Out in the Blue States, they still don’t quite seem to get it. Case in point: the effort of Michigan’s Democratic governor, Jennifer Granholm, to create yet another entitlement – this time for a free ride to college.

Michigan is one of a small handful of states in which unemployment has actually been rising, to 7% in the most recent survey. This is down slightly from its recessionary high, and it’s well below the double-digit levels of the early 1980s, when back-to-back recessions and a lingering oil crisis cratered the American automobile industry. But Michigan still looks bad compared with much of the rest of the country, and this naturally requires its politicians to analyze and strategize.

The analysis of Ms. Granholm, who is considered something of a star in the national Democratic Party, is that only 22% of Michigan workers have college degrees, compared to 26.7% nationally. The goal, she has declared, should be 45%. And she appointed a commission to come up with a strategy to reach that goal. Not surprisingly the commission concluded, among other things, that college should be free, just like the K-12 system.

Sounds nice, but a few questions intrude. How to pay for an entitlement to college at a time when Michigan’s budget already is deeply in deficit and the state contribution to its public colleges and universities has been declining rapidly? The governor’s commission doesn’t say, but if you’re thinking tax increase you might, just might, be on to something.

Secondly, why not focus on providing children with the decent education they all too often don’t get at the K-12 level? The problem isn’t money. Michigan K-12 teachers year after year are ranked as either the highest-paid or second highest-paid in the land. Spending on the K-12 system has been rising faster than inflation for decades. Yet year after year test scores show the same mediocre results. A serious education strategy would call for root-and-branch reform of this mess.

Finally, what reason is there to think that universal access to college – beginning, perhaps, with community college, though Ms. Granholm’s commission didn’t limit it to that – would be the engine that could haul a state into the sunlit uplands of full employment, even if all the children arrive ready to work? In Europe, after all, college is free – and unemployment is roughly double that of America. Not only that, but Europe’s universities are generally second-rate compared to American higher education, precisely because they don’t have to hustle for money and students.

Recent polls show that the governor’s popularity rating has slumped sharply in recent months. Perhaps it’s because voters suspect she is grasping at faddish straws like an entitlement to a college education.

The problem for Democrats in Michigan – and other old industrial states – is that they lack a serious strategy for confronting the tough adjustment problems posed by competition both at home and abroad. Some progress was made in the early 1990s, when Michigan cut tax rates, reformed welfare and tamed the bureaucracy.

But the industrial states are competing against moving targets. Other states and countries are improving their performance at an even faster clip. And they are doing so without the deadly overhang of a union mentality that makes adjustment far more painful than it needs to be. Indeed, Ms. Granholm recently approved a 10% raise over three years for state workers – even as she was lamenting the state’s budget woes.

If there is a long-term strategy, it’s hard to avoid the conclusion that it will involve a return to higher taxes. Ms. Granholm already has signed into law increases in cigarette and casino taxes, and a speedup in collection of property taxes, which basically amounts to a tax increase as well. More could be in the offing. But if you want to create jobs, this is exactly the wrong way to go.

It’s the entrepreneur, stupid. The high-tech jobs of the future will pay well, which means that workers will have plenty of incentives to get all the education they need – without horns-woggling taxpayers into bailing out those not-very-overworked, politically correct folks in higher education. But first you’ve got to have the entrepreneur.

Mr. Bray is a Detroit News columnist.