Michigan’s Economy: Where Do We Stand, Where Are We’re Going? Robert Genetski President, ClassicalPrinciples.com West Michigan Policy Forum

Outline 1. Where we’ve been 2. Where we’re going a. US elections b. State policies: Booms and Busts c. Impact of Michigan’s policies

Outline 1. Where we’ve been

1.Michigan’s economy—secular decline in past decade 2.By 2008 Michigan’s performance—worst in the US 3.In 2009 US recession—depression in Michigan 4.Since 2009—Michigan economy stable relative to US

Outline 1. Where we’ve been 2. Where we’re going a. US elections

Classical Economic Principles Policies that promote individual freedom: 1.Low tax rates & limiting public spending to efficiently producing essential public services 2.Free markets 3.Protection of individual property rights 4.Stable value for currency

Economic Problems Don’t Just Happen Problems Result from Bad Policies 1.Rapid increases in federal spending 2.Massive increases in regulatory burdens 3.Policy mistake by US Treasury Secretary

Reversing Economic Malaise Major cuts in federal spending Reducing tax burdens Reducing regulatory burdens Protecting property rights Maintaining a stable currency

Election 2012 President Obama in 2014: – plans $400 billion more spending – imposes $400 billion more compliance costs – $235 billion more taxes Governor Romney: – Repeal $400 billion compliance costs – $400 billion less federal spending – Cut individual tax rates by 20%

Outline 1. Where we’ve been 2. Where we’re going a. US elections b. State policies: Booms and Busts

Characteristics of High Performance States Policies geared toward individual freedom also promote a state’s economy State Policies that maximize individual freedom: – Low or no tax on income – Prudent spending for only essential services – Freedom to join or not join a union(Right to Work)

Characteristics of Poorly Performing States Policies place restrictions on individual freedom: – Higher tax rates – Wasteful government spending – Onerous regulations – Forced unionism (no Right to Work law) – Large union penetration – Overburdening debt

How Michigan Compares to Other States Tax burden Public employees compensation Debt

Compensation per worker: 2010 US average Private Nonfarm:$42,900 State & Local employees:$58,50036% Michigan Private Nonfarm:$40,400 State & Local employees:$59,50047%

Compensation per worker: 2010 Adjusted for cost of Living Michigan Private Nonfarm:$42,300 State & Local employees:$62,30047% Texas Private Nonfarm:$44,900 State & Local employees:$56,60026%

Worse State for Accumulating Debt Burdens on Future Taxpayers (2010 financial reports) 1. Connecticut $49,000 per taxpayer 2. New Jersey$35, Hawaii$32, Illinois$31, Kentucky$23, Massachusetts $23, California$21, Michigan$20, West Virginia$20, Rhode Island $18,800 Source: Institute for Truth in Accounting; Financial State of the States

Outline 1. Where we’ve been 2. Where we’re going a. US elections b. State policies: Booms and Busts c. Impact of Michigan’s policies

Destructive Ballot Measures “Protect Our Jobs” “Home Health Care” “Renewable Energy”

Making Michigan a High Performing State Provide more freedom to Michigan workers and businesses: Limit state spending to essential services Cut tax burdens to below US average Give workers freedom to decide whether or not to join a union