The World According to Littmann

Just because David Littmann has retired as one of Michigan’s leading economic analysts doesn’t mean the former chief economist of Comerica Bank has stopped making astute fiscal forecasts or lambasting politicians

By Fara Warner

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In his years at Manufacturers Bank, Littmann forged a solid reputation as a fiscal libertarian. (High atop the Renaissance Center, circa 1982.)

Photo by David Baditon

Michigan is no longer in a recession; it’s in a downward spiral,” says Littmann, from the neat-as-a pin family room of his home on Braemer Lake near Holly. “The word recession no longer applies unless you think of it as a recession in perpetuity. This state is locked in a vicious downward cycle of bad policies that disenfranchise would-be entrepreneurs and make it much more advantageous for people to leave the state for jobs and startups elsewhere.”

As Littmann launches into an intense, and often sobering, discussion of why Michigan finds itself in this unenviable position, he pays little attention to the placid lake outside the white, gabled home he and his wife, Esther, moved to after he retired in 2005. His career included creating some of the best-known economic indexes, such as the auto-affordability index and the recession watch. Littmann, 66, has also won prestigious awards such as the 2003 Lawrence R. Klein Award for Blue Chip Forecast Accuracy, which he won for correctly forecasting the economy from 1998 to 2002 — four of the most volatile years of the past two decades — despite being just two years from retirement.

The intensity of thought and passion for economics that journalists, politicians, and everyday citizens remember from media interviews, editorials, and speeches remains as strong in Littmann as a retiree as when he was the man many depended on to take the temperature of Michigan’s economy — and take politicians to task for their fiscal policies.

“Gov. Granholm can throw another $2 billion into education here, but if the business climate isn’t competitive, our graduates are just going to be exports to the other states that are going to eat our lunch — and dinner — now,” he says, not laughing at his slight joke. “But that’s exactly what’s happening, and no matter what positive recommendations I might offer or others might offer, you have to have an educated populace that can vote for policies that are market-oriented and not simply vote for a high-profile politician.”

The conversation is pure Littmann, an MIT-trained economist who also holds a master’s degree in economics from the University of Michigan in Ann Arbor. A student of Adam Smith, he rarely misses an opportunity to express his frustration with politicians who don’t understand or even believe in free-market economics. But he and his wife, who often serves as a tempering force for his outspoken opinions, rarely miss a chance to talk about the potential of Michigan and its citizens.

“I understand from economics and philosophy that everyone has a comparative advantage,” he says. “To underestimate people’s abilities is to make them slaves to your own policies, which is what I see happening today in Michigan and the country. It’s not a way to bring out excellence or even the expectation of excellence.”

This focus on the individual is something many people who know Littmann point out when they describe what sets him apart from other economists.

“Some economists are mesmerized by numbers. But Dave looks behind the numbers and sees real people making real decisions based on the incentives and disincentives they face every day,” says Lawrence Reed, director of the Mackinac Center for Public Policy, based in Midland, Mich., where Littmann serves as senior economist. “He thinks about the long run, not just the moment or what strikes the eye. That makes him a great analyst who cuts right through the political snake oil that too often taints public policy discussion.”

Even people who have been on the receiving end of his pointed assessments of how government intrusion always messes up a free-market system admit that Littmann’s opinions are generally based in a deep knowledge of economics and a belief in the power of the individual, even if they don’t always agree with him. Moreover, those who know him consider him to be one of the most humble and compassionate people they know, despite the acerbic and sometimes tough talk that he uses to convey his thoughts on economics and politics.

Both Gov. Jennifer Granholm and former Gov. John Engler declined to comment for this story.

Littmann’s belief in the power of free markets — and the power of the individual — stretches back more than 40 years to when he took part in a co-op program at Antioch College in Yellow Springs, Ohio, that gave him the opportunity to study at and sit for exams at the London School of Economics in the 1960s.

“I saw it every time I walked down to the Strand,” he says. “I’ll never forget the headlines: ‘Brain Drain Continues.’ So what’s the government reaction? In places like France, they said no one will work more than 35 hours a week. They take all these socialist and Marxist type theories that have no examples of working for anyone’s prosperity or security, and they superimpose policy that’s top-heavy and experience-light on what had worked, which was a market system.”