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Mackinac Center's Reed Knifes Through Peach Cobbler, State Budget

Midland Think Tank Soon to Recommend $2 Billion in Reductions

February 25, 2003       Leave a Comment
By: Dave Rogers

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Dr. Larry Reed of the Mackinac Center makes a point at the Tri-County Economics Club.
 

Dr. Larry Reed, president of the Mackinac Center, Midland's conservative think tank, wants to cut peach cobbler out of the state diet.

That's because the state has been giving away about $100,000 in peach cobbler every year at welcome centers atthe state line.

"This is not a core function of state government," says Reed, figuratively smacking his lips over the juicy nugget of wasteful spending the Center has uncovered.



And that's not all. The erudite economist Reed, speaking Feb. 24 to a full house at the Tri-County Economics Club, which meets at Saginaw Valley State University, says the Center will soon recommend $2 billion in cuts from the state budget which he says will create "a wholesale shift in thinking about what state government should do."

The Mackinac Center proclaims itself on its website as "a Michigan-based free-market institute with strong libertarian leanings," and asserts: "The Center applies libertarian economic theory to issues facing the state of Michigan. While local in scope, many of the issues are the same ones facing other areas, including public education vouchers and privatization."

Dr. Reed and his staff are focusing on the major issue presently facing Michigan: the state budget, which is deeply in the red. The deficit is a legacy from former Gov. John Engler to new Gov. Jennifer Granholm. Observers say too much tax cutting and not enough revenue created the structural deficit, a pattern repeated in states across the nation.

Reed said the Center is conducting a line-by-line analysis of the budget and soon will have recommendations for specific reductions to meet the shortfall. Granholm has not urged a rollback of the tax cuts and is working on budget reduction recommendations of her own.

Dr. Reed tipped off Economics Club members to another item which will be in the Center's spotlight: a state-owned ski resort in the Upper Peninsula which loses about $200,000 a year.

He admits the cuts recommended may not be popular. A state senator, Republican no less, already has irately protested the peach cobbler cutting suggestion.

"It's difficult to get consensus for broad-based budget cuts," Dr. Reed said in a gross understatement.

All thisskiing through the peach cobbler by the Mackinac Center guru came out during an intellectual defense of the reputation of one John D. Rockefeller, the innocuous topic of Dr. Reed's speech to the area business community.

The immensely wealthy Rockefeller, who has been dead lo these 65 years, needs defending because he has been treated unfairly by history. The revisionist outlook, Reed admits, is not his alone. In fact it was put forth by one Gabriel Kolko, a Socialist no less.

"Rockefeller is often painted wrongly as a villain," said Reed. "I see him as a hero." The influence of John D.'s Standard Oil Company didn't make the American economy less competitive and more centralized, said Reed. "Just the opposite, he helped create more competition and decentralization."

While history books generally brand Rockefeller a greedy, monopolistic price fixer whose oil cartel needed breaking by the U.S. Supreme Court in 1911, Reed, and Kolko, see the other side of the coin.

Rockefeller didn't have the ability to coerce other oil producers to sell their companies to him, Reed pointed out. Although Standard Oil's share of the oil market rose from four percent to 90 percent in 20 years, its growth wasn't because of rapacious tactics, said Reed, commenting: "It (Standard Oil) was an efficiency monopoly, in other words a company that gets big because it does a better job."

Reed gave a local example of the evils of predatory price cutting, which, he said "Rockefeller did not engage in and would have been foolish had he tried."In the 1890s Herbert Henry Dow, founder of The Dow Chemical Co., was faced with competition in bromine sales from a German government subsidized cartel. The commodity was selling for 46 cents a pound when the Germans moved into the U.S. and cut prices to capture bromine markets. Dow in turn cut the price to 36 cents a pound in Europe so the Germans slashed bromine to 15 cents a pound in the U.S. Sales of the German product went way up and the main buyer was, of course, Dow himself, who bought secretly through allies, repackaged the product and sold it in Europe at the higher figure.

"This became a very important source of capital for Dow in the early years," Reed concluded.

The next meeting of the Tri-County Economics Club will be March 24, featuring as speaker Paul Ballew of General Motors Corporation. For more information contact SVSU at 964-4048.



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Dave Rogers

Dave Rogers is a former editorial writer for the Bay City Times and a widely read,
respected journalist/writer in and around Bay City.
(Contact Dave Via Email at carraroe@aol.com)

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