Michigan must become the clean state

| Sunday, February 28, 2016
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Michigan is sending out wildly mixed messages about its stand on moving away from fossil fuels as its primary energy sources.

After the Environmental Protection Agency announced it its Clean Power Plan in September, Gov. Rick Snyder's administration quickly said it would comply with the rule, which requires utilities nationwide to slash carbon emissions by about 30 percent by 2030. Michigan's two biggest utilities, Consumers Energy and DTE Energy, also said they could meet the new requirement.

And as recently as December, the Snyder administration said Michigan could comply with the plan through at least 2025 without making any changes in its energy structure.

Attorney General Bill Schuette said he would fight the plan in the federal courts. And when the Supreme Court put a temporary hold on the plan's implementation this month, the state almost immediately said it would halt efforts to comply with the carbon-reduction rule.

But just a week after the Supreme Court's stay, Snyder joined a group of 17 mostly Democratic governors in what's being called the Governors’ Accord for a New Energy Future. The governors have "pledged their states’ commitment to effectively collaborate towards diversifying energy generation, expanding clean energy sources, modernizing energy infrastructure, encouraging clean transportation options and securing a stronger national energy future."

Michigan would be well served by continuing its work on implementing the EPA's Clean Power Plan, regardless of what the Supreme Court ultimately decides, according to the Michigan League for Public Policy. Shannon Nobles, a MLPP staffer, wrote in a blog post:

Despite these recent developments, the Clean Power Plan is still good energy policy for our state and the nation. Michigan must continue to move forward with its implementation plan to protect public health, reduce pollution and build on the success of our thriving clean energy economy. We all depend upon clean air to breathe, thrive and live our lives to the fullest, and the Clean Power Plan will help with that. If we can learn anything from the current public health crisis facing our state with the lead poisoning in Flint, it is that we cannot wait until it is too late to make the changes necessary to guarantee everyone a right to live healthfully.

She's right. Michigan is blessed with abundant natural resources, including the Great Lakes and the rugged beauty of the Upper Peninsula. The state's future depends on protecting these resources for the health and enjoyment of its residents and tourists.

Efforts to make Michigan "the clean state" also could provide a much-need image boost. The Flint water crisis has reinforced Michigan's long-held image of being a dirty, industrial, rust-belt state. The crisis makes a mockery of Tim Allen's soothing narration in those pastoral Pure Michigan ads.

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Hillary Clinton slams auto supplier for tax avoidance strategy

| Thursday, February 25, 2016
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Just when we thought the federal government bailouts of General Motors and Chrysler had been forgotten by those seeking to occupy the White House, our memories of those contentious times in 2008 and 2009 have been jogged by an unlikely presidential candidate--Hillary Clinton.

In a new television ad running in several Midwestern states, including Michigan, Clinton sharply criticizes Milwaukee-based auto supplier Johnson Controls for benefiting from the government's nearly $80 billion bailout of the automakers and then moving its legal headquarters to Ireland to avoid some U.S. taxes. Huh?

"When the auto industry was going under, car parts manufacturers like them begged taxpayers for a bailout and they got one," Clinton says in the ad. "But now that Johnson is back on its feet, they're gaming the system and moving profits to Ireland so they can avoid paying taxes here at home."

Clinton's ad gives viewers the impression that Johnson Controls received bailout funds from the federal government. It didn't, but then-Johnson Controls President Keith Wandell testified in favor of the bailout before Congress in 2008, saying that the failure of either General Motors or Chrysler would lead to "a significant number of supplier failures."

Johnson Controls announced last July that it would spin off its $22-billion auto seating and interiors division, based in Plymouth, Mich. and name it Adient.

Last month, Johnson Controls and Tyco International said they would merge and locate the new company's legal headquarters to Tyco's base in Cork, Ireland. The company's operational headquarters will be in Milwaukee.

The move is what's known a "tax inversion"in which a U.S. company moves its headquarters to a foreign country with a lower tax rate. Supporters defend the practice, saying the U.S. nominal corporate tax rate of 35 percent is too high, hurting the competitiveness of American companies. Critics say it's nothing more than a tax dodge.

Johnson Controls will save about $150 million a year in taxes, according to a report today in The American Prospect, a liberal magazine.

While Johnson Controls did not get a direct federal bailout, The American Prospect reported that the company has received more than $529 million in local, state and federal subsidies, including $149 million in tax breaks from Michigan.

More than 60 U.S. companies have used tax inversions, according to Fortune magazine. They include Fiat Chrysler Automobiles, which benefited from a $12 billion federal bailout of Chrysler. Fiat Chrysler's legal headquarters is in London.

Democrats have praised the success of the auto bailouts, which began in the administration of President George W. Bush, but were largely carried out under President Barack Obama. Clinton voted in favor of the auto bailouts as a U.S. senator. It seems unlikely, then, that we'll see a Johnson Controls-type attack ad by her against Fiat Chrysler as the March 8 Michigan presidential primary nears.

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Michigan paying big time for past neglect of cities

| Tuesday, February 23, 2016
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This old television advertisement for Fram oil filters warns that if you don't regularly change the oil filter in your car, you could be in for some expensive future engine repairs. "You can pay me now or pay me later," the mechanic in the ad says.

State government, which failed to pay enough attention to Flint and other impoverished cities over the past decade, is being hit with some big bills.

Detroit's bankruptcy reorganization cost the state (meaning taxpayers) $250 million to head off a financial collapse of the state's largest city, which had been in decline for 60 years.

Flint's lead-in-the-drinking-water crisis promises to cost the state hundreds of millions more. And it gets worse.

As Detroit News columnist Daniel Howes wrote Tuesday, Flint is struggling to survive economically. The Vehicle City, as it's known, was a company town that never recovered from the huge loss of General Motors' operations there over the past 30 years.

Michigan lacked any sort of comprehensive urban strategy while all of this was going on, so now it's in crisis mode. Gov. Rick Snyder told Howes he's marshaling resources from a shrunken Michigan Economic Development Corporation to aid struggling Flint businesses and help start new ones. Said Howes:

Those include three MEDC staffers on the ground in Flint to offer local business owners access to business retention programs; outreach to business owners to ensure they have access to clean water; efforts to determine how and whether Flint’s Big Three institutions of University of Michigan-Flint, Kettering University and Mott Community College, may aid in formation of startup companies.

Flint has been an economic basket case for years. What took the state so long to react?

A top former Snyder aide, in a stunning rebuke of his former boss's management style in the Detroit Free Press on Tuesday, blamed the Flint water crisis on the administration's focus on financial data at the expensive of people. Snyder, a CPA and former computer company executive, campaigned for governor as a "nerd" who relied on data dashboards and read budgets for fun. Said Dennis Schornack Snyder's former transportation adviser:

Government is not a business ... and it cannot be run like one. The people of Flint got stuck on the losing end of decisions driven by spreadsheets instead of water quality and public health. Having been a Snyder staffer, luckily in a spreadsheet-rich area like transportation, I lived the culture amidst its faults.

But Flint and other cities also suffered during the administrations of previous governors, including another of Schornack's former bosses, Republican John Engler, who had spent his entire career in the Legislature before being elected governor in 1990. Some economists and policy experts say Engler's focus on tax cuts, particularly near the end of his administration, deprived cities of needed resources.

And yes, city officials who were in some cases corrupt and in other instances mismanaged finances, also share blame.

We're paying dearly now for problems that percolated for many years without the needed attention. The Fram oil filter mechanic would be shaking his head.
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Donald the Disrupter

| Monday, February 22, 2016
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American business is all about disruption. Amazon is disrupting brick-and-mortar retailers. Netflix is disrupting television viewing habits. And Silicon Valley is threatening to disrupt Detroit in the development of self-driving cars.

Disruption often is unpleasant for the executives and workers of the companies being disrupted. The rapidly declining newspaper industry, where I spent my entire career, is a stark example. But disruption can benefit consumers, who get their products and services cheaper and faster through what economist Joseph Schumpeter called the "creative destruction" of old businesses and processes.

Billionaire (maybe) businessman Donald Trump wants to disrupt government, and that's a major part of his startling appeal to voters as he seeks to become president, columnist Frank Bruni wrote in Sunday's New York Times. Said Bruni:

(Voters) want to try something utterly different—utterly disruptive, to use the locution du jour—and that leaves them, on the Republican side, with the options of Trump and Ben Carson. Trump has the fire.
Bruni said he recently attended a Trump rally where supporters told him that they liked Trump's fearlessness and the idea that he's funding his own campaign. Doing so won't making him beholden to well-heeled special interests, one woman said.

Another man, an Air Force veteran who workers as a truck driver told Bruni he's upset with the continued dysfunction of the Veterans Administration and his stagnant wages. Maybe Trump, who isn't like the other professional politicians, can change that, the man said.

That's in line with comments of people I've talked to who have suffered economic setbacks. They tend to blame government policies more for their misfortunes than the actions of their employers and mortgage holders.

Former House Speaker and failed presidential candidate Newt Gingrich said on Fox News after Trump's win in the South Carolina primary Saturday that people need to take seriously Trump's chances of winning the Republican nomination. Bruni:

Gingrich analyzed his appeal perfectly during that Fox News appearance. “It’s a very simple rule,” he said. “If you think Washington is so sick you want someone to kick over the kitchen table, then you like Donald Trump and you frankly don’t care about the details.”

That appears to be the case in Michigan, where Trump has a sizable lead over his Republican rivals heading towards the state's March 8 primary, according to a new Detroit News/WDIV-TV poll. Trump enjoys strong popularity (except among women) in Michigan, despite economic policy positions that could harm the state's auto industry and put tens of thousands of jobs at risk.

Trump has said he would impose high tariffs on automakers that build parts and assembly plants in Mexico and import products from those plants back to the United States. That may sound appealing, but starting a trade war with Mexico would likely hurt U.S. automakers and jobs. Trump's plan also is probably illegal under the North American Free Trade Agreement.

He has also suggested that one way to keep auto jobs in the United States is to move some jobs out of Michigan to lower-wage states. Jobs could be restored to Michigan when workers are willing to take less pay. Really.

I don't think that's the kind of disruption we're looking for in the White House. At least I hope it isn't.

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This is why automakers are developing self-driving cars

| Sunday, February 21, 2016
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My grandson's favorite television show is "Daniel Tiger's Neighborhood," a Public Broadcasting Service series produced by The Fred Rogers Co. It's based on the Neighborhood of Make-Believe from "Mister Rogers' Neighborhood," hosted by the late--and beloved--Fred Rogers.

Daniel, his friends and their families are a diverse bunch, as you'd expect in a PBS program. While Daniel's parents are the feline equivalents of Ward and June Cleaver, the neighborhood features a wide range of family structures. Katerina Kittycat is being raised by a single mother, Henrietta Pussycat. Miss Elaina "lives in the Museum-Go-Round with her eccentric parents Lady Elaine Fairchilde and Music Man Stan, who runs the neighborhood music shop." Miss Elaina likes to walk around backward. (That's where my grandson gets it!)

O, a neurotic, blue owl, lives with his uncle, X. And oddly, in what seems to be an otherwise egalitarian community, there's a royal family--King Friday, Queen Sara Saturday and their two sons, Prince Tuesday and Prince Wednesday.

They might be different, but they are united by a transportation marvel: a red trolley that magically appears at their doorsteps to take them anywhere they want to go. Daniel thinks the trolley is grrr-rific! It's sort like what the automakers and ride-sharing companies such as Uber and Zipcar are developing. You just summon a driverless, autonomous vehicle on your smart phone app and one arrives.

In Daniel Tiger's Neighborhood, apps aren't necessary. The trolley is always there and just knows where everyone wants to go.

Today's preschool set, what I call the autonomous generation, is going to expect the kind of seamless transportation they see on Daniel Tiger's Neighborhood. Automakers and other transportation companies better not disappoint them. My generation was promised flying cars, the kind of vehicles we saw on "The Jetsons" television series in the 1960s.

That promise went unfulfilled. Some of us baby boomers are still sore about it.

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Do Michigan cities matter?

| Thursday, February 18, 2016
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Living just enough, just enough for the city. -- Stevie Wonder

As Flint's municipal water crisis exploded in the national media, I recalled a series of columns Craig Ruff wrote in 2011 for Dome magazine questioning whether Michigan really cared about its older, industrial cities.

(You can read them here, here, here and here.)

Ruff is the retired president of Public Sector Consultants in Lansing. He also recently served as a special education adviser to Gov. Rick Snyder. For years, he was a sage source for reporters seeking analysis of the state's most serious public policy issues.

In his Dome commentaries, Ruff lamented the tragic decline of Detroit, Flint, Saginaw and other municipalities. He called it "decitification." Said Ruff:

That many Michiganians have chosen to leave them over the past two generations leaves me pessimistic about our future. The trend here defies much of human history. It’s irrational, pernicious, and terribly draining of talent, investments, and economic vitality that come from close, human interaction.

Ruff cites a number of well-known reasons for the decline of the industrial cities, including the loss of high-paying, low-skilled manufacturing jobs, white flight, high tax rates, decline in basic services and the attractiveness of shiny new suburbs. In an email to me this week, Ruff said the data he cited in his 2011 columns might be a bit out of date, but he would "not retreat from the viewpoints."

There has been some good news for cities since Ruff wrote his commentaries in 2011. Many downtowns--including Flint--are seeing a rebirth of residential and commercial development, mainly a result of young, college-educated people moving into them. But poverty, abandoned neighborhoods and low-performing schools remain as grievous problems in too many cities.

Ruff said the state "must take the lead in bolstering" cities. But I wonder how many of us really believe that. Even though the evidence points directly at the state Department of Environmental Quality for poisoning Flint's drinking water, I've heard people say incompetent and corrupt city officials are to blame for not upgrading Flint's infrastructure over the past several decades. They don't believe the state owes Flint anything. (Never mind that a state emergency manager was running Flint and made the decision to leave Detroit's water system.) I suspect that's a far more popular sentiment than those calling for Snyder's head on a platter would like to believe.

But the lack of action by local leaders to replace dangerous lead pipes in Flint isn't much different than the failure of the state and other wealthier locales to improve infrastructure. The Legislature, for example, resisted Snyder's call to fix our crumbling roads for four years before approving an inadequate funding structure.

Michigan will need to spend $13.8 billion by 2033 to upgrade its drinking water infrastructure, according to the latest report by the American Society of Civil Engineers. The report gave Michigan a grade of "D" for the quality of its drinking water systems.

Ruff and others say Michigan has suffered from a decades-long lack of an urban agenda. "State public policy has not been on the side of cities," Ruff said. And the relationships between governors and urban mayors have been generally icy, he said. The major exception was the unlikely bromance between former Rep. Gov. William Milliken and former Democratic Detroit Mayor Coleman Young, who was despised by many white suburbanites.

The political clout of cities also has dramatically waned over the past several decades, putting them on the losing side of many public-policy battles. Said Ruff:

In crudely partisan and arithmetic equations, Michigan’s central cities and their old, industrial counterparts have a declining right to policymaking clout. Their voters send to the state’s legislature people who currently are in a partisan minority and progressively have less and less say in state policymaking. Cities’ market share of county votes descends, too. In the state legislature and county courthouses, non-city dwellers have the upper hand.

Additionally, cities have been badly shortchanged by money owed to them over the years by state government, said Dan Gilmartin, executive director of the Michigan Municipal League.

State government cut $6 billion in revenue sharing to cities between 2003 and 2014 in order to balance its own budgets, Gilmartin wrote this week. Flint alone was shorted $54 million--money the state now is spending in making the city's drinking water safe again. Said Gilmartin:

Something has to give. The state’s culpability in the Flint water crisis is drawing intense international criticism, but its abandonment of Flint started years ago. The same goes for places like Pontiac, Hamtramck and Jackson. The result of this policy impacts public safety, quality-of-life and economic competitiveness everywhere in Michigan. The state is, after all, a collection of its unique places- no better, no worse. We can do a lot better.

Yes, we can. Will the tragedy of Flint finally produce the political will to do so?

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Is Michigan headed for severe labor shortages?

| Saturday, October 31, 2015
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Gov. Rick Snyder tweeted on Friday that there are more than 100,000 job openings posted on Michigan's career site, Pure Michigan Talent Connect. As of Saturday morning, there were precisely 104,674 jobs available on the site. That's up from about 80,000 available jobs three years ago.

Help-wanted signs at restaurants and retail stores are ubiquitous. Snyder has been talking about a shortage of skilled-trades workers for years. And some highly paid jobs, such as electric line workers, are going begging.

Michigan faces in increasingly small pool of available workers to fill those positions. September's unemployment rate of 5.0 percent was the lowest in 15 years. There were just 235,000 unemployed people actively looking for work in a labor market of 4.7 million workers.

If all of those 100,000-plus available jobs could be filled from the unemployment roll--and that's a big if--Michigan's jobless rate would fall to 2.8 percent. That would be the state's lowest jobless rate since at least 1970.

Another problem is that the size of Michigan's labor force continues to shrink, even though the economy is growing. There were 4,732,000 adults in the labor force last month, down 15,000 over the past 12 months.

Michigan lost more than 800,000 jobs in the "lost decade" of the 2000s, instilling a fear in many workers that they were lucky just to have jobs. Employers benefited from that uneasiness by being able to keep wages down. Those days might soon be over.

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