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West Michigan Policy Forum. Michigan’s Economy: Where Do We Stand, Where Are We’re Going?. Robert Genetski President, ClassicalPrinciples.com. Outline. 1. Where we’ve been 2. Where we’re going a. US elections b. State policies: Booms and Busts c. Impact of Michigan’s policies. Outline. - PowerPoint PPT Presentation
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Michigan’s Economy: Where Do We Stand, Where Are We’re Going?
Robert GenetskiPresident, ClassicalPrinciples.com
West Michigan Policy Forum
Outline
1. Where we’ve been
2. Where we’re goinga. US electionsb. State policies: Booms and Bustsc. Impact of Michigan’s policies
Outline
1. Where we’ve been
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122.5
3.0
3.5
4.0
Michigan Share of US Income
percent
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122.9
3.0
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Michigan: Share of US Jobs
percent
Source: US Bureau of Labor Statistics
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20123
5
7
9
11
13
15
Unemployment Rates: Michigan &, US
US
percent
Michigan
Source: US Bureau of Labor Statistics
1. Michigan’s economy—secular decline in past decade
2. By 2008 Michigan’s performance—worst in the US
3. In 2009 US recession—depression in Michigan
4. Since 2009—Michigan economy stable relative to US
Outline
1. Where we’ve been
2. Where we’re goinga. US elections
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
3
4
5
6
7
8
9
Personal Income Growth Rates: Best & Worst States
Ten Worst Perfoming States
percent
Ten Best Perfoming States
Source: US Census Bureau; BEA; Regional Statistics
(annual growth rates over 5 years)
US average
Classical Economic Principles
Policies that promote individual freedom:1. Low tax rates & limiting public spending to
efficiently producing essential public services 2. Free markets3. Protection of individual property rights4. Stable value for currency
Economic Problems Don’t Just Happen
Problems Result from Bad Policies
1. Rapid increases in federal spending 2. Massive increases in regulatory burdens3. Policy mistake by US Treasury Secretary
Reversing Economic Malaise
• Major cuts in federal spending• Reducing tax burdens • Reducing regulatory burdens• Protecting property rights• Maintaining a stable currency
Election 2012
• President Obama in 2014:– plans $400 billion more spending – imposes $400 billion more compliance costs– $235 billion more taxes
• Governor Romney:– Repeal $400 billion compliance costs– $400 billion less federal spending– Cut individual tax rates by 20%
Outline
1. Where we’ve been
2. Where we’re goinga. US electionsb. State policies: Booms and Busts
Characteristics of High Performance States
• Policies geared toward individual freedom also promote a state’s economy
• State Policies that maximize individual freedom:– Low or no tax on income– Prudent spending for only essential services– Freedom to join or not join a union(Right to Work)
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
3
4
5
6
7
8
9
Personal Income Growth
States with no indiv. income tax 7: AK, FL, NV, SD, TX, WA, WY
percent
US average
(average annual growth over 5 years)
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
3
4
5
6
7
8
9
Personal Income Growth
percent
US average
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
(average annual growth over 5 years)
Right to Work States: 22
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
3
4
5
6
7
8
9
Personal Income Growth
percent
US average
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
(average annual growth over 5 years)
Right to Work States: 22 Right to Work & No Indiv. Income tax: AK, FL, NV, SD, TX, WY
percent
US average
(average annual growth over 5 years)
Right to Work States: 22
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
3
4
5
6
7
8
9
Personal Income Growth
percent
US average
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
(average annual growth over 5 years)
Right to Work States: 22 Right to Work & No Indiv. Income tax: AK, FL, NV, SD, TX, WY
percent
US average
(average annual growth over 5 years)
Right to Work States: 22
Right to Work States & No Income tax: NV, TX, WY
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
150
200
250
300
350
Personal Income: 10 Fastest Growing States
Nevada
Index: 1993=100
Wyoming
Colorado
Utah
Arizona
US Average
Texas
North Dakota
Washington
South Dakota
Idaho
(average annual growth over 5 years)
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201270
80
90
100
Relative State Tax Burdens: 10 Best Performing States
percent of US average
US Average = 100
Source: US Census Bureau Annual Survey of State Government Tax Collections; Quarterly Summary of S&L Tax Revenue (estimate for 20112); BEA; classicalprinciples.com
Characteristics of Poorly Performing States
• Policies place restrictions on individual freedom:– Higher tax rates – Wasteful government spending – Onerous regulations– Forced unionism (no Right to Work law)– Large union penetration– Overburdening debt
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
150
200
250
Personal Income: Ten Slowest Growing States
Rhode Island
Index: 1993=100
West Vir-gina
Connecticut
US Average
Illinois Indiana Hawaii Ohio Michigan
Pennsylvania
New York
(average annual growth over 5 years)
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
110
120
130
Relative State Tax Burdens: 10 Worst Performing States
percent of US average
US Average = 100
Source: US Census Bureau Annual Survey of State Government Tax Collections; Quarterly Summary of S&L Tax Revenue (estimate for 20112); BEA; classicalprinciples.com
94.7066115027517
104.714873059433
110.96941654855
116.992979649757
124.495533914227
133.131842992433
141.532230165152
151.126629301391
160.966429614529
164.127092161459
168.441766532427
176.53686243641
187.304585232782
199.581939354319
212.653950984183
225.077559343634
223.478113527719
221.168970352913
234.40183289161
243.276432536727
130
180
230
280
Personal Income: 10 States with Highest % Union Workers
WashingtonIndex 1992 = 100
US average
Source: US Census Bureau; BEA Regional Statistics; classicalprinciples.com
IllinoisConnecticut
OregonRhode Island
MichiganHawaii
AlaskaNew York
California
(average annual growth over 5 years)
How Michigan Compares to Other States
Tax burden
Public employees compensation
Debt
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
110
120
130
Relative State Tax Burdens: 10 Worst Performing States
percent of US average
US Average = 100
Source: US Census Bureau Annual Survey of State Government Tax Collections; Quarterly Summary of S&L Tax Revenue (estimate for 20112); BEA; classicalprinciples.com
Michigan
Compensation per worker: 2010
US averagePrivate Nonfarm: $42,900State & Local employees: $58,500 36%
Michigan Private Nonfarm: $40,400State & Local employees: $59,500 47%
Compensation per worker: 2010Adjusted for cost of Living
MichiganPrivate Nonfarm: $42,300State & Local employees: $62,300 47%
Texas Private Nonfarm: $44,900State & Local employees: $56,600 26%
Worse State for Accumulating Debt Burdens on Future Taxpayers
(2010 financial reports) 1. Connecticut $49,000 per taxpayer2. New Jersey $35,8003. Hawaii $32,7004. Illinois $31,6005. Kentucky $23,5006. Massachusetts $23,2007. California $21,4008. Michigan $20,8009. West Virginia $20,50010. Rhode Island $18,800
Source: Institute for Truth in Accounting; Financial State of the States
Outline
1. Where we’ve been
2. Where we’re goinga. US electionsb. State policies: Booms and Bustsc. Impact of Michigan’s policies
Destructive Ballot Measures
• “Protect Our Jobs”• “Home Health Care”• “Renewable Energy”
Making Michigan a High Performing State
Provide more freedom to Michigan workers and businesses:
• Limit state spending to essential services• Cut tax burdens to below US average• Give workers freedom to decide whether or
not to join a union
