As special interests drag down government, private entities move to public’s aid

Phil Power is founder and chairman of the Center for Michigan.

If you’ve heard it once, you’ve heard it a thousand times: The biggest barrier to a prosperous American economy is the U.S. Congress.

Cynical, no doubt. But true in important ways not seen for generations.

The Economist, an internationally respected news magazine, recently ran a big piece on “the America that works”-- the ordinary Main Street economy, far from the hyperpartisan babble of Washington.

Among the 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,” but “the combination of dysfunctional politics and empty coffers is preventing Congress from dealing with the economy’s other obvious shortcomings.”

A 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 levels not seen since 2007.  Investment in research and development is back to record highs.

States act as policy laboratories

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,” somebody 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 accountable for results. Michigan has taken the cap off the number of charter schools, designed to fill gaps left by poor public schools, while the worst schools are being forced into the Educational Accountability Authority.

THE PUBLIC’S AGENDA FOR PUBLIC EDUCATION 

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

Examples abound:

*The Kalamazoo Promise, funded by wealthy families in town, provides tuition to graduates of the public schools, thereby increasing school enrollment and stabilizing the local housing market.

*In Grand Rapids, ArtPrize offers big prizes (tops $200,000) to artists who exhibit their work downtown 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 DeVos dreamed up the idea, with the backing of his wealthy and civic-minded family.

*In Detroit, ground zero of municipal incompetence, multiple parts of city government in recent years have been off-loaded 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 managed through nonprofits.

*And the philanthropic community, especially in Southeast 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 suggests to me 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. Increasingly, not so.

What instead has grown 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 fate of former Detroit Mayor Kwame Kilpatrick suggests a long-standing “pay to play” culture in Michigan’s biggest city.

With the economic pressure of the Great Recession compounding political polarization, we now see increasingly poor performance by government and other public institutions. It’s no surprise that business, philanthropy and civic-minded families are beginning to fill the gaps -- saving money, getting results.

All this raises fundamental questions about both the proper functions and governance of government. If public institutions are twisted by single interests and political considerations, isn’t it time to begin to question what exact role those institutions should have in our society?

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of the Center for Michigan, a nonprofit, bipartisan centrist think–and–do tank, designed to cure Michigan’s dysfunctional political culture; the Center also publishes Bridge Magazine. The opinions expressed here are Power’s own and do not represent the official views of the Center. He welcomes your comments via email.