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Michigan’s Disaster: Washington’s Opportunity

By helping state recover, feds could learn how to help nation

May 12, 2008 |
Great Lakes Bulletin News Service

  During his presidential primary campaign, Senator John McCain told Michiganians that many old jobs were gone for good, so it was time to start attracting new ones—“straight talk” that, observers say, cost him votes.
First of Three Parts

Over the last four years, I have observed the glaring statistics about Michigan’s economy on my TV and radio and on the pages of my local newspaper. I must confess that it’s been keeping me up at night.
That’s because I’m a “just do it” kind of guy: I get up each day ready for action, talk to others who I expect to feel the way I do, and am always eager to put my ideas and experience to work to make things happen.

But, even though I’m always ready for action, nothing happens.

I think I know why: Too many Michiganders are just too calm for my comfort. Surely, many of them have a family member or a friend who is either out of a job or badly under-employed. Surely they know that some of our regional banks may go under. Surely they’ve read that 30,000 people moved out of Michigan last year, that the homes of thousands of people have been foreclosed, that many, many properties are selling at just 50 percent of the price they sold for three years ago.

But, still, nothing happens. I finally realized that this problem—so big and pressing to me—is just not a big enough deal to many others. This makes convicing people that it is time to break out of the box of our conventional thinking and try some seemingly radical new things a very tough sell.

But could that be changing?

A National Spotlight
I recently came across a January 15th CNN/Money article in the section on “Election 2008: The Candidates and Your Money” that made me wonder. Initially, however, I was suspicious.

“What hanky-panky are the candidates now planning to play with my money?” I asked myself as I looked over the article.

But when I read the piece, entitled “Michigan's Economic Woes on the Ballot,” by Chris Isidore, CNN/Money senior writer, I felt like I had finally found another person who thought that this was a big deal. The article looked at how the presidential candidates were responding to auto industry unemployment as they converged on Michigan, described as “the epicenter of the nation's economic problems.”

Although Michigan’s snafu over the date of its presidential primary dimmed the highly anticipated national electoral spotlight on the state’s economy, the CNN article was still a good sign to me. The piece had quite a list of what’s wrong in our state these days:

  1. Bankruptcies have swept across the region's auto parts makers and suppliers large and small, leaving many workers without jobs.
  2. Michigan is definitely in a recession, Detroit is suffering particularly badly, and it's not going to improve any time soon.
  3. Manufacturing employment in Michigan has dropped by nearly a third—300,000 jobs—since 1999.
  4. The state's unemployment rate has doubled in recent years. In January, a state agency forecast that unemployment would rise to 8.2 percent this year, and to 8.7 percent in 2009.
  5. In the third quarter of 2007, Michigan led the country in the percentage of mortgages facing foreclosure. It is second only to Mississippi in the percentage of mortgages that are delinquent by 90 days or more and thus heading towards foreclosure.
  6. More than one out of every 20 mortgages in the state is either in foreclosure or on the brink.
  7. “Here's a little straight talk I know the people of Michigan will understand,” one of the presidential primary candidates, John McCain, said at a campaign stop in Michigan. “Some jobs that have left Michigan are not coming back … and the answer to that isn't to raise false hopes that somehow we can bring back lost jobs, but to create new ones."

So it’s not paranoia that is keeping me awake: Michigan is indeed in trouble, and at least some leaders from around the country know it. But it is just not in our Michigan culture to talk about or deal with it aggressively.

That may be because, in the past, being stoic worked well for us: We would sooner look inward, suffer in silence, blame ourselves, and talk about our job-hunting efforts rather than discuss what happened to those jobs that we simply cannot find anywhere anymore.

But, while at least some people elsewhere are thinking about this, they are not going to do anything about it as long as Michiganders act as if everything is okay. That is true even though the problem will grow and spread to other states if no one acts, and national leaders cannot really afford to ignore our plight.

A National Problem
One thing about Americans is that they do pull together in times of difficulty to help victims of catastrophe. Remember September 11? Americans went off to war in strange lands to quash a threat that, eventually, turned out not to exist. Remember Katrina? Despite severe bungling and delay by all the governments involved, we as people did not hesitate to help to rebuild New Orleans. Every time there is a major domestic catastrophe, Americans pitch in—both personally and via their government.

That is why I bet that if we polled the country, a majority of our fellow Americans would react to our state’s current calamity by supporting actions that restore Michigan’s once-great economy.
And if there’s a good chance the nation will rally behind us, why not ask?

One great reason to ask for help is that our problem is also America’s problem. We are an early warning sign of what will likely happen elsewhere: Ohio is just a tad behind Michigan, and other Rust Belt states are sure to follow.

In fact, many areas of the U.S. that are mired in the Old Economy—or that recently geared up according to the Old Economy-company town-traditional manufacturing mindset—will likely follow our unfortunate path. The nation is in trouble; Michigan is only the harbinger, and if America does not learn from us how to solve the problem, it will be that much harder for the country as a whole as the Old Economy continues to fade.

When we finally do attack this problem, we must think long and hard about this fact: We have constructed our businesses, our mindset, our realities, and ourselves around a very specific, old concept of how the world works—but the world has changed drastically.

In other words, the Old Economy is dead and the New Economy is taking root only in those places that are truly prepared for it. Success today is just as likely to land in Timbuktu, Dubai, Delhi, Cancun, or Lagos as it is to land in Grand Rapids or New York. We are long past the time when our only worry was the fair distribution of the bountiful fruits of our labor. These days our big worry is all about intense competition for a shrinking pie.

When it comes to shrinking pies, Michigan is the most vulnerable state in the nation, so maybe Michigan is the place to start to learn about how to deal with this problem. But not, of course, until Michigan fully faces just how severe its problem is.

When Michigan remains in denial about just how bad off it is, and when we tell the rest of the nation that life here is not so bad here, we are setting up the whole country for its own similar but far larger problem. National leaders must see through our denial and understand that we are only the first victims of what will soon be a national problem.

Help Wanted
So, let us welcome our presidential candidates when they are unafraid to tell people that Michigan has a real problem and that the old dogs simply cannot do the new tricks required for today’s global success. If Michiganders will not vote for candidates who tell those truths, so be it; maybe people in other states will.

A few months ago Congress passed an economic stimulus package that could cost up to $150 billion. The bill moved through Congress too quickly; lawmakers did not even stop to think about Michigan’s problems and what they might suggest in terms of a stimulus strategy that could actually work. If our federal lawmakers had stopped and thought about it, rather than rushing through a feel-good package that sends a few hundred dollars to every citizen in the nation—probably to little effect—maybe they would have considered aiming their program at the epicenter of the problem, Michigan.

Sending each Michigander $20,000—or even $40,000, targeted just to ailing families and small businesses—would not only be cheaper than the stimulus bill that President Bush signed. It would also have a truly transformational effect if the money were tied to retraining people and businesses for the New Economy.

The nation could learn from that, just as it could also learn from helping Michigan’s limping corporate giants transform their businesses to embrace, rather than avoid, the New Economy. That, I am sure, would trigger the most significant corporate turnaround in history—something that would be good for the entire country, not just Michigan.

GM, Ford, and Chrysler could ward off their competitors and create new technological advantages; eager wind developers and component manufacturers could expand rapidly in the state; and companies like Google, Enliven, acd.net, and Techsmith could develop new technology platforms here.

If Congress would only realize that the U.S. is in a very serious economic war, things might change. That war is cutting down our companies; many will never resurface again if nothing is done. That is why state and federal governments should equip our companies with new “weapons” for this economic war. That is what China is doing today; it is using its massive national wealth to help its companies invade Africa and South America.

Michigan must wake up and see the challenge, and then do what it can to alert the rest of the country. Without a strong national response, Michigan will hardly be the only state to lose this war. It will merely be the first of many.


Soji Adelaja, Ph.D.This is the first of three commentaries by Dr. Soji Adelaja suggesting steps Michigan must take to meet the economic emergency it faces. Dr. Adelaja is the John A. Hannah Distinguished Professor in Land Policy and the director of the Land Policy Institute at Michigan State University. He also directs the Michigan Higher Education Land Policy Consortium, a partnership among MSU, University of Michigan, Wayne State, and Grand Valley State University scholars interested in metropolitan studies. He came to MSU from Rutgers University, where he served as executive dean of agriculture and natural resources, dean of Cook College, and chair of the Department of Agricultural, Food and Resource Economics. The opinions expressed are Dr. Adelaja’s and do not reflect the opinions of the Land Policy Institute or Michigan State University

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