The Newsletter of the Mackinac Center for Public Policy • www.mackinac.org • Fall 2005 Property Rights: Blinking Lights of Freedom
A l r - e n d A p p e A l Y e A A s p e c i Seizing the Initiative For the inspirational story of the blinking hen the U.S. Supreme government takings that aim to lights of Warsaw, check WCourt issued its Kelo increase tax revenues “reverses your mail for our special v. New London decision in the proper relationship between year-end appeal. June, Americans’ property the people and the government,” rights seemed to have reached forcing the people to become a Waterloo. The court had the means to government ends. approved government con- In Crain’s Detroit Business, he demnation of private homes so observed, “I think that this deci- that government officials could sion is going to be met with reassign homeowners’ land to quite a bit of hostility from the private developers in an effort American public in general. And to boost tax revenues. I think to the extent that any state But with the explosion of Patrick J. Wright testifies before the Michigan changes laws … it would be to public outrage over the deci- House Committee on Government Operations. enact more protections.” sion and with a spontaneous demand for the Cen- This proved prophetic. Within days, state Sen. ter’s guidance on how to fight back, it became clear Tony Stamas of Midland had announced he would that the battle had just begun. sponsor a bill to ban public takings for the primary Senior Legal Analyst Patrick J. Wright has been benefit of a private entity. In the next three months, leading the Center’s charge. Within hours of the five measures were introduced in the state Legisla- Kelo decision, Wright fired off a news release and ture to restrict the use of eminent domain. Three Web commentary that led to major media coverage would disallow takings meant for primarily private (see Impact, Summer 2005). uses, while two others would ban takings intended Wright argued, “This decision ignores the Fifth to enhance tax revenue. Contents Amendment’s clear meaning that government taking By August, Wright was receiving regular calls President’s Message 2 of private property should be for public — not from policymakers for guidance on takings under Wetlands Supreme 3 private — use.” He also pointed out that allowing see “Property Rights,” Page 4 Educational Diligence 3 Media Impact 5 Debate Workshops Shine 6 Budget Cuts Follow MEGA Study Maguire Restoration 8 n April, the Mackinac Center published a True, the state’s budget has been April 2005 Head Count for Liberty 8 Iblockbuster 121-page analysis of the Michigan pinched by Michigan’s frail economy, Labor and Education 9 Economic Growth Authority, the state’s primary but MEDC officials have typically A Mackinac Center Rep ort MEGA: Free-Market “economic development” program (see Impact, used economic weakness to argue for A Retrospective Assessment Fundamentals 10 Summer 2005, Page One). The study’s release led budget hikes, claiming their agency Michael D. LaFaive and Michael Hicks, Ph.D.
A study of the Michig Free-Market Library to widespread media coverage and to legislative can jumpstart job growth. MEDC offi- an Economic Growth Autho 11 the State of Michigan’s rity, primary tax incentive pro gram Detroit Agenda testimony concerning MEGA’s ineffectiveness by cials have also been drawing media Endorsed 12 study co-author Michael D. LaFaive, the Center’s attention to the MEGA tax incentives director of fiscal policy. Now the Michigan Eco- it hasn’t been able to offer businesses because of nomic Development Corporation, a quasi-govern- purportedly stingy legislative limits. mental agency that supports MEGA, has received Yet this summer, at the very moment the MEDC a budget cut for fiscal 2006, and the MEDC’s job might have expected an increase, the Michigan claims have been placed under the scrutiny of the Legislature clipped a total of $3 million from the state Auditor General. MEDC’s budget, with most of the cut coming from In many ways, the budget hit was unexpected. see “State Audit,” Page 4
“(This) commentary from the Mackinac Center for Public Policy in Midland … lays out five things Detroit can do to right its financial ship and make the city more livable. We urge the candidates for mayor and City Council in the November election to embrace the ideas and make them part of their campaign platform.” www.mackinac.org | Fall 2005 Mackinac Center IMPACT — Detroit News lead editorial, Sept. 2, 2005 President’s Message Board of Directors D. Joseph Olson, Chairman Edward C. Levy Jr. Senior Vice President and General President, Edw. C. Levy Co. Counsel, Amerisure Companies Rodney M. Lockwood Jr. Lawrence W. Reed, President President, Lockwood Mackinac Center for Public Policy Construction Company, Inc. Joseph J. Fitzsimmons Joseph P. Maguire Retired President, President, Wolverine University Microfilms Development Corporation Are We Biased? Hon. Paul V. Gadola Richard D. McLellan U.S. District Court Judge Attorney, Dykema Gossett Richard G. Haworth James M. Rodney ow loaded a single word can be! Chairman of the Board, Chairman of the Board, H In a vain attempt to dismiss hundreds of studies Haworth, Inc. Detroit Forming Inc. Phil F. Jenkins Linda K. Rodney and commentaries and thousands of ideas and recommen- CEO, Sweepster Inc. Attorney at Law, Law Offices dations, a well-known community figure in a nearby town Mara M. Letica of Linda K. Rodney, P.C. Executive Vice President, recently said of the Mackinac Center, “They’re biased.” General Counsel and Secretary, A moment’s thought shows that such a statement Letica Corp. hardly constitutes a refutation and is itself probably an indication of a bias. Nonetheless, it’s an accusation Board of Scholars Dr. Donald Alexander Annette Kirk Lawrence W. Reed that our opponents occasionally raise, and it therefore Western Michigan University Russell Kirk Center President deserves some attention. Dr. William Allen for Cultural Renewal Michigan State University Dr. Robert Kleiman In this instance (and probably most others as well), the accuser’s remark Dr. Thomas Bertonneau Oakland University should be translated this way: “The Mackinac Center comes to conclusions I Writer and Independent Scholar David Littman Dr. Brad Birzer Mackinac Center for Public Policy don’t agree with.” Hillsdale College Dr. Dale Matcheck The best way to prevent anyone from ever accusing you of bias is simply Dr. Peter Boettke Northwood University to keep quiet. Don’t take a stand on anything. Examine the evidence and George Mason University Dr. Paul McCracken Dr. Theodore Bolema University of Michigan pronounce that it tells us nothing. Act as if we live in the Dark Ages, where Law Offices of Theodore Bolema Charles Meiser Lake Superior State University the sum of study and experience leaves us as much in the dark as ever. Dr. Stephen Colarelli Central Michigan University Glenn Moots An intellectual shrug of the shoulders won’t offend anyone, but it can Andrew Coulson Northwood University hardly inform them either. We believe in certain core principles and have Cato Institute Dr. Robert Murphy Robert Crowner Hillsdale College always been candid in saying so: Limited, repre- Eastern Michigan University (ret.) Dr. George Nastas III sentative government is preferable to monarchy Dr. Richard Cutler Marketing Consultants University of Michigan (ret.) Dr. John Pafford or dictatorship. Free people are more produc- Robert Daddow Northwood University Oakland County Department Dr. Mark Perry tive than unfree people. Market economies of Information Technology University of Michigan - Flint work better than command and control ones. Dr. Stephen Dresch Dr. Leonard Plachta Those notions were not always widely Forensic Intelligence Central Michigan University (ret.) International, LLC Gregory Rehmke embraced in the past, but they are now Dr. Richard Ebeling Economic Thinking/ approaching settled truths. For the most part, Foundation of Economic E Pluribus Unum Films Education Dr. Steve Safranek the people who dispute them are peddling self- Dr. Jefferson Edgens Ave Maria School of Law Morehead State University Louis Schimmel Jr. serving agendas, or they are impervious to evi- Dr. David Felbeck Municipal Financial dence. University of Michigan (ret.) Consultants, LLC Dr. Burton Folsom Dr. Howard Schwartz Informed by core principles, the Mackinac Hillsdale College Oakland University Center endeavors to demonstrate when and Dr. Wayland Gardner James Sheehan how free markets and free people can solve Western Michigan University (ret.) Deutsche Bank Securities Dr. Wolfgang Grassl Rev. Robert Sirico problems. We don’t ignore evidence to the con- Hillsdale College Acton Institute for the John Grether Study of Religion and Liberty trary, cook the books or make unsubstantiated Northwood University Dr. Bradley Smith claims. Our research and conclusions should be Dr. Dale Haywood Capital University Law School assessed on their merits. Northwood University Dr. John Taylor Dr. Michael Heberling Grand Valley State University The fact that they stand up to scrutiny is why Baker College Dr. Richard K. Vedder Ohio University opponents often dodge any serious challenge Dr. Ormand Hook We hold some truths to be self-evident, but Mecosta-Osceola Prof. Harry Veryser Jr. we test their implications rigorously. and simply toss out the “b” word. Those who Intermediate School District Walsh College Robert Hunter John Walter, Jr. claim to approach every issue with a blank slate are often uninformed of Mackinac Center for Public Policy Dow Corning Corporation (ret.) what research and experience have shown — or are less than honest about Prof. Harry Hutchison Dr. William Wilson their predilections. Wayne State University Economic Consultant Dr. David Janda Dr. Martin Wing If “bias” means we have an informed perspective, then we’re guilty. But Institute for Preventative Kettering University when I hear that charge, I immediately want to know what’s flawed about Sports Medicine Dr. Gary Wolfram Hillsdale College the data or our interpretation of it. Where are the errors of fact or judg- ment? Our studies carry a “Guarantee of Quality Scholarship” that invites critics to identify mistakes of substance. In 10 years, I can count such find- ings on one finger. So if you hear someone pontificating that the Mackinac Center is biased, Mackinac Center for Public Policy 140 West Main Street • P.O. Box 568 ask them to explain what their bias is. I Midland, Michigan 48640 (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 organization classified under section 501(c)(3) of the IRS code. Christopher F. Bachelder Daniel E. Montgomery Thomas A. Shull Editor Graphic Designer Associate Editor Mackinac Center IMPACT Summer Fall 2005 2002 | | www.mackinac.org Navigating Wetlands to the Supreme Court hen the U.S. Supreme Court announced government almost unlimited jurisdiction,” which Won Oct. 11 that it would hear two Michigan the Founding Fathers “did not intend.” cases involving federal regulation of wetlands, the Their comments were picked up by the Associ- Mackinac Center burst into action. ated Press and Booth newspapers, and Harding The Center was well-positioned to influ- received numerous calls from reporters outside ence the debate on the cases, Rapanos v. United Michigan. On Oct. 17, Harding and Wright were States and Carabell v. Army Corps of Engineers, interviewed by Flint’s Fox 66 TV News Central, which involve challenges by Michigan citizens and their subsequent Op-Ed on the cases was pub- to the federal government’s authority to regu- lished in the Oct. 26 Detroit News. late alleged wetlands on their property. Senior Harding and Wright plan to follow this Environmental Policy Analyst Russ Harding had issue closely in the months before oral argu- already visited one of the properties in ques- ments, which are likely to come in 2006. By early tion (see Impact, Fall 2004), and his skepti- December, Wright will submit an amicus brief to cism about the government’s case had already the Supreme Court analyzing the regulatory over- prompted media attention for the plight of reach of Congress and the Army Corps of Engi- developer John Rapanos, including coverage in neers in these cases. Harding and Wright are also Russ Harding fields questions from Flint’s Fox 66 TV News. The Wall Street Journal, The Detroit News and developing an outreach campaign to national The Washington Times. media, so that they can underscore the dangers Following the court’s announcement, Har- to American freedom and democracy of unbri- ding and Patrick J. Wright, the Center’s senior dled federal power and of delegating key policy legal analyst, issued a news release that observed, decisions to unelected bureaucrats. The Center’s “The federal government’s claim of jurisdiction explosive start on these Supreme Court cases has on grounds that water from an otherwise isolated thus laid the groundwork for a long-term educa- water source might somehow still reach a navi- tional campaign. I gable water is ... too expansive. It gives the federal
Education Reform: Diligence Comes Due he Center’s education scholars always seek model for others across Michigan. Tto improve Michigan schooling as quickly as A second long-term policy shift came in Sep- possible, but their policy recommendations are tember, when Gov. Jennifer Granholm announced often adopted only after years of diligence. Such that, in compliance with a law she signed in Janu- was the case in two recent policy changes — one ary 2005, the American College Testing Program local, and the other statewide. would replace part of the Michigan Educational The first came in August, when Lakeview Assessment Program test for high school juniors. Public Schools Superintendent Sandra Feeley The change will take effect in 2007. Myrand announced that the district would no Two Mackinac Center studies published since longer contract its school employees’ health insur- 2001 have suggested the state consider using pri- ance through the Michigan Education Special vately developed tests like the ACT. The ACT, after Services Association, an insurance administrator all, allows parents and educators to compare indi- established by the Michigan Education Associa- vidual test results to those of the national student tion. The district predicted its switch to a new population, while the MEAP test allows compari- administrator would save $500,000 annually, and son only to a standard approved by the Michigan subsequently the school board raised teachers’ State Board of Education. In addition, the Center salaries. noted that maintaining a stand-alone test like the When Lakeview announced the change, Super- MEAP exam is four times more expensive than intendent Myrand cited the Mackinac Center’s employing a test like the ACT. seminal work on MESSA. Since 1993, the Center The Center’s scholars would be even happier has shown in several studies and commentaries if the state had deregulated test-taking, rather than that MESSA drives up insurance premiums, drain- mandating a particular exam. Still, use of the ACT ing money from the classroom. is a partial victory worth celebrating. The Lakeview school board’s decision is right When it comes to helping Michigan’s schools, in line with the Center’s policy recommendations. sooner is better. But these victories only con- Given the district’s willingness to stand firm despite firm the wisdom of a Russian proverb: The future organized protests from local and nondistrict belongs to those who know how to wait. I school employees, the school board will serve as a
www.mackinac.org | Fall 2005 Mackinac Center IMPACT Property Rights from Page 1 Michigan law, and in September, he was invited restrain takings for primarily private purposes. In to testify before the Michigan House Commit- his remarks, Wright again stressed his concerns tee on Government Operations regarding House about misuse of blight condemnations, and he Bill 5060, which would prohibit takings meant referred the committee to “some useful guide- to enhance tax revenue. Speaking on Sept. 13 to lines” on blight that appear in Snapshots the committee in a hearing broadcast on Michi- Michigan’s Brownfield Redevel- gan House TV, Wright said, “Despite the Michigan opment Act. Supreme Court’s laudable ruling in Wayne County Wright subsequently testified v. Hathcock (which prevented Michigan govern- again to the state House Com- ments from taking land for nonpublic uses), further mittee on Government Opera- controls are needed to fully protect the people of tions, and he is optimistic that Michigan from takings abuses.” the House counterpart to Senate Wright then opened two new and important Resolution E will address blight fronts in the fight against eminent domain abuses: takings, especially given the overbroad blight measures, and regulatory takings. Senate’s 35-3 passage of Resolu- Noting that blight condemnations have been tion E on Nov. 9. “Before being used to destroy entire neighborhoods, Wright approved,” Wright says, “the observed, “Homeowners who keep their homes in Senate resolution was amended good shape should not have their property taken to shift the burden of proof in merely because a number of their neighbors do blight condemnations to the gov- not.” Takings of this kind not only devalue the Con- ernment, not the homeowner, stitution, but foster a disrespect for property that is and to a higher standard, known the essence of blight in the first place. as ‘clear and convincing evi- Wright also noted that the U.S. Supreme dence.’ I think it’s fair to say that Eric and Pam Schoen have been in limbo for more than Court has ruled that regulation that reduces the the Center’s emphasis on blight a year and a half since the city of East Lansing notified them that it planned to seize their home, pictured above, value of real property can constitute a taking abuses alerted the Senate to the to clear their neighborhood so that private developers when, in the Court’s words, it “goes too far.” importance of this.” could build new residences. The city’s planning depart- Not surprisingly, this vague language, Wright If the House approves a simi- ment now tells the Center it will avoid the use of emi- nent domain, asking only for voluntary sales. Neverthe- observed, has led to ineffective property rights lar resolution, Michigan voters less, such potentially broad use of government’s takings protection in cases that actually come before will have the chance to add addi- power has become a focal point of the Center’s work. the courts. He then gave technical advice about tional property rights protections to the Michigan better state legal standards and discussed the Constitution next year. Wright has already begun state of Oregon’s “Measure 37,” a 2004 ballot educating the public on takings, having discussed initiative that forces Oregonian governments to the issue on several radio shows, including, on compensate landowners for any loss of property Oct. 4, both the Ron Pritchard show on the Mich- value as the result of new regulations. igan Talk Radio Network and the Jack Lessen- Wright’s cogent House testimony and con- berry Show in Ann Arbor. tinued responses to policymakers’ requests led This public exposure means that a constitu- to an invitation to speak just two weeks later to tional amendment may be approved in Michigan the Senate Transportation Committee on Senate soon. If so, Kelo could indeed prove to be a Water- Joint Resolution E, which would permit a popu- loo — an apparent victory that turned to defeat for lar vote on a state constitutional amendment to unlimited government power. I
State Audit from Page 1 the MEDC’s line item for “job creation services.” number of jobs claimed to be created by firms The MEDC’s case can’t have been helped receiving (MEGA) grants, and all other MEDC by LaFaive’s hour-long appearance before the claims of job creation. ...” Michigan House Commerce Committee in April. State Rep. Jack Brandenburg, a member of the He described not only how econometric analy- House Appropriations Committee, credited the sis has failed to detect any meaningful economic Center for proposing the new requirement: “The impact from MEGA’s programs, but how the Mackinac Center’s findings helped us recognize spe- agency’s job creation claims often appear to cific shortcomings of the MEDC and MEGA. Given have been overstated. these problems, the Center’s recommended state One of LaFaive’s recommendations was that audits only made sense.” Michigan’s Auditor General “conduct regular, The audits should produce MEDC job figures expanded audits of MEGA’s direct job counts.” that are more realistic. The Legislature will then The Legislature followed this advice in Public be set to ponder whether a $3 million budget cut Act 156, requiring an annual state audit of “the should be only the beginning. I
Mackinac Center IMPACT Summer Fall 2005 2002 | | www.mackinac.org Media Impact Advancing Property Rights and Promoting a Renaissance • The Wall Street Journal’s Oct. 13 “Cross Coun- administrator, and he called for a legislative try” column featured an essay by Senior Legal requirement to report aggregate claims data Analyst Patrick J. Wright describing the Michigan that would make it easier for school districts Supreme Court’s principled approach to consti- to shop around for health care administrators. tutional and statutory interpretation. The article A similar reform was suggested by Director of was then reprinted in The Grand Rapids Press. Education Policy Ryan S. Olson in his Aug. 24 • Federal abuse of wetlands regulations commentary for The Detroit News. N e w s m a k e r s received intense coverage following the U.S. • The Detroit News has digested the signifi- Supreme Court’s Oct. 11 decision to hear two cance of Director of Fiscal Policy Michael D. Michigan wetlands cases, including that of LaFaive’s definitive 121-page study of the Mich- John Rapanos, who was convicted of violat- igan Economic Growth Authority. On Oct. 6, ing federal wetlands law after moving sand the paper cited the study in its lead editorial, and other fill material on his property. Senior where it argued that the tax breaks offered by Environmental Policy Analyst Russ Harding MEGA are ineffective and may soon be ruled Harding Katz was quoted regarding the cases in the Booth unconstitutional by the U.S. Supreme Court. Newspapers and in an Associated Press arti- • Adjunct Scholar Dr. Richard Vedder’s commen- cle picked up by a number of Michigan media tary on college tuition ran in several Michi- outlets, including the Detroit Free Press. gan newspapers and was cited in an Oakland Harding and Senior Legal Analyst Patrick J. Press editorial calling on state universities to LaFaive McHugh Wright were subsequently interviewed in a improve their cost management. The piece also segment aired by Fox 66 TV News in Flint. prompted a number of radio programs, includ- Harding and Wright also wrote an Oct. 26 ing The Frank Beckmann Show on Detroit’s Detroit News Op-Ed on the subject, challeng- WJR-760, to interview Dr. Vedder on the subject. ing the federal government’s usurpation of • Adjunct Scholar Dr. Mark J. Perry wrote a Labor property rights and local prerogatives. Day Op-Ed that ran in The San Jose Mercury Washburne Wright • With the sunset of Michigan’s telecommuni- News and several other Knight-Ridder news- cations law at the end of this year, Director of papers describing the country’s robust jobs Science, Environment and Technology Diane creation, particularly over the past two years. S. Katz wrote an Op-Ed in the Sept. 1 Detroit • Director of Labor Policy Thomas W. Washburne Free Press proposing state telecom deregula- appeared in a televised news segment on WDIV- tion. Her letter to the editor on the same subject TV in Detroit analyzing the United Auto Workers’ was published in the Oct. 13 Detroit News. decision to provide financial support to striking The Oct. 3 Milwaukee Business Journal also airplane mechanics at Northwest Airlines. carried an article detailing Katz’s version of the • The Mt. Pleasant Sun and Central Michi- Center’s “Telecommunications Policy Primer” gan Life covered Senior Economist David L. for the Wisconsin Policy Research Institute. Littmann’s speech at a Chamber of Commerce • Legislative Analyst Jack McHugh won an Octo- forum in Mt. Pleasant, where he analyzed ber doubleheader by landing two Op-Eds in two Michigan’s anemic economy and dysfunc- different newspapers in a span of three days. tional public policies. Separately, Littmann was On Oct. 16, The Oakland Press published an interviewed on the Oct. 25 Frank Beckmann analysis by McHugh indicating that the Headlee Show on Detroit’s WJR-760, where he dis- Amendment’s limit on state revenues may no cussed the nomination of Ben Bernanke as the longer be restraining the growth of state govern- next Federal Reserve Board Chair. ment. Two days later, the Lansing State Jour- • The Saginaw News ran an essay on Oct. 10 nal carried a McHugh commentary that opposed by Senior Environmental Policy Analyst Russ making tax cuts conditional on the state’s ability Harding suggesting that the state of Michi- to maintain minimum spending levels. gan and its neighbors are better able than • Director of Labor Policy Thomas W. Wash- the federal government to decide the value burne authored an Oct. 23 Op-Ed for the Hol- of directional drilling and other Great Lakes land Sentinel concerning employee health environmental practices. care benefits, which has become the sticking • On Sept. 2, The Detroit News published a point in contract talks between the Michigan piece by Director of Fiscal Policy Michael D. Education Association and the Holland Public LaFaive offering a five-point agenda for eco- Schools. Washburne noted that the MEA has nomic and fiscal reform in the city of Detroit. had a conflict of interest in the past on this The News ran a lead editorial the same day issue, since it was the creator of MESSA, a entitled, “Detroit should embrace Mackinac common public school health care benefits recommendations.” I
www.mackinac.org | Fall 2005 Mackinac Center IMPACT Debate Workshops Shine With Enthusiasm and Spectrum of Ideas Sometimes, you know that something you are plan- The mix of the panelists’ views was clearly one ning will be good — and then it turns out even better. of the workshops’ strengths. One coach wrote, That’s the exhilarating experience that Debate Work- “This was the best program in 10 years; good bal- shop Director Amy Kellogg had at the Center’s High ance; excellent points for both the negative and the School Debate Workshops in September. affirmative sides; excellent speakers.” Other writ- “The kids were completely lit up about the speak- ten responses included phrases like “I will be back,” ers and the ideas,” says Kellogg, who oversaw the “great way to start out each new debate season,” and
one-day sessions in Livonia, Jackson, Grand Rapids “awesome.” One student — a future Madison Avenue and Traverse City. “They were actually pressing for executive? — even wrote: “Need a ‘kickstart’ to your even more time with the panelists, and some of the debate year? Attend one of the Mackinac Center students were staying after hours, even though other workshops.” kids had to leave at the end of the session when their These comments are exactly the kind the Center buses arrived. Our supporters would have been seeks. “Our vision,” notes Mackinac Center President delighted to see it.” Lawrence W. Reed, “is to provide students and teach- This is why the Center has posted a video montage ers with informed and challenging perspectives that of the workshop sessions on its Web site they are unlikely to receive in school or elsewhere. (see www.mackinac.org/7431). The energy at the This goal was especially important with this year’s programs was palpable — and not only because topic, which balances two primary purposes of gov- of the controversial 2005 national high ernment — national defense, and the protection of school debate topic: “Resolved: That the United individual rights.” States federal government should substantially Aside from a provocative topic, high school debaters decrease its authority either to detain without had an added incentive to participate in the workshops charge or to search without probable cause.” this year: The Center has invited the student attendees A key reason the sessions were so dynamic was to enter an essay contest on this year’s national debate the attendance: More than 300 students and coaches topic. Four winners will be chosen, and each winner participated in the program. Another reason was the will receive a $1,000 scholarship from the Center to enthusiasm and expertise of the speakers. The pan- attend the college of his or her choice. The deadline for elists included Richard Edwards, a Baylor University entering the essay contest was Nov. 1. communications professor who has authored the “It will be great to see what the students produce,” annual “topic introduction” issue of The Forensic says Reed. “We know that we’re dealing with a bright Quarterly since 1972; Mike Winther, a regular lecturer group of kids, and we’re excited to be helping some of at debate seminars and a debate coach for the past 30 the very best and brightest go on to higher education.” years; and Gregory Rehmke, director of educational This year’s workshops mark the 18th year the programs for Economic Thinking/E Pluribus Unum Center has staged its high school debate program, and Films, and a perennial writer and lecturer on national they bring the total number of students and debate high school debate topics. coaches who have benefited from the workshops to Joining Rehmke, Winther and Edwards at the more than 8,000. The national high school debate topic Livonia and Jackson workshops was Kary Moss, execu- is chosen each year by the National Forensic Associa- tive director of the Michigan chapter of the American tion, a nonprofit association. Civil Liberties Union. Moss raised a few eyebrows Next year’s topic is still unknown. But if next year’s when she described the ACLU as “the most conser- workshops are anything like this year’s, more surprises vative organization in America,” and her comments — and more enthusiasm — lie ahead. I prompted some lively exchanges with the students.
Mackinac Center IMPACT Summer Fall 2005 2002 | | www.mackinac.org “Thank you very much for making the high school Debate Workshops possible.” -Debate coach, Bishop Foley High School
“Thank you for the excellent seminar that you presented to our class. We received a lot of helpful information from your top-notch speakers.” -Student, Hudson High School
“I have utilized the Mackinac Center for Public Policy three years and counting and I continue to return with my students because of the wealth of knowledge the Center, and speakers alike, provide us.” -Debate coach, Redford High School
“Thanks for the opportunity to be more prepared for the debate season.” -Student, Henry Ford High School
“As a first year debater, I think this program was a necessary experi- ence for me before league starts in October.” -Student, Glen Lake High School
“As a first-year debate teacher, (I found) this conference incredibly helpful ... it will shape my instruction and understanding of the topic.” -Teacher, Rockford High School
“The atmosphere was great and the speakers and staff were very knowl- edgeable and helpful. Thank you very much!!” -Student, Northview High School Mackinac Center Debate Workshops
Without Probable Cause “Not only did the speakers prepare me for debate season, but they also taught me a great deal about our lib- erties and rights as Americans.” -Student, Rockford High School
www.mackinac.org | Fall 2005 Mackinac Center IMPACT Advancement Impact The Maguire Family: Restoring “Business as Usual” As a member of the Macki- mable, Lansing firefighters, along nac Center Board of Direc- with two extra fire trucks from tors, Joseph Maguire has fully Capital City Airport, worked for supported the Center’s argu- hours to quell the blaze. ment that taxes should be cut Yet Spartan didn’t miss a for everyone, not just select beat. The next day, it was run- businesses. As co-owner of ning at 90 percent capacity. And Spartan Oil Corporation, he on Oct. 11, 2005, when Maguire, has stood by that principle his brother, Bruce Maguire III, even in adversity. and his father, Bruce Maguire Jr., In today’s political cli- stood at a podium in Lansing to mate, that’s no small achieve- dedicate Spartan Oil’s rebuilt, ment. Spartan Oil is not just modernized distribution facility, a successful family business; they thanked the city — but only it’s precisely the type of for the usual services available company that is often plied to every Lansing resident: fire, with selective tax breaks by police, wastewater and municipal local governments. Spartan planning. has been in business for 52 The company never put its years; employs 70 people hand out. Maguire notes: “We’ve in the Lansing area alone; is Joseph Maguire celebrates the opening of Spar- practiced what we’ve preached headquartered in the heart tan Oil’s rebuilt distribution facility in Lansing. with this project. We neither of the city, rather than a trendy exurban industrial sought nor received any subsidies or tax breaks, complex; and engages in vigorous interstate com- and we didn’t shop our project around search- merce as one of the largest sellers and distributors ing for them. We never have. We believe in lim- of lubricants in the Midwest. ited government and lower taxes — the same for Moreover, Spartan Oil suffered a high-profile everyone.” setback in August 2004 when a fire broke out at It’s a simple rule, but it’s harder to live by in its Lansing facility. Flames consumed two of the a crisis. To the credit of Maguire and his family, firm’s five buildings and badly damaged a third. they’ve shown what restoring “business as usual” Although Spartan’s products are not highly flam- should mean. I
A Head Count for Liberty With the holidays upon us, it’s time to take investments many times over. stock of our blessings. I, for starters, can count 23 The Center’s first-rate staff, both past and of them in the picture on the facing page — per- present, have produced the many policy victories haps 24, but I reserve judgment on the fellow we’ve enjoyed over the years, and the Center’s standing fourth from the right in the back row. contributors have made that possible. That sup- That picture really is worth a thousand words, port leaves us deeply grateful. It is a blessing that but I want to take a moment to explain it anyway. each of us at the Center remains aware of every In 1988, the Mackinac Center’s first full year single day. of operation, we had just two employees and You have probably received our annual year- John Coonradt, Vice President worked in an office with a concrete floor behind a end appeal in the mail, so you know that we’re for Advancement pizza parlor. A photo of the staff would have been asking you to send us a special year-end contribu- a close-up of Larry Reed and one other employee. tion in 2005. We mailed this appeal partly because Not so today! The Center is blessed with 23 Michigan still faces many challenges, and the full-time staff members, and, as you can see, we Center must square off against tens of thousands of struggle to fit them all in. Six members of the staff friends of big government. have been with the Center for more than 10 years. But we’ve also sent the appeal because we Executive Vice President Joseph Lehman sug- wanted to achieve even more “to secure the bless- gested in the last issue of Impact that the most ings of liberty” for which the Founders fought. important form of capital is human capital. As the We know that you, like each of us at the Center, picture clearly shows, we’ve developed a gold already treasure those blessings — and that we mine of human capital from the tremendous sup- would all like to count more of them each holiday port of the Center’s donors, multiplying their season. I
Mackinac Center IMPACT Summer Fall 2005 2002 | | www.mackinac.org A Picture, With a Thousand Thanks
6 3 9 5 13 15 2 11 12 18 20 8 23 24 1 4 7 16 17 19 21 22 10 14 Center Unveils Labor and Education Project The tremendous support resulting from the Michigan Edu-
1. Sharon Millerwise of the Mackinac Center’s con- cation Association’s insistence on 2. Justin Marshall tributors during the past 18 exceptionally costly health care 3. Daniel Montgomery years is a central reason the benefits in the Holland Public 4. Jack McHugh 5. Dale Anderson Center has become one of the School district’s tense labor negoti- 6. Ted O’Neil nation’s most reliable and pro- ations. Washburne is well-suited to 7. Diane Katz 8. Lawrence Reed lific sources of policy analysis. the role of analyst and policy strate- 9. Ryan Olson That contributor support has gist, having spent the past decade 10. Kendra Shrode 11. Michael LaFaive now helped the Center launch a dealing with public policy and edu- 12. Steve Frick cutting-edge initiative on a vital Michael Jahr (left) and cation issues in Washington, D.C., 13. Patrick Wright issue for Michigan: unions in Thomas Washburne both as counsel and chief of staff 14. LeAnn Hadley 15. Thomas Washburne public education. for two Indiana congressmen, and as director of 16. Bruce Beerbower The Mackinac Center’s Labor and Education the National Center for Home Education. 17. Thomas Shull 18. John Coonradt Project was inaugurated in September with the Also firing up the Labor and Education Project 19. Michael Jahr hiring of two key personnel. Thomas W. Washburne is Washburne’s colleague, Communications Spe- 20. Russ Harding 21. Pat Benner is the new director of the LEP, counsel to the Macki- cialist Michael D. Jahr. Jahr is managing the LEP’s 22. Joseph Lehman nac Center and director of the Center’s Labor Policy outreach efforts by drawing upon 10 years’ expe- 23. Jan Eurich Initiative. He has organized a unique, four-tiered rience as communications director for U.S. Rep. 24. Chris Bachelder approach for the LEP: educating teachers about their John Hostettler, as well as his background as a Not pictured: rights in relation to their union; educating school copy editor with National Geographic and a writer Sarah Grether James Hohman boards about effective collective bargaining; educat- for The Ann Arbor News and for a newswire cover- Amy Kellogg ing policymakers about optimal education labor ing the Middle East. Kara Malkowski policies; and educating taxpayers about the effects of “It’s always exciting when a catalytic program like union involvement in public education. the LEP receives support and goes airborne,” says This process was jump-started in October by Joseph G. Lehman, the Center’s executive vice presi- Washburne with a timely and powerful Holland dent. “But when you find such talented and experi- Sentinel Op-Ed that alerted teachers, taxpayers enced professionals to guide it, you know the impact and policymakers to a potential waste of money is going to be big. It’s just a matter of time.” I
www.mackinac.org | Fall 2005 Mackinac Center IMPACT Free-Market Fundamentals The First Phase of the Great Depression (The following is an edited excerpt of Macki- the economic house of cards. nac Center President Lawrence W. Reed’s essay, Reckless money and credit growth constituted “Great Myths of the Great Depression,” which was what economist Benjamin M. Anderson called updated and reissued by the Center this fall.) “the beginning of the New Deal” — the name for the better-known but highly interventionist poli- Mackinac Center for Public Policy | Great Myths of the Great Depression Old myths never die; they just keep showing cies that would come later under President Frank- up in economics and political science textbooks. lin Roosevelt. With only an occasional exception, it is there you However, other scholars raise doubts that Fed
will find what may be the 20th century’s greatest action was this inflationary, pointing to relatively q &&( ##*& 14;84E43 6>E4A=<4=C B7>D;3 ?;0H myth: Capitalism and the free-market economy flat commodity and consumer prices in the 1920s !, . => A>;4 8= C74 42>=> q#*&"!"( $&#&!' were responsible for the Great Depression, and as evidence that monetary policy was not so wildly '3."- 74;?43 ;>F4A D=4H<4=C 1H ?DCC8=6 <0=H <4A820=B C> F>A:r only government intervention brought about irresponsible. Substantial cuts in high marginal >5 C74 q&" " &##'* (t' s"4F 40;t B0E43 <4A820 5A>< C74 America’s economic recovery. income tax rates in the Calvin Coolidge years cer- !, . 508;DA4 >5 5A44<0A:4C 20?8C0;8B<r To properly understand the events of the tainly helped the economy and possibly amelio- These and other *, --#)( myths are dispelled time, it is factually appropriate to view the Great rated the price effect of Fed policy. by the facts in this 1H 0FA4=24 + &443 essay by economist Depression as not one downturn, but four con- Free-market economists who differ on the Lawrence W. Reed secutive downturns rolled into one. These four extent of the Fed’s monetary expansion in the “phases” are “Monetary Policy and the Business early and mid-‘20s are of one view about what Cycle”; “The Disintegration of the World Econ- happened next: The central bank presided over a omy”; “The New Deal”; and “The Wagner Act.” dramatic contraction of the money supply. Lawrence W. Reed is The first phase covers why the crash of 1929 hap- president of the Mackinac pened to begin with. The Bottom Drops Out Center for Public Policy. His complete, updated, 16- Central Planners Fail at Monetary Policy The most comprehensive chronicle of the page essay “Great Myths monetary policies of the period can be found in of the Great Depression” A popular explanation for the stock market the classic work of Nobel Laureate Milton Fried- is now available from the collapse of 1929 concerns the practice of borrow- man and his colleague Anna Schwartz, “A Mon- Center. ing money to buy stock. Many history texts blithely etary History of the United States, 1867-1960.” assert that a frenzied speculation in shares was fed Friedman and Schwartz argue conclusively that by excessive “margin lending.” But Marquette Uni- the contraction of the nation’s money supply versity economist Gene Smiley, in his 2002 book by one-third between August 1929 and March “Rethinking the Great Depression,” explains why 1933 was an enormous drag on the economy this is not a fruitful observation: and largely the result of seismic incompetence by “There was already a long history of margin the Fed. The death in October 1928 of Benjamin lending on stock exchanges, and margin require- Strong, a powerful figure who had exerted great ments — the share of the purchase price paid in influence as head of the Fed’s New York district cash — were no lower in the late twenties than in bank, left the Fed floundering without capable the early twenties or in previous decades. In fact, leadership — making bad policy even worse. in the fall of 1928 margin requirements began to At first, only the “smart” money — the Bernard rise, and borrowers were required to pay a larger Baruchs and the Joseph Kennedys who watched share of the purchase price of the stocks.” things like money supply and other government The margin lending argument doesn’t hold policies — saw that the party was coming to an much water. Mischief with the money and credit end. Baruch actually began selling stocks and supply, however, is another story. buying bonds and gold as early as 1928; Kennedy Most monetary economists, particularly those did likewise, commenting, “Only a fool holds out of the “Austrian School,” have observed the close for the top dollar.” relationship between money supply and eco- The masses of investors eventually sensed the nomic activity. When government inflates the change at the Fed, and then the stampede began. money and credit supply, interest rates at first The distortions in the economy promoted by the fall. Businesses invest this “easy money” in new Fed’s monetary policy had set the country up for production projects and a boom takes place in a recession, but other impositions to come would capital goods. As the boom matures, business soon turn the recession into a full-scale disaster. costs rise, interest rates readjust upward and As stocks took a beating, Congress was playing profits are squeezed. The easy-money effects with fire: On the very morning of Black Thursday, thus wear off and the monetary authorities, fear- the nation’s newspapers reported that the politi- ing price inflation, slow the growth of, or even cal forces for higher trade-damaging tariffs were contract, the money supply. This manipulation is making gains on Capitol Hill. I enough to knock out the shaky supports under Mackinac Center IMPACT 1 100 Summer Fall 2005 2002 | | www.mackinac.org Free-Market Library Viewpoints remain below the “high-water mark.” Unfortu- Responding to Michigan’s Population Slide nately, the ruling involves a vague standard and July 2005 V2005-19 misapplies the public-trust doctrine. The resulting U.S. Census Bureau data indicates that Michigan is loss of property rights will ultimately affect us all. losing ground to other states in population. Michigan ACCESS should change this trend by emulating the policies of Tuition Hikes at Michigan Universities low-tax states, which are increasing in population. Demonstrate Need for Reform September 2005 V2005-26 Bad Food at a Good Price! Tuition increases at Michigan’s universities July 2005 V2005-20 have vastly outpaced inflation because they do A restaurant that offers a good food value will not face private-sector incentives to restrain costs. be more successful than one that gives coupons Public funds would be better spent as vouchers to to select customers for mediocre fare. Michigan’s students, not as subsidies to institutions. policymakers should apply this insight and cut taxes for everyone, not just some. Improving Michigan’s Regulatory Environment September 2005 V2005-27 Granholm’s Task Force Report: Wrong Prescrip- The importance of regulatory policy to the tion, Critical Disease state’s economic health is often overlooked. A July 2005 V2005-21 series of regulatory reforms could improve the Gov. Granholm’s Medicaid task force balked state’s business climate without harming Michi- You can access electronic versions of the publications in at forcefully recommending reforms that would gan’s environment. Free-Market Library. Simply go encourage wealthier seniors to pay for their long- to the Mackinac Center Web term nursing home care and forgo the site, click “Publications,” and ISSN 1092-7999 Journals go to “Viewpoints,” “Periodi- use of Medicaid, which is intended for cals,” or “Studies.” the poor. This failure could sink Michi- A Publication on Privatization Initiatives Throughout the State • Mackinac Center for Public Policy • No. 2005-01 / Fall 2005 Michigan Privatization Report gan’s Medicaid budget. MPR2005-01 $3.00 How many public schools outsource Survey: School Outsourcing Grows ancillary services? What progress has August 2005 V2005-22 Hamtramck made under its emergency More than 35 percent of the Mich- • Survey: School Outsourcing Grows • Privatization Update: Hamtramck financial manager? Will Amtrak subsi- • Competitive Sourcing on an Individual Basis • Privatizing Libraries igan’s school districts outsource food, • State Park Privatization and more! dies ever end? How could privatization Mackinac Center for Public Policy Michigan Privatization Report • Fall 2005 janitorial or busing services — an help Michigan’s public libraries and state increase from the past two years. parks? These and other questions are answered in this issue. 16 pages. The Sound of Freedom August 2005 V2005-23 Special Items “The Sound of Music,” which cele- brates its 40th birthday this year, is more 012!"+1t0 "00 6 1E > Q % +$"! 1%" 4,/)! The Inspiring Story of Thomas Clarkson than a big-screen musical. It is a story of SP2005-01 $1.00 tyranny and freedom that inspired a life- Mackinac Center President Lawrence time vocation for Mackinac Center Presi- W. Reed recounts how in 1785, 25-year- /# $).+$-$)" ./*-4 *! dent Lawrence W. Reed. ǩN2@[ ǐ@QJRN3 old Thomas Clarkson entered a student essay contest that began his lifelong Supreme Court Ruling Shows — and breathtakingly successful — mis- 012!"+1t0 "00 6 1% 1 Telecom Regulation Should Be Abolished % +$"! 1%" 4,/)! sion to end slavery in the British Empire. ?V )>TOBK@B 4 /BBA * (&+ "+1"/ #,/ -2 )& -,)& 6 How to order August 2005 V2005-24 12-page monograph. All publications are available at no The Supreme Court recently upheld charge via the Internet at www. a Federal Communications Commis- Government, Poverty Self-Reliance Government, Poverty and Self-Reliance mackinac.org. sion ruling that cable companies should SP2005-02 $1.00 Viewpoints: Viewpoints on Public not be forced to provide their competi- Mackinac Center President Lawrence Issues are two-page commentaries on current Michigan policy issues. tors with access to their networks. The W. Reed reflects on how the views of Three are published each month. decision is correct, but its questionable 19th century U.S. presidents on limited Individual Viewpoints are 50¢ each. reasoning shows that federal telecommu- government and self-reliance contrast Please call for bulk discounts. nications regulation should be abolished. with the 20th century’s “War on Pov- For telephone orders, please call Wisdom 19th Century Presidents erty.” 16-page monograph. the Mackinac Center at (989) 631- • by Lawrence W. Reed • Mackinac Center for Public Policy • 0900. The Center accepts Visa, Michigan Supreme Court Ruling on MasterCard, and Discover/NOVUS “Beachwalking” Erodes Property Rights for your convenience. Please have your card and item title(s) handy September 2005 V2005-25 when calling. The Michigan Supreme Court has ruled that the public can walk recreationally across privately owned beachfront property as long as people www.mackinac.org | Fall 2005 11 Mackinac Center IMPACT Revitalizing Detroit Center’s Detroit Recommendations 1. Accelerate reductions in the city in- come tax. Add no new or higher taxes to the already sky-high tax burden. 2. Review each city service. If private firms or other units of government Endorsed by The Detroit News are already providing the service, the city should stop producing it, either The Mackinac c e n T er for byPubliccanceling Policyit, or by competitively contracting it to reputable private On Aug. 30, the Mackinac Center received a and reducing business regu- firms. note from The Detroit News asking what reforms lations. Several photographs 3. Dramatically downsize the city bureau- Revitalizingcracy, now one of the largest per capita in the Midwest. Detroit’s citizens can- the Center would recommend for Detroit city gov- illustrating his policy prescrip- not afford this bloated payroll. 4. Sell underused buildings and equip- ernment. It was good timing. Chance favors the tions accompanied the com- Detment.roUse theitrevenues to reduce city debt and to finance unfunded retiree Detroit’s officials must take the five boldhealth stepscare shownobligations. on the prepared. mentary. back to halt decades of economic and fiscal decline. 5. Reduce the regulatory burden on city If the city’s finances worsen, the state canbusinesses. take overThe city’sDetroit’smaze of regula- Michael D. LaFaive, the Center’s director of And to the Center’s deep government — a fate Detroit can, ationsnd should,impedes avoid.private enterprise at every turn. fiscal policy, already had been preparing a multi- satisfaction, the newspaper’s The Mackinac Center for Public Policy is a nonpartisan, free-marketTo see research details on and these educational and other institute. proposals to set Detroit 140 West Main Street • Midland, Mich. 48640 • (989) 631-0900 • [email protected] the path to prosperity, • www.mackinac.org visit www.mackinac.org/7386 The Mackinac Center for Public Policy point list of advice to Detroit officials. An abbrevi- own lead editorial, published is a nonpartisan, free-market research ated version of this list has since been published across from LaFaive’s Op-Ed, and educational institute. on a business card, so that people can distribute was titled, “Detroit should embrace Mackinac The Center’s recommendations it easily, but LaFaive quickly responded to The recommendations: Center outlines sensible fixes for reversing Detroit’s economic News with an extended draft of his policy ideas. for city’s ailing economy.” The editorial read in decline have been printed on a handy card. The editor of The News’ editorial page, in turn, part, “We urge the candidates for mayor and City asked LaFaive to submit the ideas in an essay for council in the November election to embrace the publication. (Center’s) ideas and make them part of their cam- On Sept. 2, The News printed LaFaive’s Op- paign platform.” Ed under the headline, “Detroit can’t postpone The Center’s policy analysts have urged economic reform.” LaFaive detailed five major Detroit to adopt market-oriented reforms for recommendations: cutting the city income tax, many years now, and The News’ prominent privatizing city services, radically reducing the endorsement was a milestone. The commentary city’s bureaucracy, selling underperforming assets was scrutinized even in Lansing, where state Rep. Jack Brandenburg, who is proposing changes to napshots S Detroit’s city council elections, cited LaFaive’s figures concerning Detroit’s unusually large city bureaucracy. The Center will soon distribute business cards that contain LaFaive’s recommendations. Now that Detroit’s mayoral election is over, the city has one more chance to avoid bankruptcy and take the steps the Center has recommended for so long. Of course, after decades of decline, even aggres- sive fiscal and economic reform is no guarantee of success. But in Detroit as elsewhere, as LaFaive can Nov. 13 marked Michael D. LaFaive’s 10-year anniversary at the attest, chance will favor the prepared. I Mackinac Center. Congratulations, Mike! 140 West Main Street • P.O. Box 568 Midland, Michigan 48640 Coming in the Next Issue: Telecom Impact Morey Fiscal Policy Initiative Mackinac Center IMPACT 12 12 Summer Fall 2005 2002 | | www.mackinac.org