigan Job Gains

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That’s good because we need a lot of job creation to balance out job losses. Monthly press releases report how many jobs were added on net each month — like this one from last week. But these mask the massive job turnover that occurs. There were people that filled new job positions, people that filled old positions, people that retired, people that quit, and more. According to the Bureau of Labor Statistics, Michigan lost 204,000 jobs in the last three months of 2017. But it also added 209,000 new jobs.

Politicians cannot keep up with that volume of job churn. If residents had to rely on politicians to replace the 204,000 jobs that were lost, well, they’d be in trouble. State officials subsidized 15 companies through the Michigan Business Development Program during those same three months in 2017. These businesses in turn pledged to create 1,200 jobs. Who knows how many would have shown up without state support? (This review says somewhere between 75 to 98 percent.)

But even so, these 1,200 jobs would replace only 0.6 percent of the jobs lost during the same period, and that’s giving the government the benefit of the doubt by assuming all of these jobs will materialize. Unfortunately, they rarely do. And even when these jobs are created, they can still leave taxpayers worse off than they would be without them.

Companies shouldn’t feel bad about applying for taxpayer money that politicians make available. But politicians should reconsider this approach. United Shore didn’t need taxpayer subsidies to thrive and neither does the state economy. Better to use that money to provide services for the public, or return it to taxpayers, rather than giving it to a select few companies that probably don’t need it anyway.


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Unreasonable Demands Stifle Real Environmental Progress

Proposed SAFE Vehicle Rule balances environment, technology, and economics

Editor’s Note: Jason Hayes, the director of environmental policy for the Mackinac Center, testified on Sept. 25, 2018 to a Department of Transportation/Environmental Protection Agency hearing on proposed updates (SAFE Vehicle Rule) to federal CAFE standards. Hayes gave an abridged version of this document as his three-minute testimony at the hearing.

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In 2012, the EPA published new standards for light vehicles that mandate average fleet fuel efficiencies of 54.5 miles per gallon by 2025 — almost double the previous standard. The EPA and Department of Transportation argue that the standard would impose more than $500 billion in additional costs on the American economy through the lifetime of model year 2029 vehicles. The 2012 standard would also add $2,340 to the price of new cars and could lead to as many as 12,700 additional crash-related deaths as a result of lighter, smaller cars colliding with heavier SUVs and trucks. Critics dispute the total crash fatality numbers, but even leaving those aside, the limited environmental benefits gained by retaining the 2012 standard make it difficult to justify doing so, especially given its expected human and economic costs.

The Aug. 2, 2018, news release for the Safer Affordable Fuel-Efficient Vehicles Rule (SAFE Rule) stated a desire to “increase vehicle affordability leading to increased driving of newer, safer, more efficient, and cleaner vehicles.” This proposed 50-state rule recognizes a need to address greenhouse gas emission standards for light-duty vehicles while also balancing “safety, economics, technology, fuel conservation, and pollution reduction” by retaining the model year 2020 fuel efficiency standards of 37 mpg. All regulatory agencies should recognize the need to balance the social, environmental, and economic impacts of their actions. We all want to have a clean environment, but that desire, even if it reaches a utopian level, does not automatically entail the economic, technological, or social ability to achieve the goal.

The response the Auto Alliance and Global Automakers gave to the rule recognizes this reality, as they call for “continued improvements in fuel economy and flexibilities that incentivize advanced technologies while balancing priorities like affordability, safety, jobs, and the environment.” Automakers also stressed that federal and California regulators need to arrive at a commonsense solution to the challenges posed by the California waiver, which gives the state the authority to set more stringent tailpipe standards for its residents. Settling the waiver issue quickly would help avoid a prolonged legal battle and the market disruptions it would surely bring.

While media reports claim that automakers used “coded” language to distance themselves from the August 2 DOT/EPA proposal, the statement simply reiterates automakers’ opposition to the 2012 proposal. It also reiterates their opposition to the January 2017 “Final Determination,” which supported the 2012 standard, and was rushed into place just before President Donald Trump was inaugurated.

Using unflinching language in its February 2017 letter to the EPA, the Auto Alliance requested that the Trump EPA withdraw the January 2017 Final Determination. It also called for resuming the “Midterm Evaluation” — the process put in place to determine the state and development of current automotive technology as the EPA sets fuel efficiency standards. This resumption, the alliance stated, was essential “to remedy the severe procedural and substantive defects that have infected the process to date.” The Trump administration agreed, the Midterm Evaluation was resumed, and the revised Final Determination was completed and released in April.

The media’s idea that automakers were somehow caught off-guard by the Aug. 2 proposal is nonsensical. In fact, the rule reiterates automakers’ desire to improve efficiency while still balancing economic, technological, and social reality. When the EPA released the findings of the completed midterm review in April, National Automobile Dealers Association president & CEO Peter Welch said, “Auto dealers fully support continuous improvements in fuel economy.” But he added, “The key to the equation isn’t just the highest possible standard. It’s the highest standard we can achieve while keeping vehicles affordable.”

As I wrote in a May op-ed for The Hill, Welch noted that a primary concern for American car buyers was having affordable monthly payments. But with the 2012 CAFE standards tacking on more than $2,300 to the price of a new car, many buyers would hold off and remain in “older, less efficient, and less safe cars,” meaning the federal government would have effectively “neutered their goal of a cleaner automobile fleet.”

Critics claim that the Trump administration’s proposed rule will encourage vehicle emissions to grow, causing declines in health and growing climate impacts. But even a small step back allows one to see the real-life implications of the previous standard. I’ve already touched on higher prices for new vehicles causing delayed fleet turnover, which encourages older, less efficient, and less safe vehicles to stay on the road. Additionally, estimates from the EPA show the proposed standard would have “no noticeable impact” on net emissions of criteria air pollutants, and would result in only a 0.08 percent increase in atmospheric CO2 levels. That’s equal to a completely undetectable 0.003 degrees Celsius temperature increase — by the year 2100 — when compared with the Obama administration standard.

Those who desire a greener environment and more efficient and clean automobile fleets should move past their distrust of the Trump administration and automobile manufacturers. The reason is simple: At some point, the endless press for ever-stricter environmental regulation actually harms consumers and the environment. But reasonable regulations can balance environmental, social, and economic pressures.


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