Should the Government Not Help Michigan?

By Noah Graff

President Obama with the Chevrolet Volt after a groundbreaking ceremony for a new battery plant in Holland, Mich (Photo source: NY Times)

Yesterday, Barack Obama visited the Compact Power plant in Holland, Michigan, to attend the groundbreaking of a new plant to produce battery cells for Ford and GM electric vehicles.

The $300 million facility is the ninth factory to begin construction since the administration allocated $2.4 billion from the president’s economic stimulus program toward production of advanced batteries and electric vehicles. It is one of two factories in Holland, which together have received $450,000 in grants from the U.S. government.

The factory that broke ground Thursday will employ 400 people, in 18 months. It and others like it could be a decent starting point to jumpstart economic growth in Michigan. In five years, officials say, the government subsidized plants will be making batteries for 500,000 new cars a year and will cost 70 percent less.

The Holland area happens to have a large Tea Party movement. They have come out with a mixed reaction to the government stimulus and the President’s visit. Jim Chiodo, a Tea Party leader in Holland, said that he has nothing against the jobs that the plant will provide the town. But says he doesn’t believe it’s up to the government to pick and choose which towns get help.

“For every winner, there’s 10 losers,” Chiodo says. “It’s really, really hard to take a position that’s against your hometown. And I’m not against my hometown. I love Holland. I’ve been here 25 years. It’s a great town. But it’s going to hurt towns like Holland when this gravy train gets turned off.”

If that’s all Chiodo can say to criticize the stimulus program, he’s having some trouble keeping his Tea Party cred in my book.

I’ve always been a big fan of analogies, here’s what I came up with in response to that criticism.

Is it fair for one guy on dialysis to get a kidney transplant while another guy who needs one dies because he was further down on the list? Of course not. So does that mean nobody should get a new kidney then? Take this further now, what if you knew that the guy who was lucky enough to receive the kidney was an amazing doctor who had a good chance to help prevent others from having kidney problems like his own. And, what if the only way the doctor could get the kidney fast enough to survive was with help from an arrogant, socialist, idiotic president who had no experience with kidney problems?

One could say that Holland and lot of towns in Michigan are on economic dialysis. I’m not sure how doing nothing “Tea Party style” can save it and places like it.

Question: Should the Obama administration not have helped build the battery factory in Holland, Michigan?

Source: NPR.org

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27 thoughts on “Should the Government Not Help Michigan?

  1. Brian "Dwight" Hoff

    Great question, Noah. The naive / pretty rainbows side of me says we should let free markets determine where money goes. My cynical side says from the revolution on we have never had a truely free market & why should we pretend we have one now. Plus, like anything that involves big money, they seem to breed greed & corruption due to human nature. My answer is the government, in the systems in place for the past 30 years, must “incentivize” large, new, and logistically complex markets in order to respond to world demand as quickly as possible. How we pick winners & losers will never have an agreeable answer to all parties and will always be politcally charged debate. The need to get government out of the process as soon as possible is also important. There’s so many caveats to my response but I need to do work now.

     
  2. Mark Bronson

    Of course the federal government should not help Michigan. That’s not the role of the federal government. Period.

     
  3. Daniel Richter

    The problem IS the Government…So what’s the answer when the Government screws everything up? MORE GOVERNMNET! The Government is US. This money doesn’t grow on trees (well, in this case it really does via the gov’t printing press)…Unless you plan on screwing our bondholders, it’s OUR money! You liberals don’t seem to understand that. This was nothing more than income redistribution, a photo op for Obama, and a chance for him to take a stab at the Republicans in general and Pete Hockstra specifically (who was also there). Either get out of the way or let’s go full bore into the incestuous Chinese model of government/business relationship (subsidies of energy, facilities, raw materials, capital and no EPA, OSHA, building codes, etc.). How many of you knew that there were almost 2700 coal miners killed in China last year? You can’t have it both ways and expect us to suceed either as a country or in manufacturing.

     
  4. Bruce Renwick

    Obviously, Mid-term elections are coming up and politicians are falling all over themselves giving hand outs to whomever they can. If the government is concerned about manufacturing jobs they should talk about giving tax incentives to businesses to keep jobs in America. Instead, this administration says “the rick and wealthy” will pay all the huge deficits’ they have created over the last 30 plus years. Sounds like they are talking from both sides of there mouths.
    After the factory is built in Holland what is being done to assure the jobs will stay there?
    Let’s see what Obama and his colleagues, on the right and the left, have to say in December about manufacturing, I predict it will be a huge nothing.

     
  5. Shawn Ferguson

    I pose a question for everyone opposing the help the government is giving. If YOU and YOUR company were given hundreds of thousands of dollars to build a new plant, hire new people, and generate more income – would you turn it down? Because if you are true to your ideals espoused here and believe that free markets should totally determine growth and recovery, then your answer must be no. I’m not so sure it would be. I’m not judging anyone – it’s just something for everyone to think about.

     
  6. Larry

    Noah, get a clue. IS IT FAIR, FOR MY HARD EARNED TAX DOLLARS TO BE SHIPPED TO MICHIGAN, RATHER THAN MY USING MY DOLLARS TO EMPLOYEE THE SPOUSE OF MY NEIGHBOR WHO NEEDS THE KIDNEY, AND HE HAPPENS TO BE A THE ONLY BRAIN SURGEON WHO HAS ANY HOPE OF REPAIRING YOUR SOCIALIST BRAIN. Noah, you should just stop commenting on political issues, your’e parents must have let you play with plastic bags as a child.

     
  7. Miles Parker

    Before anyone comments further please read the July 5 Businessweek feature by Intel’s Andy Grove titled “How to Make an American Job.” He outlines all the issues needed for manufacturing to succeed and comes to the table with numbers, not old ideological truisms about capitalism and “free markets.” Speaking of which, this country has long run on tax incentives and subsidies. Sometimes Government has had significant success where private industry would never have taken the risk. Look at the great strides being accomplished from nanotechnology to composites through grants by DARPA, the NSF or through direct technology transfers from NASA. The real problem is big, inefficient government and big, inefficient private industry. Everyone needs to use better cost/benefit models and deploy rules that create trust and safety for citizens and investors. This Tea Party/Libertarian stuff is intellectually bankrupt and naive.

     
  8. Noah Graff

    Time after time, I see 3 things in these comments–Obama Bad, Government Bad, Stop Manufacturing Jobs from going overseas.

    So is doing nothing going to stop jobs from going overseas? Can we rely on all the businesses here and the consumers here to exercise economic patriotism to keep jobs here?

    Free markets are good. They are ideal. But will that alone stop outsourcing?

    You can’t have it both ways. The point here is to give people a start so they can succeed. Create new industry to put people to work, so then they won’t need government welfare.

    Is new growth in Michigan supposed to come from just spontaneous generation? Give the place a chance to succeed. Stop seeing everything in Black and White.

     
  9. wayne

    The answer is yes. Whether or not this is the right place to put the money only time will tell.
    As for the free market economy and it is not the government’s job perhaps that takes more discussion. We are in a world economy and if other countries help business, can we compete? Is it fair to have to compete if other governments subsidize?
    I agree that we should also look at the long term fix. If it is the existing tax rules they should be changed. It is not just the tax code that needs to be reviewed; all rules that relate to the economy should be reviewed.

     
  10. Richard Rudy

    Noah:

    Pretty poor analogy to me…

    Your counterpoint to Chiodo is that just because everybody won’t get a government handout doesn’t mean that nobody should. Kidneys are a limited commodity, and ideally they are granted to qualifying patients in list order. No governmental judgment of “value” is involved, at least not yet.

    But spreading government development dollars around means the government is trying to choose winners and losers in the marketplace. And as we all know, government is really lousy at choosing. Remember Jimmy Carter’s synfuels fiasco? Can this battery company be profitable without a government handout? If so, let them do it. If not, forget about it; some other company will. The government and our courts should level the playing field and referee the game. After that, the more our mostly ignorant lawmakers call the shots on how businesses operate, the worse off we all are.

    Besides, why Holland, Michigan? Are former auto plants in Ohio any less worthy? For that matter, why are Michigan and Ohio suffering so much? Let’s see, they have older, less technically advanced factories, archaic work rules, and very highly paid employees and legacy costs that are over the moon. So, why Holland? Hmmmm, Holland “happens to have a large Tea party movement” – could this be an attempt to quiet down local discontent with the federal government using taxpayer money? Lately, there is so much more evidence of governmental financial largesse as political payback (autoworkers, SEIU, Acorn, Fannie and Freddie, etc, etc) that any comparison with the unbiased blessing of life conferred by a kidney seems inapt.

     
  11. Ben Satran

    Only if they want the Gov. to run there business, Which you can bet your bootie they will.

     
  12. Mike Sterling

    I think you may be comparing apples and rocks…Both are round and they hurt if they hit you in the head. However you can only eat one of them.

    If the government was forcing you and me to give up one of our kidneys 50% to get some of the people in America off Dialysis your analogy would work. But they don’t. They do have us paying 50% or so in taxes. I don’t have any issue paying taxes if the money is spent wisely. But, when our debt load is out of this world I do believe we need to throttle back on spending have the government take less taxes and let Capitalism work the way it should. Socialism doesn’t work. It holds everyone down to a lower level.

    I do enjoy reading your articles and I believe this is the first one I disagreed with…I will continue reading and thank you for what you do. Free speech is something this country is founded on.

     
  13. Mark

    Noah,
    You are too impatient. We want to build a strong country and strong businesses. The only way to do that is through the free market. It is easy for the government to create temporary demand and create weak businesses to satisfy it but, in the long run, that won’t work. You can quote Keynes at me and say, in the long run we’re all dead. But that mentality has brought us to this doorstep. Yes Keynes is dead and if you look at it objectively you can see how sick and twisted he must have been to provide us with such a quip. If we invoke Keynes once more, and if we dodge fate one more time using his methods, it will still come eventually. I would rather work hard now on something real than accept the easy street the government offers because the bill WILL come due.
    It’s really too bad that people with your mindset can’t seem to comprehend this undeniable fact which has been proven over and over throughout history.

     
  14. Janie

    The government (ie politicians) tax us so they can use the $ to impress upon us the necessity to vote for them. Because it is NOT based on true desire for American’s best interest, but their own, it most definitely produces facades of good. Tax cuts are the best way to stimulate the economy, that is proven.

    Government is NEEDED to protect National freedom, not produce jobs. Too bad that is a secret!

     
  15. Kimberly Pontius

    Wait a minute everyone. Who is “the government”? Last time I read the Constitution I thought it was the People. Wouldn’t this be all of us? OK, call me silly but I think the root cause of the problem is not Michigan or kidneys but the inability of the People to get more involved (beyond the “voicing my opinion” phase), VOTE, actively participate in government at all levels, VOTE, and attempt to come up with better solutions that do not always involve political ideologies and of course VOTE. Those who VOTE have the power to change the government. Let us hope they take the time to do their due diligence first.

    Noah, thanks for your commentaries (political or otherwise). It is one reason why I continue to read the magazine cover to cover and every issue.

     
  16. Ron

    It is a given that no one can produce an electric car at a price that can generate sufficient demand to create a market. To reach the volume of 500,000 electric cars by 2015, the government is going to have to subsidize the price through tax credits as high as $ 7,000.00 a car. So we are going to have the government give grant money away and then subsidize the consumers that buy these cars. The bulk of demand will be for conventional technology such as clean diesel, hybrids and small cars that don’t require subsidies to create a market. Save your money Obama (excuse me – save our money!)

     
  17. Jerry Johnson

    Noah My Boy;

    You need to get a few years under your belt, and open your eyes. Government IS the problem. Allow me to assist with your continuing education:

    Medicare – BROKE
    Social Security – BROKE
    Medicaid – BROKE
    Post Office – BROKE

    Government has never created anything viable.

    The United States of America is a Free Market, and time and time again, the government intervenes and screws things up. The large majority of Government employees have no business background, and never made a payroll, particularly Lord Obama. They are nothing more than pigs at the government trough.

    Each of the jobs in this Michigan battery plant will cost the American Taxpayers in excess of $500,000.00 each to create. (I think you forgot a few zeros in your numbers). Where are you going to get the batteries charged? What is going to be used to generate the electricity to fuel the charging stations (can’t do “dirty” coal, nuclear is a no no, not allowed to drill off the coast for oil, etc. etc.)

    The sooner you realize that this Utopia that Obama promises (lies about) is nothing more than self service to his “career path”, his pathological narcissism, and his desire to destroy this country from within, the better off you will be. The Government welfare that you refer to – that’s exactly what he wants so that he, the Chosen One, can control everything, and we serfs (including you) will be totally dependent on him for a few crumbs.

     
  18. Larron

    Hi Noah…

    I’m not certain that the kidney patient waiting list analogy is entirely correct… a few liberties seemed to be taken with the logic there. I’d look more at as if there were a prototype all-electric kidney product that was being developed and the government decided to stimulate the market by picking a few companies to support while they tooled up to start making these miracle kidneys. It’s not an issue with picking the order that battery companies get funding that is analogous to the kidney waiting list, it’s whether or not there is artificial demand being created for a product that may or not be viable yet.

    How is one all-electric kidney start-up selected over the others, or one area versus another? In the guise of “fairness” hidden special interests will always ferret out carrots for themselves Funding would ostensibly start with a new tax on alcoholic products, but then expand to higher taxes on sodas. Of course it couldn’t stop there… how far down the line would it be until taxes on completely unrelated items like running shoes need to be raised? (15 years… 8 years.. 40 years..) How do we pick where in the delivery infrastructure the subsides stop? How many agencies will be created to regulate this new, cornerstone, electric organ technology while the existing agencies fight over how the greedy manufacturers of these new products only make them available only to the rich. When do electric-kidneys become a human right to have available? Oh… not to worry our great public society, another hike in alcohol tax will pay for it all. Well.. plus a few cents on those new tennis shoes as well mind you, but what’s a few cents on sneakers when the health of our humane society demands sacrifices?

    I’m not saying that, funded, start-up capital is a bad thing from any source… I just wonder how many decades or generations of unintended consequences occur in de facto when governments involve themselves with short term funding for things that are not directly part of their core competencies, and will certainly evolve long after they have moved on to other more important things. Like the next terms hot election issue de jure.

    I think that I understand the desire to do something… but sometimes having the strength to not do something is not the same as doing nothing.

    My ideas here aren’t really fleshed out.. just thrown together, but I’ve learned to be careful with an analogy as they can get away from you pretty quickly in many contexts.

    Best of luck

    Larron

     
  19. Michael Paul

    Government subsidy is a tax. The money used to help a select group is paid for by a tax. In this situation the public will see government help group “x” in location “x” but what is not seen is who was deprived of this money. That is, the American taxpayer and other business’s. For example lets say it cost taxpayers two dollars a year for this subsidy, well that two dollars is now spent and we have to spend two less dollars on our own local economy where providers of goods and services will make two dollars less from each local resident.
    This is a socialist practice of wealth distribution through history it has been proven not to work.

     
  20. Noah Graff

    For all the jaded fiscal republicans out there commenting on this blog, I thank you for caring to participate in the dialogue, and I must give you a link to this Hilarious Headline in The Onion, a fictional satirical newspaper.

    “Nation Demands Tax Dollars Only Be Wasted On Stuff That’s Awesome”
    http://onion.com/9vJXpQ

    Enjoy, and keep reading and commenting!

     
  21. Buelldog

    Noah,
    I think the kidney dialysis analogy is missing something. Your analogy only has one negative; the suffering of the patients. What if we added another negative? For example: the hospital is doing most of these operations for free and if it continues to do operations for free, the hospital will have to close due to lack of funds.

    With this addition, I think your analogy now contains both the legitimate concerns of helping communities to survive & thrive and the lack of sustainability of the federal government spending money they don’t have.

    Think about $13 trillion of debt. That works out to about $40,000 per citizen, or more importantly, about $118,000 per taxpayer. How is it that every alarm bell in the country isn’t going off right now?

     
  22. Noah Graff

    But you see Buelldog, in my analogy, the man who was cured was a doctor, who supposedly could help cure future people with Kidney problems, so there wouldn’t need to be handouts. That’s supposed to be the function of this aid. It’s to invest in something, which then is supposed to lead to that thing becoming independent. Then, having its success trickle down to the larger economy. You know this….

    If things were executed correctly, I think there would be a good chance to work. Ayne Rand would say that the concept of government help will lead to nothing but oblivion.

    Is that true? Or is the truth that the Government is 95 percent incompetent of executing something like this correctly, while there exists a 5 percent chance of good effects.

    One philosophy is black and white and closed minded. The other one is highly jaded, yet has a slight, teeny weeny idealism. Once and a while the worst team gets a win. It’s possible to beat the odds. The New Jersey Nets had 12 wins last season. But they went out and played every night. They tried.

    Perfect games seldom happen in baseball. But it could happen. Blah blah blah….:)

    Which one do you believe in? Remote possibilities AKA Hope? Or one way is right and and one is wrong? I like to have a tiny bit of hope, even if I remain pessimistic.

    Read the link I gave in my last comment. It’s hysterical!

     
  23. Jack Frost

    I don’t see why not. They are still a part of our 50 basic free states. I just read that the U.S. contributed $135.0 million for a rocket defense system in Israel. And they are not even related to us. Lloyd, the problem is one that will not be corrected by money. The battery factories are the products of foreign companies designed and developed by engineers and scientists educated in their home lands. The good green jobs are already going to those already educated. There are a lot of top jobs in the U.S. with no takers because the U.S. applicants do not possess the required education. Jack Frost
    On Jul 16, 2010, at 11:16 AM, Today’s Machining World wrote:

     
  24. Ken Pendleton

    our question about the Holland electric makes no sense. If Ford and GM are going to need batteries and if it is expected to be profitable, then there are plenty of investors waiting to build the plant. Why should Obama be involved in making the decision of who builds it and where the plant is built?

    If the truth be known, this is another proposition that is not profitable and would not be built with government intervention. Like ethanol, there will soon be more plants to be removed for scrap value.

     
  25. Steve Baranyk

    No, the government should not interfere with the Free Market.

    Should the government make a direct “investment” in one U.S. based machine tool builder to “protect” America’s position in this critical market segment?

    Should the government establish a central machine tool auction source to buy and sell used machinery “more efficiently” than the current system of competing auction firms?

    It does not matter if the issue is National Health Care or Economic Development. When the Government interferes with the Free Market it causes distortions in the allocation of resources which inevitably “helps some” at the involuntary expense of “some others”. And in almost all cases, every taxpayer “involuntarily contributes” to the source of funds to “help some” at the expense of “all the others”.

    Substituting “emotion” for “rational analysis” in decision making may make some “feel good” about the results of “helping some” at the “involuntary expense of others” but the result is always a perverse set of outcomes.

    Question for you – “Should the Government help some trade publications to survive financially at the expense of other trade publications?”

     
  26. Dan Murphy

    Noah,

    These discussions always degenerate into two camps, liberal and conservative. Both sides love freedom, though neither believes that the other side does.

    There are two types of freedom. One is the idyllic freedom that a child enjoys. Most days children are free to do as they please. They don’t have to worry about a roof over their heads, their meals, or their well being.

    In a way the life of a child is true freedom.

    Of course as a child you might have to go to bed when you don’t want to, go to school, do your homework, and maybe some chores. But your parents will justify all of that by telling you that it’s all for your own good.

    On the other hand a child’s life can be scary from the child’s point of view..Who knows how qualified your parents are to make decisions for you? And as the horrible headlines in the newspaper attest, often parents don’t act in the best interests of their children, As a child you are pretty much powerless to change your circumstances. Seen from this point of view, you aren’t really free at all.

    Eventually children grow up and they begin to chafe under what they see as the tyranical rule of their parents. The kids leave the nest and strike out on their own where they find they are free to do as they please. But soon they find out that if they stay out late partying, they’ll lose their job when they show up late. Without a job they have no food, no place to live, and no healthcare.

    Adult freedom comes with responsibilities, and while some see the freedom to make all of your own decisions as the ultimate freedom, others question how can you really be free without guaranteed healthcare, shelter, and food. How can you be truly free when your employer can fire you at will for any reason at all?

    Liberals look at the constant worries of employment, healthcare, food, and shelter as oppression. Conservatives fear that with the government taking so much responsibility for your life, what happens if they fail? What if you don’t like their decisions? What if they go broke and can’t provide? You are truly screwed because there are no other options. And history shows that if you revolt against such a government, they will clamp down and remove what little freedoms you have left.

    While liberals treasure the freedom of a child, and conservatives treasure the freedoms of an adult, there are no absolutes in the United States. Absollute adult freedom is found in the animal kingdom where there are no guarantees and no justice. It’s everyone for themself. The absolute freedom of a child is found in places like North Korea, where Dear Leader and his government makes all of your decisions for you. They tell you where to live, where to work, they provide your food (sometimes), they tell you when to turn the lights off, where you can go, what you can do, what you can read, and even what you can think.

    Inarguably the United States is the most successful country in the history of mankind in both terms of governance and wealth. The success of this nation can be traced back to our founding documents which provided us with just the right balance of the two types of freedoms.

    Since the dawn of the industrial era, we have been moving further away from the adult freedoms provided in the constitution and more toward the care free freedom that a child enjoys, with the government providing the entitlements.

    The current administration seems to be hell bent on turbocharging our move toward bigger government and fewer adult freedoms.

    My answer to whether the Obama administration should build this plant is a resounding “No!” If the plant were economically viable it could exist without the governments help. I don’t believe a small group of beurocrats knows better than anyone else where we should be investing our money and where we shouldn’t.

    Clearly Washington has proven itself to be incapable of managing its own money and meeting the promises it has already made. I seriously doubt they can accurately prognosticate the future of the automobile industry, much less make a prudent investment in its future that will pay off.

    Given the choice, I would prefer to keep more of my hard earned money, make my own decisions, and accept the responsibilities that come with the freedom to be an adult.

     
  27. Bill Osterman

    You are in the wrong century. Why didn’t the gov. help TUCKER or any of the over 100 other mfgs. in the 1900’s ? Pick and choose. The battery plant refered to is owned and run by offshore people. Where is our brain trust ? Using drugs and wild music with a huge failure rate to go with high teen pregnancy. Help Michigan ? The one went to Cleveland and espoused the need for one companies products, needed for wind turbines. The payoff ? Within 1 month, 62 % were laid off because govt. regulations prevented building new units.

     

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