Commentary

Piecing Michigan back together

State requires bold leaders, better climate to create jobs

David Brandon and Leslie Murphy

It is no secret that Michigan faces monumental economic challenges with job losses and business closures. What is not as evident for many people experiencing hardship and despair today is the map we must follow to put our state back on the path to prosperity. In the face of this tremendous adversity, there is reason to be optimistic.

There is a formula for successfully creating jobs and growing businesses, even in a state that is suffering the highest unemployment rate in the country and that is bearing the brunt of a national recession.

The three components of the equation are exhibiting bold leadership, creating an entrepreneurial environment and leveraging our region's key assets. Each of these parts is essential and accomplishing them simultaneously will be no small feat, but it can and must be done.

Leadership

It is going to take an abundance of courage, collaboration and effort among all leaders -- political, business and community -- to swiftly and aggressively act to reverse the staggering job losses and to support new economic growth. Business and community leaders are committed and unified around these goals. Exerting pressure on the inertia of the political status quo is proving to be a lot tougher.

The nature of politics usually results in avoiding tough choices for more palatable options for the voters. The parochial tendency of politicians can also stymie progress.

Michigan is no different than any other state because these forces are always at play in politics. But no other state faces the enormous challenges that we do, so Michigan must push past politics if we are truly serious about job creation and business growth. It is going to take a singular vision and shared commitment among all the political leaders to turn the state's economy around.

Our unwillingness to fix the state's budget deficit is one regrettable example of how an absence of strong and effective political leadership is detrimental to our economy. Without a healthy and sound budget, Michigan will never reach its full potential in terms of job creation and business expansion.

Our elected officials in Lansing have known about the structural disconnect between the state's spending habits and taxing policies for a long time. Yet, they have been unwilling to rectify the problem in a sustainable, pro-growth manner.

There is considerable pressure to use Michigan's resources from President Barack Obama's economic stimulus program to prop up the state's budget for one more fiscal year. While this may be a politically expedient plan, it is shortsighted and unwise because it does nothing to repair the long-term, constant deficits that will plague the state after all the federal dollars are used.

Until there is a decision to put Michigan on a sound fiscal footing, there will be no structural integrity to the state budget. Businesses will be reluctant to invest in Michigan because they fear more taxation will be required to support the state government's spending levels.

There also are new leaders arriving on the scene and with such change there is always an opportunity to do great things.

Detroit's new leadership presents such an opportunity. The region and state must rally around Mayor Dave Bing, and Detroiters need to seize the moment to tackle the tough reforms necessary for the city's revival.

The business community is ready and willing to support Bing as he addresses such daunting issues as restoring ethics and integrity, revamping the city's budget and polishing Detroit's image.

It has been said many times, but it is an undeniable truth: The fortunes of the region and state are tied to a vibrant Detroit. The state's largest city must flourish if Michigan is to regain its economic prowess. With bold leadership, Bing can make great strides that push Detroit forward and help the rest of the state recover. This can be a great example of how strong and effective leadership will bring about positive results.

We need to appeal to all of our elected leaders and encourage them to take the difficult, but necessary, measures to get Michigan's economy turned around.

Entrepreneurialism

There are many facets to creating a robust entrepreneurial environment that will make Michigan more cost competitive and welcoming for job creation and business growth. First and foremost, the state needs to bring its public policies in line with its economic development priorities. This will require tax and regulation policies that give entrepreneurs and businesses the confidence to invest in Michigan.

The call for elected officials to find new revenue streams for dealing with Michigan's chronic budget deficits are mounting. A proposal that has surfaced during the past few months is moving the state from a flat individual income tax rate to a graduated individual income tax rate. The theory is this will bring more revenue into the state treasury.

The reality of such an approach will have the exact opposite effect in the long-run by driving more taxpayers, including entrepreneurs, out of the state. The better, albeit more difficult, solution is to bring the state's spending under control.

Michigan must be attractive to individuals willing to open new businesses and to create new jobs, not driving them away by making it more expensive to live and work here. The way to grow the state is to restructure Michigan's tax system to be more competitive with the states we most often compete with for jobs. Being an "average tax" state is not good when the states we compete with have "below average" costs. When you add in wage, benefit, energy and regulatory costs, Michigan becomes an "above average" cost state.

Diversification is the name of the economic development game for Michigan. We are in a race to bring in or expand on as many new industries as possible, which will lead to more jobs for the state's residents. It has become painfully clear that relying on one main industry as the backbone of the state's economy is not a smart strategy.

While most of our effort should go into making Michigan a more attractive place for entrepreneurs in all industry sectors, Michigan has already made a promising start in several areas including alternative energy and health care. Helping the automotive suppliers diversify their product offerings and consumer base is also producing results.

Logistics is another industry that will allow Michigan to diversify its business base, attract new investment and grow additional jobs. The Detroit region is ideally suited to capitalize on the way global commerce is conducted in today's fast-paced world. We have the transportation infrastructure -- the roads, railways, water routes, international border crossings and airports -- to become a major center of international trade. These are all great assets that we can build on to continue economic diversification of the region.

Entrepreneurs will drive the economic growth and recovery in our state. That is why we need to create an environment that invites them to set up shop and thrive in Michigan.

Leveraging key assets

Southeast Michigan is blessed with some amazing assets that can drive future economic growth. Three in particular stand out. First, we have the highest concentration of skilled engineers anywhere in the world. Engineering talent is the bedrock needed to support the expansion of most new high-growth industry sectors, including advance battery technology, next generation vehicles, life sciences and others.

Second, we have a higher education system that produces quality students and has some of the greatest research universities in the United States. We need to support efforts that more fully integrate our universities into the business world and create more jobs to use the talent flow coming out of our universities.

Third, we have an international border that provides a unique opportunity to attract and grow business. This will be dependent on our ability to invest resources into connecting and improving all of our transportation assets so we can fully realize the economic benefit of our border crossings.

The formula for Michigan's success -- exhibiting bold leadership, creating an entrepreneurial environment and leveraging our region's key assets -- is right in front of us. We must be willing to adopt it if we hope to make the state prosperous again.

E-mail: letters@detnews.com