Traverse City Record-Eagle

April 11, 2013

Phil Power: Congress is the barrier to prosperity

BY PHIL POWER
Columnist

---- — You’ve probably heard it said a thousand times: “The biggest barrier to a prosperous American economy is the U. S. Congress.”

Cynical? For sure. But sadly true today, in important ways. The Economist, the respected international news magazine, recently ran a big piece on “the America that works,” the ordinary Main Street economy, far from the hyper-partisan babble of Washington.

Among their findings: America’s politicians have been “feckless” about resolving the looming structural problems facing our economy. “The politicians in Washington have not inflicted any crippling damage yet,” the British-based publication concludes, but the editors go on to say that “the combination of dysfunctional politics and empty coffers is preventing Congress from dealing with the economy’s other obvious shortcomings.”

One case in point: America’s big businesses are sitting on a $2 trillion mountain of cash, afraid to invest because they can’t imagine Washington’s bickering, gridlocked politics ever fixing anything.

But The Economist also found that under the blaring headlines, the “real” economy is doing pretty well. Both the jobs and the housing markets are coming back. The stock market has returned to near-record levels not seen since 2007. Investment in research and development is back to record highs.

States and localities, pressed for cash, are innovating like crazy. Louisiana and Nebraska are talking about abolishing corporate and personal income taxes. Kansas has a “repealer,” charged with getting rid of red tape. Our own Gov. Rick Snyder has an ongoing program of eliminating obsolete state regulations.

Nationwide and in Michigan, schools are undergoing the biggest overhaul in memory. Michigan’s new, rigorous core curriculum is toughening up standards while schools and teachers are being held more accountable than ever for results.

Michigan is taking caps off the number of charter schools, designed to fill gaps left by poor public schools, while the worst public ones are being forced into the new Educational Accountability Authority, which will have broad powers to reform them.

But more interesting and possibly more significant is the growing trend for business, individuals and nonprofits to move forward in vigorously creative ways while the public sector flounders.

Just a few of the best examples:

n The Kalamazoo Promise, funded by wealthy families in that town, provides tuition to public school graduates, thereby increasing school enrollment, bringing more money in and stabilizing the local housing market.

n In Grand Rapids, ArtPrize offers big prizes (tops $200,000) to artists who exhibit their work downtown in September and are judged by public vote. Now approaching its fifth year, the program is driving enormous crowds to the city. A brainchild of city government? Nope. Social entrepreneur Rick de Vos dreamed up the idea, with the backing of his wealthy and civic-minded family.

n In Detroit, textbook case study of municipal incompetence, multiple parts of city government in recent years have been off-leaded to a series of non-public bodies: Cobo Center, Eastern Market, Detroit Historical Museum, Riverwalk. Bigger institutions — the Detroit Zoo and the Detroit Institute of Arts — are owned by the city but are now managed and run by nonprofits.

n And the philanthropic community, especially in Southeastern Michigan, is pouring millions into restructuring and re-tasking lagging public institutions. Especially important are Michigan’s great foundations — Kellogg, Dow, Frey, Kresge, Hudson-Webber, Skillman, McGregor, Mott - and civic-minded corporations — DTE, PVS Chemicals, Masco.

All this strongly suggests that something important is going on under the surface. For generations, we assumed the government and the public sector were responsible for and competent to manage tasks resulting in the general good of our people.

But that’s increasingly not so.

What instead grew up over the years are encrustations of single interests that tilt public institutions toward their parochial benefit. Public sector unions extract fat contracts from city councils and school boards whose members are elected by union votes.

The trial of former Detroit Mayor Kwame Kilpatrick and his cronies revealed the existence of a long-standing “pay to play” culture in Michigan’s biggest city.

But we would be facing a civic crisis even without the corruption that seems to have been rampant in a city like Detroit.

Combine the economic pressure of the Great Recession with today’s rigid political polarization, and the result has been increasingly poor performance by government and other public institutions, statewide. So it’s no surprise that business, philanthropy and civic-minded families are beginning to fill the gaps - and in the process, saving money and getting results.

That’s the good news. But at the same time, all this raises fundamental questions about the proper functions and role of government. If public institutions can be so twisted by single interests and political considerations, isn’t it time to begin to question what role those institutions and interests should play in our society?

Phil Power is a former newspaper publisher and University of Michigan Regent. He is founder and president of The Center for Michigan, a centrist think-and-do tank. The opinions expressed here are his own. By e-mail at: ppower@thecenterformichigan. net.