Michigan: The Turnaround State (But Who or What Turned it Around?)

Michigan was already in a deep economic hole when the 2009 recession hit, adding another 400,000 plus lost jobs to the over 400,000 the state had already lost. Unemployment reached 14% that year and personal income dropped to 87% of the national average, tough numbers for the nation’s industrial powerhouse. But things have started turning around, with unemployment dropping to just under 9% and per capita income growing by 3.5%, inching its way to the national average. Housing sales, building permits, and population statistics are also up.

But this good news has triggered a political debate about who caused the turnaround and how, according to Suzanne Weiss in the May 2014 State Legislatures. Legislative minority Democrats point to the federal bailout of General Motors and Chrysler and Ford’s amazing turnaround (the company mortgaged almost all of its assets to stay in business). Majority Republicans cite a host of 2011 initiatives including a flat 6% corporate income tax (that’s expected to reduce business taxes by about $1.8 billion a year) and a 10-year phase-out of personal property taxes.

Photo: http://www.bettermovement.org/2013/

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Who’s right? Well, we’re not going to jump into this debate, but we would like to suggest that both sides consider University of Michigan professor Scott E. Page’s ideas about complexity, a discipline that draws ideas, concepts, and tools from many other disciplines, including mathematics and economics. Complexity science helps us understand how our choices interact with those of others to create unexpected and unintended outcomes.

While the debate continues, a group of Michigan business leaders put forward a plan in 2009 (updated in 2014) recommending that the state concentrate resources on five assets, in addition to the automotive industry, that could create the most jobs and strengthen the economy:

1. Play up Michigan’s top ranking with respect to engineers per capita and concentrated technical talent.
2. Invest in the state’s transportation infrastructure, including the Port of Detroit, one of two U.S. deep water ports that can handle the largest container ships.
3. Capitalize on Michigan’s leadership in university- and industry-based innovation by making higher education more affordable and strengthening university-business partnerships, among other things. 
4. Maximize the state’s natural resources by attracting more tourists and boosting agricultural production and exports. 
5. Capitalize on Michigan’s unique combination of bioscience majors, high quality medical research facilities, and other related assets to make the state an incubation hub for startup pharmaceutical businesses.