End the 21st Century Jobs Fund

Michigan Capitol Confidential ^ | 4/19/2016 | James Hohman

[MichCapCon]

Over 10 years ago the state began an experiment in economic development policy. Gov. Jennifer Granholm pushed through a plan to gradually spend $2 billion through a “21st Century Jobs Fund.” Famously, she told Michiganders that they would be “blown away” by the incredible results of this spending.

Well, the results are in and it’s hard to describe the 21st Century Jobs Fund as anything other than a complete failure. The money has all been spent, but no one has been blown away. And if new jobs have been created by this spending, they have not been consistently or coherently reported.

What use is a jobs fund that cannot demonstrate that it produces jobs? Well, it might just be a slush fund for politicians who can give sweetheart loans and deals to friends. The latest annual report on this jobs fund lacks any reporting on how many jobs its five programs have created. This is despite the fact that state law requires this type of reporting.

There are some programs funded by the 21st Century Jobs Fund that do report jobs, but their reports are neither standardized nor consistent. For example, some programs report their “jobs created;” others, their “net jobs.” Some report “current direct jobs” while others report “jobs created/retained.” This mishmash of terms makes measuring and comparing the effectiveness of the fund impossible.

In addition, the state auditor expressed concern that the reported numbers did not accurately account for the number of jobs created by companies that received taxpayer dollars. It noted that program administrators “did not consistently ensure that recipients were in compliance with grant or contract provisions. As a result, [the administrator] could have disbursed funds for grants or contracts that did not achieve the desired economic development goals.”

What use is a jobs fund that cannot demonstrate that it produces jobs? Well, it might just be a slush fund for politicians who can give sweetheart loans and deals to friends, show that they’re “doing something” to boost Michigan’s economy or fund the latest economic development fad.

Through the 21st Century Jobs Fund, taxpayers have funded a wide variety of interests. It was originally envisioned to lend money to companies in the life sciences, alternative energy and technology industries. But through earmarks and 19 different alterations to the law that governs the fund, taxpayers have supported the forest industry, tried to prop up laid-off Pfizer employees, provided grants to defense contractors, partnered with venture capital firms and pumped money into universities. And now, the program funds Pure Michigan tourism promotion and “economic gardening,” a term that will baffle most state residents.

The most noteworthy quality of the 21st Century Jobs Fund is that it has no essential feature, other than spending taxpayers’ money on projects that are ostensibly for economic development purposes. There is no clear explanation or understanding of the strategy it is to use to improve the economy.

Moreover, there are plenty of clear failures. Through the 21st Century Jobs Fund, the state has made grants to companies that cashed its checks but never managed to create a single job. The state has made loans that were left unpaid and invested in companies that went under.

Spending taxpayer money on centrally planned economic development is unlike other forms of government spending. For example, spending on the Department of Corrections does employ a number of people as prison guards or parole officers. But the purpose of the department is to administer justice, not have an economic impact. By contrast, the stated purpose of the jobs fund is to create jobs and have an economic impact. But too often, state-funded economic development programs appear to have a simpler-to-achieve goal: spend money.

Lawmakers were clear on what they intended to achieve with the 21st Century Jobs Fund. It was to “diversify the economy of this state, encourage long-term economic growth and full employment, and create jobs.” It’s uncertain that the scope of the program was large enough to give it a chance of making substantial progress toward this goal — $2 billion spread out over a decade accounts for just 0.05 percent of total economic production over the period.

But beyond the drop-in-the-bucket nature of the fund’s effect on the state economy, its failure to adequately disclose the jobs purportedly created ought to encourage lawmakers to reconsider the entire scheme. Upon investigating it, they will find that the state has spent a lot of money without much to show for it, and moving forward, scarce resources could be used in more effective ways.

[equaviator]

Granholm was a spectacular failure if not a fraud. I’ve seen her on Sunday news shows and she says so much about nothing at all and other people at the table just nod their heads or quietly wait their turn to speak. However, she really thinks highly of herself. Go figure.

[loveliberty2]

America's Founders knew the formula for jobs creation. Obviously, Gov. Granholm doesn't.

Coercive "taking" power, when wielded against the citizenry by either the government alone (taxing), or in combination with another power (unions, etc.), is destructive of freedom and prosperity.

The following statement by Sir Winston Churchill, upon leaving office as Prime Minister in 1945, was prophetic for Great Britain, and as it turns out, the United States and the world:

"I do not believe in the power of the State to plan and enforce. No matter how numerous are the committees they set up or the ever-growing hordes of officials they employ or the severity of the punishments they inflict or threaten, they can't approach the high level of internal economic production achieved under free enterprise. Personal initiative, competitive selection, and profit motive corrected by failure and the infinite processes of good housekeeping and personal ingenuity, these constitute the life of a free society. It is this vital creative impulse that I deeply fear the doctrines and policies of the socialist government has destroyed. Nothing that they can plan and order and rush around enforcing will take its place. They have broken the main spring and until we get a new one, the watch wil not go. Set the people free. Get out of the way and let them make the best of themselves. I am sure that this policy of equalizing misery and organizing society--instead of allowing diligence, self-interest and ingenuity to produce abundance--has only to be prolonged to kill this British Island stone dead."

In the early days of America's experiment in liberty, its Founders warned of oppressive taxation by those elected to represent the people. Under their "People's" Constitution, the people were left free, and the government was limited.

While Europe struggled with oppressive government intervention, the genius Founders of America recognized enduring truths about human nature, the human tendency to abuse power, and the possibilities of liberty for individuals. Richard Frothingham's 1872 "History of the Rise of the Republic of the United States," Page 14, contained the following footnote item on the condition of citizens of France:

"Footnote 1. M. de Champagny (Dublin Review, April, 1868) says of France, 'We were and are unable to go from Paris to Neuilly; or dine more than twenty together; or have in our portmanteau three copies of the same tract; or lend a book to a friend: or put a patch of mortar on our own house, if it stands in the street; or kill a partridge; or plant a tree near the road-side; or take coal out of our own land: or teach three or four children to read, . .. without permission from the civil government.'"

Clearly the government of France at that 1868 date laid an oppressive regulatory and tax burden on citizens, robbing them of their Creator-endowed liberty and enjoyment thereof. Frothingham observed that such coercive power constituted "a noble form robbed of its lifegiving spirit."

Thomas Jefferson warned Americans:

"To preserve [the] independence [of the people,] we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers." --Thomas Jefferson to Samuel Kercheval, 1816. ME 15:39

Note Jefferson's very last thought here. He declares that when government taxing and debt have reached certain levels, in order for individuals to survive, then their chosen "employment" becomes "hiring ourselves to rivet their (the government's) chains on the necks of our fellow-sufferers." Might that account for why it is government employment levels which have risen at such great rates in the past few years?

Inasmuch as government creates no wealth and has no money, the pay for every job in government must first come out of the pockets of hardworking citizens in the private sector or be borrowed (to be paid back eventually from the pockets of future generations).

Ahhh, guess that's what you call "redistributing" wealth! In Jefferson's words, it's called "rivet(ing) chains on the necks of our fellow-sufferers."