The following article appeared in Crain's Detroit Business on November 29, 2004.
Wonder why Michigan hasn't joined the rest of the country in an economic rebound?
As Terry Kosdrosky reports on Page 1, the answer lies in the steep drop in market share for the traditional Big Three automakers. Their share of cars and light trucks sold in the U.S. has dropped more than 14 points in less than 10 years, from 73.2 percent in 1995 to 58.9 percent through October of this year.
The ripple effect in Southeast Michigan has the makings of a tidal wave. This is more than the cyclical downturns Michigan has weathered so many times in the past. It's a systemic issue that requires a huge effort to attract a new industry base.
It's a good sign that Democratic Gov. Granholm and Oakland County's L. Brooks Patterson, a leading Republican, worked so effectively together on the state's European trade mission this month.
But to turn the economy around, it's going to take a lot more: overhauling state spending and the tax structure; focusing on attracting key, growing industries such as biotech and health care; and making the state more hospitable to small business.
You have to start with the state's business climate and tax structure. Not surprisingly, the hottest book in Lansing right now for both Democrats and Republicans is The Price of Government, by David Osborne and Peter Hutchinson. The book calls for budgeting for outcomes rather than simply adding or cutting last year's spending. The book offers a blueprint for cutting spending while focusing on the outcomes that matter most.
Michigan needs such an overhaul. Radical change often is difficult because of work rules and entrenched expectations of what government is. Crisis is often the best time to accomplish radical transformations to fix what isn't working.
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