Michigan made cars, they weren’t quite up to par, the Japanese did better, the market got wetter — that’s the recession and there you are.
Well, that may not be the whole story.
Unlike the rest of the country, which entered a recession in 2008 or perhaps never, like some parts of the South, Michigan has been in a recession since 2001, according to its state website.
“After a decade of almost continuous recession, many residents of Michigan have stopped expecting to hear any good economic news about their state,” said the site.
Despite this mess, the University of Michigan has remained one of the premier public universities in the nation. U.S. News ranked the Ann Arbor school 29th in the nation overall.
Michigan is similar to LSU. Both schools have enrollments between 20,000 and 30,000 undergrads.
Somehow, despite the economic mess, the University of Michigan was insulated from it all. It remained arguably the best university in the state while facing a substantial loss in the tax base.
Here might be the answer — endowments.
Endowments are essentially trust funds for colleges. They are the total value of an institution’s investments.
LSU’s endowment for 2011 was $443 million; Michigan’s endowment was $7.7 billion, according to U.S. News.
Big difference. So, why the discrepancy? Wouldn’t we expect two roughly equal universities to share a similar endowment?
Not necessarily. There are many reasons why Michigan has more cash than us. An unlikely reason is rich alumni, who only donate a fraction of a University’s operating budget.
Another scenario is bailout money from the federal government. If this were the case, it would be a testament to Keynesian economics, proof that intervention can work.
I think the most likely answer is Michigan is better at managing money than us (I know, sounds crazy, recession state).
Michigan was able to consolidate its cash through taxes, donations, grants and put all of it into solid investments.
Even when the national recession was expected to end and life to return to normal, Michigan residents feared they could be perpetually stuck in a one-state recession.
Why? Because Michigan makes a lot of stuff, unlike the South, where we find a lot of oil.
Michigan is a manufacturing-heavy state, especially when it comes to the auto industry. In a nutshell, well, the poem says it all.
Despite popular belief, Michigan did not experience as massive of an exodus as the news media would have us to believe. The state’s population peaked in 2005 at roughly 10.1 million and currently stands at 9.8 million.
Louisiana lost enough people after Katrina to necessitate combining two congressional districts.
However, we have oil and Michigan doesn’t. To put it simply, there is no reason LSU, this state’s flagship university, should ever be in financial peril.
But somehow, we are.
I encourage LSU to work with the state government to find some sort of solution to this financial mess. They don’t call it black gold for nothing, and we have tons of it.
Proper allocation of tax dollars is just as important as taxation itself. The highest grossing and highest taxed industry in this country is oil and gas. However, for the sake of higher education, I think they could do a little more.
You don’t see poor oil men. That’s a taxable industry, and it’s about time we started looking at taxes as investments in our future and not some satanic ritual invented by Democrats and Europeans.
