The Foxconn deal is horrible for Wisconsin. The Taiwanese tech giant just announced a deal to build a factory here and Governor Scott Walker appeared with President Donald Trump and Speaker Paul Ryan to salivate over the potential.
But the whole thing stinks more than a carp allowed to rot in the sun. Let us count the ways.
Foxconn doesn’t keep its promises. Foxconn has a history of leaving others at the altar when they don’t deliver high enough on the dowry. In 2013, Pennsylvania offered $30 million to create 500 jobs there. There was fanfare not unlike the breathlessness of Scott Walker this week here. But the Pennsylvania plant never happened. And Foxconn will disappoint you wherever you are in the world. They’ve come up short in Vietnam and Brazil too. It’s entirely possible that Foxconn will use the Wisconsin deal as the baseline for the extortion of other states that dare to go higher.
Two hundred and thirty thousand per job. The $3 billion in taxpayer handouts to Foxconn would come out to $230,000 per job even if they keep their promise and create a total of 13,000 jobs here over 15 years. That’s an average subsidy of $15,000 to $19,000 per job per year. That makes Wisconsin a world class sucker because the average nationally for similar projects is all of $2,500 per job. There’s desperate and then there’s pathetic. Have we no self-respect at all? Guess not.
Fifty grand ain’t what it used to be. To maintain an average middle-class lifestyle by 1970’s standards, a family of four needs to earn $131,000 a year. Foxconn promises jobs at an average of $50,000 per year, but that’s even less than the current national average for four-person families of $57,000, which is in itself only 43% of what’s needed to maintain a 1970’s middle-income lifestyle. And, as One Wisconsin’s Scot Ross points out, even that $50k average could take into account million-dollar salaries of Foxconn executives. To make matters worse, Ross notes that the company has offered no promises at all regarding benefits like health insurance and retirement.
Environment? What environment? Iconic Wisconsin Governor and U.S. Senator Gaylord Nelson, founder of Earth Day, famously said that, “The economy is a wholly owned subsidiary of the environment.” Yet, according to the Wisconsin State Journal the special session bill authored by Walker would allow the company to “move or change the course of streams, build manmade bodies of water that connect with natural waterways and discharge materials in state wetlands without authorization from the state DNR. It exempts the company from being subject to an environmental impact statement.” Okay, then. So, basically if you’re a Taiwanese tech giant you can mess all you want with the water we all use and drink and we won’t even ask that you tell us about what you’re doing much less get an independent take on what it means for the fresh water and fish that define us as a people. And it’s not like the manufacture of liquid crystal screens is likely to produce any toxins that might end up in somebody’s drinking water. Don’t worry. Be happy.
Best deal for Cubs fans ever! Foxconn wants to locate someplace in southeast Wisconsin along I-94. Governor Scott Walker couldn’t be convinced to finance the expansion of that route when it was just something that a lot of Wisconsinites and ho-hum businesses along the route wanted. But now that Foxconn wants it he’s included it in his giveaway legislation. Great. What this means is that Illinois residents will have an easier drive to their new jobs at the company, but only Wisconsin residents will have to foot the $3 billion bill for the freeway and the tax giveaways and shoulder the damage to their environment. As if that’s not hard enough to swallow, now the damn Cubs have overtaken our Brewers in the Central Division. You can hear the Flatlanders cheer, “Suckers!”
What about everybody else? Wait just a minute here. If a Taiwanese tech company can ignore environmental regulations, not even have to document impacts to air and water in an environmental impact statement, and get $3 billion in handouts to boot, why can’t Mercury Marine? Why can’t Kimberly-Clark? Why do all these rules apply to us and why do we get great tax breaks but not actual cash payments (as Foxconn would, because the tax credits are projected to be larger than their tax bills)? If this is what we need to do to create jobs, why not do it for homegrown Wisconsin businesses too?
And, by the way, most of the analysis above was provided in a report produced for Foxconn itself. In other words, this is all putting the best face on it. Wait until we get a report — as we should — from an independent public agency like the Legislative Fiscal Bureau or an independent private group like the Wisconsin Taxpayers Alliance. My guess is we’ll discover that this is even worse than it looks right now.
In 2012 The New York Times did a massive study of various handouts and tax incentives provided by state and local governments. The paper concluded that a low estimate was $80 billion a year in public money going to private corporations. And in the strong majority of cases there was little in the way of proof that jobs had been created as promised or that they would not have been created anyway without the payouts.
What this kind of thing really does is pit state against state and city against city in a race to the bottom where the tax base gets depleted and the environment gets degraded.
A few progressive business people are willing to actually say that out loud. “If you’re looking at the competitiveness of a region, the most important thing a region can do is to focus on education. And this use of incentives is really transferring money from education to businesses,” said David J. Hall, the CEO of Hallmark, in that 2012 Times story.
Rather than lavishing expensive gifts on big corporations that don’t need them, Wisconsin would be better off heeding people like Hall. It might be thought of as a Big Ten approach. Like Big Ten football, known for its grind-it-out, run-up-the-middle style of offense, an economic development strategy that would make sense would make steady, long-term investments in public education at all levels, in infrastructure like roads, buses, rail and high-speed internet, and in environmental protection.
Especially in a tight labor market, businesses will go where they can find smart, educated and hard-working employees, where they can move people, products and ideas around easily and where it is all supported by clean water and air, which in turn attract a talented workforce. I would like to see my state government invest $3 billion in those things.
But right now they won’t. They’d rather help put the con in Foxconn.
An earlier version of this article stated that the Foxconn facility is proposed for somewhere along Interstate 90. It is in fact proposed to be located along Interstate 94.
