September 25, 2011/Detroit Free Press
By John Austin
Michigan and the nation are struggling to identify what can reboot our economy and grow jobs again. A leading argument is that low taxes and reduced government are the answer.
The truth is that to be truly "business friendly" requires strategic investment in public goods -- the things the market does not do itself -- that in turn support business and create conditions for economic growth.
These public goods are:
• Great schools and universities that produce well-educated people and do the basic research that brings economy-changing innovation like the Internet (which the University of Michigan helped develop).
• The infrastructure to move goods, services and ideas in the global market: roads, rail, airports, broadband.
• Attributes that make our cities places people want to live: public safety, parks, libraries, arts, transit.
• Our special Michigan selling points: Great Lakes, clean water, rivers, parks, forests -- available for hiking, hunting, fishing and pure joy.
The private-sector does not invest in these goods no matter how business-friendly the tax and regulatory environment.
These investments are as important -- arguably more important -- to job creation than "business climate" issues.
Gov. Rick Snyder said as much as he campaigned. He pushed for rebuilding cities, said it was foolish to cut our universities, and wanted to attract and keep our young talent. His director of strategy, Bill Rustem, wrote a persuasive 2007 article ("It's Time to Re-Invest in Michigan's Assets") naming Michigan's natural beauty, Great Lakes, higher education and core cities as priorities.
Business Leaders for Michigan, led by Doug Rothwell, a strong backer of business tax cuts and the business-friendly agenda, also says that Michigan needs to invest more in cities, higher education and infrastructure.
Look at other states: North Carolina has benefited enormously from long-term state investment in quality, low-cost, higher education and its Research Triangle. It has 18,000 national board certified master teachers (a program created in Michigan) versus our 381 because it backed K-12 reform with more pay for great teaching.
Colorado has attracted thousands of well-educated, new entrepreneurs by selling its great outdoors and Rocky Mountains as a place to live and work -- and by investing in transit, parks and downtown redevelopment, making Denver one of the country's most livable cities.
New public investment must be combined with meaningful government reform if people are to trust government with our money. That's happening. Local governments now have to meet performance expectations. Public employees are co-paying for health and pension benefits. Teacher tenure reform means great teaching is recognized and poor teachers eased out.
It is now time to invest in the work these good folks do: repairing roads, staffing libraries, policing our streets, teaching our kids.
It is not true that we don't have the money, and have to "live within our means." Michigan has been cutting its taxes (and ability to invest in public goods) for 12 years. Over the last decade, personal incomes have actually grown at a rate 40 times greater than spending from state taxes and fees. We are now $8.4 billion under the Headlee tax limit conservative lawmakers put in place years ago.
Having signaled we are "business friendly," it is time to invest in what matters. We can't grow jobs when:
• Michigan roads, bridges and sewers are a laughingstock, literally falling apart, and we can't even match available federal dollars to repair them.
• Our once-top-tier university system is now near the bottom in state support, tuition is priced beyond working-class Michiganders, and top talent at our universities are packing up for other states.
• Parks are closing, and foul water closes beaches as we advertise "Pure Michigan."
• Our cities are laying off police and firefighters and are unable to create the walkable downtowns and urban lifestyle new entrepreneurs demand.
We must do better. We can do better. Whether our kids and grandkids choose to stay and build a better Michigan depends on it.
John Austin is president of the Michigan State Board of Education. He is also a nonresident senior fellow with the Brookings Institution and visiting faculty member at the University of Michigan.