Finale: Michigan’s 21st century fund

I have updated a post from a while ago. Call this a rant, a vent, whatever. I am saddened that we wasted so much time on this process. This is not a mistake that will be repeated.

I like to tell people that if you design something to fail, often that is exactly what happens. Back to business.

Update: 4-Sept-2006
We aren’t the only folks to notice that something is not quite right. This has more to do with how it was constructed.

Look, if you want to create jobs, you need to have investment. This requires capital. California did it by leveraging Calpers, and spending a long time cultivating the area. This change does not happen overnight. More importantly, one needs some level of foresight. Investing 200M$ in a buggy whip factory would not be a wise expenditure of limited resources.

This is about the time that deep opportunity cost considerations need to be made. If you put money into one area, you do not have money to put in another. The utilization of money is a zero sum game for the MEDC.

This cannot be fun for the political types. They have the old constituancies, and they have folks who want to build new companies.

Right now, the economy of the US has been undergoing a structural transformation from a manufacturing centric to other economic drivers. This is because we cannot cost effectively compete with manufactering providers elsewhere in the world. This will not change, no amount of investment will alter this fundamental reality. The big three autos are in some pain, with some being in more pain than others. There is a very real possibility of a large bankruptcy. Michigan has not yet seen the worst of this.

Against this backdrop, something on the order of 700 organizations submitted letters of intent for the 21st century capital program. Some number of these are small companies, and a fair number of these cannot get capital from the Michigan capital markets either due to lack of interest from the majority of these markets (if you are not into medical devices, you need to look outside the state).

The Detroit news article linked above points out that there are lots of boards with the word “jobs” in their title. No new jobs, lots of layoffs. Maybe this is the plan? Put everyone who needs a job on a job board? Where is a sarcasm HTML tag when I need one…

There is a demand for capital in this state. There are lots of small companies who might be able to create jobs in this state if given the chance. If they can’t get capital, they won’t hire.

But somewhere, someone has to make a decision about what jobs are going to look like in 20 years here. Speak to the chief economist of Comerica bank if you need a sobering account of what types of jobs won’t be here in 20 years.

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