The latest Forbes ranking of the "Best States for Business" lower Michigan from 46th worst last year to 47th worst this year. We ranked #39 on business costs, #44 in labor climate, #46 in economic climate and a terrible #49 in growth prospects. We only scored well on regulatory environment (#4), but this ranking factors in a state's incentive offerings (of which Michigan has plenty) and tort climate (which was dramatically improved in the 1990's). The only states that scored worse on the overall rankings were Alaska, Louisiana and West Virginia.

But the pain we are experiencing today might help us in a few years. The historic union agreements with the auto companies are going to make our cost structure more competitive. Our companies are getting leaner and more competitive to create jobs a few years down the road. Our cost of living is getting even more affordable. We're increasing our number of college graduates and increasing our level of venture capital.

Yet the actions that would likely have the biggest impact still aren't getting enough attention: lowering the cost of doing business through state tax, structural and energy reforms. Until these are dealt with, we should fear what our ranking will look like in 2009.