(The following is an edited transcript of a Mackinac Center interview with Center Adjunct Scholar Gary L. Wolfram, a Hillsdale College professor of political economy. Wolfram is the co-author with Michigan Rep. Rick Baxter of a recent Wall Street Journal Op-Ed that detailed Michigan’s poor economic performance, criticized Gov. Jennifer Granholm’s proposed Single Business Tax revisions and recommended specific state tax cuts to spur economic growth. The governor responded angrily to the piece, calling it "treasonous to the state of Michigan.")
MCPP: How did you come to write your Wall Street Journal column with state Rep. Baxter, and how did it get published in The Journal?
Wolfram: Well, first, the Wall Street Journal had run an editorial a number of weeks ago that had quoted a paper that I had done on the poor effect on Michigan’s economy that an increase in insurance rates would cause under the governor’s (Single Business Tax) proposal. Given that the Journal had already discussed the issue, we thought it would be a good outlet for a new article.
A former student of mine is chief of staff to Rep. Baxter, so there was a natural connection through Hillsdale College. He’s an interesting new state representative, so we thought it would be a good venue, and we both thought alike on the issue.
MCPP: What was the key message of the piece?
Wolfram: The key message of the piece is that Michigan’s economic activity is trailing the rest of the nation’s. It’s not a matter of Michigan’s economy being poor because the rest of the country’s is poor; it’s a matter of us not doing well relative to other states. Our message is that the one main thing that government can do to control the cost of producing is to reduce the state taxes on the cost of producing. That’s not a real difficult message to get across; people aren’t going to produce if it’s too costly to produce here.
MCPP: The governor complains that she'll have a harder time bringing new business to Michigan as a result of your article appearing in a newspaper with an international readership. Is there an argument for publishing criticism of state policies only in in-state newspapers?
Wolfram: Well, no. Her argument is ridiculous when you think about it. If you were thinking about opening up a Toyota plant in Michigan, you wouldn’t have to go to an obscure editorial in the Wall Street Journal to figure out Michigan had the highest unemployment rate in the country. The idea that we should somehow ignore this is a disservice. The whole point of the democratic process, as (economist) Friedrich Hayek talked about, is to expand the state of knowledge through debate.
I think that she should be willing to discuss whether there are other reasons for Michigan’s lagging economy that the state can deal with. She ought to talk about that, not try to say that a state representative of the other party is treasonous because he happens to point out the obvious.
MCPP: What kind of reaction did you hope for when you wrote the article, and how does it compare to the reaction you received?
Wolfram: We had hoped to further the discussion — to persuade people that lowering taxes will increase economic growth. Again, it’s not rocket science here. Basic economics is going to tell you that if it’s more costly to produce in Michigan than it is in West Virginia, then people will produce in West Virginia.
So the state government has to try to deal with those things that it can deal with that increase the cost, and we thought that this would perhaps stimulate some debate. We did not expect that the governor would declare us treasonous for doing so. (Laughs.) And in some sense, it’s slightly humorous, but in another sense — you know, for me, it’s a little bit different. I’m a professor of economics, and I can have people say that I’m crazy, or whatever, and it’s not going to affect me that much. But when the sitting governor calls for the removal of a freshman state legislator, I think that’s a moderately big deal, and that it’s something you don’t call for as governor unless you’re willing to follow through with it.
I was totally surprised. In fact, we did a radio interview on Monday morning, and I had not seen the paper, and we were on (WJR’s) Paul W. Smith Show, and the first question was, "What’s your response to the governor calling you treasonous?" And both of us were just silent for a moment, thinking, "Are you kidding?"
MCPP: It must have been a shock. What did you think of the Journal’s editorial response to Granholm’s accusation?
Wolfram: Well, I thought it was on point. The Saint Joseph-Benton Harbor (Herald-Palladium) also was on point, and the Lansing State Journal was as well, saying that we have the right to publish our opinion on things. It wasn’t as if our facts were incorrect, or that we had lied or committed libel or slander. I thought The Wall Street Journal was absolutely correct in coming to our defense and to the defense of its editorial page.
MCPP: Any other seditious activities planned for the near future?
Wolfram: I plan to stay in the public policy arena. I think it’s very important that people do what Sherlock Holmes talked about — see and observe. For instance, the government trying to pick winners and losers in the marketplace is a very bad way of doing things, and the experience of central planning around the world has demonstrated that it didn’t work empirically. The theoretical writings back from at least Ludwig von Mises have demonstrated that central planning can’t work, and we ought to just recognize that.
I’m going to focus the debate on (the idea), "Let’s just cut taxes and reduce the burdens government places on us in the economic arena." I think we also need to focus on the structural failure we have in three major programs: Medicaid, K-12 education and corrections. Those are all driving the budget, and we need to examine structurally how those services are produced, as opposed to just putting more money into the current system.
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Gary L. Wolfram is an adjunct scholar at 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.
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