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Granholm: Government intervention is new economic reality

Former Michigan Governor Jennifer Granholm. Photo: Courtesy of State of Michigan

By Rick Pluta, Michigan Public Radio Network


Former Governor Jennifer Granholm says she coached the CEO of General Motors on his congressional testimony following a disasterous appearance before Congress. It's part of her political memoir, "A Governor's Story." Granholm says she also learned some on-the-job lessons to help the U-S compete with the rest of the world for high-tech manufacturing jobs.

Jennifer Granholm was a politician known for her ability to deliver a passionate stemwinder, and she tried to pass some advice along to General Motors' then-CEO Rick Wagoner. That was after the Detroit Three CEOs suffered a fiasco in their first appearance before a congressional committee to appeal for emergency business loans.

"You remember the first time, of course, that that they went and they flew in their jets," Granholm says.

Then there's a clip of audio from the event. "I'm going to ask the three executives here to raise their hand if they flew here commercial. Let the record show no hands went up. Second, going to ask you to raise your hand if you're planning to sell your jet in place now and fly back commercial. Let the record show no hands went up "

"And it was this disaster," Granholm says. "I was just a disaster. So, the second time they went, if your listeners recall, they drove in their favorite car to Washington to make their case and present their new plans. So it was so important to Michigan. So I just remember this conversation that I had with Rick. He was a basketball player himself, so he was very open to coaching. I said, Rick, you've got to look them in the eye.' I was in my office by myself gesticulating while I was talking on the phone, saying, You've got to make the case from your heart that this industry is going to lead America to energy independence, that we are going to come back because of this industry, not in spite of this industry.'"

Granholm also took to the airwaves, the halls of Congress, and the White House to make the case for a federal bailout. She could not keep GM and Chrysler out of bankruptcy. But the auto companies did get federal loans to help them survive.

Granholm says the experience of trying to turn around Michigan's economy as jobs moved offshore or to other states, or simply disappeared taught her some lessons that she is trying to pass along to the public and nation's leaders.

"There's some things that worked and some that didn't and you can learn from us," Granholm says.

Granholm says tax cuts and smaller government are not enough to help a state, a region, or the country compete with nations that subsidize their industries. She says the federal government needs to help with research, and place bets to help some industries grow, like Michigan did with advanced batteries.

"To stand idly by will only ensure the loss, the continued loss of good-paying middle-class jobs."

That's in contrast to the argument that government should not try to pick winners in a free-market economy. And Michigan has stepped back from industry-specific tax breaks and other subsidies since the governor left office.

"I think there is a role for this sort of thing, but I would caution you need to be very careful," says Charles Ballard. He's a Michigan State University economist who has written two books about the state's economy.

"If the state of Washington had gotten in on the ground floor of Microsoft, they would have been great," Ballard says. "But if the state of Texas had gotten in on the ground floor and invested a whole lot with Enron which, at the time everyone was saying, Oh, what a brilliant company Enron is, that would have been a disaster."

Ballard says it's more important for governments to focus on education and transportation and communication infrastructure.

He says Granholm got it right when she called for tougher high school standards, and better worker training and re-training, but he says she still cut funding for higher education year after year when she was governor facing budget crises.

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