The Wisconsin Legislature is now considering Scott Walker’s latest campaign ploy: a request that the state commit $3 billion for payouts to a Taiwanese electronics contractor with a troubled history of abusing workers, harming the environment, and failing to follow through on promises. As they evaluate Walker's proposal, responsible Democrats and Republicans might want to consider what else could be done with the $3 billion the governor has suddenly discovered.
Foxconn gets poor marks from analysts who are interested in 21st century job creation. The company is a contractor, rather than an innovator. It makes money by looking for labor markets where it can pay the lowest possible wages, and it is committed to replacing jobs even in those markets via automation.
A Bloomberg View editorial analyzing Walker’s proposed payouts to Foxconn noted: “(After) all that public expenditure — and even using hugely generous assumptions, including indirect jobs — the Foxconn deal might yield at most 2,300 jobs annually. And what type of jobs, exactly? Mainly, the new plant will churn out LCD flat-panel screens — a business beset by sluggish demand, rising competition and changing consumer tastes. Worse, such jobs are highly likely to be automated. Foxconn had better hope so, at any rate, if it wants its investment to be viable. Although the legislation aims to match certain incentives to job creation, such metrics can be gamed. Other inducements — such as a sizable sales-tax exemption — will go on regardless, whether the work is done by humans or robots.”
“In short,” argues Bloomberg, “Wisconsin’s plan is likely to help a few people in an unpromising industry find temporary work before they’re displaced by technology — and to do so at the expense of everyone else in the state.”
That is true.
But Wisconsin faces an even greater expense if it embraces Walker’s arrangement with Foxconn, which appears to have much more to do with positioning the governor as a “job creator” than with getting the best deal for Wisconsin workers and Wisconsin taxpayers.
There are better ways to spend $3 billion.
1. Imagine if the state used the money to fund public education. Wisconsin could do more than just revitalize the elementary and secondary schools that have declined because of Walker’s ill-thought-out funding cuts and caps, it could launch a 21st century initiative to put the state’s students on the cutting edge of the future. Wisconsin could stop competing with other states and start competing with other countries — such as Germany and Finland — that are preparing graduates to get ahead of the globalization, digitalization and automation revolutions that are transforming everything about how we work.
That commitment would attract investments by multinational corporations that are interested in the future, as opposed to crony-capitalist firms that are simply looking for the next corporate-welfare payout.
2. Imagine if Wisconsin invested in state-of-the-art roads, bridges and other forms of traditional infrastructure, as well as the infrastructure of the 21st century: universal high-speed internet for all at no cost, high-speed rail lines, and the transition from reliance on fossil fuels to new sources of energy. These changes, organized as part of a coherent plan, could move Wisconsin beyond competition with other states and into competition with countries — such as South Korea and Japan — that have raced ahead of the rest of the world in developing infrastructure that appeals to the innovative industries of the 21st century.
That commitment could attract not just traditional manufacturing but also the research and technology firms that are shaping what business analysts refer to as the new machine age. Coupled with smart investment in the University of Wisconsin System, infrastructure investments could spread innovative investment — which is now largely concentrated in Madison — to communities across the state.
3. Imagine if Wisconsin established a $3 billion fund that would, over the next decade or so, provide grants and low-interest loans to small business owners and small farmers. The money would go, overwhelmingly, to people who live in Wisconsin, who are committed to creating jobs here, and who are inclined to stay here. The fund could also support research and innovation by firms, such as Epic and Exact Sciences, that are rooted in the state and that have proven their commitment to hire Wisconsin workers and pay them fairly, to protect Wisconsin’s environment and find innovative ways to conserve our invaluable water resources, and to pay their fair share of taxes — rather than demand, as Foxconn has, the sort of corporate tax exemptions that shift more and more of the burden for sustaining public education and public services onto property taxpayers.
That commitment would reward the people who are committed to Wisconsin and do not need to be bribed — and, make no mistake, what Walker refers to as “incentives” are, by any honest measure, bribes — to build the businesses of the future where they live. It could also renew Wisconsin's agriculture sector by getting new generations of young farmers going, expanding existing cooperatives and getting new ones going, and encouraging the development of more high-end processing and marketing operations along the lines of Organic Valley.
It is possible that Foxconn could have a place in Wisconsin’s economic future. But not on Scott Walker’s terms. The governor, whose ineptitude as an economic development planner and negotiator is well documented, has not forged a smart or responsible relationship with this company. Rather, Walker is betting the state’s future on a single firm that lacks a track record to justify his dramatic diversion of the state’s tax dollars.
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