How not to run an economy

In our continuing series on why Obama’s policies will be ruinous for America, an article that shockingly reports the Detroit metro area is the worst big city for jobs. Funny how a friendly-with-the-unions state and local government, an unfriendly-to-taxpayers economic climate, and ever increasing federal mandates have decimated an industry that was once the envied across the globe.

The Sun Belt just might recover, but employment prospects look grim in Michigan, Ohio and California.

First let’s deal with the perennial losers, the sad sacks of the American economy. Mostly cities in the nation’s industrial heartland, these places have ranked toward the bottom of our list for much of the past five years. Eleven of the bottom 16 regions on our list are in two states, Ohio and Michigan. In fact, the Wolverine State alone accounts for bottom four cities: Jackson, Michigan, Detroit, Saginaw and Flint.

One easy prediction is that Ford will soon be the #1 US automaker by a wide margin. Washington will try to choke the life out of them with increasingly burdensome environmental mandates, but being free (for now) from direct management by the government will spare them the slow death of heavily subsidized, impractical little clown cars no one wants to buy. Should Ford run the gauntlet they’ll have huge PR leverage in the market. Now if they only have the balls to run an ad with one family pulling into the driveway in a comparatively spacious Ford while his neighbor is tying the dog and grandma onto the roof rack of their new Chrysler Persephone sub-compact plug-in hybrid…

Things look grim in Michigan, Ohio, and California. Interestingly, one of these things is not like the other. California is hardly the rust belt. Yet as I previously posted they have only one city – Bakersfield – in the top 1/3 of the Best Cities for Jobs and now things look “grim”.

Much of the problem lies with the state’s notoriously inept government. The enormous budget deficit will almost certainly lead to tax increases, which will fall mostly on the state’s vaunted high-income entrepreneurial residents. Stimulus funds won’t do much good either, Adibi notes, since “the state is grabbing all of the federal stimulus money” to keep itself afloat.

A draconian regulatory environment also could dim California’s prospects for growth. Despite double-digit unemployment, the state seems determined not only to raise taxes but also to tighten its regulatory stranglehold.

But an even deeper recession, it seems, hardly troubles today’s dominant players–public employees, environmental activists and gentry liberals who largely live along the coast. The state has recently passed a draconian Assembly bill aimed to offset global warming by capping greenhouse gas emissions–a measure that seems designed to discourage productive industry.

“This is becoming a horrible place to produce anything,” says Watkins, who is executive director of the Economic Forecast Project at the University of California, Santa Barbara.

California’s lawyers, though, might stay busy. Attorney General Jerry Brown has threatened to sue anyone who grows their business in unapproved, environment-threatening ways. To be sure, this promise may have relatively little impact on the more affluent, aging coastal communities–but it could wreak havoc on younger, less tony areas in the state’s interior. Many of the local economies there still reply on resource-dependent industries like oil, manufacturing and agriculture.

The desire to increase regulation reflects a peculiar narcissism and arrogance of the state’s ruling elites, who believe the genius of San Francisco’s venture capitalists and Los Angeles’ image-makers alone are enough to spark a powerful recovery.

This is delusional. True, California still has a lead in everything from farm products to films to high-tech manufacturers. But it has been slowly losing ground–to both other states and overseas competitors. CEOs and top management might stay in the Golden State, but they increasingly send outside its borders all jobs that don’t require access to the local market, genius scientists or talented entertainers.

“There’s a feeling in California that we will come back, no matter what, because we are California,” Watkins says. “The leadership is swallowing Panglossian Kool-aid. Some very smart people, a beautiful climate and nice beaches is not enough to guarantee a strong recovery.”Democrats in Washington – and Obama in particular – have narcissism and arrogance in abundance. California is their blueprint and they will stick to the plan even though it will produce a new Tacoma Narrows Bridge. As bad as things are in Michigan, California is Exhibit A in how not to run a government and an economy – yet it’s Plan A for Obama, Nancy, and Harry.

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