For nearly two decades we have recommended that Michigan make Minnesota the model for its economic policy. We chose Minnesota because year after year after year it is the most prosperous Great Lakes state. It not only is a neighboring state, it also is a cold weather state and a non-costal state.

The recently released 2023 state per capita income data makes clear once again that Minnesota has the economy Michigan should want to have. Michigan is 39th in per capita income at $61,144, 12.4 percent below the national average. Minnesota is 12th in per capita income at $72,557, 3.9 percent above the national average. All a Great Lakes state best.

The two Great Lakes states that policymakers of both parties almost always compare Michigan to––Ohio and Indiana––are also low-prosperity states. Ohio is 37th in per capita income at $61,495, 11.9 percent below the national average. Indiana is 38th in per capita income at $61,243, 12.3 percent below the national average.

Minnesota also is the Great Lakes state with the highest proportion of adults with a B.A. or more. It is 11th in the nation. Michigan is 34th, Ohio is 37th, Indiana is 42nd. The proportion of adults with a B.A.or more is probably the best predictor of a state’s per capita income. Because college-educated talent is the asset that matters most to high-wage employers.

What has Minnesota done to become the Great Lakes’ most prosperous state? In 2014 we asked Rick Haglund to answer that question. His report, State Policies Matter: How Minnesota’s Tax, Spending and Social Policies Helped it Achieve the Best Economy Among Great Lakes States, is as valid today as it was a decade ago. Yes the data in the report needs updating, but Rick’s description of the path Minnesota has taken for more than five decades is still accurate today.

Rick’s conclusion:

Lawmakers and governors in many states, including Michigan, have focused primarily on cutting taxes and shrinking the size of their governments as the path to prosperous economies. As this report has shown in detail, Minnesota has traveled a different path. There is no question Minnesota is a high tax state—as stated earlier, its residents paid $2,309 (updated for 2023) more than Michigan residents in state taxes alone.

But it has largely invested that additional revenue in services and investments that matter in a knowledge-based economy. An educated workforce, efficient transportation systems, vibrant cities and metropolitan areas, and a secure safety net for those making the transition to a global economy all matter in creating a prosperous state.

Minnesota has made those necessary investments and enacted policies making the state welcoming to all. It really shouldn’t be surprising, then, that it has the strongest economy in the Great Lakes region and one of the most vibrant in the country.

Maybe most important is what isn’t part of the Minnesota playbook:

• Minnesota did not lower taxes. In fact as Rick documents, in 2013 when Michigan was slashing business taxes, Minnesota raised taxes on companies and the wealthy. In 1980 Minnesota had the 6th highest state taxes per capita in the country. Michigan ranked 13th. Minnesota’s state taxes per capita were 122 percent of Michigan’s. In 2023 Minnesota had the 8th highest state taxes per capita in the country. Michigan ranked 34th. Minnesota’s state taxes per capita were 162 percent of Michigan’s.
  
• Minnesota did not slash its safety net. As Rick wrote: “Many states have cut benefits to the poor and unemployed in the belief that these payments dissuade people from looking for paid work. Minnesota takes a different view. It has created one of the strongest safety nets in the country, spending generously on benefits to help those who have lost jobs or been stricken by poverty get back on their feet. That protective net has not trapped Minnesotans and turned them into a bunch of government-dependent slackers. Far from it.”
  
• Minnesota does not offer big incentives for economic development projects. Read the Minnesota Economic Development Resource Guide and you will not find any big incentive program like SOAR, Michigan’s new billions of dollars business incentive program.
  

Michigan has, of course, done the exact opposite. On a bipartisan basis accepting that high taxes, particularly on businesses are job killers, the state has anchored its economic development playbook on cutting taxes for at least three decades. And, also on a bipartisan basis, enacting one version after the other big economic development incentive programs. As well as slashing the state’s safety net in part on the belief that a more generous safety net discourages people from working.

At its core the Minnesota playbook for economic success has been higher taxes used for public investments to compete for talent by offering good schools from birth through colleges and
creating places where people want to live by offering high quality basic services, infrastructure and amenities.

Minnesota focus on making public investments in education from birth through college and creating high quality of living communities combined with being welcoming to all is the foundation for its economic well-being success. Minnesota has developed a policy playbook that makes preparing, retaining and attracting talent its economic development priority one. That is exactly what is needed in today’s economy where talent attracts capital.

The post Michigan in 39th, Minnesota is 12th appeared first on Michigan Future Inc..

The first post I wrote for this blog was 13 years ago. It was entitled the Need For a New Michigan and made the case that what made us prosperous in the past, won’t in the future. That if we wanted to recreate a high-prosperity Michigan, the state needed a new economic agenda––one that focused on competing in the rising knowledge-based economy, rather than the factory-oriented strategy that had been in place for decades.

Unfortunately everything I wrote in August 2009 I could write today. Only the data needs updating.

The 2009 post ended with a warning: “As long as most Michiganders want political and civic leaders to get their old job back for them –something they can’t do–we are going to continue to decline!”

And decline we have. We detailed that decline in our last three posts. One on the failure of Michigan’s factory-based strategy, one on the failure of the state’s low-tax strategy and one on the out-performance of Minnesota compared to Michigan in both employment and wages.

Minnesota has pursued for decades a public investment in preparing, retaining and attracting talent based economic strategy that we have been recommending Michigan pursue as the most effective way to recreate a high-prosperity Michigan. 630,000 more Michiganders would be working today if the state was doing as well as Minnesota. And the average full-time, year-round worker in Michigan would be earning about $9,000 more if Michigan had average wages equal to Minnesota.

Here is what I wrote in 2009:

Our vision and strategy for growing the Michigan economy is laid out in our New Agenda for A New Michigan report. As I talk to audiences across the state I am constantly reminded that if you don’t understand the need for a new Michigan, the new agenda is irrelevant.

Its clear to me that many – probably most – Michiganders have not accepted that a new Michigan is required. That what made us prosperous in the past, won’t in the future.

Michigan enjoyed high per capita income for most of the last century. As recent as 2000 we were sixteenth in per capita income. Now we are consistently below the national average in both upturns and downturns. In 2007 we were thirty third – 11 percent below the national average. This is the lowest Michigan has been since the federal government started collecting data in 1929.

Why? What made us prosperous for nearly a century––an extraordinarily long run––was good-paying, lower-skills jobs primarily in manufacturing. The hard truth is those jobs are gone forever.

The new reality is that manufacturing (work done in factories) is no longer a sustainable source of high- paid jobs. Nor is it a source of future job growth. Manufacturing makes up about 10 percent of the American workforce today and is declining. Its average wage nationally is about $35,000. Michigan factory work in the future will pay around the national average. So whether it’s traditional Michigan industries like autos and furniture or new industries like alternative energy, factory jobs will not be a source of new high-paid jobs for Michiganders.

Until we understand and embrace that new reality we are not going to work on what really matters to rebuilding a high-prosperity Michigan. As long as most Michiganders want political and civic leaders to get their old job back for them – something they can’t do – we are going to continue to decline!

A recent insightful Politico article demonstrates that this post is as relevant today as it was 13 years ago. The article makes clear that many Michiganders still want their old jobs back (high- wage/extensive-benefits factory jobs).

The assets we need to build to recreate a high-prosperity Michigan with lots of good-paying jobs and careers was clear 16 years ago when we published A New Agenda for a New Michigan. And Minnesota has been working on building those assets for 50 years: education from birth through college and creating places where talent wants to live.

What the Politico article makes clear is that you cannot get to building those assets as long as Michiganders are demanding their elected officials recreate the economy of 1969 when Michigan had the 2nd highest average wages in the country. As long as that is what many, if not most voters, are demanding, we are going to continue pursuing factory jobs first and foremost––even though they are no longer high-wage except for Detroit 3 UAW jobs. And the way we are going to pursue those jobs is with a combination of low taxes and big project-based incentives. Which, of course, makes it impossible to make the public investments in education and placemaking which is what is needed to recreate a high-prosperity Michigan.

Unfortunately our 2009 warning is as relevant today as it was then: As long as most Michiganders want political and civic leaders to get their old job back for them––something they can’t do––we are going to continue to decline!

The post Why Michigan doesn’t pivot to a high-prosperity economic strategy appeared first on Michigan Future Inc..

The 2010s were a great decade for America’s big cities. The 2020 Census found that each of the top 25 cities in the country gained population. 14 of them had population growth of more than 100,000.

New York City led the way. Growing by an astonishing 629,000. Only 29 cities in America have a population of more than 629,000. New York City grew by about the total population of the city of Detroit (639,000) and three time more than the total population of the city of Grand Rapids (199,000).

New York’s 2020 population is 8.8 million. The most ever in the city’s history. More than all but 11 states. New York’s population is larger than the entire state of Michigan minus Oakland County.

The 2020 census count was conducted when New York City was getting hammered by COVID-19 and the press and social media were filled with stories that everyone was moving out of the city. Conventional wisdom had it that dense places––particularly big cities––were toast. Think again!

One of the dominant trends of the 2020 Census is that Americans are increasingly choosing to live in big metropolitan areas, most anchored by vibrant central cities. And those big metros with their vibrant central cities are also the most prosperous places in America.

The competitive advantage of big metros and their big cities was evident a decade ago. In a 2011 post about Manhattan, really all of New York City, I described that competitive advantage this way :

Manhattan is probably the highest cost place to do business in America. Not only high state and local taxes, but also high labor costs and, maybe most important, sky high real estate prices. In many ways it is the poster child for big government: big police and fire departments; big park system; public support for the arts; transit,transit, and more transit; one of the few cities with safety net programs over and above the state and federal safety net and on and on and on. Add to that lots of regulation, powerful public employee unions, lots of renters; sky high density; lots of immigrants, gays and folks of different races, religions and ethnicity and you have a recipe for what we are constantly told leads to economic disaster. Wrong!

Instead it is a place where knowledge-based businesses from across the planet are increasingly concentrating. It is one of America’s great centers of innovation and entrepreneurship. A place where the affluent (the 1%) and talent concentrate. It all adds up to one of the most successful economies in the country. So strong that it is the main engine of a metropolitan area of more than 22 million people (more than twice Michigan) in four states. A metropolitan area that is the third most prosperous big metro in the country, with a per capita income of more than $52,000. ($18,000 higher than Michigan’s.)

Turns out in the real world all those so-called liabilities are assets that lead to prosperity. A big city that works, a government that provides quality basic services and amenities, terrific alternatives to driving, density and welcoming to all. Combine those features with an entrepreneurial culture and you have a place where talent – from across the planet – wants to live and work. And where talent concentrates you get growth and prosperity, not decline and falling income and employment. To get back on the path to prosperity Michigan needs far more – not less – of what Manhattan has.

Michigan policymakers––from both parties––and Michigan business leaders, by and large, spent the last decade ignoring these Manhattan lesson. Pursuing instead a let’s make a Michigan low-cost place economic strategy. Clearly that strategy didn’t work.

The Census data makes clear that it is far past time for Michigan to put in place a new economic development strategy. Just as a decade ago, New York City offers the state a model for what the assets are that matter most to creating places where people want to live and to driving growth and prosperity.

The post Led by New York, big cities had a great decade appeared first on Michigan Future Inc..

More than a decade ago we asked if the state’s economic development strategy worked, what state would you want Michigan to look like?

Our answer was Minnesota. At the time the most prosperous state in the Great Lakes. And cold weather and non coastal so that mirroring their economy seemed realistic for Michigan.

As the murder of George Floyd made clear, the City of Minneapolis (and almost certainly the region and state) are not a model when it comes to policing and racial equity. Being a high-prosperity state, one with a broad middle class, does not guarantee an economy that provides equal opportunity to all or that benefits all.

More than a decade later Minnesota remains a high personal income state. As well as a high employment rate, high education attainment, and low poverty rate state. Far better on all these measures than Michigan.

The 2020 Census results reveal Minnesota also is the Great Lakes leader in population growth, growing this last decade by 7.6 percent, compare to 2.0 percent in Michigan.

That population growth largely occurred in metro Minneapolis. Metro Minneapolis grew by 10.7 percent, accounting for 88 percent of the state’s population growth. And the Twin Cities were big growers too: Minneapolis up 12.4 percent, St. Paul 9.3 percent.

And some of that population growth came from people moving into the region. The region’s Metropolitan Council estimates that “the region gained 116,000 residents from migration during the 2010s, compared with a net loss of -26,000 during the 2000s. (These numbers include both international and domestic movers.)”

In Michigan metro Grand Rapids and metro Detroit also accounted for almost all of the state’s population growth. But lagged metro Minneapolis’ growth. Metro Grand Rapids grew 9.5 percent, the city grew 5.8 percent. Metro Detroit grew 2.2 percent. The City of Detroit saw it population decline by 11.7 percent.

Minnesota’s population growth demonstrates that much of what passes for conventional wisdom when it comes to where people are choosing to live post pandemic is not accurate. So much for the conventional wisdom that people are fleeing cold weather places. So much for the conventional wisdom that people are fleeing high density places––particularly big cities. So much for conventional wisdom that people are fleeing high tax places.

Minnesota, of course, has been pursuing a much different economic development strategy than Michigan for decades. While we focused on being a low-tax, low-cost state, Minnesota has focused on making public investments in education from birth through college and creating high quality of living communities. Minnesota’s policymakers understood that this is an economy where talent attracts capital. So that preparing, retaining and attracting talent is economic development priority #1.

It is hard to look at the data and not conclude than Minnesota’s strategy has worked, while Michigan’s has not.

We have documented Minnesota’s economic development strategy in a case study written for us by Rick Haglund entitled State Policies Matter: How Minnesota’s Tax, Spending and Social Policies Help It Achieve The Best Economy Among the Great Lakes States.

Because, as the Census data demonstrates, so much of a state’s economic success is driven by their big metro(s), we also asked Rick to write a case study of the economic development strategy of metro Minneapolis. It is entitled Regional Collaboration Matters: How Metro Minneapolis has forged one of the wealthiest and most livable metropolitan regions in the United States.

The Census data makes a strong case for a second look at both those case studies. It should be clear that it is far past time for Michigan to put in place a new economic development strategy. Just as a decade ago, Minnesota offers the state, and metro Minneapolis offers our regions, a model for what that strategy should look like.

The post Minnesota led the Great Lakes in population growth appeared first on Michigan Future Inc..

Salesforce chairman and co-C.E.O Marc Benioff in a New York Times op ed entitled We Need a New Capitalism becomes another capitalist advocating for big changes in American capitalism. He writes:

To my fellow business leaders and billionaires, I say that we can no longer wash our hands of our responsibility or what people do with our products. Yes, profits are important, but so is society. And if our quest for greater profits leaves our world worse off than before, all we will have taught our children is the power of greed.

It’s time for a new capitalism — a more fair, equal and sustainable capitalism that actually works for everyone and where businesses, including tech companies, don’t just take from society but truly give back and have a positive impact.

Benioff joins Ray Dalio, Nick Hanauer and Tom Wilson on a growing list of high-profile capitalists calling for big reforms in American capitalism. They all agree that capitalism, as it is practiced in American today, is leaving far too many American households behind.

Benioff’s list of challenges that today’s capitalism is failing to fix includes equal pay for women, privacy, climate change, quality K-12 education and homelessness. In each area he argues if government is not up to the task then corporate America needs to act.

But he also understands that corporations and philanthropy are not adequate substitutes for public policy. And that part of the public policy response needed is increased public investments that require higher taxes. He writes:

Of course, C.E.O. activism and corporate philanthropy alone will never be enough to meet the immense scale of today’s challenges. It could take $23 billion a year to address racial inequalities in our public schools. College graduates are drowning in $1.6 trillion of student debt. It will cost billions to retrain American workers for the digital jobs of the future. Trillions of dollars of investments will be needed to avert the worst effects of climate change. All this, when our budget deficit has already
surpassed $1 trillion.

How, exactly, is our country going to pay for all this?

That is why a new capitalism must also include a tax system that generates the resources we need and includes higher taxes on the wealthiest among us. Local efforts — like the tax I supported last year on San Francisco’s largest companies to address our city’s urgent homelessness crisis — will help. Nationally, increasing taxes on high-income individuals like myself would help generate the trillions of dollars that we desperately need to improve education and health care and fight climate change.

Wow! Benioff is exactly right. If we want an economy that as it grows benefits all we will need to increase public investments. Those public investments need to be paid for and a big part of paying for them should be a more progressive tax system.

The post A capitalist calls for a new capitalism appeared first on Michigan Future Inc..

In an interview with Bridge magazine University of Michigan President Mark Schlissel lays out the case for public investments as essential to the future success of Michigan. Particularly public investments in higher education. Schilissel says:

It used to be the public would come together around common goods, things that, you know, no individual benefits from, but we all benefit from collectively if we all chip in. We’ve gotten away from that notion. So it’s a question of making investments for the future. And I think we [Michigan] are failing to do that.

… So consistently through the decades, public higher ed has been starved. We’re not alone. Other states have been similarly short-sighted in their approach to the role of education in the future economic success of the state.

And it’s not just education. Look at how we’re paralyzed now in a discussion over the roads. It’s absolutely clear from multiple independent sources how much it’s going to cost to get our roads back to the condition that they should be and then to keep them that way. The problem is quite similar to the problem with higher ed: Nobody wants to pay for things. They think that there’s a magic way of squeezing efficiency out of bureaucracies, of moving money around using clever financial management tricks, and then nobody has to pay. And obviously, that’s silly.

Silly indeed. Michigan Future for years has documented that the most prosperous states––except those that are energy driven––are state that have made public investments the centerpiece of their economic strategy, rather than low taxes.

The New York Times article on Texas that we explored in our last post and a recent Wall Street Journal article on southern states lagging over the last decade are two more examples of the failure of low taxes as a path to prosperity.

Schlissel proposes that public investments in higher education be done through funding college students rather than the institutions. He says:

I’ve tried a new argument this year with the Legislature, and it hasn’t been any more successful [than past arguments]. The argument is, rather than necessarily giving more money to the universities, perhaps it would be more popular if we gave the money to the students. Based on need, we’ll give you a subsidy, a scholarship. If you’re a student at a certain [income] level, we’ll provide you with X number of thousands of dollars, and you spend it at the school that you think is going to give you the best education. 

And that way, instead of being concerned about having too many students that can’t pay, the public universities compete for these students, which is a wonderful thing. And the kids will vote with their feet where they think they’re going to get the best value for this money.

The state of California does this. It’s basically pegged to the full tuition at the public universities in the state. It adds up to about $11,000 or $12,000 a year and it’s based on academic performance and financial need. We [the state of Michigan] are, as in many things, near the bottom of all the states in direct-to-student financial aid. We’re 47th in the country in the amount of [college aid] per capita.

This is an idea we advanced in our 2006 A New Agenda for a New Michigan. We wrote:

As we assess the assets Michigan has to prepare, retain, and attract talent, our higher education system rises to the top of the list. Michigan has spent decades building a world-class system of higher education, both universities and community colleges. They are arguably the most important assets we have in developing the concentration of talent we need to be successful in a knowledge-based economy. That is particularly true of our major research universities.

So the single most important thing policy makers can do for the future economic success of Michigan and its regions is to ensure the long-term success of a vibrant and agile higher education system.

… What we need from policy—and are not getting—is a commitment to insure a system of higher education that is world-class in (1) preparing students for success in a flat world, and (2) contributing to new knowledge creation.

We need a new approach to state support for higher education, one that will give us a better chance of maintaining a high-quality and agile system of higher education for decades to come. We propose a new structure for state support of higher education. It would have three components:

• Institutional independence at public universities and community colleges.

• Provide state funding to students, no matter where they come from, rather than to institutions.

• Provide a substantial state match for federal research funding.

More specifically we proposed:

With autonomy, institutions will control their revenue based on their ability to compete in the marketplace. The state’s role should be to make higher education more affordable to students. We believe this is a terrific—probably the best—investment for the future economic success of the state. So, the higher proportion of tuition paid by the state, we believe the better for the state’s future. The reality is, given the state’s chronic structural deficit, there is almost no chance of a substantial increase in higher education funding without a tax increase.

We recommend a single fund that would take the place of all state funding for higher education (including merit scholarships and capital outlays) and would provide students with a voucher/foundation grant.

Imagine if we had implemented this approach to higher education over the last 13 years. We would have substantially fewer students leaving college because of the inability to afford college and far less students paying off high student loans. But most importantly we would have a far higher concentration of those with a four-year degree or more, which as we should have learned from neither metro Detroit or metro Grand Rapids making the final 20 list for Amazon’s HQ2, is the key to attracting high-wage employers.

Let’s hope our current policymakers heed the advice of President Schlissel and we don’t let another 13 years go by and continue on a path to making Michigan permanently a low-prosperity state.

The post Schlissel makes the case for public investments appeared first on Michigan Future Inc..

In the report we make the case that cutting taxes is not the way to combat the Great Decoupling. That as Michigan has gone from a high-tax state to a low-tax state over the past three decades, we have also gone from a high-prosperity state to a low-prosperity state.

Ronald Brownstein in an Atlantic article entitled How Much Do Tax Cuts Really Matter? explores what happened nationally to median household income and the poverty rate during the administrations of the last four presidents who were in office for two terms. His conclusion:

With the Census measures from 2016 now public, it’s possible to compare the economic records of the past four two-term presidents. Over their respective eight years, Bill Clinton and Obama each raised taxes on the affluent and generally increased federal regulation of business (though Obama did so more aggressively than his fellow Democrat). By contrast, Republicans Ronald Reagan and George W. Bush each cut taxes, particularly on top earners, and slashed regulation, exactly as the GOP is promising to do now.

As the Republicans intensify their push for a major tax reduction, these economic records directly refute the idea that their plan is a surefire recipe for growth—or that its opposite is certain to depress it.

Notwithstanding Clinton’s tax increase and relatively pro-regulatory posture, the economy during his two terms produced by far the best record on both raising incomes and reducing poverty. Reagan generated the second-best record on raising incomes, but he trailed well behind Obama in reducing poverty. Despite two big tax cuts, Bush generated, by far, the worst record on both fronts.

The data: median household income up 15 percent during the Clinton administration, up ten percent in the Reagan administration, up 6 percent in the Obama administration, down two percent in the Bush administration. The poverty rate down 20 percent in the Clinton administration, down seven percent in the Obama administration, unchanged in the Reagan administration and up 21 percent in the Bush administration.

So if lowering taxes are not the answer to insuring a rising standard of living for all what is? Our answer: public investments in education, placemaking and shared prosperity. As we write in our state policy agenda:

The post Tax cuts not the answer to the Great Decoupling appeared first on Michigan Future Inc..

They have just released their principals for how state policy makers should deal with transportation funding now in the wake of the defeat of Proposal 1.

What follows is their approach to transportation policy. Its exactly the recipe policy makers should follow. Funding from transportation user fees––as it always has been in Michigan; funding for transit as well as roads; and funding that does not reduce spending on other essential public investments like schools and local government services.

Here are their principles:

1. Transportation infrastructure should be funded by users of the system.

Governor Snyder’s original proposal, Proposal 1, as well as plans passed by both the Senate and House maintained the proper role of transportation users in funding the system. Certainly, there can be policy disagreements on each of these proposals, but they met the basic benchmark that user fees are the best model to fund transportation. The Chamber welcomes creative solutions but creativity shouldn’t be the enemy of utility.

2. The funding crisis has been decades in the making, an appropriate solution should be permanent and dedicated.

There have been various reports and suggestions that existing state funding can be found within the state budget to properly fund our transportation system. While this is certainly true, funding transportation in this manner is at its essence, a one year solution, there is no guarantee that future Legislatures will prioritize spending in the same manner. Our infrastructure requires a multi-decade commitment to meet the expectations of job providers and citizens.

3. New revenue will be required to protect services that the business community and citizens demand.

The House passed plan in 2014, would have adversely impacted the ability of schools and local governments to provide necessary services. As such, the Chamber opposed the plan and will continue to oppose similar models that take away revenue streams from vital services. Certainly, efficiency in government can and should continue, including improved and expanded warranties on road construction projects and smarter bidding procedures. However, attempting to cut our way out of the problem diminishes quality of life, economic competitiveness and most importantly does not provide a guaranteed revenue source. We must not solve this problem by creating a new problem.

4. Transportation is multi-modal and all modes of transportation are important to competitiveness.

Businesses clearly rely on roads and bridges as a means to move products and attract customers. Fixing our roads is of primary importance. However, businesses also rely on other modes including rail, transit and Great Lakes shipping. A specific example of reform needed to continue multi-modal growth is SB’s 415 and 416 of 2013 which would make Michigan’s taxation of aviation fuel remain in compliance with federal regulations.

5. Speed is important, but getting it right is more important.

The Chamber is fearful that well intentioned efforts to solve this problem in a piecemeal approach will lead to public perception that the entire problem has been solved and thus making efforts to complete the work at a later date even more difficult. A permanent solution of $1.2 billion is the bare minimum, waiting beyond this summer makes the price go up considerably.

The post Detroit Regional Chamber on transportation appeared first on Michigan Future Inc..

The tax increase generated lots of predictions of economic doom. Consistent with the prevailing conventional wisdom that low tax states––particularly those with low or no income tax––have the best economies. Think again!

As we detailed in our latest report, State Policies Matter: How Minnesota’s tax, spending and social policies help it achieve the best economy among the Great Lakes states, Minnesota is both the highest tax state in the Great Lakes and the  state with the best economic outcomes, by far, in the Great Lakes region.

They have achieved the economic outcomes we all want––low unemployment, higher wages and high per capita income––in part through decades of public investments in the real drivers of economic growth: education, infrastructure and creating communities where people want to live and work.

Minnesota’s Governor Mark Dayton, the Star Tribune reports, wants to use the budget surplus to make even more investments in education and transportation. They write:

Gov. Mark Dayton told reporters that the surplus, which he credited to the state’s well-performing economy, should be used to invest in education and transportation, his two main priorities. Though he’s not opposed to offering tax cuts as Republicans are putting forth, he said spending on schools and the state’s infrastructure would be a way to spur future economic development.

“Inevitably, there will be another national economic slowdown or downturn, and Minnesota’s economy will be affected like everyone else’s,” he said. “Our budget surplus will disappear, so I propose that we invest our collective good fortune in our collective better future.”

If Michigan is serious about the more and better jobs goal Governor Snyder has set, Minnesota provides the playbook for achieving that goal.

The post Minnesota surging appeared first on Michigan Future Inc..

We will not have a mass middle class again, with rising living standards, until we transition to the knowledge economy that is the path to prosperity in the 21st Century. Add to that the reality that a rising economy is not enough to raise living standards for most Michigan households. Corporations and a small percentage at the top are doing great here and around the country. But unlike in the past, a growing economy is not generating shared prosperity.

These are the two great challenges that Michigan policy makers need to address if Michiganders are going to enjoy a rising standard of living: the need to transition to a knowledge-based economy and the need to widely share economic growth.

The Detroit Free Press just published two op eds by Democratic office holders that address these challenges. Quite encouraging. Both worth reading! They lay out substantive ideas for how we might deal with those two challenges.

The first from John Austin, President of the Michigan State Board of Education, makes the case that Michigan Democrats need to put forward a positive economic agenda for the state. His proposed agenda looks to the future, not the past. His priorities: education, blue green industries of the future, public investments to create communities people want to live in and a state that welcomes all. (Austin leads the Michigan Economic Center. Check out their website for more on how to grow the Michigan economy.)

The second comes from State Representative Jim Townsend. Townsend details how Michigan tax policy has exacerbated income increasingly concentrating in corporations and a few at the top of the economic pyramid, rather than raising living standard non elite Michigan households.

Townsend notes that MIchigan ranks 48th in the proportion of tax revenues that come from business. He continues: “Adjusted for inflation, Michigan’s median household income has declined by $15,633 (24%) since 1999, and none of the recent reforms have done anything but make the problem worse by shifting taxes onto working families and retirees, and cutting the essential services we need to compete for jobs.” 

Townsend’s solution: a graduated income tax that would raise taxes on top earners while lowering taxes for the rest. And generate enough revenue to “Help restore our crumbling infrastructure; ensure safe and sustainable communities; provide our children with the education they need to realize their fullest potential; and lower tuition rates to ensure graduates aren’t burdened by unimaginable debt.”

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