Scott Walker Is a Rube

From NYT, “Foxconn Is Reconsidering Plan for Wisconsin Factory“:

Foxconn, the giant Taiwan-based company that announced plans for a $10 billion display-making factory in Wisconsin, now says it is rethinking the project’s focus because of “new realities” in the global marketplace.

Photograph: Evan Vucci/AP

Clearly, neither the explicit subsidies and tax expenditures, nor the relaxations of environmental regulations, were sufficiently large to ensure the Foxconn investment.

Discussion in my 2017 post. See a broader recap of such incentives in a guest contribution by Professor Ann Markusen.

A CROWE economic analysis contingent on implementation as planned, here.

It is possible that Foxconn will reverse its recent decision, and move back to planning for a massive production facility. However, with global growth slowing and US labor costs relatively high, I don’t see this happening in the near future.

30 thoughts on “Scott Walker Is a Rube

  1. pgl

    CROWE suggested:

    “Thus if Foxconn accounts for 13,000 direct jobs, it may generate a total of 32,000-39,000 jobs directly and through its supply chain, suppliers of employees, spillovers on existing firms, and new investments.”

    But what to make of the latest news. Here is what I wrote:

    Foxconn pulls a bait and switch on Wisconsin:

    https://talkingpointsmemo.com/news/foxconn-shift-focus-away-from-blue-collar-manufacturing

    They will still create 13 thousand new jobs but they will not be manufacturing TVs. No Foxconn wants a research center. I bet the intercompany contract will read that the Taiwanese parent will pay cost plus 5% so all IP created will be owned offshore. Now why is this not “stealing American IP” or whatever nonsense PeakTrader used to rant?

    Reply
    1. dilbert dogbert

      The Taiwanese job shop my older brothers worked at in Silly Con Valley, all the production workers were “trainees” from Taiwan. Rotated in and out as required. Not possible anymore due to housing costs. Might be prossible in WI.

      Reply
  2. Willie

    I seriously doubt if Foxconn will create 13 thousand jobs. Fox Con. Well named. Even if Foxconn had created that many jobs, Walker piddled away too much of Wisconsin’s money to coddle Foxconn. It’s a free country. If we want to elect idiots, there’s no law against it.

    Reply
    1. Moses Herzog

      @2slugbaits
      How is the guy on the right a “rube”?? Please explain. As far as I can tell, he’s quite sharp. What is Gou supposed to do when he’s offered everything and the kitchen sink with it?? He can either take it, or leave it, at his discretion. I fail to see how that makes Terry Gou a “rube”.

      Reply
      1. Jake formerly of the LP

        I love that picture. It’s like Gou is turning to the audience to say “Can you believe that these stupid Americans are falling for it?”

        The real treat today is how GOPs in Wisconsin are implying it’s the new Governor’s fault Foxconn downsized. If you read between the lines, they’re unhappy that the giveaways with no strings attached and no oversight (and the related kickbacks to GOP politicians and companies) aren’t going to continue.

        Reply
        1. Willie

          They got rolled. So did Trump. That’s what happens when you are intellectually lazy and borderline really dumb. Lack of accountability and avoidance of responsibility is the GOP way, which is easier when you are intellectually lazy and borderline really dumb. That’s not partisan, just observation.

          Reply
    2. pgl

      “I think he has done a tremendous job in supporting a lot of the things that people of faith really care about,” Sanders added.

      Sarah comes from a part of the world where there are white Baptist churches and black Baptist churches. The latter actually understand what Jesus was about. The former is known for advocating the lynching of members of the latter. Yes in Sarah’s world – “God” is a racist.

      Reply
      1. noneconomist

        Many black Baptists understand and attempt to apply the beatitudes. Many white Baptists are content to stop after the first syllable and combined with “up”, apply it to the best way to deal with liberals.

        Reply
  3. Moses Herzog

    Companies and perennial grifters like Donald Trump and Scott Walker are always telling us that the “Job creators” provide a lot of revenue to the tax base. But I’m curious if that is the case in reality, because in multiple states and in multiple examples you can cite, they pay ZERO in income taxes. In fact the “job creators” have such little connection to the function of their label of “job creators”, one wonders if they are half-brothers with the infamous “market makers” who magically vanished in 2008 markets and were vaporized right before our very eyes. But the “market makers” are so “magical” at “providing” “liquidity” when front-running their own customers’ accounts in good times. What would the small investor do without all that “liquidity” “market makers” provide stealing margins off their own customers’ trades?? It’s “frightening” even to think about…… “terrorizing” even…… But anyway…… One wonders why state legislators hand out all these gifts to the “job creators” when over time it’s clearly shown they add nothing to the tax base.

    One might even wonder what opulent gifts and expensive wine bottles (and cash envelopes under the table) those companies are giving state legislators if one read enough of these stories in the better papers.
    https://www.readfrontier.org/stories/oil-bust-has-allowed-many-oklahoma-companies-to-avoid-income-tax-despite-massive-profits/

    https://oklahomawatch.org/2015/03/24/state-pays-companies-to-preserve-existing-jobs/

    https://www.readfrontier.org/stories/oklahoma-lawmakers-can-accept-limitless-hotel-stays-and-travel-subsidies-from-special-interest-groups/

    Oh well, we don’t need to read a major respected newspaper or look for respected journalism. We have FOX news, Facebook, Snapchat, and MAGA is our guiding light…… our lighthouse and beacon on turbulent seas…….. Sometimes when I am finding out what I must purchase on the 2nd hour of the “Today” morning show I even feel like donald trump is our savior, and we MAGA red cap people are his disciples…… quick someone pinch me and tell me it’s just an erotic dream.
    https://adage.com/article/media/nbc-shows-continue-set-pace-product-placement/229280/

    Those who watch the “Today” show and are regular viewers are a “very bright” group though. We can’t deny the rigors they go through to find good products for their family.
    https://adage.com/article/media/interrupt-nbc-program-bring-word-sponsor/300785/

    Thank God the women of America aren’t DUMB enough to watch commercials posing as television programming. I’m so so glad American women aren’t that DUMB [ happy and content sigh……. ] Wouldn’t it be cool if housewives could pay for a product where they get to listen to advertisements all day?? Similar to cable, but we can feel “more modern” while we are soaked in and saturated with even more advertisements?? Oh wait!!!!
    https://www.cnbc.com/2018/01/02/amazon-alexa-is-opening-up-to-more-sponsored-product-ads.html

    G*ddamn!!!! These are “exciting” and “exhilarating” times!!! [ another happy and content sigh…… ] Now if only American housewives could find a product where they pay to breathe and each to breath they take an advert appears on their shirt—and they get charged a fee for each advert that appears on their shirt….. 2nd Hour “Today” show producers and anchors, let’s do this!!!!!

    Reply
    1. pgl

      Let’s say a tax cut raises output by 1% (a generous estimate). Let’s pull out those fuzzy arithmetic calculators:

      1.01 times zero = infinity! Just ask Stephen Moore for the details.

      Reply
  4. Samuel

    What I find interesting is the WI GOP is now saying the Foxconn deal is all Evers fault: https://www.jsonline.com/story/news/politics/2019/01/30/republican-lawmakers-blame-tony-evers-foxconns-changing-plans/2720215002/

    Any reporters talk to the people who’s houses were taken by eminent domain to build the highway to the now empty Foxconn field? That happened while WI GOP were in charge.

    Of course, I imagine the national GOP will do the same thing in two years. “Donald who?” and “Well really it is not our fault!”

    Also, why does the WI GOP always think it is better to invest taxpayer $ to private companies rather than investing in the people of the state via research, education, or public infrastructure?

    Reply
    1. Peter pohl

      Curious, government breaks for foreign companies but China is wrong to fund their own companies.
      Funding our farmers due to insane trade war but China should not. WTF. The republican business men sent the work to China in the first place to increase their profits ?

      Reply
  5. Erik Poole

    Menzie: Calling the Governor a ‘rube’ is not very academic-polite. My mother would not approve, assuming she understands what ‘rube’ means…..

    Markusen was prophetic: “Yet for all that, the plant may never be built. ” though it may have been an easy call.

    Markusen….. where do I know that name from? She did some work on the Brander-Spencer model of profit shifting if I recall.

    In any event, I clearly missed Markusen’s excellent guest contribution in August of 2017: “Gander Mountain, for instance, a Minnesota-based sporting goods company, begged the state legislature to deny tax increment financing (TIF) to subsidize Bass Pro and Cabela’s moves into the state – it didn’t happen. This unfair competition – tax breaks not offered to the Minnesota competitor – is a major cause of Gander Mountain’s current difficulties. ” Emphasis added.

    American socialists subsidizing retail outdoor recreational big box stores….. who would have thunk it? Anyhow, that is something to keep in mind when righteous American pundits go on about Venezuela being just another “failed socialist state”.

    Too bad American socialists view freemarket capitalism as a zero-sum game. It does not have to be that way.

    Reply
    1. Willie

      As a genuine American of Appalachian Ancestry, I’m OK with the word Rube to describe Walker. Just don’t call him a Hillbilly. Then I’ll get offended.

      Reply
      1. noneconomist

        Willie, my step father always cautioned those who discovered our origins to please refer to us as Mountain William’s.

        Reply
    2. Moses Herzog

      @ Erik Poole
      You probably already know this, but Bass Pro and Cabela’s are renowned for pulling these type stunts of duping municipal and state level governments (usually on Republican controlled legislators and Republican mayors, giving their usual “job creators” diatribe). Similar to Amazon’s shopping for headquarters and then just sitting around waiting for the gifts and tax rebates to fall into their lap “or else”. Similar to pro teams (NFL, NBA) holding cities ransom for teams, and the Olympics Committee taking large city municipal governments for a ride, and a “mark” every 2 to 4 years. The city councils/mayors taking city funds for building Olympic structures (that often sit vacant, largely unused afterwards) are actually dumber and a bigger “mark” than your average pro-wrestling fan. At least the pro-wrestling fan is actually getting what he paid for—an entertainment show. What are cities left with??
      https://public-accountability.org/wp-content/uploads/2011/09/fishing_for_taxpayer_cash.pdf

      https://www.cfr.org/backgrounder/economics-hosting-olympic-games

      https://www.multinationalmonitor.org/mm2006/092006/leroy-sports.html

      https://www.arktimes.com/ArkansasBlog/archives/2012/08/13/bass-pro-and-con-on-government-subsidies-for-retailers

      https://www.citylab.com/solutions/2012/08/why-have-so-many-cities-and-towns-given-away-so-much-money-bass-pro-shops-and-cabelas/2906/

      Let’s go down our well travelled lane of lexicon and terminology education once AGAIN kids. Government money for poor and low educated minorities= “wasteful welfare spending”. Government money for free hand-outs to wealthy white businessmen that they largely pocket for themselves and not on municipal/state tax revenues and/or salaried jobs= subsidies for the “job creators”.

      Now as long as you can be conned that government money for the wealthy=subsidies=good and government money for low-income=welfare=bad, then you can go along on Republicans’ joy ride of raiding state government budgets for their rich friends. If not, then you are a “dirty liberal” and need to watch FOX news more and pray more to your life-size Ronnie Reagan wall poster.

      Reply
  6. SecondLook

    It is fairly obvious that when it comes to relationships between major corporations and various level of government. The former is dominant.
    I suspect you could employ some mathematics to work out the process abstractly; perhaps using some variant of a Markov chain…

    Ironically, classic American conservatism used to be appalled by the idea of neo-feudalism growing out of trusts, oligarchical businesses, etc.

    Reply
  7. Erik Poole

    @spencer ,who wrote: “Isn’t all his severe weather in the Midwest God punishing them for voting for Trump?”

    No. God is rewarding Trump and Trumpsters for dismissing anthropogenic climate disruption. This is prima facie evidence that global warming is a hoax.

    It is also prima facie evidence that Trump and supporters do not understand math…. but for a political movement that strives to be anti-technocratic, all is well in the best of all possible worlds.

    Reply
  8. joseph

    Donald Trump on January 4, 2018: “DOW just crashes through 25,000. Congrats! ”
    Donald Trump on July 14, 2018: “The Stock Market hit 25,000 yesterday. It is all happening!”
    Donald Trump on January 30, 2019: “DOW just broke 25,000. Tremendous news!”

    Jumping the gun by three days, he can’t even get Groundhog Day right.

    Truly the dumbest president ever.

    Reply
        1. Moses Herzog

          I’m really torn on whether I should take that CoRev course at Trump University or Corinthian Colleges. Maybe I should call Betsy Devos and ask her?? BabblingBetsy must know some places where I can get a high interest, borderline usury loan for a useless curriculum of classes, yes??
          https://www.youtube.com/watch?v=IZrMQfXven0

          http://blogs.harvard.edu/clinicalprobono/2018/11/14/borrowers-face-hazy-path-as-program-to-forgive-student-loans-stalls-under-betsy-devos/

          https://youtu.be/DBa8uRM5fcI?t=57

          https://www.brookings.edu/blog/brown-center-chalkboard/2018/10/17/betsy-devos-puts-protecting-for-profit-schools-ahead-of-students/

          From Arne Duncan’s writings at Brookings Institute:
          “The for-profit regulatory cycle exists for good reason–namely because it is driven by the laws of economics and human behavior. When government provides businesses with an opportunity to procure a substantial pot of government money to educate people for careers with few strings attached, profit-making businesses and enterprising business owners will make the most of the opportunity. Not all or even most for-profit programs shortchange students. But it is an inescapable truth of history that for-profit colleges face and often succumb to perverse financial incentives to boost profits by cutting corners in educating students.

          Secretary DeVos argues that her plan to require all colleges to publish more detailed information by program on post-graduation earnings, debt, and other outcome measures on college-related websites would “inform student enrollment decisions through a market-based accountability system.” However, history and a rich body of research shows that transparency alone, in the absence of meaningful sanctions, is ineffective. The consequence is that hundreds of low-performing for-profit programs will resume gorging on taxpayer dollars, while they load up disadvantaged students with loan debt and worthless degrees. ”

          Really all BabblingBetsy Devos wants to know is, why those kids that can’t afford to go to a private charter school didn’t have the foresight and inner fortitude to be born with a silver spoon up their ass like BabblingBetsy did. Why can’t they just be born to billionaire parents and suck off Mommy’s trust fund like BabblingBetsy did?? BabblingBetsy Devos had the foresight for that when she chose which womb she was gonna pop out of. Is that “so hard” really??

          Reply
  9. pgl

    Trump was on the TV babbling nonsense as usual. For example he said we would have another shutdown if he can’t have his stupid wall but then he said over and over we are currently building the wall. OK – then WTF is his whole problem if we are currently building his stupid wall?

    He also said we had massive trade surpluses with Mexico but NAFTA changed all of that. This was after he declared NAFTA 1.1 to be a much greater deal than NAFTA 1.0. I know Menzie has noted that the new deal is virtually the old deal.

    But one can check with http://www.census.gov which has bilateral export/imports back to 1985. We had deficits during the late 1980’s, which turned to modest surpluses a few years later. OK we have had deficits since 1994 but this was not NAFTA. It was more due to the massive devaluation of the peso in late 1994. Now our Usual Suspects will insist Trump did not lie. I guess he really is this incredibly stupid and has no one in the Administration that can educate him on either economics or history.

    Reply
  10. Jesse Livermore

    NYT needs to check their sources!

    In an email with TODAY’S TMJ4 Woo said: “No matter how we look at it, the campus cannot be simply described as a factory. It is a lot more than that.”

    Woo indicated the Foxconn campus would be multifaceted: “Our plan is to build an advanced manufacturing campus which will at least include a crystal display backend packaging plant, a high precision molding factory, a system integration assembly facility and a rapid prototyping center to help startups to test out their ideas and concepts to develop new vertical solution using 8K+5G platform/ecosystem.”

    8K refers to higher-quality display panels, while 5G refers to the upcoming next generation of wireless cellular technology.

    https://www.tmj4.com/news/local-news/it-is-not-just-a-factory-foxconns-louis-woo-pushes-back-on-recent-reports-about-commitment-to-wisconsin

    Reply
  11. Mike

    One wonders how anything was built in the days before government subsidies. We must have been an undeveloped economy dependent on subsistence farming with horse-drawn implements right up until the 1980s when the refundable tax credit was invented.

    Reply
  12. Erik Poole

    @Moses Herzog: Thank you! Those are excellent references. Much appreciated.

    $500 million in subsidies for Bass Pro? Look, I love to recreationally fish and might also know a little about the economics of the business but was awestruck to learn that folks were pitching Bass Pro as an anchor store for shopping malls.

    The Brander-Spencer profit-shifting model captures well this competitive subsidy competition.

    Economist Hicks quoted in the CityLab piece might be on to something too: “It’s almost like they are out to take advantage of the rubes,” says Michael Hicks, an economist at Ball State University in Muncie, Indiana. “Often these small town city councils aren’t the most sophisticated in analyzing an economic development proposal.”

    Though from what I observe, regular folks caught up in what can be described as prisoner and social dilemmas tend to be focused intently on short-term benefits.

    Reply

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