Wisconsin has historically been a great manufacturing state. Well situated in the center of the country, home to able and industrious workers, sustained by a great university system and innovative unions, Wisconsin attracted many of the great industries of the 19th and 20th centuries. Unfortunately, with Republican House Speaker Paul Ryan preaching austerity instead of investment, and with Republican Gov. Scott Walker practicing austerity, the pattern of plant closures and layoffs has been devastating.
So Ryan, Walker and Republican Sen. Ron Johnson are talking up the news that Foxconn Technology Group, an Asian company, may invest as much as $10 billion to build a display panel plant in Wisconsin that would start by employing 3,000 workers and could eventually employ 13,000.
If Foxconn actually locates a facility in southeast Wisconsin, that would be a boon for the manufacturing sector, which has sagged because of the misguided policies that Ryan, R-Janesville, has promoted in Washington and Walker has promoted in Madison. And, of course, that would be a boon for Ryan and Walker — both of whom are bidding for re-election in 2018.
Perhaps that is why a pair of supposed fiscal conservatives are suddenly so excited about providing Foxconn with a record-breaking $3 billion in subsidies from Wisconsin taxpayers.
Three billion dollars is 50 times as much as the state has ever provided for an economic development project. The Milwaukee Journal Sentinel notes: “The subsidies would total more than the combined yearly state funding used to operate the University of Wisconsin System and the state's prison system.”
If Foxconn lives up to its most ambitious claims and creates 13,000 permanent jobs, the state’s taxpayers would be paying roughly $230,700 per job. If Foxconn falls short, the jobs could cost taxpayers much more.
Economic development experts say Walker is making too big a commitment to fund Foxconn’s project with taxpayer dollars. There will be objections to this level of corporate welfare, not to mention the fact that Walker aims to give Foxconn wide latitude to ignore state environmental regulations in building and operating its plant. But it is probably true that a majority of Wisconsinites could be convinced to provide substantial support for Foxconn’s project — if the company can be trusted to deliver on what is being promised.
That’s where the most serious concerns arise.
Foxconn has a troubling record of promising to develop projects and then failing to see them through. As The Washington Post reminds us: “Foxconn has made splashy job announcements in the past that have not quite panned out. In 2013, the company earned headlines for a plan to invest $30 million and hire 500 workers for a new high-tech factory in central Pennsylvania. The state’s governor boasted about the deal. Economists wrote think pieces explaining how this was the leading edge of a U.S. manufacturing renaissance. But once the attention died down and the politicians moved on, Foxconn never followed through with its plans in Pennsylvania.”
Indeed, Foxconn has a history of announcing big plans around the world — in India, Vietnam, Brazil — and failing to deliver on promised investments and job creation.
Walker is an economic development bumbler, whose Wisconsin Economic Development Corp. has been plagued by complaints about cronyism, mismanagement and failure to focus on quality and consistent job creation. Now he is staking his political future on a project with a firm that has had its own troubles.
Walker is a politician, not a businessman. He will be inclined to talk this project up even though he has not done due diligence. Wisconsinites should be wary.
Walker campaigned for governor in 2010 on a promise to create 250,000 jobs in his first four years — a goal that he fell far short of reaching. As the Milwaukee Journal Sentinel reported in March, in 2016 employers in our state added 17,200 jobs, the lowest annual total since Walker took office in January 2011, and after six years the total number of jobs created under Walker is just 185,208.
Perhaps one explanation is that, after he was narrowly elected, Walker forgot about his jobs promise and found a new project. Claiming that the state did not have enough money to provide adequate support for schools and communities, the governor launched a deeply divisive assault on teachers, nurses and other public employees. Wisconsin began to trail other states in measures of job creation, wage growth and economic development activity.
It got so bad that, when Walker ran for the Republican nomination for president in 2016, Donald Trump ripped into the governor’s record of failure. “Wisconsin is doing terribly,” the billionaire said in a 2015 assessment of Walker’s leadership. "He has got a lot of problems in Wisconsin."
Walker’s presidential campaign tanked. Now he is seeking re-election and, with Trump as president, he can no longer run against Washington as he did in the past. He’s got to run on his record — the one that Trump said was so terrible.
What to do?
Announce that he has finally struck gold.
For Walker, this project is all about politics.
For Wisconsinites, however, it is about much more than politics. Committing $3 billion in tax dollars on the promises of a single corporation is an incredible risk. That’s money that could be used for education and job training, for services and infrastructure improvements — all of which are critical to economic development. That’s money that could help thousands of young farmers and small business owners get started in the state where they were born and raised — and where they would almost certainly keep their successful businesses.
And what if Foxconn says it needs more? "Throwing money into incentives makes a slippery slope," explained University of Wisconsin-Madison professor Steve Deller, an expert in applied economics. "(Officials) get so wrapped up in the winning game, in the headline of 'we got it' that they lose sight (of the) pretty steep price."
Translation: $3 billion might not be all that Foxconn asks for, and gets, from Scott Walker.
This is a time for adults to step up, at the local, state and federal levels of government, in the private sector, in academia. This deal, which was developed behind closed doors and with limited transparency, needs to be examined by people who want to see jobs created in Wisconsin — but who don’t want to see Wisconsin get played by multinational corporations and ambitious politicians.
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