Michigan can’t go back to factory-driven economy


In a Business Insider interview, Ohio Gov. John Kasich did something almost no politician does today: He clearly states we can’t go back to a factory-driven economy. Business Insiders writes:

“But the notion that states such as Ohio are dependent on manufacturing jobs returning is one with which he vehemently disagrees.

“‘Manufacturing is still very important to us, but we are much more diversified state,’ he said. ‘And furthermore, anybody that says the steel mills are coming back to Youngstown is not telling the truth. They’re not coming back. You could have some aspects of advanced manufacturing appear. But if you look even at Pittsburgh, where I grew up, you’ve now replaced steel jobs with technology jobs, and they pay better.

“‘So, I know that, you know, leaders have to lead,’ Kasich continued. ‘I don’t read polls to decide what I’m going to do. But for the best interest of the people of our state, having a big mix of technology, health care, IT, financial services and manufacturing is the ticket. To put all of your eggs in one basket is silly. We did that for a long time, and I don’t think it’s very smart.’”

Exactly! Yes, it would be better if we could recreate the high paid factory-based economy of decades ago. But we can’t — in part because of globalization but increasingly due to smart machines doing the work that workers used to. And smarter and smarter machines are going to continuously do more and more of the work required to make products.

So as Kasich states, the middle-class jobs of today, and even more so tomorrow, are going to be concentrated in knowledge-based industries — including the professional and managerial jobs of companies that make things. One can add education and professional services to his list of technology, health care, IT and financial services.

We are having a hard time as a state and nation learning that lesson. We continue to try to recreate a factory-driven middle class, largely by subsidizing the industry. Business Journal Editor Carole Valade is right when she made the case in a recent editorial we need to move away from those kinds of supports. And make investing in human capital development the prime strategy for rebuilding the middle class in Michigan and the country. Valade writes:

“Since the 1980s, the evolution from manufacturing to a knowledge economy has been cited and documented time and again, perhaps most often referenced by ‘The Rise of the Creative Class’ by Richard Florida. Now 30 years later, Sen. Gary Peters and Michigan Economic Development Corp. are refueling millions of additional taxpayer dollars for the Manufacturing Extension Partnership Improvement Act even while public education allocations remain woefully inadequate. Michigan and the U.S. — indeed manufacturers — need knowledgeable workers coming from schools and universities. The tremendous funding void and disparity will have a profound impact for at least another generation, creating even more debt for the millennials to suffer. A generation of children poorly prepared by education for even currently existing positions in manufacturing assures the continued drain of knowledge-based jobs from this region, from Michigan and across the U.S.”

Gov. Rick Snyder summed it up best when he wrote in 2011: “In the 20th century, the most valuable assets to job creators were financial and material capital. In a changing global economy, that is no longer the case. Today, talent has surpassed other resources as the driver of economic growth.”

To grow economic well being of Michiganders, we need policy that acts on this insight. Michigan’s — including West Michigan’s — fundamental economic challenge is we need better education outcomes, including more residents with 21st-century skills who demand high wages in today’s and tomorrow’s economy. That requires public investments. The payoff from those investments will benefit not only all Michiganders, but employers — including manufacturers — too, because talent is the asset that matters most to employers and is in the shortest supply.

Lou Glazer is president of Michigan Future Inc.

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