I Don’t Know What This Is, But It Sure Isn’t Capitalism…

A number of media outlets have recently reported that Foxcomm, a company usually referred to as a “Taiwanese giant,” will open a plant in Scott Walker’s Wisconsin. As the Guardian prefaced its article,

The announcement by the Taiwanese giant Foxconn that it will build an LCD-manufacturing facility in Wisconsin worth an estimated $10bn was met with considerable fanfare.

But the state has a troubled history in matters of economic development, and the company, a supplier to Apple, Google, Amazon and other tech giants, has a lackluster record when it comes to fulfilling its promises. The news should raise red flags.

In a way, it is a transaction that barely merits publicity; for as long as I can remember, states and municipalities have been trying to entice “job creators” to their areas by offering bigger and better incentives: tax abatements, infrastructure improvements, job training “grants”–all manner of goodies funded out of our tax dollars.

The deal, backers say, will create 13,000 jobs in six years – in return for a reported $3bn in state subsidies. Only 3,000 of those jobs will come immediately. Furthermore, the Washington Post has reported that Foxconn has a track record of breaking such job-creation promises. In 2013, the company announced plans to hire 500 people and invest $30m in Pennsylvania. The plan fizzled out.

Walker and Paul Ryan aren’t the only politicians taking credit for this deal; the White House immediately weighed in, with President Trump reportedly saying, with his characteristic modesty and eloquence: “If I didn’t get elected, [Foxconn] definitely would not be spending $10bn.”

Jennifer Shilling, a Democratic Wisconsin state senator, is one of those who have criticised the deal, noting that the company “has a concerning track record of big announcements with little follow through,” and questioning the legislative appetite for a $1bn-to-$3bn corporate welfare package. Of course, Wisconsin’s legislature is controlled by Republicans who won’t need bipartisan support to pass the enormous subsidies.

The Guardian noted the patchy performance of Foxcomm elsewhere–Foxconn investments in Indonesia, India, Vietnam and Brazil failed to live up to the hype, despite written agreements–and also referred to the less-than-impressive performance of Wisconsin’s previous economic development efforts.

The Wisconsin Economic Development Corporation (WEDC) is a participant in the Foxconn deal. During Walker’s brief presidential run, it was dogged by questions over failed loans. Businessman and Republican donor Ron Van Den Heuvel was indicted for fraudulently borrowing $700,000 from a local bank. Months after WEDC was created in 2011 the agency, then led by Walker, lent him more than $1.2m, without performing a background check.

Likewise, the state’s manufacturing and agriculture tax credit has been widely criticized as a simple refund for millionaires, according to the Wisconsin Budget Project (WBP) nearly “wiping out income taxes for manufacturers and agricultural producers”.

What the Guardian and other outlets failed to address was the absolute absurdity of these sorts of “job creation” efforts. The use of tax revenues to lure large, profitable corporations to one’s city or state may or may not be immoral (I vote for immoral), but the practice is hardly consistent with genuine capitalism and free enterprise, which require that entrepreneurial activities take place on a level playing field.

Criticisms of these sorts of economic development agreements tend to focus on whether the state or city has made a “good deal.” (Evidently, Wisconsin has not.) But that is almost beside the point. The local factory or other home-grown enterprise that prospers enough to hire new workers doesn’t receive these perks; meanwhile, new, sometimes competitive enterprises are being lured to their state with their tax dollars.

This is corporatism, not capitalism. Paul Ryan and Scott Walker are said to be fans of Ayn Rand, but I’ve read Atlas Shrugged. Rand was a capitalism fundamentalist, and would have been disgusted by this deal; she would have labeled the beneficiaries “looters.”

And she’d have been right about that.

 

 

 

16 thoughts on “I Don’t Know What This Is, But It Sure Isn’t Capitalism…

  1. WI could save time and doubt about FoxConn’s (could they have a more devious-sounding name??) commitment if they simply gave that corporate welfare to their citizens who are in need – a direct route seems best. Then let that money recirculate back into their economy (we all know that the money would be spent on essentials, and not hoarded in savings).

  2. Remember that long ago TV program, “Who Do You Trust”? Today, when it comes to any level of government the only intelligent answer is – NO ONE. People in Wisconsin will read only that term “13,000 jobs” and support Walker and Ryan come election day; others from around the country will begin making plans to move there (probably including former Carrier workers here). Forgetting the reports that, while there appears to be thousands of job openings, they are remaining open because businesses claim applicants are not qualified so few are hiring. My 52 year-old daughter-in–law, a 5 year victim of Rolls Royce firing, is still looking for work. Told at one job fair that 50 is too old to be employable.

    “Corporationism” is obviously flourishing if you believe the stock market figures yesterday; but people are still unemployed, losing homes and going hungry or without needed medication due to the current economy. We watched as the Dow Jones Industrial number rose from barely over 7,000 in January 2009 to barely under 20,000 in January 2017. Employment did improve under President Obama, since then appears to have reached a standstill as big business, health care and Big Pharma continues increasing their wealth by looting.

    We have no leaders to look to for assistance; and salvation is out of reach. When I posted my “Pence Must Go” yard sign; I meant for him to leave the governor’s mansion but did not mean for him to rise above his state level position to the 2nd highest level of leadership in the world. That election is costing us millions in tax dollars to honor his and Trump’s bogus saving of Carrier jobs; which we are forced to pay.

    And the majority of Republicans maintain their strangle-hold on all of us.

  3. Aren’t these so-called “deals” essentially contracts? Given FoxConn’s record, you’d think the Walkers and Ryans who are falling for the promises would build in serious penalties for nonperformance. Maybe the voters eventually will realize that that is actually their remedy.

  4. Remember then governor Daniels big announcement about the guy he was giving incentives to who was going to start a company in Indianapolis to put large video screens on the side of semis. Guy was a fraud, hadn’t even incorporated this company yet Indiana was jumping at the chance to throw tax payer dollars at his bogus operation. No one can point to a single reliable study that shows these tax incentives work, yet the GOP keep lining up at every level to throw our tax dollars this way! I’m perplexed by their dogged ignorance.

  5. Sounds like they are getting started as early as possible for re-election. Now, all they have to do is drag out the story long enough that these jobs will definitely be coming and the voters will have been “conned” into allowing those politicians to keep their jobs.

    Trump proved to us that all you really have to do to get a top political job is lie and lie and lie and tell the voters what they want to hear. Too many voters have proven over and over that they don’t want to hear the truth.

  6. While “corporatism” sounds like an official “ism” to me it’s too benign sounding for the wealth redistribution that it is.

    I’m sure that Foxconn bought its way into the deal and will buy their way out when it fails but the wealth redistribution will go on until we are a third world banana republic with our own honest to goodness aristocracy.

    Pence would say as God always intended.

  7. The dreamer in me wonders what kind of world it would be if the corporations, the rich people and the churches actually paid taxes.

    If only.

  8. The same thing is happening on a local level. Developers purchase a property in an area that is not distressed, but still expect the taxpayers to help cover their development costs, in the form of tax abatements, TIF borrowing, taxpayer subsidies and grants. Why use your own money, if you can use ours? Why not demand assistance if you can get it?

    TIF handouts to developers in California was so rampant that schools found themselves in dire straits. Developers got local governments to ignore the requirement for TIFs that the property had to be distressed and otherwise not eligible for conventional loans, so they came to expect that the taxpayers would help finance their projects. The loans were repaid out of increased property tax value after the improvements, but the original tax value was locked in for 25 years. As the cost for everything for schools went up over 25 years, tax revenues were insufficient, causing property taxes to skyrocket. Of course, local politicians wouldn’t stand up to the developers, so then- Gov. Swartzenegger had to issue an executive order to freeze any more TIF handouts state-wide. Gov. Brown continued it. I worry that Indiana is on the same path.

    Politicians never just say “NO” because they are afraid of being accused of killing jobs and economic development. Communities are supposed to compete with one another to “lure” new businesses by handing out taxpayer money or other goodies, like training grants, tax abatements, infrastructure improvements and so forth. When does it end? If a business would otherwise be successful, why should taxpayers help to finance it in any manner, and what will the endpoint be? What will it take to stop this?

  9. It’s a pretty sweet deal when capitalists don’t have to put up the capital in whole or in part to go into business, and now that Wisconsin is a right to work state, these coddled capitalists can also depend on Walker to see to it that their wages are of the slave variety. What’s worse is that the money Walker is handing over is in part taxes paid by the prospective Badger employees of Foxcomm as well as those who do not get a job and otherwise get no benefit from this “bribe to come to town” exercise. This is corporate socialism pure and simple.

  10. Trey Hollingsworth’s campaign ads touted his ability to create lots of good paying jobs by rehabbing old factories and converting them to warehouses. The 9th district voters bought it. I wonder if anyone has researched how many facilities have been opened and if those promised jobs materialized.

  11. Gerald, love the term “coddled capitalists “.

    Power corrupts and as the economic aristocracy has been successful at buying power the corruption only increases.

  12. Well… the next question will be: Are they going to bring in ‘company’ people to run the plants? That is THEIR Engineers? Are they going to ‘hire American’. And are they going to PAY a living wage? I doubt it. I think it will be another empty flop! Foxconn is a Con – the products that I have experienced in building computers for myself and others – I won’t use Foxconn products! I don’t trust their reliability and they are made with the cheapest tech possible. I remember they made RJ-45 and Dialup Modems as well as other components such as MoBo’s (motherboards). Do not trust their product – sure don’t trust the company and its business model! This to me is an attempt to fast track us back to the days of slave labor… NON UNION SHOPS – and dirt for pay! JMHO.

Comments are closed.