In my previous post I briefly explained the concept behind rent seeking and provided specific and general examples of how former government employees are often hired by special interest groups and paid to acquire special favors for their new employer from the very agencies for whom they had previously worked.
My favorite Michigan-specific example involves the former director of international and national business development for Michigan Jobs Commission (predecessor agency of the Michigan Economic Development Corporation). After leaving the state this former bureaucrat was hired by Ernst and Young to steer their clients through the process of obtaining economic development incentives. State records show that at half of Michigan Economic Growth Authority meetings held in 1999 and 2003 this individual represented Ernst & Young clients seeking tax favors.
In 2004 my colleagues at the John Locke Foundation uncovered and publicized an Ernst & Young PowerPoint that taught would-be rent seekers at a conference in Atlanta how to “turn your state government relations department from money pit into a cash cow.” The PowerPoint went on to detail precisely how the government relations departments of businesses should acquire and keep tax incentives and other government goodies.
Now imagine this scenario being played out a thousand times by consultants across the country and even outside the economic development arena, and you begin to get an idea of why it's so difficult to make government smaller, despite the frequently-expressed wishes of an electorate to do so.
One solution to the problem is to have less government for special interests to lobby. The state of Michigan should begin by eliminating departments and programs with a rich history of failure, such as the Michigan Economic Development Corporation and the Michigan Economic Growth Authority.
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