Re-publishing STR from 2007

A Vicious Cycle

Ohio and Michigan are falling apart.

In the case of Michigan, it is literal. Pieces of bridge deck are falling onto cars on I-94. Infrastructure maintenance is that far behind.

To put this into perspective, the two states lost more manufacturing jobs since the start of the 2000-2001 recession than total jobs lost in Katrina (as best I can untangle the stats). The only replacement jobs have been in big box stores, warehouse operations (someone has to move the Chinese merchandise) and the usual food service and retail. All low value.

Since NAFTA light and medium manufacturing has been fleeing offshore, and the Big 3 and UAW have been engaged in a ju jitsu match in which both will die of strangulation.

A vicious cycle has begun, both states need to spend more money on education and infrastructure, neither can afford the spending. Both states need to raise taxes, both need to cut taxes.

The response of the Bush administration has been “let them eat cake,” or words to that effect.

The response of the Café Hayek types is “go eat libertarian cake, you are too stupid to flourish in a global economy.”

The Club for Growth recommends tax cuts, tax cuts and tax cuts (both states had weird corporate tax systems and needed reform, Ohio’s is sorta fixed, Michigan is still a mess).

The right-to-workers want to solve the problems by destroying unions.

The unions want to solve the problems by raising taxes and government spending.

Robert Rubin feels our pain, but his bonus makes him feel better.

Ohio Republicans both cut taxes and raise taxes, while using the state as a racketeering enterprise. They lost in 2006. Michigan Republicans, just see the Club for Growth above.

Ohio Democrats are very cautious and hope some high-tech miracle will happen. Michigan Democrats are waiting for leadership from Governor Granholm, and waiting, and waiting, and…..


……. is there anything anyone can do, or must this run its course? Do the feds have any responsibility to assist? Will something change after 2009? Any fresh ideas?