The Price of Cool

In 2003, Gov. Jennifer Granholm launched a “Cool Cities Program” aimed at “building vibrant, energetic cities that attract jobs, people and opportunity to Michigan.” The program is based on the work of Richard Florida, an economic development professor at Carnegie Mellon University and author of “The Rise of the Creative Class.” Florida’s thesis is that significant economic activity can be spurred by attracting creative people — and particularly young people — to cities through arts, entertainment and street life.

But whatever the program’s academic pedigree, can bureaucrats really determine what’s “cool”? The program appears likely to lose its way and simply redistribute wealth in the state, suggesting that there are better ways to develop Michigan’s economy.

The 29 “Cool Cities” projects designated for 2005 were announced at the end of June. Out of these projects, 13 will involve $100,000 each in “catalyst grants” to help ongoing developments. Most of these will be sent to larger cities, such as Detroit, Grand Rapids and Lansing. Additional funds will be provided to other towns for improvement and planning projects.

While some may argue that it is logical to provide this type of funding to larger cities, it is important to remember that past state and local government efforts to stimulate economic growth in larger cities have failed. These include the creation of the Autoworld theme park in Flint in 1984 and the proposed development of Rivertown in Detroit, which was supposed to include three casinos in 1998.

Then there is the question of equity. Large cities like Lansing, Detroit, Ann Arbor, Holland, Traverse City and Grand Rapids will receive $1.3 million in state funds. But why do people in East Lansing gain wireless Internet hotspots throughout their city at the expense of other Michigan taxpayers? Is it important for operagoers to be able to listen to state-of-the-art audio equipment the next time they attend a show in Traverse City? Does the state need to fund a mixed-use retail and condominium development along the riverfront in Battle Creek? Even though the grants provided to a few of these cities might generate some development, they have costs in higher taxes and less money for other state services.

Regardless, it does not make sense for the state to invest thousands of dollars into small towns across the state. These small towns are receiving matching grants to “revitalize” their downtowns, and the state’s Michigan Economic Development Corporation is paying for half of their consultant fees to create blueprints for a new downtown through the “Cool Cities Neighborhood” program.

While these towns each possess their own charm, they do not have the ability to draw young people to their area. Places such as Vassar (population 2,784), East Tawas (population 2,882), Whitehall (population 2,884) and Iron River (population 1,929) seem highly unlikely to attract young educated workers. What would attract the average person in his or her mid- to late-20s to move to a town that is miles away from sports complexes, large entertainment venues and even shopping malls? This does not even take into consideration the lack of available business and employment opportunities for recent college graduates. Helping these towns redesign their downtown and neighborhoods will not improve their chances of attracting the people the Cool Cities program is supposed to target.

Gov. Granholm’s attempts to revitalize Michigan’s economy through the Cool Cities initiative might seem honorable, but it is ironic that the state is handing out hundreds of thousands of dollars in dubious grants at a time when legislators are debating the per-pupil funding for schools, money for higher education and restraining Medicaid benefits. With Michigan’s unemployment rate skyrocketing to 7.1 percent in May — tying with Mississippi for the highest unemployment rate in the nation — perhaps it is time for the state to reexamine its priorities. It should shift its focus to providing a secure environment that is open to new business by restructuring the single business tax, rationalizing its regulatory environment and removing other roadblocks to economic development.

Until Michigan creates a sound economy, the creative class will continue to be attracted out of the state’s borders whether it has any Cool Cities or not. After all, Chicago is ranked 16th on Florida’s “creative class” index (Detroit is 68th) — and the Windy City is just across the border.

Vanessa C. Ferguson is a writer and researcher for Michigan Government Television. She wrote this article for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.