Issues

Revitalizing Michigan’s Economy:
The North Coast Project
by Vicki Barnett

Home to one-fifth of the world's fresh-water, the Great Lakes states share several common bonds: economies rooted in durable goods manufacturing, world-class universities, exceptional medical facilities, abundant fresh water and other natural resources and stable geology.

Together, they form the third largest economy in the world, behind the United States as a whole and Japan. The Great Lakes region contains the highest concentration of the world's top 100 universities of any region on Earth, graduates almost 38 percent of America's university graduates and develops 32 percent of this country's patents. But despite these achievements, our region commercializes only a scant percentage of these patents and continues to bleed jobs and commerce to a global economy.

The North Coast Project is a nascent economic alliance of the Great Lakes states that seeks to exploit the region’s enormous strengths to revitalize our shared economies. It aims to create a robust entrepreneurial environment by attracting and retaining talented individuals, providing funds to commercialize the many patents created here and funneling national and global investment into our North Coast communities.

The North Coast Project reflects a fundamental alteration of the current economic and political paradigm of the region, in which our cities bear the burden of old-economy thinking that employs state tax incentives to lure manufacturing plants across common borders in an ongoing zero-sum game. Instead, the North Coast Project will harness the creativity within our educational, medical and research institutions to provide for knowledge-based economic development throughout the Great Lakes states, and especially in our urban communities where extensive governmental investment in roads, sewers, and public infrastructure already exists.

Because the Great Lakes states share common economic challenges, an economic and political alliance to push for a common North Coast agenda is in our mutual best interest. While it is no secret that Michigan’s economy has been in decline for nearly a decade, an examination of the annual GDP of other Great Lakes states reveals that all have suffered a manufacturing-based recession borne disproportionately by Michigan.

Moreover, most North Coast states are significant tax donors to the federal government, meaning they receive far less back than what they pay in federal taxes. According to the Tax Foundation, Michigan received 92 cents for each dollar paid to Washington in 2005. In real dollars, Michigan received about $1.54 billion dollars LESS than what it paid to the Federal Government. The majority of our North Coast neighbors suffer from a similar, and in some cases more dramatic, disparity between what they pay into federal coffers and what they receive in return. To redress this imbalance, Michigan’s solo voice in Congress numbers only 15 representatives and 2 senators. But, in concert, the North Coast constitutes a formidable force of 125 representatives and 16 senators -- almost 29 percent of the House and 16 percent of the Senate

Working with the Michigan Municipal League, the Brookings Institution and John Austin, author of "The Vital Center: A Federal-State Compact to Renew The Great Lakes Region," I organized a meeting of representatives of Great Lake States Municipal Leagues in March 2007, followed by a second meeting in June. Our preliminary discussions centered on our commonalities and shared desire to attract federal resources to the region. We met again in November 2007 to discuss a framework for action around several common issues: economic redevelopment; attracting, educating and retaining talented individuals; and restoring the Great Lakes. We will also meet in February with various local and regional chambers of commerce from throughout the Great Lakes states to discuss ways to advance the region’s mutual interest.

At the state level, we have already established a goal to enact common legislation around several priorities:

• Create a venture capital pool from one-half percent to one percent of the assets of the region's state and municipal pension funds to invest in promising patents, technologies and business ventures within the region.
• Establish reciprocal professional credentialing and certification among all North Coast states to attract and retain highly educated professionals within the region. Just imagine the increased attractiveness of, say, a teaching degree at Eastern Michigan if it carried with it a license to teach in any of the eight North Coast states, or a nursing degree with the same North Coast license.
• Establish region-wide reciprocal agreements to grant in-state tuition to attend public higher education institutions throughout the North Coast.

In addition, a Great Lakes restoration compact, the Great Lakes Regional Collaboration Strategy (GLRC Strategy), is part of the federal agenda for the North Coast Alliance. This is a $26 billion federal-state plan for cleaning and preserving the Great Lakes. The North Coast governors have agreed to use the GLRC Strategy to guide future restoration efforts, and legislation to implement the strategy has been introduced in both houses of Congress. The Brookings Institution estimates that the GLRC strategy could provide economic benefits well in excess of $50 billion, including an increase in coastal property values of $12 billion to $19 billion. Long-term, new recreation and tourism opportunities would infuse billions of additional dollars into the economies of our coastal communities.

Michigan's stake in the North Coast Project is high. We have more coastline than any other state, save Alaska, and the most to gain from Great Lakes restoration efforts. Throw in an enhanced ability to attract additional business investment in knowledge-based research, development and entrepreneurial enterprises, and we can create the mechanism to transform Michigan from rust-belt to "brain-belt," from an aging state into one reborn for the 21st century.

It may take a generation for these proposed changes to be implemented and bear fruit. But this common agenda of hope and prosperity for our future is possible with the resources we already have. The challenge for us is to think in bi-partisan and very long-range terms. All we need do is redirect our priorities, work together and invest in ourselves.