I’d rather my tax money went to me.
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Then you need to elect those who agree with you.
In Wisconson, they did.
They got rid of Scott Walker after this Foxconn shitshow and a bunch of unrelated undemocratic shit he tried to pull, and they voted in a Democrat instead.
It’s the narrowly targeted, narrowly tailored incentives that are most troublesome. The Mercatus paper lays out all the incentives, the changes to them, shows why narrowly targeted incentives didn’t work in WI and can be a very bad idea using econ theory to explain why.
I think Walker and Trump were desperate to get some manufacturing back in the US, and just reached too far here (certainly can’t fault them for that). As the paper points out, though, econ dev efforts will take some misses and hits before hits become the norm. Unfortunately for the taxpayers of Wisconsin, they were guinea pigs in the effort.
Good read.
Interesting to learn that this program has become a bit of a bell cow for the left. Does anybody know what the gist of their objection is? Do those on the left object to investment in economic development? Or did they see this as a way to elect Tony Evers, or do they see it as a millstone around Trump’s neck? Or is this just a convenient heat sink for anger? Or??
Long article on the Foxconn plant here
The short of it is Foxconn isn’t building what they originally promised hence the need to revise the deal. Foxconn want the original deal to stand and think the tax incentives should stand. Bottom line is they can continue finish up make the plant operational and Wisconsin can deny them their tax cuts.
As a result Foxconn have threatened to walk away unless the original deal is still in place. Which may happen, or they might show some sense of fairness that a scaled back smaller plant doing work on less than promised technology employing fewer people than promised is indeed deserving of a new negotiation. What does not seem on the table anymore is the original deal.
The gist of the objection is that foreign businesses shouldn’t get tax incentives to bring in jobs. Especially not (essentially) Chinese companies and def not manufacturing. If you have Netflix, you can watch “American Factory”. They follow around the employees at a car glass manufacturer in Ohio that got a similar deal to Foxconn. Those were people who used to make upwards of $30/hr (ten years ago, remember inflation) in manufacturing, with health care and other benefits to boot. Fuyao (company in the documentary) was paying something like $12-$15/ hour and expecting them to work overtime in understaffed stations. This ain’t Ford’s “I need to pay my workers enough that they can afford to buy my product, cuz otherwise who else will?”. This is “I don’t give a f*** if you can barely afford transportation and housing for yourself while we use you to get as much money as we can from your sweat, blood, and broken bones”.
One person might be expected to lift and carry items that, for apparent safety reasons, should have 2-3 people carrying. They also had a ton of Chinese people working the factories with them to “train them”.
A factory opens in Ohio using taxpayer dollars, promising to bring back American jobs, but half of those jobs go to Mainland Chinese people who otherwise wouldn’t have a shot at coming to the US.
In the end, and not long after the factory opened, Fuyao automated almost the entirety of the factory, laying off most of the workers. Still got all the glorious tax benefits. Did those go to Americans? Well, some Americans had jobs at wages that hovered around “living” for a short time. Before they were replaced by machines. Fuyao can continue to call their stuff “made in America”, but it’s Chinese businessmen reaping the benefits. Especially with the tax breaks + machines as workers, very very few Americans gain anything from the deal. And with so few people going in and out of the factory, you’re not getting the shops and housing and schools that would spring up naturally and drive economic development further in the area around a high-staffed factory.
But this is the problem with manufacturing in this day and age: everything we do is being taken over by machines. Look at driverless trucks as another example. They can go 24/7 and don’t need to stop to sleep or pee. It sucks that manufacturing jobs have left the US, but even in Mexico and China and wherever else the US manufacturing has gone, there are very few humans with jobs in those places. Machines do all the work and a fraction of the original workforce might be there to clean the floor or repair broken parts that other machines can’t. Yet.
Meanwhile, a few top executives make millions and pay few taxes on those earnings.
It’s not an objection to economic development, it’s facing the reality of the modern world. Bringing in manufacturing won’t lead to the level of manufacturing jobs that America once had because there’s no need for humans to do those jobs anymore. And machines can work around the clock, unlike humans, bringing in even more profit.
The other popular thing to give big tax breaks to is shopping centers. But the mall is dead because Amazon/online shopping can be done in your underwear at 3am, so no one is stopping by physical stores if they don’t have to.
Economic development is very important, but equally important is how you approach economic development. You can’t just throw money at a company and pray they stay long enough to benefit the community. Research needs to be done in to the long term effects of tax breaks to anyone, and the current research shows that the way things are being done doesn’t work.
As for electing Evers…my guess it has a lot to do with being tired of the crazy economic shit Walker pulled during his time in office. There was a lot more than just Foxconn…
I didn’t read your link to Verge, so apologies if this is redundant.
It seems like Foxconn were not aware of the costs in Wisconsin of skilled labor for their original 10.5 plant when they signed the original, back-of-an-envelope deal with Walker. They eventually scaled down to a 6 plant because labor costs were much lower, although that damaged the econ dev’s estimate for the tax multiplier.
They are not even sure they are building that anymore, anyway, if you negotiate the price of a three tiered wedding cake and they bake you a cupcake, it’s common sense they don’t get paid the money that was agreed on for a three tiered wedding cake.
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Hate to start with a slight aside, but I’m not likely to watch that. I saw some folks from that production in pics from the Academy Awards, heard some of the things they said, no thanks. My mission here in 2020 is to avoid any and all “learning” if it comes from partisan sources.
Yes, we’ll never see American mfg come close to the level we had before Clinton and Congress exported the American middle class to the rest of the world at the end of last century.
However, not all factory tasks lend themselves to full, no-human automation. Bringing some level of mfg back also carries a huge psychic benefit that comes to us Americans who remember what American mfg used to be, and the kids who grew up enjoying the wages their parents earned there.
We’ll never get all the way back, but that is no reason to pull an Obama and turn our backs completely. Just means we need to cut better deals.
I’m not a resident of Wisconsin, but if I recall correctly Walker won election on the idea that union power - especially public sector union power - was strangling Wisconsin and needed to be cut down to size. Again not a resident, but from the outside looking in it seemed his agenda was aimed at helping all Wisconsin taxpayers, rightly or wrongly. And again, I know far less about how his efforts actually played out.
The infuriation was that “unions are strangling our economy” (but not the police, they deserve allll their benefits. Even firefighters and EMTs can go pound rocks) and “teachers are paid too much” and “the public sector has too much control” was coming from the same guy who cut the Foxconn deal. Can’t say public sector is killing the economy in the same breath that you throw out billions to a private sector company that can’t begin to keep its word. People saw through it
Again, hate to quibble too much, but I think a more honest way to state that is
Can’t say public sector is killing the economy but then go on to make very bad econ dev deals. Voters were invited to see it as hypocrisy, not honest error born of trying too hard.
ymmv
Ok, I’ll take that
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The events in Wisconsin are really only side stories in a much larger debate going on now in America.
I was in a graduate level finance class twenty years ago, and was shocked when my prof set aside a full lecture on a financial disaster looming over the US economy: pensions, accounting for pension reserves (I mean the transfer of pension liabilities to balance sheets and the amounts stored there), and the dire effect public pensions were going to have on governments and, eventually, taxpayers. The sidetrack was relevant to the day’s lecture, but the heat behind it was remarkable. He was telling us that we’re being handed a big bag of shit and being told it’s granola, that pension reform was badly needed because we were all headed to firms that could not keep their pension promises otherwise.
As far as I know there are still state governments that have made completely unrealistic pension promises, promises than can only be fulfilled if taxpayers are turned into a public version of Detroit auto makers as “financial engines designed to pay out future pension liabilities” rather than attracting investment by sharing profits with shareholders. (looking at you, California, and you, New York)
That is another say to define socialism, as an economic engine designed only to distribute all earnings to its citizens. Or since open borders have become popular on the left, to distribute all earnings to anyone, citizen or not.
Anyway, note that Bernie Sanders is only adding to the list of financial promises that cannot be kept. Not one word on how to grow the pie, not once.
The other side is trying to avoid adding to the list just yet, and also devoted to making the US economy grow big enough that some day big promises can be made and, more importantly, kept.
No, the left doesn’t object to economic development. Most of the American left believes strongly in capitalism, in the beauty of free-market incentives, in a fair system and level playing field that rewards those who word hard. The discourse has become so horribly polarized that many on the American right seem to have some kind of pre-conception these days that the left no longer believes in those things, but that’s bollocks. Ask the average Democrat and yes, capitalism, free markets, and rewards for those who work hard will be pretty damn uncontroversial.
Here’s the problem with the Foxconn deal: it goes against all of those deeply American ideals. It’s not free market because it’s only Foxconn getting that deal. It’s not fair nor does it promote a level playing field, because by giving Foxconn that sweetheart deal, you’re inherently disadvantaging any other firm that wants to come into Wisconsin and do the same thing.
You saw the same thing with Amazon’s much-ballyhooed “HQ2” competition last year, where NY lawmakers cut an incentives deal with Amazon but then had to retract it after public outrage. New Yorkers just felt it’s preposterous to cut special deals for unbelievably powerful companies. The feeling is: we have laws, we have tax rates, this things are transparent and apply equally to everyone, if you want to come set up shop in NYC or Wisconsin or wherever, play by the damn rules like everyone else does!
Hilariously, Amazon is now hiring shitloads of people in NYC anyway. No, they’re not officially doing the HQ2 dog and pony show anymore, but it amounts to the same thing. With no incentives. Proving that the incentives were never really needed in the first place and were just a socialism-for-the-rich giveaway to the shareholders of one of history’s most successful companies.
With the Foxconn and Wisconsin situation in particular, it had such a negative impact on Scott Walker not even so much for partisan or ideological reasons. People were just pissed that he (and those under him, down to the municipal level) were such idiots. They got taken for a ride by Foxconn. They committed tons of public money to things like highway infrastructure around the vaporfactory site (highways which will now never get used properly, just money down the drain, as roads elsewhere in the state fall into disrepair), they booted people out of their homes via eminent domain, and all for nothing. They just handled the whole thing as such clowny idiots.
Anyone with half a brain could have seen through Foxconn’s bullshit or looked at Foxconn’s record of pulling the same bullshit with other governments around the world, but no, Walker et al were starry-eyed by trips to factories in China, didn’t properly vet or think through what they were doing and their incompetence cost them their offices. There were so many massive holes in Foxconn’s proposals - an LCD factory in Wisconsin, when LCD was already a dying technology with heaps of overcapacity in Asia? Really?
But Wisconsin leaders were not interested in asking too many questions or doing much vetting of any kind, they just grovelled and opened the public coffers to a foreign company, all to get the big boss with the little hands a photo op with a golden shovel. It left a bad taste in the mouths of a lot of pragmatic Midwesterners, who yes, very much believe in economic development in principle but were very much horrified by the incompetence of Mr Walker.
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Well, check the polls. Sanders seems to be about to run away with the nomination.
Those Democrats voting for Sanders in primaries are fans of capitalism, free markets, and rewards for those who work hard only if they are allowed to redefine “a fair system” as one where Uncle Sam suddenly becomes the new owner of 20% of all market equity, and “capitalism” where Uncle Sam’s tax arm, the IRS, suddenly requires all American taxpayers to report an annual balance sheet ( to measure personal retained earnings ie personal wealth) for the purpose of taxing it, in addition to reporting income and paying tax on same.
According to multiple campaign staffers, Americans who are to be defined post-election are to be sent to “re-education” centers that these staffers seem to regard (with some glee, I might add) as American gulags. Sanders’ campaign staffers’ words, not mine. I think they exaggerated the extent of guillotining of GOP members, so I’ll perhaps take that as a kind of sick puffery.
If you think this is just a slight moderation of Democrat beliefs, I strongly disagree.
Yes, that’s another way to say that Wisconsin made a bad deal. I agree.
Well, we’ll have to disagree about the meaning of the word “proves” but I agree that there is good evidence that tailoring financial incentives toward narrowly targeted companies exclusively likely requires much better information than Wisconsin econ dev people had.
As far as Amazon goes, the only conclusion regarding its HQ2 decision we can make is that Amazon simply walked away from the bargaining table once a freshman Democratic Socialist US House member suddenly interjected herself into negotiations. We know nothing more about how that would have ended up if Amazon had located there. I mean, we can speculate but see my point about “proves” above.
I believe in a reasonable wealth tax. I think it’s the only solution to the runaway inequality we see all over the world. Implementation is a tricky problem, because if you implement a wealth tax in just one country, you’re risking a hell of a lot of capital flight. But at some point, we are going to need it. The alternative - our current system of modern feudalism and wage slavery for the bottom 50% of society - is simply untenable.
A wealth tax is quite fair. Just as fair as property taxes. In fact, property taxes are themselves a kind of wealth tax. We’re happy to tax physical capital such as property, but not financial capital such as securities? That makes no sense to me.
Other than a reasonable wealth tax, what other solution is there to wealth inequality?
However, I don’t think it’s likely Bernie will be actually be able to pass a wealth tax. But I’m happy to see it discussed in the campaign.
I don’t know where you’re getting this stuff but I don’t think that’s a position of the Sanders campaign. If it is, can you point me to it because uh, I don’t agree with gulags…
There’s a couple things to unpack here.
Sanders campaign positions are very different than typical Democratic fare, that’s true. His marquee proposals - Medicare For All, Green New Deal, and College For All - are not necessarily mainstream Democratic positions, at least they certainly weren’t before he started to take off. But guess what? This is politics in action. The Democratic party has been a slave to the Goldman Sachs set for far too long, and people are sick of it. Bernie’s ideas are for the people, and they strike a chord.
And before you go off into gulag-land again, just bear in mind that none of these things are radical.
- Most wealthy democracies have something similar to Medicare For All already, and have had for a long time
- Most wealthy democracies have free tertiary tuition - or very cheap - for their citizens
- Most wealthy democracies are waking up to the fact (thank God) that dramatic action on climate change is needed yesterday
And the bottom line here is that none of Bernie’s proposals are incompatible with what I said earlier, which is that Democrats do believe in capitalism, in the beauty of free-market incentives, in a fair system and level playing field that rewards those who word hard. Bernie’s campaign actually embodies these things.
But he has his work cut out for him: he has to first convince Democrats, and then the American people, of this fact, all over the howls about gulags coming from people like you. Sorry 
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I strongly disagree. The IRS has never even had a form for measuring personal wealth each year, although wealth may have been taxed by the British prior to 1776.
There is none as human nature makes it impossible to prevent wealth inequality. Trying to “fix” that would be like making breathing illegal. Or sex. No need to send us to gulags because of our nature.
It’s not being reported in the mainstream media. These are quotes from videos recorded by Project Veritas, which I was able to view several weeks ago. Quite likely they’ve been removed from youtube now, but you should make an effort to see them from any source.
Like staffers in the previous two videos, Mr. Baird brushed off reports of atrocities within the Soviet gulags, saying he thought “the gulags and the persecution of the Kulaks and things like that are exaggerated,” adding “our own American empire has excesses of course.”
He emphasized that he had no stomach for violent revolution, saying with a laugh that “after we abolish landlords, we don’t have to kill them,” and that “I’m not excited by the prospect of armed struggle.”
“I just never want to kill anybody. That scares me a lot,” Mr. Baird said. “I would say most people in the movement are in it to avoid going that far, and there’s a wing of the movement that sees that as … “
“Inevitable?” asked the PV undercover investigator. “Yeah,” he replied.
I’m afraid it’s not me who’s the radical or who’s off in gulag-land here. Sanders proposals are quite radical, and the DNC seems to be fighting quite hard against his nomination as a result.
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This is a perfect example of what I was trying to say earlier, and evidence that tax breaks and incentives are unnecessary and unsustainable.
Amazon, after not getting a sweet deal, saw potential for their people to be in NYC, so they set up shop in NYC anyway. New York taxpayers didn’t have to fund those jobs because the jobs arrived naturally by location and potential of the workforce. If amazon had gotten a sweet deal to build their HQ there, how much would that have cost taxpayers? Would Amazon have stuck around after their tax breaks and credits dried up? Or would they have happened to decide they need a “new” place for their HQ in 15 years, aka more taxpayer money from a different location? Especially as a corporation that makes billions each year but pays nothing in taxes.
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Well, we will never know the answers to your questions, thanks to AOC.
Just to sum up here: Amazon didn’t walk away as a negotiating tactic. They walked away because a freshman House rep without committee assignment (and she could have landed in a place that would allow her to take a helluva swing at Amazon) barged in and effectively ended the whole shebang.
But we do know they’ve shown up anyway, at cost only to themselves