Tuesday, June 16, 2009

WSJ: Michigan Needs to Move into a 21st Century Economy

William McGurn has it right:
As Mr. McCain so bluntly put it on the eve of last year's Republican primary, "Some jobs that have left Michigan are not coming back. And the answer to that isn't to raise false hopes that somehow we can bring back lost jobs but to create new ones."

Mr. McCain took a lot of grief for those words and ended up losing the primary to Mitt Romney. But Lou Glazer thinks Mr. McCain had it right. Mr. Glazer heads a nonpartisan think tank called Michigan Future. And he advances a simple argument: While the reliance on manufacturing made sense in the 20th century, the sooner we recognize that manufacturing is no longer the key to a prosperous middle class, the better off Michigan will be in the 21st.

I certainly hope those in Wisconsin are listening, as auto makers lose jobs in Kenosha. Stop giving them false hope; it'll come to bite you, them and the economy in the ass someday.
Mr. Glazer says that the state's most pressing need is to transition to the "knowledge economy," which Michigan Future defines as any industry where the proportion of workers with bachelor's degrees or higher is 30%. That's important, because the knowledge economy is more than the Googles and the Microsofts. The top knowledge industries include information, finance, insurance, professional services, health care and education. Not only are these industries creating jobs, they pay higher wages.
Instead of paying out bribes to help outdated industries move here, help more people go to college and invest in their human capital. Not all people can go to college, but there are ways of increasing access to higher education, including human capital contracts.
The larger point is that what the middle class needs more than anything else is an economy where employers have to compete for their labor. The more open a state's economy is to investment and entrepreneurship, the more employers there will be. And the more education a state's citizens have, the more advanced the industries they can support.

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