Following is a letter I e-mailed to a television station on Oct. 15, 2008.
Station Manager
WLNS-TV
P.O. Box 40226
Lansing, MI 48901
Dear Station Manager:
I am writing in response to an item posted on your Web site (“More Jobs Coming to Area,” Oct. 15) that uncritically repeats the claim in a Michigan Economic Development Corporation press release that discriminatory tax breaks granted to several particular firms will result in 7,500 net new jobs for Michigan. The MEDC’s track record for picking winners and losers in the marketplace is poor, and the state has been in a wholesale growth retreat literally since the MEDC’s creation in 1999.
In 2005 a colleague and I produced an exhaustive 123-page review of the state’s premier tax incentive program, the Michigan Economic Growth Authority, and found it had been a complete failure. The study included a peer-reviewed statistical model that found MEGA did not improve employment, the unemployment rate or per-capita personal income during its first nine years.
To date, the MEDC has not to our knowledge refuted a single fact in the study — a point that should deeply embarrass the state’s economic development mandarins. Moreover, a review of state documents found that of the 127 MEGA site locations that should have had fully employed facilities through 2004, only 56 claimed to have any net new employment and only 10 could be shown to have “created” the number of jobs they promised in the time frame set forth by the firm and the state. Moreover, several of the companies subsequently left the state or cut employment or went belly up altogether.. Plastech is a good example. It’s mentioned in your article because another company got state assistance at a former Plastech location. But Plastech itself is one of the MEGA “winners” that turned out to be a big loser in the marketplace, having gone out of business this year.
Gov. Jennifer Granholm even praised the Plastech deal in a press release, probably just like the one you received yesterday, saying, “Michigan’s leadership in attracting new businesses and expanding our existing manufacturing sector continues today with Plastech’s commitment to the future of our state. My administration wants to make Michigan a magnet for economic growth — Plastech’s expansion is evidence that we're making it happen.”
The bottom line is that the economic development apparatus that sends you self-aggrandizing press releases is a jobs announcement program, not a jobs creation one. The 7,500 new jobs allegedly coming to the state probably won’t appear, but that is of little consequence for the MEDC, as few will remember their promises and MEDC officials face no accountability if they’re wrong.
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