Open For 19th Century Business

From the grasping at straws file, Michigan governor Jennifer Granholm has been talking for a while about remaking Michigan as an alternative energy powerhouse.  Henry Payne reports on her breakfast talk yesterday morning at the DNC Convention:

At a breakfast talk, Michigan's deeply unpopular governor
Jennifer Granholm explained that she was chosen to moderate Tuesday
night's energy panel from the convention stage because of the Wolverine
State's efforts in renewable power. The idea that windmills will rescue
one of America's great manufacturing states is absurd on its face, but
she persisted in spinning a fairy tale that Michigan is perfectly
positioned to take advantage of alternative energy manufacturing
because of the "Five Ws" (I'm not making this up) in abundance in the
state: "Wind, water, waste, workforce and wood."

That's terrific - they have all the key inputs needed for setting up an early 19th century business.  What is left unsaid is that Michigan has the highest unemployment rate in the country, driven by fussy and high cost unions and a crushing taxation and regulatory burden.  The only message I take from the governor's talk is that if one is not in an alternative energy business, it's time to get out of Michigan, as the majority of businesses are about to face higher power costs and more taxes to support the governor's preferred industrial investment.  Which, come to think of it, is a message most businesses have already internalized about Michigan, seeing as the population of its largest city has dropped by more than 50% over the last several decades.

It is highly entertaining to see people who have never even worked in, much less have run, a real business (including Obama, Clinton, and about everyone else on the DNC rostrum) express the hubris that only they know what the right industrial investment plan for the US is and that only they know how to build a major new industry.  In particular, we saw last night the repetition of Obama's ridiculous made-up 5 million jobs number that I critiqued in depth several days ago.

Disclosure:  I actually run a few campgrounds in the UP of Michigan, but since sleeping in tents seems to fit the governor's industrial policy, I'll probably be OK.


  1. dave smith:

    The "five Ws" are more in line with a 12th century enterprise than even a 19th century.

  2. Max:

    The funny thing is that even business owners couldn't agree about such issues which leaves me to think that no one should set any standards regarding this but rather let the "majority" ... eh.. market decide what would be the good investments in Michigan. I believe that the outcome between 500 politicians voting on economic issues and 500 business owners voting on the same issues not be that different.
    There are at least as many socialist business owners as there are classic liberals, so it would be almost a split....

  3. Esox Lucius:

    Have you ever seen Detroit? Dear God. It is by far the worst city, in the worst state in the US. I did some research on them a while back and I follow their progress from time to time. They have 40,000 totally abandoned houses. How's about a little economic work-up on how bad a city has to be to make a perfectly functional (before abandoned) house, un-sellable at any price? There is a guy that goes around on his free time and paints the houses bright orange to shame the city into tearing down some of these structures. I was there this summer, it looks post-apocalyptic and I am NOT exagrerating. Check out google earth for Detroit and pan the map to the South West. You can see that there were so many houses torn down that there are sometimes one or two per city block left. Some of them you can see that the roofs have holes.

    What I wonder is how they don't come to the conclusion that socialism kills everything it touches.

  4. L Nettles:

    So what would have happened if Granhold had been Governor in 1908. We can't sustain the number of horses we have soon we'll be up to our waists in dung. The people can't do it on their own, the State must provide the solution to this horse problem. We'll build trains everywhere.

  5. CRC:

    I find it interesting that two states (NJ and MI) that have enough electoral votes (32) to easily swing the election, that have Democratic administrations, that are suffering from prolonged big government, high tax, heavy regulatory regimes are leaning almost unanimously for Obama (who appears to have the same plan in mind for the entire country as these states have implemented within their borders).

    P.S. I'd add CA as well, but since their government is (nominally) a Republican, it doesn't quite fit the pattern.

  6. carloss:

    May I insert an article from Glen Beck here. Now, I know it will be hard for you to comprehend, but these are FACTS about your precious Democrats and their attrocious economic policy:

    "For example, Detroit, whose mayor has been indicted on felony charges,
    hasn't elected a Republican mayor since 1961. Buffalo has been even more
    stubborn. It started putting a Democrat in office back in 1954, and it
    hasn't stopped since.
    Unfortunately, those two cities may be alone at the top of the poverty rate
    list, but they're not alone in their love for Democrats. Cincinnati, Ohio
    (third on the poverty rate list), hasn't had a Republican mayor since 1984.
    Cleveland, Ohio (fourth on the list), has been led by a Democrat since 1989.
    St. Louis, Missouri (sixth), hasn't had a Republican since 1949, Milwaukee,
    Wisconsin (eighth), since 1908, Philadelphia, Pennsylvania (ninth), since
    1952 and Newark, New Jersey (10th), since 1907.

    The only two cities in the top 10 that I didn't mention (Miami, Florida, and
    El Paso, Texas) haven't had Republicans in office either -- just Democrats,
    independents or nonpartisans.

    Over the past 50 years, the eight cities listed above have had Republican
    leadership for a combined 36 years. The rest of the time -- a combined 364
    years -- they've been led by Democrats.

    Five of the 10 cities with the highest poverty rates (Detroit, Buffalo, St.
    Louis, Milwaukee, Philadelphia and Newark) have had a Democratic
    stranglehold since at least 1961: more than 45 years. Two of the cities
    (Milwaukee and Newark) have been electing Democrats since the first Model T
    rolled off the assembly line in 1908."

    As you can see, DEMOCRATIC RULE = POVERTY.
    If the Democrats are truly the champion of the people, then why is there still so much poverty in long held Democratic bastions in the US? Liberals just drink the kool aid and apparently go back for more!

  7. Mike:

    I find it incredible how many people I encounter in my day to day life who believe that if a politician has any experience running a business he is somehow a "profiteer" trying to line his pockets.

    I hear this all the time about Bush: "He's just wants to make more money for his oil buddies and himself!" "McCain only cares about big business, he doesn't care about the shrinking middle class!"

    Somehow, Obama seems to come out clean as a politician who "cares" about saving the middle class. It's amazing how he is going to do this by "making big business pay their fair share" with taxation.

    What logic I try to espouse is that when a business' costs are lower, they are more successful. When a business is more successful, they grow. When they grow, they need more employees. When they need more employees, they can afford to hire them, and suddenly, more people get a pay check, less people in poverty, more middle class, and less welfare is doled out.

    Taxes ARE an expense, just like raw materials, utilities, etc... The higher a business' expenses, the less they have available to pay employees.

    Of course, then they try to argue that the CEOs just make way too much money. I then ask if they ever considered running a business. If they say that they have, I then ask why they didn't do it. They usually will say they fear the risk. I then go into all the risks associated with a business.

    I then ask: "If you took all these risks, would you want financial compensation for those risks? What if the politicians told you that you made too much?"

    At this point, the Socialists are separated from those that simply didn't know, and were simply repeating things they hear (usually on television), but hadn't given it much thought. The Socialists will still insist I'm wrong, the others will think about it, and nod in agreement with my argument.

  8. ettubloge:

    I just visited Amish country or PA Dutch country. They live simply and appear to have minimal carbon footprints (or feetprint?). But I saw the large bins in the front lawn holding cordwood. I assume it gets cold in late fall and winter out there. They must burn some serious wood in their stoves for heating (along with all of the baking).

    Is it better for the environment that hundreds of people burn wood (and coal?) versus millions of us in cities using electric and gas for cooking/heating?

  9. cb:

    Mike, don't forget that the risks to company executives are higher because of the actions of those politicians (e.g., the latest accountability-or-jail writs in SOX).

  10. MJ:

    "As you can see, Democractic rule equals poverty."

    No, not really. This is classic case of implying causation where there is none.

    The economic fate of central cities is inextricably linked to the larger urban regions of which they are a part. Nearly all of the central cities mentioned are in regions with stagnant or declining economies.

    The response to decline in central cities has mostly been industrial policy on the part of big city politicians. This is failed to reverse the decline of central cities, to be sure, but I also doubt that any politician from any party would be able to single-handedly reverse the economic decline of a city, much less a region.

    Central cities tend to vote overwhelmingly Democratic because they appeal to liberals, who seek high levels of public services and to live near like-minded individuals, and to recent immigrants and the poor. These latter groups tend to have weaker political preferences, but to the extent that they do vote, they tend to enforce Democratic majorities. This is called sorting. Furthermore, as long as Democratic politicians continue to offer big plans (for things like sports stadiums, rail transit, convention centers, "green" jobs, etc.), they will offer hope to voters (perceived or real), who will respond with their support. Salvation is always just a mega-project away.

    Similarly, conservatives in central cities tend to be in the minority. Not only does this make political organizing activities more difficult, but it also makes it hard to attract support from county and state-level party machines, who are loathe to waste much money on a losing cause.

    I find this to be a far more convincing explanation for the observed outcome.