The Wisconsin Economic Development Corporation is an absolute disaster. If it were a ship it would be the Titanic. If it were a college football team it would be the Wisconsin Badgers under Don Morton. If it were music it would be Barry Manilow.
Okay, that’s unfair to Barry Manilow. I apologize to all his fans out there.
The brainchild of former Gov. Scott Walker, who created it in 2011 to replace the old Commerce Department, the WEDC is supposed to be some sort of private-public partnership and therefore somehow lighter on its feet than a regular state agency. In practice, the WEDC is making a pretty strong case for regular state agencies.
The latest report from the respected Legislative Audit Bureau shows an organization that is being incompetently managed, if you can say it is being managed at all.
The report found that:
- For contracts that ended in the last two years, 68 businesses were required to create almost 6,000 jobs with the help of state grants and loans, but only about 2,000 were actually created. And while the report didn’t say this, I’d say that it’s impossible to prove that those jobs would not have been created without the state handout.
- Another 60 businesses were supposed to use their taxpayer gift to retain 13,200 jobs, but ended up keeping only 59 percent of those.
- One company got just under $500,000 in state tax credits, but actually lost 17 jobs.
- Other companies got money through WEDC to create jobs in other states. One created over 200 jobs in three dozen states — none of them are named Wisconsin.
- In the years 2017-2018, the auditors couldn’t account for jobs actually created because the WEDC completed only one verification effort during that period.
All this would be bad enough if it were anything new. But actually WEDC has been audited twice in the past and the same issues of lax enforcement and poor management have come up again and again. In response, WEDC Director Mark Hogan offered the weak defense that the number of audit recommendations has been declining, never mind the severity of the problems behind each recommendation. According to Hogan, the Titanic is listing badly, but he’s sure more lifeboats will pop up somewhere if they keep looking. The Veer offense is going to work on the very next play. Barry Manilow will stop writing sappy songs one of these days. (Sorry, I did it again. Apologies to Manilow.)
One of the more perplexing things in all this is the position of Gov. Tony Evers. During the campaign, Evers promised to eliminate the WEDC, but shortly after winning the election he reversed his position without explanation.
According to press reports, Hogan, who was appointed by Walker, claims to have a good relationship with Evers and his aides and expects to be reappointed. That just takes a person’s breath away. Look, I don’t know Mark Hogan. He may be a perfectly nice guy, but there is overwhelming evidence that he is terrible at his job.
But even replacing Hogan isn’t the answer. Evers was right in the first place. The WEDC should be ended. The entire concept is wrong. Taxpayers shouldn’t be giving handouts to businesses. At all. For anything.
Between 2011 and 2018, the WEDC closed out $130 million in grants and loans, but the Audit Bureau reports that it can’t say for sure how many jobs were created or saved because WEDC didn’t do the job it was required to do under law to verify results.
And of course, now even that amount will be swamped by the horrible Foxconn deal, which would give away up to $4.5 billion in state and local subsidies to the Taiwanese flat screen manufacturer. And guess who is in charge of overseeing and enforcing that deal? The WEDC. Why does this not inspire confidence?
But even if the WEDC were a competently run agency, taxpayer handouts to businesses, no matter the amount or the purpose, are a waste of money. A report last fall from the Center for American Progress looked at business incentive programs from around the country and concluded:
“It seems that some companies have learned their lesson, but this does not change the fundamental reality that, far too often, economic development incentives are irrelevant to decision-making, fail to meet promised results, take away from existing or potential public services, lead to zero-sum competition among governments, and lack appropriate oversight.”
In my view the WEDC should be ended, but there’s no particular need to recreate the old Department of Commerce either. Government should just get out of the corporate welfare business altogether. Redirect those needless handouts to the basics: good public education, sound hard and digital infrastructure, and clean air and water. Those are the foundations on which businesses can grow.
