Former Governor Gets it Wrong Again

Former Gov. Jennifer Granholm and her husband Dan Mulhern, in an on line article in Newsweek, lament that America is losing manufacturing jobs to China — especially the so-called clean energy jobs. They are right about the problem. During her eight-year reign as governor, Granholm presided over a state that shed hundreds of thousands of manufacturing jobs. They are wrong, however, about the solution of targeted tax breaks and more public-private partnerships.

Targeted tax breaks for clean energy projects or any other favored cause of the political class simply do not work. The money has to come from somewhere else in the economy, which results in a penalty to companies not among the chosen few. Targeted tax breaks and other subsidies are increasingly unsustainable for federal, state and local governments that are going broke.

The call for public-private partnerships is just a code work for crony capitalism. In public-private partnerships the tax payer usually ends up paying the bill for companies that benefit from government subsidies and favored treatment which further erodes the free markets and competition that are essential to growing the economy and increasing the number of jobs.

The national and state economies will not recover as long as the political class advocates redistributing tax payer money rather than doing the hard work of structural tax, labor and regulatory reform.

The good news in Michigan is that Gov. Rick Snyder and legislators in Lansing are recognizing that the failed policies of the last eight years have not worked. They have made a good start in reducing government handouts and eliminating red tape through regulatory reform legislation, but this is just a start and much work remains to be done.

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