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Business & Professional

Michigan Economics 101

Staff photos by Armando Rios

A dialogue on the state's economic future.

Judith Doner Berne
Special to the Jewish News

F

lexibility, creativity, entrepreneur-
ship combined with cuts in state
spending.
Local economists Sam Kahan and David
Littmann count these as essential for
Michigan to turn its liabilities into assets.
"There has to be a premium in today's
world on flexibility," says Littmann, former
chief economist for Detroit-based Comerica
Bank and now senior economist with the
Mackinac Center in Midland. "This has
been the problem for the auto industry
— arrogance and non-flexibility"
"You need people to think creatively —
what can I do tomorrow that is different?"
says Kahan, senior economist at the Federal
Reserve Bank of Chicago's Detroit branch.
The car industry is never going to be the
way it used to be, Kahan says. "The state
will have to re-build its economy one new
business at a time. It's important to remem-
ber there's more than one avenue. You have
to encourage entrepreneurial skills:'

Idea Sharing
In a joint interview at the Skyline Club, high
atop Southfield's Town Center complex,
both expressed similar ideas for refueling
the Michigan economy.
Of the two, Kahan is the more optimistic.
A natural story teller, he uses the example
of the baseball teams he followed growing
up in the Bronx. The Yankees piled up runs
by having the big hitters slug the ball out of

the stadium, he says. The Brooklyn Dodgers
scored by singling, stealing second, bunting
the runner to third and then making it
home on a long fly ball.
"There's no big silver bullet to solve
Michigan's problems',' Kahan says. "It's a
little here, a little there."
"If you can attract diverse industries','
Littmann adds, "you have a better chance of
hitting a home run"
Healthcare, not autos, is the area's lead-
ing jobs industry, with education not far
behind, Littmann says. "It is the absolute
principal industry of the area, including
insurance, hospitals and suppliers to hos-
pitals. The demographics and technology
offer tremendous possibilities. It can lure
people here for both jobs and medical care:'
"The story in Michigan is not automo-
biles',' Kahan seconds. "When we get stabil-
ity in the auto sector, by 2008, 2009, we
could see positive employment figures."
People in the United States are wealthy
enough to have cars designed to meet
special needs, he says. "We have the skills,
knowledge and capital. I could see Detroit
excelling."
"I don't see it," Littmann differs, although
he says, like Winston Churchill, he believes:
"People in a republic get it right eventually,
after experimenting with every other disas-
trous form of government and economic
system.
"We have to leap frog. Being as good as
Indiana isn't good enough."
We have to be like Estonia, Ireland and
Iceland — all of which have turned their

Personal Statistics

SAMUEL D. KAHAN

Senior Economist

Detroit Office, Federal Reserve Bank of
Chicago

Background: Undergraduate degree
in economics from Yeshiva University
(1969); graduate degrees in economics
from Columbia University. Economist
for Citibank's Money Market Division
(1976-81); vice president and direc-
tor of financial futures for Heinold
Commodities, Inc. (1981-85); senior
vice president and chief economist at
Fuji Securities, Inc., a primary dealer
in U.S. government securities and sub-
sidiary of Fuji Bank (1985-94 ); presi-
dent of A.S.K Financial Research, Ltd.,
Chicago, providing macro-economic
consultancy to business, financial

institutions and government in eco-
nomic analysis and financial markets;
producer of ASK Weekly Business
Barometer (1994-99). As a Federal
Reserve economist, he tracks the
automobile industry, developments in
gambling, computer activity around
Ann Arbor, expansion of Detroit
Metropolitan Airport and holds confer-
ences with community and industry
groups to gather economic intelligence
on the auto industry, energy, regional
labor and healthcare.
Resides: Weekdays, Royal Oak
Township; Weekends, Rogers Park area
of Chicago.
Family: Married to Tirza, a high
school English teacher at Ida Crown
Jewish Academy, Chicago. They have
three children: Jonathan, director of

Sam Kahan, Federal Reserve Bank of Chicago, and David Littmann, Mackinac Center
for Public Policy, both senior economists, at the Town Center office complex in
Southfield.

economies around by deregulating and
lowering taxes, Littman says. "We have to
become E-Michigan."

Spending Controls
Both insist that cutting state services is
an absolute, that Michigan's problems are
structural, not cyclical and there's no count-
ing on Washington for help.
"Don't look for a Chrysler-style bailout','
Kahan says. "No such thing is coming up. In
Washington, nobody's home."
The Federal Reserve has set good climate
conditions, with low inflation and the free
flow of capital, Kahan says. "We have to rely
on our resources; the solution must come
from within:'
"State spending has dashed ahead far
further than the taxpaying base,' Littmann

finance and research for TV Guide
in New York; Zahava, with Deloitte
Consulting, New York; and Zippora
(Zippy) Lisker, senior marketing man-
ager for Hearst Corporation, New
York. The Kahans have "three beloved
grandchildren."
Outside interests: Kahan describes
himself as an economist and a worka-
holic. "I'm boring. For excitement, I
thought of becoming an accountant."
He also has a sense of humor.

DAVID L. LITTMANN

Senior Economist

Mackinac Center for Public Policy

Background: B.A., Antioch College
(1964), including a year abroad at
the London School of Economics
and Political Science; S.M. in eco-

says. "They [elected leaders] pretend there's
no flexibility. It makes the state's future
shaky."
He urges the state to look at a business
model. "Everything in business is priorities.
The state must tailor services to what the
private tax base can afford'.'
"People are going to have to get fewer
services than before," Kahan agrees. "The
public sector in many states is a problem
— not just Michigan."
In Chicago, for example, "they may not
raise taxes; they raise user fees:' he says.

Corporate Shifts
The loss of jobs in companies like Pfizer in
Ann Arbor and the transfer of Comerica

Economics 101 on page 38

nomics and industrial management,
Massachusetts Institute of Technology
(1966); M.A. in economics, University
of Michigan (1967). Retired from
Comerica Bank in 2005 as senior vice
president and chief economist after
35 years; authored business barom-
eters and developed many leading
indicators for the local and national
economies, ranging from tourism to
the auto industry; served as chairman
of the Economic Advisory Committee
of the American Bankers Association
in Washington, meeting regularly with
governors of the Federal Reserve
Board. Littman was honored with
the 2003 Lawrence Klein Award for
Blue Chip Forecast Accuracy, as the
2004 state Chamber of Commerce's
Michigan Man of the Year and by the

Personal Statistics on page 38

May 24 2007

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