What’s the Matter with Michigan? The Rise and Collapse of an Economic Wonder

Mason Gaffney, Groundswell Nov-Dec 2008 (posted 1/29/09)

During the Golden Age of Georgist Progressives, roughly 1890 to 1935, lower Michigan stands out as one of the great success stories. Detroit Mayor, then Governor, Hazen Pingree pushed single tax principles. He reformed assessments to emphasize land over improvements, and raised property taxes to provide services for working men and their families, notably mass transit.

Pingree plugged for public ownership of city monopolies and for low fares, an attitude later to be rationalized by many academics as “marginal-cost pricing”. Property taxes also paid for public education, public health, public parks, water, sanitation, welfare–all the public services that make a big city livable, and its small industries viable. Property tax rates of 2.5% were normal; there were no sales taxes, business taxes, or income taxes. Detroit’s private sector was a big collection of small machine shops, little businesses and services providing a matrix for the famous innovators who were to spawn the auto industry. Jane Jacobs would have venerated it, as she did Tokyo and Birmingham.

For some years, Pingree’s successors followed his path. Detroit thrived and the auto industry boomed. But eventually Michigan’s leaders forgot. 1995 witnessed the last straw: Over the opposition of local governments, and despite Georgist warnings, Michigan’s Governor John Engler replaced local property taxes for school finance with state sales taxes.

Today, famous firms are dying, industrial cities rotting, great universities shedding, public services declining, public schools starving, unemployment soaring, and youth fleeing. Michigan’s number of apportioned U.S. Representatives has dropped from 19 in 1960 to 15 in 2000. The great University of Michigan now charges the highest tuition of any public university in the nation. Michigan’s “Big 3” auto firms have crashed loudly and publicly, going to Washington to beg.

Read the full story on Mason Gaffney’s website: What’s the Matter with Michigan?

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