Most people take for granted that Michigan is an industrial powerhouse. But few realize that a disastrous experiment in the state's early history set the stage for world leadership in industrial production and economic might.
Michigan's first governor spent millions of tax dollars to promote state-owned canal and railroad companies to encourage economic growth.
One of the first projects was a canal planned to run from near Detroit to Kalamazoo. Instead of helping the economy, it was a disaster. Costing $350,000, the canal earned only $90.00 in tolls before it was abandoned.
Then the state spent millions more trying to build and run railroads. They were such colossal failures that the governor called his decision to build them a "fatal policy" after the state was forced to sell or abandon them at a huge loss to taxpayers.
After these costly mistakes, Michigan citizens learned a lesson and approved the constitution of 1851 that kept the state from subsidizing economic development schemes. A free market economy then blossomed and Michigan grew to world leadership in lumber, carriages, and automobiles. That lesson is just as valuable today as it was then.
For the Mackinac Center, this is Catherine Martin.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
Please consider contributing to our work to advance a freer and more prosperous state.
