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Seven steps to reviving Michigan

Reliance on the beleaguered auto industry is out. But what to do? Economic sages weigh in.

Rich Clabaugh/Staff

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Every cloud may have a silver lining, but when it comes to Michigan's economy, you'd be forgiven for thinking you'd need an electron microscope to find it. Two of the Big 3 automakers are in Chapter 11 bankruptcy, and many auto-parts manufacturers look likely to join them, with giant Visteon heading the list. Plant closings are announced weekly, and thousands of people are losing their jobs.

"The challenge of the state is clear to everyone: We're a one-horse town with a sick horse," says George Erickcek, senior regional analyst with the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.

General Motors' bankruptcy filing June 1 put an exclamation point on the fact that the state can't keep tying its fortunes to the auto industry. Over the past decade, Michigan's economic output has plummeted - dropping from No. 16 in 1999 to No. 42 in 2007. Unemployment is almost 13 percent and seems destined to climb. Residents' per capita income lags 11.2 percent behind the national average.

"Not even during the Great Depression did we see that," says Michael LaFaive, a senior economist at the Mackinac Center for Public Policy. State government, for its part, faces a roughly $2 billion shortfall as of October.

But beyond boarding up Detroit, or transplanting the Great Lakes somewhere warm and sunny like Bermuda, what can the state do to shake loose from its economic malaise?

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