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Why is the State of Michigan using public money to subsidize the production of electric vehicles?

March 1, 2023

On March 1st, MLive reported that the Michigan Senate approved $629.7 million for the Ford EV Project. If you add to that the $1 billion in subsidies (although the State of Michigan likes to call it “incentives”) that the State of Michigan provided to General Motors last year for EV production, that puts the total at $1,630,000,000 in public money that has gone to two of the largest US multinational corporations.

Now, politicians, businesses and others will say that this “investment” by the state of Michigan is important and necessary, since it will create jobs. Now I always thought that Capitalism and Capitalists didn’t like the government interfering in the economy. The so-called Free Market will make the investment, since they will make it back many times over in sales. 

Last year, when The Guardian wrote a piece about the $1 Billion going to GM in subsidies, they addressed the issue of job creation. In that Guardian article, GM claims that the new investments in EV vehicle production would result in 4,000 new jobs. 

The article goes on to say: 

But what’s good for GM may make less sense for state taxpayers, a Guardian analysis of the deal finds. Once again large corporate subsidies – paid for by taxpayers – look set to benefit the corporations while leaving taxpayers out of pocket.

Michigan has effectively agreed to compensate GM more than $310,000 for each job created, but during the next 20 years, the positions are unlikely to generate more than $100,000 in tax revenue in the very best case scenarios.

Collectively, the plants’ jobs will probably return less than $300m of the state’s $1b investment when contributions to state income, sales, property and other taxes are factored in.

The question then becomes, where does the rest of the public subsidy go? We know exactly where it goes, it goes into the coffers of GM. 

Now, let’s compare the amount of public money that is going to GM and Ford to say affordable housing. In January, Governor Whitmer announced that the State of Michigan would contribute $176.6 million to build or improve nearly 700 affordable housing units across 17 projects from Cheboygan to Detroit. However, let’s be clear here, the housing money will not go to people to purchase housing, it will go to developers, both private and non-profit, for them to build or rehab 700 housing units. Those who would be moving into these 700 housing units would still be paying rent or a mortgage.

Wouldn’t it be a more direct benefit to people who are housing insecure, to give public money to families to be able to purchase a home. For instance, if we used the $1,630,000,000 in public money that has gone to GM and Ford and gave it to families to purchase say a $200,000 home, which is a moderate cost for a house these days, how many families would be able to buy a house? For the amount of public money given to GM and Ford over the past 12 months, 8,150 families could buy a $200,000 home. This would also mean that these families would have no mortgage, since the house would be paid for and they could then spend money in other areas, which would also stimulate the economy. 

Just imagine, what a fundamentally radical shift this would be in how public money could be used. Plus, this is just public money that the State of Michigan could provide in one year, based on the subsidies to just two corporations. It is never a question of whether or not there is enough money to fund housing for all or a single payer health care system, but it is a question of priorities. We all need to radically imagine other possibilities and then organize to win those possibilities.

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