Sorry to hit you with this, especially after a nice Labor Day weekend. But the news for Michigan is bad. Very bad.
The facts are clear, cold, and come from five years of U. S. Census data released last week. The main points:
* Michigan’s median household income (adjusted for inflation) fell from $52,323 in 1995, when the stock market was booming, to $46,039 in 2005, when the bottom started falling out of the automobile industry. That’s a 12 per cent drop. Put another way, Michigan’s “Joe Six Pack” just became “Joe Five Pack.”
* This didn’t just hit working stiffs. The decline was pretty much across the board, from rich areas to poorer ones. In wealthy Oakland County, median household income fell 11.7 per cent, while Wayne County families were 14.4 per cent worse off.
* Family income in urban Ingham County (Lansing, Michigan State University) fell by 11 per cent, while neighboring, rural Eaton County families were down 18.5 per cent.
* Nineteen per cent of Michigan children live in poverty. That’s up sharply from six years ago. Nearly a third of African-American families are now below the poverty level.
David Littmann, longtime chief economist for Comerica and now senior economist for the Mackinac Center, told the Detroit Free Press: “I hate to superimpose worse news on top of bad news. We’re in a secular decline here in Michigan. As the economy slows nationally, we’re going to sink much further relative to the other states. We’ve only just begun.
“We’re going to see Michigan sink to levels that no one has ever seen. We’re going to be looking at the highest unemployment rates in the nation for the next five to 10 years.”
Talk about a bucket of cold water in the face!
The context is as simple as it is stark. Michigan is facing its worst economic crisis since the Great Depression. While the automobile industry (both management and labor) is undergoing its long, inevitable, grinding restructuring, there isn’t much that public institutions or policymakers can do in the short run.
But over the long run, sensible public policy has to be tailored to the dimensions of the crisis in order to shorten the period of transition and lay the foundation for a better future for us all.
So far, the response from our political leaders might best be termed “remorseless incrementalism.”
In plain English, what that means it that too many of them are putting their heads in the sand when it comes to dealing with our major problems. Instead, they have a single- minded obsession with reducing business taxes. Nor does the public have any confidence in our elected leaders anymore. I’ve been talking with lots of Michigan folks about our economic troubles over the past few months; to a person, they say the best response from the politicians would be to get the hell out of the way. Not a pretty picture.
My view is simple. Michigan is so economically damaged, its politics so splintered and its civil society so threatened that we need radical measures. That means a far-reaching, breathtaking but broadly acceptable restructuring plan. History has seen something like this before — namely, the Marshall Plan — the great device by which America saved and rebuilt Western Europe after World War II.
What might a “Marshall Plan for Michigan” look like? It would focus on growing a brain-based knowledge economy in place of a brawn-based manufacturing base. It would require a dramatically more skilled and educated work force.
It would concentrate on attracting and retaining in Michigan talented and ambitious people, especially the young. For when you’re in the trouble we’re in, nothing trumps energy and talent.
A proper Marshall Plan for Michigan would also require a tough-minded review of our state’s antique, built-in spending priorities.
We need to ask whether what we spend on prisons, Medicaid and generous benefits for public sector employees really helps get us where we need to go. And it would demand we concentrate our resources on what makes Michigan really distinctive, whether the Great Lakes or our great universities.
Where is this thinking going to come from? Forget the politicians in Lansing. Instead, we need to convene our best minds and our most dedicated assets, from far-seeing business leaders who see their assets withering to the experts resident in our universities and the stewards of Michigan’s great philanthropic foundations.
The assignment: Design a Marshall Plan for Michigan. If it is as far-reaching and broadly acceptable as it could be, its very presence will compel attention and diligence from the political system.
The hour is late. The situation is dire. The challenge is profound. Let’s get on with it!
Phil Power is a longtime observer of politics, economics and education issues in Michigan. He would be pleased to hear from readers at ppower@hcnnet.com. These opinions and others expressed in Phil Power’s columns are individual opinions and do not in any way represent official policy positions of the Center For Michigan.
