The Newsletter of the Mackinac Center for Public Policy www.mackinac.org FALL 2009 A Legal Foundation for Liberty

e hear the stories all filed suit on behalf of two Michigan women too often. Michigan who refuse to acquiesce to an abusive scheme residentsW find their rights concocted by a state agency and three unions. trampled by a government agency and feel powerless. The Case Without money, lawyers or For years, Sherry Loar (pictured far left) and political connections, their fight Dawn Ives (to Loar's right) have run successful for justice is often over before it day care operations out of their homes in begins. Petoskey, Mich.1 When talking with them, it Until now. On Sept. 16, the quickly becomes clear that they love what they Mackinac Center launched a pro do and that they provide an important service bono, public interest law firm to parents and children in their community. dedicated to advancing individual see “Mackinac Center Legal Foundation” Page 6 freedom and the rule of law in

Michigan. As its first action, the 1 Just before this issue went to press, Dawn Ives closed her day care Mackinac Center Legal Foundation operation and could no longer act as a plaintiff in the case.

The Michigan Economic Delusion Corporation

he Michigan Economic A M A c k i n A c c e n t e r r e p o r t the agency needed to become more Development Corp., the transparent. Tagency that oversees the state The concession was a tactical government’s targeted tax victory. Openness will not only incentives and other flawed further good government; it will Contents “jobs” programs, is the black expose the MEDC’s fecklessness. 2 President’s Message box of state government: Few Since the agency’s creation in 3 Center Videos Detect Smoke know what it does. On Aug. 1999, the MEDC has blustered its 5 Media Impact 31, however, Mackinac Center way through the largest decline in 8 Building Stronger Bones analysts Michael LaFaive Michigan’s economic fortunes in 8 Curing a Plague by Going Viral and James Hohman capped state history. Indeed, since 1999, off a summer of hard-hitting Michigan’s gross domestic product 9 Young Guns Join the Drive publications on the MEDC’s has plummeted from 16th in the 10 Free-Market Fundamentals shortcomings with the release of an 81-page nation to 41st. The state’s per-capita personal 10 Henry Payne Cartoon study, “The Michigan Economic Development income is now 11.2 percent below the national 11 Free-Market Library Corporation: A Review and Analysis.” It average. Not even during the Great Depression 12 A Reform ImPERAtive appears to have helped push the MEDC to a did our incomes as a percentage of the national tipping point: Just over a week later, a leading income drop this low. newspaper columnist was reporting that MEDC Yet the MEDC continues to claim it is President Greg Main had now conceded that see “The Michigan Economic Delusion Corporation” Page 4

"A fabulous research and educational institute headquartered in Midland. The largest state- based free-market think tank in the country and certainly one of the most respected." Paul W. Smith, WJR AM760 radio show host, discussing the Mackinac Center, Sept. 2, 2009

www.mackinac.org Fall 2009 1 Mackinac Center IMPACT Board of Directors President’s Message D. Joseph Olson, Chairman Rodney M. Lockwood Jr. Senior Vice President and General President, Lockwood Counsel, Amerisure Companies Construction Company, Inc. Joseph G. Lehman, President Joseph P. Maguire Introducing the Mackinac Mackinac Center for Public Policy President, Wolverine Development Joseph J. Fitzsimmons Corporation Retired President, Center Legal Foundation University Microfilms Richard D. McLellan Attorney, Dykema Gossett Hon. Paul V. Gadola U.S. District Court Judge Lawrence W. Reed he Mackinac Center has never been an ivory President Emeritus, Kent B. Herrick Mackinac Center for Public Policy President and CEO, Thermogy tower think tank. Historically, our work has been James M. Rodney T Richard G. Haworth Chairman of the Board, Chairman Emeritus, aimed at public policy formulated in the legislative Detroit Forming Inc. Haworth, Inc. and executive branches. Our newest venture, the Linda K. Rodney Phil F. Jenkins Attorney at Law, Law Offices Chairman, Sweepster Inc. Mackinac Center Legal Foundation, will place free- of Linda K. Rodney, P.C. Edward C. Levy Jr. market ideas squarely in the judicial branch. President, Edw. C. Levy Co. Joseph G. The Center’s entrepreneurial founders saw a Lehman President void in the marketplace of ideas and filled it. Until Board of Scholars they formed the Mackinac Center, no Michigan Dr. Donald Alexander Dr. Dale Matcheck institution existed solely to develop comprehensive, free-market Western Michigan University Northwood University Dr. William Allen Dr. Paul McCracken solutions and put them on the policymaking table. Michigan State University University of Michigan (ret.) Dr. Thomas Bertonneau Charles Meiser That entrepreneurial spark still burns. The newly launched MCLF Writer and Independent Scholar Lake Superior fills a void in judicial decision making. We will represent clients, Dr. Brad Birzer State University (ret.) Hillsdale College Glenn Moots free of charge, in strategic cases with the potential to set strong legal Dr. Peter Boettke Northwood University precedents that protect economic liberty. George Mason University Dr. George Nastas III Dr. Theodore Bolema Marketing Consultants This approach, called “public interest law,” focuses beyond the Anderson Economic Group Dr. John Pafford Northwood University narrow interests of particular litigants by advancing a broad social Dr. Stephen Colarelli Central Michigan University Dr. Mark Perry goal. For example, Brown vs. Board of Education wasn’t just about Andrew Coulson University of Michigan - Flint Cato Institute a handful of children’s right to attend particular schools in 1954. It Gregory Rehmke Robert Crowner Economic Thinking/ was about the right of millions of people to equal treatment. Eastern Michigan University (ret.) E Pluribus Unum Films Dr. Richard Cutler Dr. Steve Safranek We’ve come to understand that litigation capacity is necessary University of Michigan (ret.) Ave Maria School of Law to achieve our mission. For years, big-government advocates have Dr. Jefferson Edgens Dr. Howard Schwartz Morehead State University Oakland University used the courts to achieve their policy goals — either undoing Dr. David Felbeck James Sheehan Deutsche Bank Securities what legislatures have done or doing what legislatures would not University of Michigan (ret.) Dr. Burton Folsom Rev. Robert Sirico Hillsdale College Acton Institute for the do. Ceding the field of strategic litigation is one way we can fail to Study of Religion and Liberty Dr. Wayland Gardner accomplish our mission. Western Michigan University (ret.) Dr. Bradley Smith Capital University Law School Public interest litigation gives us more ways to succeed. We John Grether Northwood University Dr. John Taylor Grand Valley State University will always try to win in courts of law, but we’ll also take every Dr. Michael Heberling Baker College Dr. Richard K. Vedder opportunity to win in the court of public opinion through strong Ohio University Dr. Ormand Hook media relations. Mecosta-Osceola Intermediate Prof. Harry Veryser Jr. School District University of Detroit Mercy Litigation produces yea-or-nay decisions, while many legislative Robert Hunter John Walter Jr. ideas never get a vote. Litigation coupled with effective publicity can Mackinac Center for Public Policy Dow Corning Corporation (ret.) Prof. Harry Hutchison Dr. William Wilson stop bad legislation in its tracks. And sometimes, litigation is the only Wayne State University Economic Consultant way to force government to comply with laws already on the books. Dr. David Janda Mike Winther Institute for Preventative Institute for Principle Studies Strategic litigation augments our public policy work without Sports Medicine Dr. Gary Wolfram Annette Kirk Hillsdale College compromising our principles or changing our identity as a research Russell Kirk Center for institute. Our priorities remain the same: education, labor, property Cultural Renewal David Littmann rights, tax and budget, economic development, political speech and Mackinac Center for Public Policy government transparency. In our first case, we’re representing home day care owners who were illegally dragooned into a union along with 40,000 others. If we’re successful, the union will lose its hold on these business owners and the state will have to stop diverting $3.7 million in child assistance funds to the union each year. (See Page One.) Our friends at the Institute for Justice have advised us along the way. I hope you are pleased by this natural and necessary extension of our capability. A generous friend has pledged to match 50 cents of every dollar you give for strategic litigation. Please consider

multiplying the impact of your support by designating a gift to the 140 West Main Street, P.O. Box 568, Midland, Michigan 48640 Mackinac Center Legal Foundation. I 989-631-0900, Fax 989-631-0964 www.mackinac.org [email protected]

Mackinac Center IMPACT is a quarterly publication of the Mackinac Center for Public Policy, a nonprofit, nonpartisan, tax-exempt research and educational institute classified under section 501(c)(3) of the IRS code. Michael D. Jahr Editor Daniel E. Montgomery Graphic Designer Mackinac Center IMPACT 2 Fall 2009 www.mackinac.org Center Videos Detect Smoke

ackinac Center investigative videos this summer aimed to snuff out two bad proposalsM before they caught fire and spread: a bill that would allow Michigan politicians who violate campaign finance laws to defer their penalties, and an expensive and heavy-handed measure to make fire sprinklers mandatory in new housing construction. The Center’s dogged reporter, Kathy Hoekstra, took note of little-publicized House Watch the Mackinac Center's video on politicians seeking to defer Bills 4713 and 4714, which would allow political campaign finance fees and penalites at www.mackinac.org/10834. candidates who violate campaign finance laws to pay their fines on an installment plan. Hoekstra produced a video to shed light on this self- lives, groups like Habitat for Humanity said the preservation effort by lawmakers. mandate would unfairly raise home building While slogging through reams of campaign costs for the neediest families. The video finance documents, Hoekstra found that many brought the issue to the attention of reporters of the bills’ co-sponsors had lengthy records from Detroit to Traverse City, Livingston to of campaign violations. Among those violators Muskegon. was the legislation’s primary sponsor, Rep. When the Building Code Committee met Fred Durhal Jr., D-Detroit. Hoekstra landed an on July 22, officials initially tried to prevent on-camera interview with Durhal and asked Hoekstra from bringing her video camera into him about the offenses she had uncovered. the hearing. In violation of the Open Meetings He acknowledged his record, adding that Act, they claimed she needed to secure a he currently owes no money to the state for waiver from the Department of Energy, Labor campaign finance violations. Instead, Durhal & Economic Growth two days prior to the told Hoekstra, he introduced the bill on behalf meeting. However, a few e-mails from Mackinac of another lawmaker who had run up significant Center Legal Analyst Patrick Wright convinced debt due to campaign finance disclosure the officials they were in error. In the end, the violations and who wanted the Secretary of State committee overwhelmingly voted to eliminate to have the ability to set up an installment plan mandatory fire sprinkler installation from the to pay it off. proposed state building code. Hoekstra also interviewed the head of Ken Bensen, president of Habitat for the Michigan Campaign Finance Network, a Humanity of Michigan, was featured in nonprofit campaign finance watchdog group. Hoekstra’s video and led the opposition Executive Director Rich Robinson told Hoekstra, against mandatory sprinklers. He later said of “If I was to prepare a long list of problems that Hoekstra’s reporting, “We were impressed with need to be addressed in the campaign finance the widespread coverage this video received reporting system and enforcement, I don’t think in news outlets across the country. Our news that would make the list at all.” searches show it is receiving play from Texas There is no indication that the legislation to the East Coast. Since this issue is being will emerge from the House committee where it addressed in many more states in the next year, now languishes. we appreciate the widespread coverage and Another issue that had gone unnoticed by will continue to use the video as a resource in the media, but had the potential to negatively our continued efforts to educate others on this Watch the Mackinac impact Michigan’s economy and those in issue.” Center's video on fire need, was a measure that would require fire The fire sprinkler issue could flare up again. sprinklers at www.mackinac.org/10778. sprinklers in every new home in Michigan. On The state’s director of Building Codes will July 21, Hoekstra released a video that explained consider whether to adopt the committee’s how the state Building Code Committee was recommendation at a later date. But thanks to considering a fire sprinkler mandate for new top-notch investigative reporting, the public is home construction throughout the state. less likely to be burned by policies that might While some, including the fire sprinkler have gone undetected until the damage was industry, argued that such a mandate would save done. I

www.mackinac.org Fall 2009 3 Mackinac Center IMPACT The Michigan Economic Delusion Corporation from Page One

creating thousands of jobs and to deprive the public FROM THE REPORT and the Legislature of meaningful information on “New Jobs” at MEGA the agency’s successes and failures. As LaFaive, Facilities as a Percentage director of the Center’s Morey Fiscal Initiative, puts of Michigan Jobs, 2006

it, “We wanted to make this sprawling and complex MEGA Facilities: 19,551 (0.45%) agency more transparent and understandable, because all too often, all that’s known about the department is what it chooses to reveal — usually in self-aggrandizing press releases.” In the study, LaFaive and Hohman zeroed in

on the MEDC’s most high-profile program, the Rest of the State: Michigan Economic Growth Authority, which 4,307,549 (99.55%) offers select companies state business-tax credits

if they create or maintain jobs and investment in Michigan. Among other measures, they included a Source: Authors’ calculations based on data from the U.S. Bureau of Labor new analysis by Mackinac Center Adjunct Scholar Statistics and the MEDC’s “MEGA Credits vs. Conversions” spreadsheets. (“New Jobs” were not all created in 2006.) Michael Hicks. Hicks used a common statistical technique to test the relationship between a county’s Center news releases throughout the summer and manufacturing jobs and the MEGA tax credits the publication of two shorter Mackinac Center earned by the county’s manufacturers. He discovered Policy Briefs by LaFaive on MEDC Programs: the relationship was negative: For every $1 million “Special Effects: Flawed Report on Film Incentive in credits, 95 manufacturing jobs were destroyed. Provides Distorted Lens,” and “MEGA, the LaFaive and Hohman also discussed the Michigan MEDC and the Loss of Sunshine.” As a result of Strategic Fund and the Michigan Film Office (see this communications drive, LaFaive conducted Impact, Summer 2009, Page One), while outlining 26 interviews with a variety of media outlets, the MEDC’s congeries of other “job creation” including WJR radio in Detroit and Grand Rapids, programs. WTCM radio in Traverse City, WMKT radio in Petoskey, WHWL radio in the Upper Peninsula and Michigan Public Radio statewide. There has also been a response in the Legislature. "The MEDC's CEO has State Sen. Nancy Cassis, R-Novi, chair of the called on people to examine the results of the MEDC's Senate Finance Committee, has publicly praised the programs. We did exactly that, Center’s work during her fights to mandate greater and we weren't impressed." MEDC transparency, and she sponsored a bill James Hohman, co-author of increasing the MEDC’s reporting requirements for "The Michigan Economic Development Corporation: MEGA along the lines of two recommendations in A Review and Analysis" the Center’s study. Her bill was subsequently signed into law. An additional amendment — ultimately The release of the study was met with an defeated — would have prevented MEGA from explosion of interest, including an editorial in The issuing tax credits to new companies that directly Wall Street Journal titled “The Michigan Example,” competed with an existing Michigan business. Jim an editorial in The Detroit News, stories in the McBryde of the MEDC reportedly said that if the Detroit Free Press and in Crain’s Detroit Business. In amendment were approved, it “would essentially a Sept. 8 Grand Rapids Press column on the study, render the entire program neutered.” Booth Newspapers business writer Rick Haglund No harm done. As LaFaive and Hohman’s work reported: “[MEDC President] Main said he agrees shows, the black box of the MEDC is really a black with the center’s contention the MEDC should hole — a distraction, at best, from the real work be required to release additional details about its of improving the business and residential climate programs. He said he supports legislation that would for everyone, not just a few. The new transparency allow more information to be released without mandates on the MEDC will help force that truth violating taxpayers’ privacy.” into the light of day. I This response followed numerous Mackinac

Mackinac Center IMPACT 4 Fall 2009 www.mackinac.org Media Impact Promoting Sunshine, the Law and Economic Growth

Transparency also was the focus of extensive media coverage for another of the Center’s initiatives — the “Show Michigan the Money” project directed by Policy Analyst Ken Braun. His work convincing school districts, municipalities and lawmakers statewide to post their spending online was cited by the Traverse City Record-Eagle June 16, Battle Creek Enquirer June 18, Clare County Review June 19, Michigan Citizen June 21, Lansing State Journal June 30, Observer & Eccentric Newspapers July 2, Southgate News-Herald July 7, he Mackinac Center Legal Port Huron Times-Herald July 24 Foundation, the Center’s and WOOD-TV Aug. 4. Paul Kersey and Michael Van Tpublic interest law firm, Braun also was cited July 6 Beek, directors of labor policy and introduced itself to Michigan with by the Detroit Free Press and education policy, respectively, were a media blitz in mid-September WDIV-TV4 in Detroit on the asked by The Wall Street Journal immediately after filing its first Center’s objection to Michigan's to write a July 24 Op-Ed about the lawsuit, with coverage in The pursuing stimulus money for a state of Detroit Public Schools. Van Washington Times, The Detroit Detroit-to-Chicago high-speed rail. Beek also was cited on a variety News, Detroit Free Press, Lansing That issue was covered in-depth of education issues, including a State Journal and numerous TV by Randal O’Toole, an adjunct school reform, school funding, and radio outlets (see related story, scholar with the Center, in an teacher certification and the Page One). Op-Ed that appeared Aug. 3 in the Center’s database of school union The Aug. 31 release of “The Detroit Free Press and Aug. 5 in collective bargaining agreements in Michigan Economic Development the Livingston Daily. Michael Gongwer Aug. 12, The Kalamazoo Corporation: A Review and Jahr, director of communications, Gazette Aug. 17, the Detroit Analysis,” also drew extensive discussed the issue July 6 on Free Press and Bay City Times media coverage. Co-authored by WJRT-TV12, while the Center Aug. 18 and the Midland Daily Michael D. LaFaive, director of was cited Aug. 24 by the Chicago News Aug. 31. Kersey was cited on the Morey Fiscal Policy Initiative, Tribune and CBS2 in Chicago, binding arbitration in the July 11 and James Hohman, fiscal policy as well as Aug. 25 by the Lansing Wall Street Journal and the July analyst, the study explores the State Journal. 19 Detroit News, and on right-to- shortcomings of special tax More transparency coverage work protection for employees in favors the state gives to selected resulted from the Center’s scrutiny the June 24 Grand Rapids Press. companies in hopes of creating of the Michigan Film Office, the tax A study by LaFaive about more jobs. The study was cited by rebates it gives to movie producers cigarette taxes and smuggling the Detroit Free Press Sept. 1, and the office’s unwillingness caught fire on the West Coast over The Detroit News Sept. 3, a Wall to be forthcoming about total the summer when California’s Street Journal editorial Sept. 4 expenditures. The Center’s Legislature considered increasing (reprinted in the Minneapolis research was cited in the Aug. 28 tobacco taxes. Op-Eds by LaFaive Star-Tribune Sept. 6), the Dalton, issue of Variety, the Hollywood appeared in the Aug. 11 San Ga., Daily Citizen Sept. 8, The trade publication that covers the Jose Mercury News, the Aug. Grand Rapids Press Sept. 8, entertainment industry. LaFaive 13 Fresno Bee, the Aug. 14 Livingston Daily Sept. 23 and was cited on the topic June 28 in Sacramento Bee and the Aug. USA Today Sept. 25. LaFaive the Livingston Daily and Aug. 28 16 Long Beach Press Telegram. was also cited earlier by the Wall in MIRS, as was Communications The study was also cited in an Street Journal July 24 about the Specialist Kathy Hoekstra Aug. 18 Aug. 11 Investor’s Business Daily MEDC’s lack of transparency. by FOX17 of Grand Rapids. editorial. I

www.mackinac.org Fall 2009 5 Mackinac Center IMPACT Mackinac Center Legal Foundation from Page One

Neither woman works for the state of Michigan or failing even to comply with basic state constitutional any other government entity. In fact, aside from the provisions in doing so. This council, a government parents who have hired them, neither woman has shell corporation, was to become the day care an employer. Each has simply run a child day care providers’ “employer,” even though it handled none service out of her home, much like tens of thousands of the money involved in the state day care subsidy of other Michiganders. to parents. In September 2006, the CCPTM won the So it came as a surprise in December 2008 when right to organize against the MHBCCC. Loar and Ives were notified that they were dues- A statewide union certification vote was conducted paying members of the newly formed “Child Care by mail in late 2006. Of the 40,500 home day care Providers Together Michigan,” a union of supposed providers who would be affected by this decision, 6,396 government employees. How could individuals voted. The outcome was 5,921 in favor of the union and who independently contract with parents become 475 opposed. Loar, Ives and other home-based day care members of a public-sector union? providers say they were not aware of, and did not vote It wasn’t easy, but the basic pretext was this: in, that election. Because a parent who used Loar's or Ives' services In December 2008, the DHS notified Loar, Ives received a subsidy from the Michigan Department and their counterparts that they were now members of Human Services for child care, Loar and Ives were of a government-employee union. At the same considered government workers. This absurd and time, the DHS began withholding “dues” from state sweeping argument, combined with underhanded subsidy payments intended to help low-income contrivances of the DHS, the United Auto Workers parents pay for their children’s day care. In short, and the American Federation of State, County and a state agency was taking money from day care Municipal Employees, left Loar, Ives and more providers’ pay and funneling it to a union that would than 40,000 other home-based day care workers in “bargain” with a shell corporation on their behalf. Michigan illegally shanghaied into a government Amazingly, the shell corporation’s only involvement union. The union, in turn, was collecting cumulative in their pay would be lobbying the Michigan “dues” of an estimated $3.7 million annually. Legislature for higher child care subsidies. The exact process resembled an elaborate swindle. In 2006, Child Care Providers Together Seeking Justice Michigan — a joint creation of the UAW and When Loar shared her story with Wright, he AFSCME — was formed to organize home-based day realized he had the inaugural case for the Mackinac care providers. The fact that a manufacturing union Center Legal Foundation. Two women, providing a and a government-employee union produced a third service to their community, had been swept into a union to represent private-sector, home-based day government-employee union by a conglomeration care business owners and employees should have of powerful and distant interests. Nearly $4 million raised eyebrows. Instead, the Michigan Department annually was being diverted from day care providers of Human Services took another bizarre step, and needy parents to union coffers. The Michigan entering into an agreement with Flint-based Mott Constitution had been circumvented. Community College to create the Michigan Home And it all happened under the radar. Based Child Care Council, with the DHS and Mott At the Hall of Justice in Lansing on Sept. 16,

Mackinac Center IMPACT 6 Fall 2009 www.mackinac.org “The Mackinac Center is beginning a nationwide blog attention, including coverage on new effort in strategic litigation because the widely read blog site MichelleMalkin.com. it’s something that the proponents of Wright pointed out that the case set a freedom have ignored for too long. dangerous precedent, saying, “If Sherry and We’ve noticed that those who favor Dawn are government employees simply larger and more expansive government because a few of their customers receive have been doing this for a long time government aid, then doctors, landlords and — taking strategic cases to court, trying independent grocers can’t be far behind.” to get key decisions that actually set Following the press conference, Wright did live precedents that increase government’s power over our lives. The Mackinac radio interviews with Frank Beckmann on WJR 760 Center wants to be the antidote to that.” AM in Detroit and with Norm Jones on WTCM NewsTalk 580 in Traverse City. Wright, Loar and Mackinac Center President Joseph Lehman, “Opening a New Front in the Battle for Ives then did in-studio interviews at Detroit TV Freedom,” www.mackinac.org/9051 stations WJBK-TV and WXYZ-TV. They also spoke with members of the editorial boards of the Detroit Wright filed a suit asking the Michigan Court of Free Press and The Detroit News. Appeals to prevent the DHS from taking dues There was more print, radio and television from child care subsidy payments. At a press coverage around the state in the days that Watch the Mackinac conference on the courthouse steps, Wright, followed. Loar, Ives and Wright did a lengthy Center's videos covering Loar and Ives explained the merits of the case. interview with Greg Marshall on WMKT 1270 the Loar v. DHS case at www.mackinac.org/11149. Both women told the gathered reporters that AM in Petoskey, where both women reside. their issue is not with unions — both come from Wright was a guest on the Detroit Public TV union households. But Loar summed it up best: show “Am I Right?” Flint’s WEYI-TV began “How can I be in a union? In my house, I’m both looking into the role that Mott Community management and labor.” College played in the affair. The case received coverage throughout the It is the natural tendency of government week (and well beyond), while the Michigan to stray from serving the people to subverting Department of Human Services, the UAW and their rights. The judicial branch checks this AFSCME consistently provided “no comment.” tendency, but only when prodded, which is why Among the outlets covering the story were the Mackinac Center Legal Foundation was The Washington Times, The Detroit News, the founded. Starting with Loar and Ives, ordinary Detroit Free Press, the Lansing State Journal, Michiganders whose constitutional rights have The Flint Journal, the Petoskey News-Review, been abused now have a champion in the halls WXYZ-TV7, WJBK-TV2, WEYI-TV25, WJRT- of justice. TV12, WILX-TV10, WLNS-TV6, WJR AM760, Visit www.mackinac.org/9051 to see case documents Reporting Michigan, WATZ-Alpena, Michigan and short videos discussing the Mackinac Center Legal Public Radio, Detroit Public Television and the Foundation and the stories of Sherry Loar and Dawn Ives. Lansing-based political newsletters MIRS and Gongwer News Service. The case also received

www.mackinac.org Fall 2009 7 Mackinac Center IMPACT Advancement Impact Building Stronger Bones

ov. Jennifer Granholm has been quoted in Charlie on board throughout the transition. But The Washington Post as saying Michigan has regarding his workers’ need to work out of state, aG sound basis for a better future: “We have great she wrote: “It would be nice if you could get bones as a state. We know how to build stuff.” those poor guys home more often. They and their But without smart choices, bones can decay. families are suffering terrible. Trust me, I know. Recognizing that fact and dealing with it require For the 14 months Charlie has been with your tough decisions. company he has only been home about 20 weeks Consider Mike Houseman, a contributor out of the 60. It has been really hard for all of us.” and friend who knows “how to build stuff.” This is a request that Mike would love to fulfill, Mike started Houseman Construction in 1998, but can’t for now. A husband and father of four specializing in small commercial building. While himself, Mike is travelling far more than he would his business grew, so did Michigan’s government. like in order to obtain licenses to operate in other Investment waned, work slowed and Houseman states and create work for his employees. Construction had to find work outside of For these reasons and more, Mike is passionate Mike Houseman Michigan. about the Mackinac Center’s work to improve tax Houseman Construction developed a strong policy, restrain spending and encourage a better reputation nationally, yet in 2009, Mike made the business environment in Michigan. He volunteers, difficult decision to sell his business to a larger supports us financially and introduces us to others contractor, Wolverine Building Group. Mike is who desire positive change. now president of Wolverine North America. You can “build stuff” — and strengthen Though Mike is still able to work in an industry Michigan’s bones — by doing the same. I he loves, the road has not been easy. Hillary Walker, wife of one of Mike’s employees, Charlie Walker, wrote an e-mail praising Mike for keeping

Curing a Plague by Going Viral

lu season has arrived in Michigan, and we have Choices link to it. gone viral. Mackinac Center President Joe Lehman FViral by YouTube’s standards, that is. has committed resources to marketing our On Oct. 12, 2009, the Mackinac Center posted research through social networking Web sites the video “Oh. Canada?” to YouTube. The two- and producing entertaining, high-quality and minute video features Canadian citizens discussing strategic videos. Greater investment in marketing their experiences with universal health care. and new media formats will not distract from the Lin Gilbert, a young mother and resident fundamentals, however: The Center is, and will of Vancouver, British Columbia, asks, “If the remain, a research institute that produces original Justin W. Marshall, U.S. changes their medical system, where are and insightful analysis of the most important Vice President of Advancement Canadians like us going to go for surgery?” During policy matters. her three-year wait for surgery, she became so Your investment in our work and belief in crippled she had to use a walker and wear diapers. liberty is allowing us to have ever greater impact. Shirley McGuin of Windsor, Ontario, needed As 2009 ends, I hope you will support our work a knee replacement for over a year, and when the with a contribution. And if you choose specifically pain became unbearable, she went on “medical to support our new litigation center (see Page vacation” to receive treatment abroad. She warns, One and the President’s Message on Page 2), an “[Canadians] have to be patient patients in anonymous contributor will match 50 cents for Canada.” every dollar you send us. Your estate plans reflect the values you Why is “Oh. Canada?” viral? Twenty percent The Mackinac Center is a cure for the plague hold dear and hope to perpetuate. of individuals who viewed the video forwarded it of bad government policy. Join us today by Join the Mackinac Center’s Legacy Society by calling Justin W. Marshall at to a friend via e-mail, Instant Messenger or a blog sending a contribution — and help keep our video 989-631-0900 and including the Center post. In two days, the video received over 10,000 contagious by passing it along: www.mackinac. in your bequest today. views. That number continues to grow as national org/11145. I organizations like Consumers for Health Care

Mackinac Center IMPACT 8 Fall 2009 www.mackinac.org Young Guns Join the Drive

t’s been said that the demands of the Western frontier spurred America’s love of liberty and self-reliance. But theI end of the “wild West” hasn’t killed that spirit. Instead, it has opened up new frontiers in the quest for freedom, which is why we’ve hired four young guns to take new ground. Michael Van Beek, 28, is the Mackinac Center’s new director of education policy. As a former teacher and administrator at a private academy, Van Beek brings firsthand experience to educational issues, and he’s restless Four reasons the West will remain free. From left to to push on, saying: “We’ll continue to be the voice that right: Hannah Mead, 22, Chris Deming, 22, Claire demands more freedom for parents to choose the way they Forman, 22, Michael Van school their children.” Beek, 28. He knows it won’t be easy, but adds: “My colleagues hold me to a very high standard. It’s invigorating and challenging.” Rising to this challenge, Van Beek has already embarked on several major projects, including a new study of virtual schools, an update of the “Michigan School Money Primer” and a public database of Michigan school districts’ insurance spending. Van Beek is used to tough goals. He earned his master’s He began work over the summer, and this fall, SFE was in American history from Purdue University, and he present at information fairs on 17 college campuses. received his bachelor’s degree from Hope College while Deming just finished college himself, graduating serving as captain of the varsity baseball team. magna cum laude in 2009 from Northwood University Hannah Mead joins the Mackinac Center as assistant in Midland, Mich., where he majored in economics, editor, having impressed everyone with her work as Center international business and management. Deming also communications intern during the summers of 2007 and received the Ludwig von Mises Award, the university’s 2008. Just 22, she has already accumulated an impressive highest honor for an economics student. resume: She graduated summa cum laude from Hillsdale Claire Forman, 22, is working for one year as a College in 2009, receiving the Adam Smith Award for research analyst to Mackinac Center President Joseph academic achievement in economics. In the spring of Lehman as part of the prestigious Koch Associate 2009, she even journeyed to Gautemala City to present Program, which trains promising college graduates in a paper at a conference of the Association of Private nonprofit management and organization. Forman has Enterprise Education. already been able to contribute to several Mackinac Center Mead says she appreciates the Center’s congenial policy initiatives by conducting project research and work environment and her colleagues’ “wit, sincerity and providing organizational support. dedication to the Mackinac Center’s mission.” Though Forman earned her bachelor’s degree in global most of her work is behind-the-scenes, she has already affairs and Latin American studies from George Mason written several commentaries, including “Advice from University, where she also minored in economics. She has the Nanny State,” a hilarious riff she co-authored with studied in Argentina and Honduras, working at a micro- Communications Director Michael Jahr, and “The Bone credit loan organization and teaching at an orphanage. of Contention,” a thoughtful reflection on quarterback “It was frustrating to see good people in need and not Michael Vick’s reinstatement into the NFL. be able to explain just what the problem was,” she says Christopher Deming, 22, is the new director of of her time abroad. “Later, my studies in market-based Students for a Free Economy, the Mackinac Center’s economics made the problems clear, and I want to share college outreach and leadership program. Deming says he that understanding, whether here or in South America.” is excited: “College students don’t often hear a message Talk about new frontiers. The “West” may keep like SFE’s. Entrepreneurial success, opportunity for all changing — Michigan was once part of the America’s people and the moral arguments for free markets: These “Northwest Territory” — but there is always a new ideas resonate with college students. Students become the generation ready to join the drive for freedom. I fiercest of advocates for individual liberty the world has ever seen.” Deming wants to expand SFE’s influence to every university in Michigan and to community colleges as well.

www.mackinac.org Fall 2009 9 Mackinac Center IMPACT Free-Market Fundamentals

Rome and the Great Depression By Lawrence W. Reed

Lawrence W. Reed is president emeritus of the Mackinac the wake of the crisis soared. Center for Public Policy and president of the Foundation for Following the lead of Rome, many cities within the Economic Education, headquartered in Irvington, N.Y. empire spent themselves deeply into debt. Beginning ommentators on the present financial crisis have with Emperor Hadrian, municipalities in financial noted interesting parallels to the Great Depression difficulty received aid from Rome and lost a substantial Cof the 1930s, but ominous parallels to an earlier age are measure of their political independence in the bargain. more troubling. Emperor Nero once rubbed his hands together and Monumental sums for bailouts. Staggering declared, “Let us tax and tax again! Let us see to it that no increases in public debt. Concentration of power in one owns anything!” Taxation ultimately destroyed the the central government. A mad scramble by interest wealthy first, followed by the middle and lower classes. groups with endless claims on the treasury. Higher Late in the third century, Emperor Aurelian taxes on the productive. These things are as familiar declared government relief payments to be a hereditary in 21st century America as they were in the ill-fated right. He provided recipients government-baked bread Roman welfare state of two millennia ago. (instead of the old practice of giving them wheat for In the first century B.C., a rogue named Clodius ran their own bread) and added free salt, pork and olive oil. for the office of tribune. He bribed the electorate with The massive demands on the government to spend promises of free grain at taxpayer expense and won. and subsidize created pressure to increase the money Thereafter, Romans in growing numbers embraced the supply. Roman coinage was steadily debased to pay notion that voting for a living could be more lucrative for expensive programs. Once almost pure silver, the than working for one. Economist Howard E. Kershner denarius by the year 300 was little more than a piece of described the process this way: “When a self-governing junk containing less than 5 percent silver. people confer upon their government the power to take Price controls further ravaged a battered and from some and give to others, the process will not stop shrinking private economy. By 476 A.D., when until the last bone of the last taxpayer is picked bare.” barbarians wiped the empire from the map, Rome had Nearly a third of the city of Rome received public relief committed moral and economic suicide. payments by the time of the birth of Christ. Another Great Depression should indeed concern In response to a severe money and credit crisis in 33 us. The one that followed the Roman welfare state A.D., the central government extended credit at zero is known as the Dark Ages, and it lasted for several interest on a massive scale. Government spending in hundred years. I

Mackinac Center IMPACT 10 Fall 2009 www.mackinac.org Free-Market Library

VIEWPOINTS Massachusetts Should Not STUDIES Be Michigan’s Role Model Flawed MSU Film Subsidy Special Effects: Flawed Report on Film Report Misleads Taxpayers August 2009 V2009-26 Incentive Provides Distorted Lens Instead of replicating Massachusetts’s July 2009 V2009-19 S2009-04 cost overruns and reduced care, Michigan A Michigan State University report on A Michigan State University report on can lower health care costs and increase the state’s film subsidy program left out the impact of the Michigan film incentive availability of affordable insurance by the program’s cost, thereby providing program is of limited use in determining allowing more competition. a skewed picture of the Michigan film the program’s success because it ignores www.mackinac.org/10843 incentive’s actual impact. the film subsidy’s costs. www.mackinac.org/10733 School Privatization Survey Shows www.mackinac.org/10661 Gains in Support Service Contracting Transparent Failures MEGA, the MEDC and the September 2009 V2009-27 July 20009 V2009-20 Loss of Sunshine Almost half of Michigan public school Michigan’s economic standing has S2009-05 districts contract out for one of the three fallen precipitously in the decade since The recent emphasis on government main noninstructional services — food, the creation of the Michigan Economic “transparency” has led to the publication busing or transportation — saving millions Development Corp. The entity is a failure of much useful data on Michigan state of dollars. government. One state agency, however, and should be eliminated. www.mackinac.org/10906 www.mackinac.org/10734 has bucked this trend: the Michigan MEDC Should Become A Perfect Storm: Batten Down Economic Growth Authority. Transparent — Or Disappear www.mackinac.org/10798 the Hatches or Drown September 2009 V2009-28 July 2009 V2009-21 The Michigan Economic Development As Michigan’s economy has become less Municipal governments across Michigan Corporation: A Review and Analysis prosperous, the Michigan Economic must redefine how they operate in order S2009-06 Development Corp. has become less to deal with the reality of shrinking tax This extensive examination shows the transparent, making it more difficult to revenues over the next decade and beyond. Michigan Economic Development Corp. assess its job-creation claims. www.mackinac.org/10735 has spent more than $1.6 billion and done www.mackinac.org/10909 “Obama-Care’s” Unintended little to halt the state’s economic decline. Consequences Advice from the Nanny State Finding that job-creation projections are September 2009 V2009-29 grossly overstated and tax credit deals are July 2009 V2009-22 Rest assured that the cash-strapped actually associated with job losses, the President Obama’s goal that every state of Michigan has not neglected core study recommends the department should American have access to affordable, functions! Multiple state Web sites tell be eliminated. quality health care is laudable, but his you how to do everything from driving to www.mackinac.org/10896 proposal’s impact and cost on Michigan eating to dressing. taxpayers should be examined closely. Michigan’s Public Employee www.mackinac.org/10910 www.mackinac.org/10757 Relations Act: Public-Sector Labor Law and Its Consequences Diminishing Private Sector Keeps Take a Closer Look at Issues Supporting Bloated Public Benefits With Canadian Health Care S2009-07 September 2009 V2009-30 This Policy Brief finds that the Michigan August 2009 V2009-23 Problems with Canada’s single-payer Public Employee Relations Act, which Government employees in Michigan insurance system need to be kept in mind governs collective bargaining between receive benefits worth almost $6 billion as the United States considers health care local governments and their employees, more than those of private-sector reform. hamstrings local officials, undermines employees. This disparity must be www.mackinac.org/10914 democratic principles and adds billions to addressed to improve Michigan’s the cost of government. economic future. www.mackinac.org/10911 www.mackinac.org/10839 JOURNALS Michigan Capitol Confidential Length of School Year Won’t VIDEO Improve Student Achievement MCC2009-04 Delay Your Fines for Free? August 2009 V2009-24 Key stories: Canadian trash, Detroit Communications Specialist Kathy Focusing on teacher quality would do schools, government transparency. www.mackinac.org/10861 Hoekstra examines proposed legislation to more to improve student performance allow politicians to pay campaign fines in than increasing the number of days installments — an option not available to students spend in school. Michigan Capitol Confidential www.mackinac.org/10840 residents who owe Michigan taxes. MCC2009-05 www.mackinac.org/10834 The EFCA Rodeo Key stories: Congressional spending, A Fire Sprinkler Mandate? August 2009 V2009-25 nanny state advice, pending legislation. www.mackinac.org/11217 Communications Specialist Kathy The so-called Employee Free Choice Act is Hoekstra examines the potential like a calf roping contest, with workers as consequences of a proposal to mandate calves and union organizers as cowboys. www.mackinac.org/10842 fire sprinklers in all new houses. www.mackinac.org/10778

www.mackinac.org Fall 2009 11 Mackinac Center IMPACT 140 West Main Street, P.O. Box 568 Midland, Michigan 48640

A Reform ImPERAtive

he Public Employment Relations empowers union officials, who are Foundation gave the report additional Act has been perhaps the not accountable to the general public, exposure in the national free-market Tmost important law passed by the in effect creating a 'union veto' over movement by including it as part of Michigan Legislature in the last 50 many decisions. At the same time, its weekly “Insider.” Communications years. Understanding PERA is the contracts signed under PERA transfer Specialist Kathy Hoekstra made PERA key to understanding why Michigan millions of dollars from government part of the gubernatorial debate when, government is in a state of perpetual funds to an increasingly ideological serving on a panel with The Wall Street crisis. Yet it rarely comes up in all the union movement, establishing a Journal's John Fund and the Detroit debates and punditry. permanent, taxpayer-funded lobby for Free Press' Stephen Henderson, she If Paul Kersey gets his way, big government. Kersey concludes, asked candidates for their opinions on that is about to change. Kersey is “The government employee unions the law at the GOP’s Mackinac Island the Mackinac Center’s director of created by PERA may be the single conference. labor policy, and his recent study, largest obstacle to restoring the state’s “We aren’t done talking “Michigan’s Public Employment prosperity. … PERA is long overdue for about PERA. It really is critical to Relations Act: Public-Sector Labor Law a thorough re-examination, leading to understanding Michigan’s politics and and Its Consequences,” reveals the far- the rewriting or repeal of the law.” economy,” says Kersey. “PERA creates a ranging and overwhelmingly negative As reluctant as the state’s politicians lot of problems, but there are solutions effects of the state law governing labor and media have been to discuss PERA, that protect both residents and relations in local governments and Kersey’s study is already making an government employees, and we school districts throughout Michigan. impression. Kersey appeared on “The are going to help find them The report, issued just prior to Frank Beckmann Show” on WJR and implement them.” I Labor Day, demonstrates how public- AM760 shortly after the study’s release sector union officials have used the to discuss PERA, yielding a lively law to usurp the powers of elected give-and-take with several callers. The officials and voters, expanding their Detroit News included PERA repeal power and making government more or overhaul as one of its “50 Ideas to extensive and expensive. “PERA Fix Michigan,” and the Heritage

Mackinac Center IMPACT 12 Fall 2009 www.mackinac.org