Tag Archives: Scott Walker

Foxconn For Dummies

Remember all the hoopla about Scott Walker’s deal with Foxconn? As the New Yorker summarized it,

When it was signed, less than two years ago, the deal that Wisconsin struck with the electronics giant Foxconn contained all kinds of headline-grabbing numbers: the company promised a ten-billion-dollar investment in the state, a new 21.5-million-square-foot campus for manufacturing L.C.D. screens, and as many as thirteen thousand new jobs, paying an average wage of fifty-four thousand dollars a year. The manufacturing facility would be the Taiwan-based company’s first U.S. factory, and the prospect stirred the hopes of a region that still dreams of clawing back the middle-class factory jobs that were its pride in the middle of the twentieth century and that it lost to foreign competition long ago. As Dan Kaufman wrote for The New Yorker last year, the deal also appeared poised to give a boost to the reëlection prospects of Scott Walker, the conservative Republican who was then Wisconsin’s governor, who transformed the state into a bastion of conservative, free-market politics.

Scott Walker’s version of free markets differs rather considerably from mine; giving huge subsidies via tax abatements and other government goodies to large enterprises hardly equates to a competitive marketplace where manufacturers and sellers contend on equal terms with others.

Trump, of course, applauded the announcement as evidence that he–the self-described great dealmaker– was bringing manufacturing back to the U.S. (although from what I read, he had nothing to do with making the deal originally).

As the details of Walker’s great coup leaked out, and Wisconsin citizens found out what the state had promised, the coverage became considerably less rosy.

But since then Wisconsinites have found out a lot more about the $4.5 billion in taxpayer subsidies that Foxconn was promised—money the company was being given despite the dramatic cuts that the state has made, in recent years, to education, infrastructure, and other public spending—along with the pollution waivers and special legal privileges that it was granted and the bulldozing of neighborhoods that it needed to acquire the land it wanted.

Those details helped defeat Walker in the gubernatorial election. But the state was still on the hook for the promised subsidies.

To add insult to injury, the company recently–and significantly– backpedaled on its commitments, telling Reuters it isn’t even going to manufacture in Wisconsin, and will employ mainly research and development workers. As a result, some of the incentives the state originally promised will be left on the table, but others are irreversible. Millions of dollars of highway money have already been redirected to support Foxconn’s project, and a number of homeowners have been “cleared” from the area designated for the factory.

Time Magazine reported that, following a telephone call from Trump in the wake of the no-manufacturing announcement, the company said it would build a smaller factory after all.

I wonder what Trump promised them.

The Foxcomm scandal is just a particularly egregious example of corporate welfare; bribery ( subsidies and an absence of regulation) has become a commonplace element of what is delicately called “economic development.”

This clusterf**k is simply added evidence that America’s economic system is corporatism, not market capitalism. The dictionary defines corporatism as the control of a state or organization by large interest groups, and adds that “fascism was the high point of corporatism.”

Real capitalists are screwed.

 

Easy To Destroy, How Long To Repair?

A friend who lives in Wisconsin occasionally sends me items from newspapers in that state that he thinks will interest me. Most have obvious implications for other states–and since Scott Walker became Governor, those implications have tended to range from worrisome to terrifying.

The most recent news from what I’ve come to call “the frontier of shooting yourself in the foot” was a report about the University of Wisconsin’s loss of thousands of engineering students.

The story began by explaining why engineering is “more than classrooms and theory: It’s a hands-on discipline for turning ideas into prototypes and products that help people.” The university should have a number of advantages when it comes to attracting engineering students–most recently, it has used private grant funds to create an innovative “maker space” appealing to both in-state and out-of-state applicants.

Accommodating those applicants is a different issue.

There are roughly 4,500 undergraduate students in UW-Madison’s engineering sequence today. About 6,600 applied last year, including many qualified applicants from outside Wisconsin who could add to the state’s talent base.

The main barrier to taking more is a lack of faculty to educate more students without diminishing the quality of the experience for all. Private gifts help, but the core funding for faculty hires comes from state government support and student tuition.

As the article delicately puts it, those funding sources “haven’t grown.” That’s a rather massive understatement: the Walker Administration’s cuts to funding for the university can only be characterized as savage. In the wake of those cuts, and other measures inimical to higher education, the once-storied University of Wisconsin has seen faculty depart and rankings slip.

Walker not only engineered (no pun intended) an enormous $250 million cut to the University of Wisconsin’s budget, just when other state universities were finally emerging from the recession. He also proposed to get rid of academic tenure.

As one observer wrote at the time,

With his draconian budget cuts and his assault on the tenure system, Walker is sending a message that professors at Wisconsin should sit down and shut up. Some of them–those most able to move, which likely includes some of their best talent–might now be looking for greener pastures elsewhere.

An article in Slate a year later considered the consequences of these changes in funding and tenure protections. Several highly-regarded professors had left; others at risk of being “poached” were retained (at least temporarily) at a cost of some $9 million dollars in pay raises and research support. As the Slate article explained:

Academics, whether they have it or not, want some form of tenure to exist to protect the integrity of the knowledge that is produced, preserved, and disseminated.

Wisconsin professors simply do not want research limited by the whims of 18 people appointed by a governor with an openly stated anti-education agenda. And you shouldn’t, either. Think university research doesn’t affect you? You’re wrong. Hundreds of technological and social advances that you depend upon have been made thanks to the research of some brainiac at some university somewhere: what kind of cities to plan; how (and where) to alleviate poverty and hunger; what kind of diseases to treat; what kind of drugs to invent (or make obsolete); what kind of bridges and roads to build (and where). If professors are not protected from disagreeing with the agenda of their “bosses”—whether that be Dow Chemical, Gov. Walker, or President Trump—the consequences will go far beyond one person’s paycheck.

What is happening in Wisconsin is tragic: Scott’s vendetta against intellectual “elitists” is affecting everything from the quality of the state’s workforce  to its reputation and its ability to attract new employers. Last year, the state ranked 33d in job creation–not dead last (Kansas has that distinction) but nothing to brag about.

What is happening in Wisconsin is also where Donald Trump and today’s rabidly anti-intellectual GOP want to take the rest of us. And that is truly terrifying. It’s relatively easy to destroy an asset; rebuilding it, and restoring a sullied reputation is a far dicier proposition.

 

 

 

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.

 

 

 

The Politics of Resentment

A Wisconsin friend recently sent me an article about a book written by a Professor at the University of Wisconsin. (I realize that the professorial status of the author automatically makes her a member of a suspect “elite” whose observations or theories are thus automatically to be rejected..)

Kathy Cramer’s journey to the center of the political landscape began with road trips to corners of Wisconsin many people only drive through — if they drive there at all.

It accelerated after Election Day, when those same places had a key role in making billionaire celebrity Donald Trump the 45th president.

Suddenly there were national implications to a theme Cramer explored for more than a decade: how Wisconsin’s rural-urban cultural divide affects its politics. Cramer, a UW-Madison political scientist, published a book in March: “The Politics of Resentment: Rural Consciousness in Wisconsin and the Rise of Scott Walker.”

Cramer spent five years researching the book–research that revolved around extended discussions with rural Wisconsin voters. Although her research focused on Scott Walker, a number of commentators have drawn parallels between the resentment Cramer uncovered — and the way in which she says it was politicized — and Donald Trump’s  appeal to rural Midwesterners.

Cramer said the book she wrote was not quite what she set out to write.

In 2007, Cramer laid out maps of Wisconsin on her floor, looking for places to visit to conduct research. As a Grafton native, she already knew some of the terrain.

Cramer said she began the work with a guiding insight.

“I’ve found that the best way to study how people interpret politics is to listen to them talk with people they know in their own settings,” Cramer said.

Cramer’s initial plan was to explore issues around social class, but as she talked to people in rural Wisconsin, she discovered a deep resentment of “city dwellers,” who were seen as getting more attention from government, and looking down on rural residents.

“I never expected that a big driver for the way people were thinking about politics was their attitudes toward the cities,” Cramer said.

Into that environment, Cramer said, came Walker, elected governor in 2010. In early 2011 Walker proposed Act 10, a measure to curtail collective bargaining by public workers.

Cramer said Walker was able to tell rural voters: “I hear what you’re saying, and it’s time we step back government, because clearly it’s not working for you. And public employees pensions, health care, salaries are quite a bit higher than yours, many times, so I hear what you’re saying. Let’s pull that all back.”…

But how does rural resentment toward big-city elites explain those areas embracing a Manhattan billionaire?

Cramer’s explanation: Trump “validated their resentment.”

“The way I interpret his message is, ‘You are right to be pissed off. And you do deserve more. And what you deserve is going to these people who don’t deserve it.”

“Those people” is a familiar phrase to any member of a minority group, of course. The article doesn’t delve into the identification of minorities with “city dwellers,” and I haven’t read Cramer’s book to see whether she addresses that issue. But it was impossible to listen to Trump’s campaign rhetoric without understanding–quite clearly–who “those (undeserving) people” were.

Quid Pro Quo…

I’m certainly not surprised by the recent revelations about Scott Walker’s unethical fundraising. I’m just depressed by yet another confirmation of the sorry state of American politics and the increasing corruption of the political system. I don’t enjoy being suspicious and cynical, but it’s getting a lot harder to maintain my Pollyanna side.

For those who missed the recent reporting, here’s one lede from the Wisconsin State Journal:

A new batch of leaked documents provides the most complete record yet of how Gov. Scott Walker raised millions of dollars for a supposedly independent, tax-exempt group during the 2011 and 2012 recalls — activity that prompted a now-halted John Doe investigation into whether Walker’s recall campaign circumvented state campaign finance law.

The newly revealed donations to the Wisconsin Club for Growth included six-figure sums from a lead producer who later stood to benefit from changes slipped into the 2013-15 state budget.

In another article, expanding on the details of the “lead producer,” we read

One of the more tangible revelations found in the leaked documents is how money buys bad policy-making decisions. An example is how Harold Simmons, a man who owned a company that produced lead that used to be in paint, made $750,000 worth of donations to Walker in 2011 and 2012 and got Republicans to protect him from lawsuits.

The Guardian US posted more than 1,300 pages of documents online, detailing more of Walker’s corrupt behavior. It’s unclear how the newspaper got the documents, which were being held under seal.

These disclosures come just weeks before the U.S. Supreme Court will consider a petition by prosecutors to overturn a Wisconsin Supreme Court 4-2 decision that quashed the investigation into Walker’s practices. The prosecutors bringing the petition argue, among other things, that conservative justices Michael Gableman and David Prosser should have recused themselves from the case.

Walker, in a May 2011 letter to Republican strategist Karl Rove, wrote that his chief political adviser R.J. Johnson ran the efforts to elect Gableman in 2008 and re-elect Prosser in 2011. Johnson was under investigation for his role in coordinating advertising for both the Walker recall campaign and Wisconsin Club for Growth, which is organized as a tax-exempt 501(c)4 group.

“Club for Growth—Wisconsin was the key to retaining Justice Prosser,” Walker wrote to Rove.

Johnson affirmed the group’s role in a December 2010 email to Club for Growth director Eric O’Keefe, saying “Club is leading the coalition to maintain the court.”

In this case, “maintaining the court” evidently meant retaining judges who’d been bought and paid for. Engaging in such partisan activities is illegal for a tax-exempt 501(c)4 like the Club for Growth.

It’s bad enough when elected officials like Walker ignore the laws with impunity, but when quid pro quo politics infect the judicial process, it’s worse. The ability of citizens to rely upon the impartiality of jurists is a bulwark against inequality, corruption and tyranny.(And speaking of politics infecting the judiciary, when will the Senate discharge its constitutional duty to vote on the nomination of Merrick Garland??)

It’s all pretty sleazy.

Buying laws, neutering the courts….and we wonder why young people don’t trust “the system.”