A central belief in Washington and most state capitals nowadays is that government should "invest" in certain businesses—"clean tech," say, or manufacturing—to drive job creation. We hope it all turns out better than it has in Michigan.

For the past 14 years, Lansing politicians have offered $3.3 billion in tax credits through the Michigan Economic Development Corporation and spent another $1.6 billion in outlays to create and retain jobs. The subsidies have ranged from tax breaks for Hollywood, to...