gala marks decade of impact t - mackinac

THE NEWSLETTER OF THE MACKINAC CENTER FOR PUBLIC POLICY • SUMMER 1998

President’s Message ........ 2

Bold Men Receive HighHonor ............................ 3

Media Impact ................. 4

Weekend Economists andHistorians ...................... 4

Educational ChoiceTraining ......................... 5

Schools Can Earn Voters’Trust .............................. 5

Celebrating a Decade ofImpact ...................... 6, 7

Contents:Contents:Champions of Freedom ... 8

Capitalism and Morality .. 9

Free Market Bookstore .. 10

Upcoming Events .......... 11

New Education Staff ..... 12

he Mackinac Centerfor Public Policycelebrated its firstdecade of policy

impact on June 5 with anopen house of its new $2.4million headquarters and ablack-tie gala headlined bypublisher and 1996 presiden-tial candidate Steve Forbes.

Forbes praised the MackinacCenter before the selloutcrowd of hundreds of friendsand supporters for theinstitute’s decade of “greatwork,” especially in advanc-ing school choice, workerrights, and privatization. Hedelighted the gathering byrecounting how the Centerdiscovered and publicizedthat the Michigan Education

Association contracted withoutside firms for custodial,food, security, and mailingservices while the unionsimultaneously opposedallowing schools to contract

for the sameservices.Forbes calledthe Center’sexposure ofthe MEA’shypocrisy “apublic service.”

MichiganSupremeCourt justiceand master ofceremoniesClifford W.Taylor joined MackinacCenter Chairman of theBoard Richard Antonini inacknowledging the Center’sunique ability to shift publicopinion—and thereby thepolitical climate—towardsound public policy based on

free marketsand indi-vidualliberty.

The Boardof Directorshonored B.FrankWebster,Thomas F.Bertonneau,and OrvilleD. and RuthA. Merillatfor outstand-

ing contributions to advanc-ing Michigan’s culture andprosperity. See pages 3 and8 for complete coverage ofthe first-ever Lives, Fortunes,and Sacred Honor, and

Gala Marks Decade of Impact

T

A 17,000-square-foot former department store is the newMackinac Center headquarters.

Forbes credited the work of the Mackinac Center and institutionslike it with the rebirth of American civil society ideals.

“Public opinion is stronger than the legislature. . . .”— Charles Dudley Warner, Associate Editor, Hartford Courant 1870

Champions of Freedomawards.

During the afternoon openhouse, celebrants crossedMain Street from the AshmanCourt Hotel ballroom to greetthe Mackinac Center staffand tour the new headquar-ters building. The openhouse was continued for thepublic on Saturday, June 6.

Many did not wait until theopen house for their tour.The Center enjoyed earliervisits by scores of friends ingovernment and the mediaincluding Governor JohnEngler and Fox News Sundayanchor Tony Snow.

See pages 6 and 7 for moreanniversary news andphotographs.!

Lawrence ReedPresident

PRESIDENT’S MESSAGEPRESIDENT’S MESSAGE

he economist, said Ludwig von Mises, one of thegreatest economic thinkers of this century, will neverbe popular with most politicians. It is the economistwho must bring the politician down to earth and show

him how promises are one thing but reality may be quite another. The econo-mist reminds the politician that there is a cost to everything. Many politicianswould prefer compliant yes-men who forsake principles, ignore evidence, andschedule the next photo-op.

One of the many reasons I am proud of the Mackinac Center for Public Policy’sfirst decade of achievement is that we have fulfilled that role of the economistfaithfully and effectively. Our many supporters recognize that Michigan wouldbe the loser if the Mackinac Center ever let politics and personalities interferewith the timely presentation of sound economics. The integrity of our workdepends upon calling the shots as we see them, presenting innovative ideas formoving the state forward, and letting the political chips fall where they may.

The Mackinac Center’s work has often enjoyed the endorsement and support ofprominent public officials. Some of the policies of state government today havetheir roots in ideas that we originated or advanced in some way. But we havenot hesitated to offer constructive criticisms—even of policies promoted byfriends—whenever we have felt that remaining true to our mission or sticking tothe evidence required it. In the long run, our friends in government shouldunderstand that we would have no credibility when we praise them if we didn’tspeak out when we disagree with them.

When state government in 1995 imple-mented new programs involving discrimina-tory tax treatment and subsidies for selectedbusinesses, we explained forcefully why thatwas poor policy. Every year, when politi-cians are loathe to cut spending, we tell themwhere to cut and why doing so will enhanceboth our pocketbooks and our liberties. I’vealways appreciated the fact that never once hasa single Mackinac Center supporter indicated tome that his or her support was contingent uponwhat any public official thinks of our work.

Being independent sometimes means we’reon the cutting edge of public discussion, helping to generate new debate andpushing the politicians in directions they don’t want to go. School choice, forinstance, is a cause that will prosper in 2000 because of what the MackinacCenter boldly did in 1997: We presented Michigan’s first comprehensive pro-posal for constitutional change (our Universal Tuition Tax Credit plan).

With the Mackinac Center, what you see is what you get—a decade of consistentapplication of sound economic principles. That’s what economists—and allindependent thinkers—are supposed to be all about.!

Let the Political Chips Fall

T

“...our friends ingovernment shouldunderstand that wewould have nocredibility when wepraise them if wedidn’t speak out whenwe disagree withthem.”

Board of Scholars

Board of DirectorsRichard Antonini, ChairmanLawrence Reed, President

William AllenPeter CookHon. Paul GadolaTodd HerrickMara LeticaEdward Levy, Jr.Rodney Lockwood, Jr.

Bruce Maguire, Jr.Richard McLellanRichard MerillatD. Joseph OlsonJames RodneyLinda Shinkle

Joseph LehmanEditor

David BardallisAssistant Editor

Daniel MontgomeryGraphic Designer

IMPACT!!!!!

IMPACT! is a quarterly publication of the Mackinac Center forPublic Policy, a nonprofit, nonpartisan, tax-exempt research andeducational organization classified under section 501(c)(3) of theIRS code.

Mackinac Center for Public Policy140 West Main Street • P.O. Box 568

Midland, Michigan 48640(517) 631-0900 • Fax (517) 631-0964Internet: http://www.mackinac.org

[email protected]

Dr. Donald AlexanderWestern Michigan University

Dr. John AttarianThe Social Critic Magazine

Dr. Thomas BertonneauCentral Michigan University

Dr. Peter BoettkeNew York University

Dr. John BornhofenGrand Valley State University

Dr. William BrowneCentral Michigan University

Dr. Stephen ColarelliCentral Michigan University

Dr. Keith CrockerUniversity of Michigan

Dr. Robert CrownerEastern Michigan University

Dr. Richard CutlerMichigan Association of Scholars

Robert DaddowOakland County Executive

Dr. Stephen DreschJhéön & Associates

Prof. Richard EbelingHillsdale College

Prof. Greg FleckensteinBaker College

Dr. Wayland GardnerWestern Michigan University

Dr. Dale HaywoodNorthwood University

Dr. Ormand HookMichigan Resource Center forCharter Schools

Prof. Harry HutchisonUniversity of Detroit Law School

Dr. David JandaInstitute for Preventative SportsMedicine

Mrs. Russell KirkAuthor, Lecturer

Dr. Robert KleimanOakland University

Dr. George LeefPatrick Henry Associates

David LittmannComerica Bank

Dr. Dale MatcheckNorthwood University

Dr. Paul McCrackenUniversity of Michigan

Prof. Charles MillikenSiena Heights College

Dr. George Nastas IIIMarketing Consultants

Dr. John PaffordNorthwood University

Dr. Mark PerryUniversity of Michigan - Flint

Dr. Karen Potter-WitterMichigan State University

Gregory RehmkeFree Enterprise Institute

Dr. Steve SafranekUniversity of Detroit Law School

Louis Schimmel, Jr.Municipal Advisory Council ofMichigan

James SheehanCompetitive Enterprise Institute

Fr. Robert SiricoActon Institute for the Study ofReligion and Liberty

Bradley SmithCapital University Law andGraduate Center

David SowerbyBeacon Investment Company

Dr. John TaylorWayne State University

Prof. Harry Veryser, Jr.Walsh College

Dr. William WilsonComerica Bank

Dr. Martin WingGMI Engineering &Management Institute

Dr. Gary WolframHillsdale College

n 1776, 56 principledmen boldly riskedeverything they had byaffixing their names to a

document that challengedthe authority of the world’sgreatest power. Theircourage sparked a revolutionthat secured political free-dom for millions, whilecosting most of the signerstheir positions, property, andin some cases their lives.They resolutely acceptedthat cost the moment theysigned the Declaration ofIndependence under thesewords: “[W]e mutuallypledge to each other ourLives, our Fortunes, and oursacred Honor.”

B. Frank Webster and Tho-mas F. Bertonneau embodythat courageous spirit inMichigan today. The menwere presented with theMackinac Center for PublicPolicy’s first-ever Lives,Fortunes, and Sacred HonorAwards on June 5 at the

Center’s 10th-anniversarycelebration in Midland.

Webster was chosen for theaward to recognize hisinvaluable contribution tobetter education for Michiganchildren. After leaving hispost as executive director ofthe health insurance subsid-iary of the state’s largestteacher’s union, Websterrisked his personal interestsby assisting the MackinacCenter’s investigation of the

Bold Men Honored for Risking Personal Interests

Thomas F. Bertonneau

union’s misuse of funds. The1993 Center study MichiganEducation Special ServicesAssociation: The MEA’sMoney Machine showed howthe union used public moneyfor political purposes. Thestudy led to legislation thatcurtailed the union’s abusesand saved school districtsmillions of dollars.

Bertonneau earned theaward for courageouslyrisking his personal interests

to improve education atMichigan universities. Hewrote the 1996 MackinacCenter study DecliningStandards at Michigan PublicUniversities while he was anEnglish instructor in CentralMichigan University’s Collegeof Extended Learning. Hisstudy analyzed and criticizedweak curricula and teachingat public universities—including CMU—and maderecommendations for im-provement. CMU PresidentLeonard Plachta later soughtBertonneau’s advice for improv-ing education at CMU andconvened a public forum toconsider the recommendations.

The Mackinac Center confersLives, Fortunes, and SacredHonor Awards from time totime to honor individualswho conspicuously riskpersonal interests to advancesound economics and indi-vidual liberty in Michigan.!

n May 7, leadersrepresenting adozen free-marketinstitutes from

eight states and Washington,D. C. learned how to maketheir organizations moreeffective at advancing soundpolicy at the three-dayMackinac Center LeadershipConference in Midland.

Senior members of theMackinac Center for PublicPolicy staff provided the 16executives of state- and

nationallybased re-search, educa-tional, andlegal instituteswith intensivetraining on themanagement,marketing,project, anddevelopmentideas that havehelped the Mackinac Centerbecome the nation’s largeststate-focused policy researchinstitute.

Leadership Conference MultipliesMackinac Center Impact Nationwide

Mackinac Center for Public Policy IMPACT! Summer 1998 3

I

O

Leaders from the followinginstitutes were energized

Sixteen executives from a dozen institutes gain insight onhow to more effectively advance policies that promote freemarkets and individual liberty.

See “Leadership” on page 10

Heritage Foundation Resource BankDirector Tom Atwood describes how hisorganization assists state-focusedresearch institutes on national policyissues.

B. Frank Webster

1997 Print Media Coverage Worth Over $700,000

tudents whosecollege memories ofeconomics andhistory classes may

have included dozing offwere energetic and eagerlearners at the MackinacCenter for Public Policy’sEconomic History Weekendconducted in Grand RapidsApril 17-18.

More than thirty students,parents, and interestedcitizens learned fromMackinac Center PresidentLawrence Reed and SeniorFellow in Economic Educa-tion Burton Folsom thehistorical importance ofeconomic forces and free

markets. CornerstoneCollege, a private, four-year,Christian institution, helpedhost the event at its campus.

Curriculum topics wereselected to provide insightsthat the participants may nothave received in theirtraditional history andeconomics classes. Reed andFolsom explained in a seriesof nine lectures how theRoman welfare state led tothe fall of its empire, the truecauses of the Great Depres-sion, which Americanpresident tried to createprosperity by raising the toptax rate to 99.5 percent, andhow slavery came to be

abolished in theWest.

Attendees alsolearned lessonsfrom the historyof taxation inAmerica; inspir-ing stories of thelives of America’sgreatest entrepre-neurs, includingFord, Kellogg, Rockefeller,and Dow; the nineteenth-century history of money andbanking; and the promisingfuture prospect of freemarkets around the globe.

The next Economic HistoryWeekend will take place

Weekend Economists and Historians LearnWhat Their Teachers Never Told Them

Mackinac Center for Public Policy4 IMPACT! Summer 1998

S

•

•

•

•

•

•

•

•

June 19-20 in the Norval K.Morey Conference Room atthe Mackinac Center’s newMidland headquarters. The$100 cost includes meals.Call (517) 631-0900 soon toregister.!

Participants learned how government policies led to theGreat Depression and how New Deal jobs programs,such as the one pictured above, prolonged it.

S Mic

hig

an S

tate

Arc

hiv

es

ome organizationshave to purchaseadvertising space toget their messages

in print, but MackinacCenter for Public Policy ideasare newsworthy in their ownright. Each month last year,newspapers alone devotedspace to our commentariesand research findings equiva-lent to an average of morethan $60,000 worth ofadvertising. A small sampleof spring 1998’s mediaexposures is below.

The Wall Street Journalprinted an essay by HillsdaleCollege’s Ron Trowbridgethat praised the MackinacCenter’s Universal TuitionTax Credit as the mosteffective way to advanceschool choice. An Investor’sBusiness Daily editorial also

lauded the plan for creatingincentives to support privatescholarships.

The Wall Street Journal alsoprinted Senior Fellow inEconomic Education BurtonFolsom’s commentaryexplaining how America’sfirst minimum wage law wasnot passed to help poorworkers; it was a politicalploy to protect Northerntextile manufacturers fromSouthern competitors whomthe law forced to pay artifi-cially high wages.

Folsom also recounted in aGrand Rapids Press op-edMichigan Senator ArthurVandenberg’s principledopposition to federal NewDeal policies that stifledeconomic freedom duringthe 1930s.

Urban sprawl expert andAdjunct Scholar Samuel R.Staley argued in separateDetroit Free Press and TheDetroit News op-eds that thegrowth of new cities is abenefit to families and theeconomy and recommendedways for central cities toattract residents.

The Cato Institute’s DeanStansel explained in anInvestor’s Business Daily essaythe benefits of the MackinacCenter’s innovative Right ToKnow Payroll Form, whichreveals to workers thehidden, government-man-dated costs of keeping themon the payroll.

In a front-page Detroit FreePress story reprinted indozens of papers statewide,Senior Vice President Joseph

Overton challenged theeffectiveness of selective taxcredits equivalent to $153,000per job granted to GeneralMotors by a politicallyappointed board.

Statewide reporting of theCenter’s ten-year anniversarygala and open house includedlive broadcasts by WSGWradio in Saginaw and front-page coverage in The SaginawNews and other Booth news-papers, as well as the MidlandDaily News.

President Lawrence Reed’scommentary arguing for alegislative resolution to permitMichigan to opt out of SocialSecurity generated severalradio interviews and wasreprinted in papers includingthe The Oakland Press.!

Intensive Grass-Roots Training Increases School Choice Momentum

n the heels of astate police andFBI investigationof the mishan-

dling of $162 million inDetroit Public Schools bondmoney, the Mackinac Centerfor Public Policy has pro-posed safeguards to helppublic schools better managethe bonding process.

The 17-page report, The Needfor Debt Policy in MichiganPublic Schools, helps schoolofficials earn the trust of thevoters and taxpayers theyask to approve new bondissues. The amount of bond-financed K-12 school con-struction jumped 152 percentto $6.3 billion between 1990and 1996.

Most schools lack formal debtpolicies that help them avoidbond-related problems includ-ing excessive borrowing,mishandling of bond fundsurpluses, improper accounting,negative perception by votersand taxpayers, and conflict ofinterest in debt issuance.

Prosecutors found in theDetroit Public Schoolsinvestigation that bond fundswere used illegally to pay forgeneral operations andgenerate interest income.Earlier audits found thatmillions of dollars were alsospent on unapprovedprojects. Publicity over theseproblems makes it harder forall public schools to raiseneeded capital.

The report recommends 15elements of sound debtpolicy that each schooldistrict should adopt to helpmeet legal requirements andwisely manage bond monies.Recommendations includeavoidance of the use of bondmonies to pay for operations,limits on total indebtedness,competitive bidding for debtunderwriters, enforcing theprohibition against the use ofpublic funds to influenceballot questions, and fulldisclosure by financialadvisors and bond counsel.

School officials are request-ing copies of the report andaccessing it at no charge viathe Center’s Web page,www.mackinac.org. All of

Report Helps Schools Earn Voters’ Trust on Bond Issues

Michigan’s nearly 5,000superintendents and schoolboard members were con-tacted when the report wasreleased in May.!


P

O

Public school guidance counselor and seminar traineeJoe Nekvasil shares his observations on the need forsystemic change in education.

articipants in theMackinac Center forPublic Policy’sFreedom in Educa-

tion Training Seminars comewith a desire to improve thequality of education forMichigan’s children andleave with thefacts and argu-ments they needto translate thatdesire into action.

The free, one-dayseminars held atthe Center’s newMidland headquar-ters buildingattract parents,teachers, policymakers, commu-nity leaders, andothers interestedin learning how toadvance market-based schoolreforms in Michigan. More

than two dozen have alreadybeen trained in two sessions.Small classes foster in-depth,interactive instruction.

Trainees are instructed in themoral, historical, and practi-cal arguments for allowing

schools. Mackinac Centereducation policy departmentpersonnel explain where,why, and how school choiceis working to improveeducation; identify those inMichigan who support oroppose school choice andwhy; and provide powerfulresponses to commonarguments made by schoolchoice opponents.

Participants become part of astatewide network of citizensworking to improve educa-tion through competition andparental choice.

A library of intellectualammunition including thepathbreaking UniversalTuition Tax Credit (UTTC),the Mackinac Center’s planfor expanding parentalchoice in Michigan, isprovided to every attendee.

An independent citizens’group called School ChoiceYES! is working to place theUTTC on the 2000 ballot forvoter approval.

Democratic party activist andseminar trainee Anita Nelamsaid the training “provides avaluable analysis of theforces that have shapededucation in America, andhow school choice—a truecivil right—gives us a roadmap to the future.”

The next Freedom in Educa-tion Training Seminar isscheduled for November 14.Please call (517) 631-0900 toregister.!

parents greater freedom tochoose their children’s

Why We Celebrate Our First Decade of Impact


T

The Board Room boasts a 360-degree panoramic photo of Mackinac Island,after which the Mackinac Center was named.

•

•

•

he Mackinac Centerfor Public Policy wasfounded ten years agoby a group of citizens

who shared an interest inpromoting ideas that wouldmake Michigan a betterplace to live and work. TheCenter opened its doors witha small office in Midland anda broad base of publicsupport.

Today, the Mackinac Centeris an influential, respectedvoice in public policy and isthe largest of the nearly 40state-focused policy researchand educational institutes.

The Center has alwaysfocused on advancing soundpolicy through research,education, and ideas—notpolitics. The best way tomake a lasting policy impactis to change public opinion.When the beliefs of thepeople change, politicianschange with them.

Through vigorous promotionof its ideas, the MackinacCenter has chalked up scoresof policy victories on dozensof issues over the years, butperhaps its most importantsuccesses have been in thestrategic areas of education,labor law, and privatization.

School choice, consideredradical ten years ago, is nowa mainstream idea. TheMackinac Center’s researchshowing the benefits ofcompetition and parentalchoice set the stage fortoday’s intra-district schoolchoice and helped to makeMichigan a national leader incharter schools. The Center’scomprehensive school choiceplan, the Universal TuitionTax Credit, is slated to go onthe general election ballot in2000.

Citing labor unions’ uniqueability to distort the demo-cratic process by using

compulsory dues money forpolitical purposes, the Centermade a convincing case forreform. New Michigan lawnow restricts unions’ abilityto take PAC contributionsfrom members without theirexpress permission.

“Privatization” hardly, if ever,appeared in print ten yearsago. After a decade ofCenter research showing thepotential benefits ofprivatization, hundreds ofMichigan schools and mu-nicipalities now save moneyand improve quality by

privatizing services. Now, nota day goes by without newsstories on privatization.

The Center has not beenalone in its promotion ofsound policy, but it has beenMichigan’s most consistentand influential voice for freemarkets, limited government,and individual liberty. Withthe momentum of the lastdecade under our belt and thefaithful support of hundredsof contributors, our 20th

anniversary is bound to be anunparalleled celebration ofsuccess!!

Free-market economists show they have a sense of humor by laughing atJustice Taylor’s couplet: “The world would not be in such a snarl, if Marxhad been Groucho instead of Karl.”


Father Robert Sirico, president of the Acton Institute for the Study ofReligion and Liberty, delivers the invocation and reminds celebrants ofthe moral foundations of commerce.

Open offices bathed in natural light adjoin the Center’seconomics and public policy library, shown in backgound.

At a Mackinac Center news conference, Steve Forbes explains that unemployedaccountants would not be a problem under a flat income tax because they wouldbe busy keeping the books for all the new and growing businesses energized bytax simplification.

During a pre-open-house tour on February 16, President Lawrence Reed explains toGovernor Engler and Supreme Court Justice Taylor the educational events that cannow be held at the new headquarters.

Frequent guests from schools, communities, research institutes,and governments are welcomed in the spacious lobby.

The Norval K. Morey Conference Room accommodates eighty or morestudents, teachers, elected officials, community leaders, and citizens forworkshops, lectures, training, and seminars.

Tenth-Anniversary Gala and Open House

Merillats Win First-Ever Champions of Freedom Award

Ruth A. and Orville D. Merillat

sk Bill Gates atMicrosoft if youcan be “too suc-cessful.” At the

zenith of his success, Gates isnow decried as being “too big”by many of the same peopleand institutions who benefitdaily from his products.

After completing our mostsuccessful year ever, some ofour friends perceive theMackinac Center for PublicPolicy as too successful. I’vebeen asked a couple ofquestions that translateroughly as, “Isn’t your new$2.4 million building proofthat you no longer needfinancial support?” and“Couldn’t the $2.4 millionhave been spent on other,more worthwhile projects?”

Let me explain why theanswer to both questions is“no.” Two years ago, we were

18 people crammed into lessthan 3,500 total square feetof scattered, rented officeswith almost no storage ormeeting room, no place tohost educational events, andinadequate space for theextensive library that is socrucial to our research. Thespace served us well fornearly a decade, but we

succeeded in outgrowing it.We put our minds to secur-ing major relocation fundsfrom new sources—moneythat would not be divertedfrom other Mackinac Centerprojects and would nototherwise come to us at all.

With the help of campaignco-chairs Ranny Riecker andAlan Ott of Midland, weasked four Midland founda-tions to fund the lion’s shareof buying and renovating anabandoned downtowndepartment store building.The foundations saw therenovation as a great eco-nomic development projectand a way to keep theMackinac Center in Midland,so they provided the leadgifts. We could not walkaway from their $1.8 millionin “new money” that wouldnot have been available to usfor other purposes.

Is the Mackinac Center Too Successful?With a head start of 75 per-cent of the funds, we launchedthe $400,000 western Michi-gan component of the cam-paign, which succeeded ingenerating more one-timecontributions that also wouldnot have been available to usfor other projects. In justover one year, we are lessthan $45,000 away fromcompleting the campaign.

We’re inspired by our beauti-ful and functional newheadquarters, but theMackinac Center needsfunding more than ever tomaintain our momentum inadvancing free markets,limited government, andindividual liberty. I hope ourdecade of success makes youeven more determined tosupport the Mackinac Center.!

James E. Kostrava, Vice Presidentfor Development


A

DEVELOPMENT IMPACTDEVELOPMENT IMPACT

L ong-time MackinacCenter for PublicPolicy supportersOrville D. and Ruth A.

Merillat were awarded thefirst-ever Champions ofFreedom Award at theCenter’s 10th-anniversary galaon June 5.

The Champions of FreedomAward honors individuals whodemonstrate a lifetime ofaccomplishment and dedicationto the principles of freedomand self-reliance through theirexceptional entrepreneurship,philanthropy, and MackinacCenter support.

The Merillats founded highquality cabinet manufacturer

Merillat Industries, Inc.,through which they ulti-mately created thousands ofjobs that in turn providelivelihoods for thousands offamilies.

Among a large number ofcharities generously sup-ported by the Merillats is theLenawee Christian School inAdrian, for which theyprovided all the start-upfunding and continue toprovide operational support.

The Merillats’ MackinacCenter support goes backover eight years and includessubstantial sums given tosupport the Center’s generaloperations, major policy

initiatives, and recentbuilding campaign.

In accepting the award, theMerillats joined in saying,“We’ve been financiallyblessed and we’ve alwaysmade donations where ourhearts are. The MackinacCenter defends the valuesand promotes the policies webelieve are most beneficial toMichigan workers, students,and families.”

Richard Merillat, son ofOrville D. and Ruth A.Merillat and chairman of theboard of Merillat Industries,has been a member of theMackinac Center’s board ofdirectors since 1996.!

Capitalism and Moralityby Edward W. Younkins


FREE MARKET FUNDAMENTALSFREE MARKET FUNDAMENTALS

F ew would deny thatcapitalism is the mostproductive andefficient economic

system, especially after thecollapse of Soviet Commu-nism. But some critics stillcontend that capitalism is nota moral system.

Yet morality is impossibleunless one is free to choosebetween alternatives withoutoutside coercion. Sincecapitalism is based on free-dom of choice, it provides thebest environment for moral-ity and character develop-ment. In addition, businesssuccess not only requires butalso rewards virtuous behav-ior by participants in themarket.

Morality Requires Freedom

All human beings havenatural rights—either en-dowed by their Creator orinherent in their nature,depending on whom youask—and have a moralobligation to respect therights of others. Naturalrights impose the negativeobligation not to interferewith someone else’s liberty.Thus, it is morally illegiti-mate to use coercion againstsomeone who does not firstundertake the use of force.The role of government, asrecognized by America’sfounders, is to protect man’snatural rights.

This kind of freedom in-volves far more than simpledemocracy. It demands aprotected private spherewithin which an individualcan pursue his freely chosennorms, actions, and ends

without the arbitrary inter-vention of others. And thisfreedom is necessary forindividual morality.

There can be no moralitywithout responsibility and noresponsibility without self-determination. Responsibleself-determination impliesrationality, honesty, self-control, productiveness, andperseverance. In order toprovide the maximum self-determination for eachindividual, the state shouldbe limited to maintainingjustice and defending againstinternal or external coercion,thus protecting life, liberty,and property.

A social system such ascapitalism is a system ofrelationships and cannot bemoral or immoral in thesense that a person can be—only individuals can be moralagents. However, a socialsystem can be moral in itseffects if it promotes thepossibility and likelihood ofmoral behavior by individu-als who act within it. Itfollows, then, that there is amoral imperative to create apolitical and economicsystem that permits thegreatest possibility for self-determination and moralagency. Capitalism is thatsystem.

Capitalism is itself only ameans and requires itsindividual participants todecide on the ends to bepursued. No economicsystem can make peoplegood. The best that aneconomic system can do is toallow people to be good. Butmorality and virtue require

that individuals be free to beimmoral and of bad charac-ter. Only when an individualhas choice and bears respon-sibility for his actions can hebe moral. Capitalism, morethan other economic sys-tems, allows the exercise ofindividual free will. Thus,though capitalism cannotguarantee a moral society, itis necessary for one.

Human development usuallyrequires more than materialwealth. However, prosperityenables individuals tocultivate their talents,abilities, and virtues. Thus,capitalism, the best systemfor wealth creation, permitsindividuals to spend lesstime on physical concerns,leaving them more time toengage in higher pursuits.

Voluntary ExchangeEncourages Moral Behavior

At the same time, theachievement of prosperitytends to reward moralbehavior. Businesses—moreparticularly, their owners,managers, and other employ-ees—have moral obligations.They must respect thenatural rights of otherindividuals, which includeshonoring contracts, notengaging in fraud, not usingcoercion against others, andhonoring representationsmade to the local commu-nity. Moreover, businessmenshould not support govern-ment economic interven-tions, such as price supports,tariffs, and subsidies, eventhough doing so might resultin higher profits. To do sowould involve the use ofcoercion, one step removed.

Living up to these virtueswill aid businessmen in thepursuit of profit. The freemarket rewards polite,cooperative, tolerant, open,honest, realistic, trustworthy,discerning, creative, fairbusinessmen. Lying to andcheating other businesses,misleading consumers, andmistreating workers all haveserious adverse conse-quences. In the long run,profitable businesses tend tobe operated in accordancewith the basic ethical prin-ciples most people hold dear.

Under capitalism a businesstransaction takes place bymutual agreement forperceived mutual advantage.Through voluntary exchangebuyers and sellers canpromote their own interestsonly by serving the interestsof others. By protectingindividual choice, capitalismnot only generates enormouswealth, but also creates anenvironment in which virtuecan flourish. In the end,capitalism is not only themost productive and efficienteconomic system. It is alsothe most moral economicsystem.!

Adapted and reprinted from anarticle in the November 1997issue of The Freeman withpermission from the Founda-tion for Economic Education.

Senator ArthurVandenberg: A Profilein Courage

April 1998 VP 98-10While 1930s Washington wasabuzz with interventionistbureaucrats and politicians,Michigan Senator ArthurVandenberg championed thefree-market economy andwas rewarded—by beingelected to four terms.

A Tax Credit Is Not aVoucher!

April 1998 VP 98-11Opponents of school choicefor Michigan’s children aremisrepresenting tuition taxcredits in order to recycletheir shopworn anti-voucherarguments.

Pay Up, Michigan:Using Tax Credits toSubsidize the Sunbelt

April 1998 VP 98-12President Clinton wants tocurb “greenhouse gas”emissions by encouragingsolar energy use through taxcredits. Those in sunnystates would enjoy blue skiesand lower taxes asMichiganians went withoutboth.

Greenhouse GasReduction Is NoSimple Task

May 1998 VP 98-13President Clinton is tellingAmericans they must reducecarbon dioxide emissions tocomply with the unratifiedKyoto treaty, but he has yetto say how this will be donewithout sacrificing jobs.

Michigan to Washing-ton: Privatize SocialSecurity or Let Us OptOut!

May 1998 VP 98-14The looming bankruptcy ofSocial Security threatens theretirement security ofmillions of workers. Michi-gan lawmakers should callon Congress to either priva-tize the system or let statesdesign alternate plans.

Property Doesn’tCommit Crimes,People Do

May 1998 VP 98-15American citizens arepresumed innocent untilproven guilty, but whengovernment accuses theirproperty of criminal activity,it’s a whole new ball game.

Government’s HiddenBite out ofMichiganians’ Take-Home Pay

June 1998 VP 98-16Hidden payroll taxes are onereason Michigan ranks twelfthfrom the bottom nationwidein take-home pay. Workersshould be informed of the fullcost that government imposeson their pocketbooks.

Minimum WageCauses Maximum Pain

June 1998 VP 98-17The minimum wage hurtslow-skilled workers by pricingthem out of the labor market.Sixty years ago, New Englandtextile workers afraid ofSouthern competition werecounting on just this fact.

Do Dollars EqualScholars?

June 1998 VP 98-18Eighty-three percent of allspending on public educationgoes toward employeesalaries and benefits, but overhalf of Michigan schoolemployees never set foot in aclassroom.

Time to ChangeMichigan’s RevenueSharing Program

June 1998 VP 98-19Each year, over one billiondollars in state sales taxes aredivided among Michiganmunicipalities. Why arecities with the highest taxrates rewarded with the lion’sshare?

Michigan PrivatizationReportMPR98-02 $3.00

Privatiza-tion takesoff in aspecialtranspor-tationissue,includingfeaturearticles onprivatiz-

ing the nation’s airports andair traffic control system,privatization and Detroit’sport authority, and privatedriver’s education. Otherfeatures discuss competi-tively contracted transitservices, ending Amtraksubsidies, and the new bookCurb Rights. 20 pages.

“Leadership” from page 3

Journals

Viewpoint Commentaries


FREE MARKET BOOKSTOREFREE MARKET BOOKSTORE

with new ideas to put towork in their organizations:Pacific Research Institute(California), Cascade PolicyInstitute (Oregon), TexasPublic Policy Foundation,Yankee Institute (Connecti-cut), Buckeye Institute forPublic Policy Solutions(Ohio), IndependenceInstitute (Colorado), TheCommonwealth Foundation(Pennsylvania), HillsdaleCollege (Michigan), and theHeritage Foundation, Com-petitive Enterprise Institute,James M. Buchanan Centerfor Political Economy, andInstitute for Justice (Wash-ington, D. C. area).

“[W]e are better prepared asmanagers, communicators,and leaders, thanks toMackinac’s instruction,” saidInstitute for Justice VicePresident for Marketing andDevelopment John Keppler.

The conference was the firstof two planned this year.Representatives from groupsin the U. S., Europe, Canada,and South America areexpected to attend the nextconference in October.

“We are pleased to assist somany other fine organiza-tions,” said Mackinac CenterPresident Lawrence Reed.“The leadership conferenceisn’t just one-way mentoring.It provides tremendousopportunities for cross-fertilization of ideas.”

The Atlas Economic Re-search Foundation supportedthe event with a generouscontribution.!


The Need for DebtPolicy in MichiganPublic Schools

S98-02$5.00Publicschoolconstruc-tion isboomingacrossMichigan,but due to

citizens’ negative percep-tions, many districts arefinding it harder and harderto gain voter approval forbond proposals to fundneeded projects.

This analysis of Michiganpublic school bonding

concludes that developmentof formal debt policies canhelp schools earn essentialvoter trust by managing bondmonies in the most efficientand effective manner.

The report recommendsfifteen elements for a sounddebt policy that schooldistricts should adopt toavoid common pitfalls andproblems in bonding, includ-ing excessive borrowing,improper accounting, andconflict of interest in debtissuance. 17 pages.

Great Myths of theGreat Depression

by Lawrence W. Reed

ST98-01 $5.00Students today are often

Studies & Reports

UPCOMING EVENTSUPCOMING EVENTS

Monographs

How to Ordergiven a false account of theGreat Depression of 1929-1941 that condemns free-

marketcapital-ism asthe causeof, andgovern-mentinterven-tion thesolutionto, the

economic hardships of theera. In this essay based on apopular lecture, MackinacCenter for Public PolicyPresident Lawrence Reeddebunks the conventionalview and traces the centralrole that poor governmentpolicy played in fosteringthis legendary tragedy. 12pages.

VIEWPOINTS: Viewpoints onPublic Issues are two-pagecommentaries on currentMichigan policy issues.Three or four are publishedeach month. IndividualViewpoints are 50¢ each.Please call for bulk discounts.

For telephone orders, pleasecall the Mackinac Center at(517) 631-0900. The Centeraccepts Visa or Mastercard foryour convenience. Pleasehave your card and itemtitle(s) handy when calling. Ifyou do not have the MackinacCenter for Public Policy’scurrent Publications catalogwith a complete listing of allMackinac Center publications,please request your free copywhen ordering.

U P C O M I N G

E V E N T S

Economic HistoryWeekendJune 19-20

Midland

President’s Councilfeaturing Indianapolis

Mayor Steve GoldsmithOctober 1

Grand Rapids

Freedom in EducationTraining Seminar

November 14Midland

Call (517) 631-0900 formore details.

Brouillette Leaves Classroom to Advance Educational Freedom

Former White House and U. S. Departmentof Education Official Joins Staff

F

At the Center’s February Issues and Ideasluncheon in Lansing, Cassidy explains to statelegislators and policy makers the lessonsMichigan can learn from New Jersey’seducation reform successes.

NON PROFIT ORG.U.S. POSTAGE

PAIDMIDLAND, MI 48640

PERMIT #275

F

Matthew J. Brouillette

140 West Main Street • P.O. Box 568 • Midland, Michigan 48640

ormer teacher Mat-thew J. Brouillette isthe Mackinac Centerfor Public Policy’s new

education research assistant.

Brouillette works in theeducation department wherehe analyzes Michigan K-12education policy and tracksnational school reformtrends. His research is usedto develop and promotereforms that improve educa-tional opportunity and schoolquality for Michigan students.

Brouillette helps train par-ents, teachers, and commu-nity leaders to advancemarket-based reforms andschool choice through theCenter’s Freedom in Educa-tion Training Seminars. Thisfall he will coordinate thelaunch of a new quarterlypublication called MichiganEducation Report which willinform and connect educa-tion reform advocatesthroughout Michigan and thecountry.

Brouillette earned his masterof arts degree in educationfrom Azusa Pacific Univer-sity in California and taughtU. S. history at the middle-and high-school levels forover six years. He is cur-rently writing a study aboutschool choice in Michigan tocomplete a second master ofarts degree from the Univer-sity of San Diego.!

ormer U. S. Depart-ment of Educationappointee and BushWhite House official

Daniel J. Cassidy is theMackinac Center for PublicPolicy’s new director ofeducation policy.

Cassidy heads the MackinacCenter’s education depart-ment, where he overseesresearch and initiatives thathelp parents, teachers, electedofficials, and communityleaders apply market-basedreforms to improve educationfor Michigan’s children.

Cassidy directs the free, full-day Freedom in EducationTraining Seminars that equippolicy makers and grass rootsactivists with strategies toadvance educational choiceplans including the UniversalTuition Tax Credit.

After his White House andU. S. Department of Educa-tion assignments, Cassidyserved on the staff of na-tional school reform figureand Jersey City Mayor BretSchundler where he coordi-nated the Mayor’s statewidecampaign for school choice

and comprehensiveeducation reform.

In June, he is coordinat-ing the National Summitof Teachers for Educa-tion Reform, hosted bythe Mackinac Center inMidland. At the sum-mit, some of thenation’s most gifted andacclaimed teachers willissue a boldly wordedletter to the Americanpeople calling forsystemic change ineducation.!

gala marks decade of impact t - mackinac

Documents