Three thousand jobs. And a big, big press conference. Do you feel prosperous yet, America? We can just buy foreign jobs at a staggering cost. Why didn’t we think of this sooner??
Yesterday, America was Made Great Again primarily via the splashy White House press conference announcing that suicide-inducing Chines manufacturing firm Foxconn would be building a new plant in Wisconsin, initially bringing 3,000 new jobs. Exciting! This pushes quite a few politically attractive buttons: Trump creating jobs! Trump turning the tables on China taking our jobs! Scott Walker’s pro-business attitude paying off for regular citizens! And, most important of all, the ever-present ability of elected officials to use the public’s ignorance of “details” and “math” against them!
JOBS! JOBS! JOBS!
Let’s look at what our gracious leaders have achieved here. The state of Wisconsin is giving Foxconn a package of tax breaks worth $3 billion. In return, Foxconn is creating “at least 3,000 jobs.” If that is all Foxconn does, that would mean the government paid a private company $1 million per job that pays $54,000 per year. Not the best investment! But let’s be more generous to the government: Foxconn claims its new plant will eventually employ 13,000 workers. That would be a payment of$231,000 per job. Still not great! On top of that, the state of Wisconsin claims (unverifiably) that “an additional 22,000 indirect and induced jobs” will be created. If we quite generously add those all together, we find that the government has given a tax break of only $86,000 per job.
Is it wise, proper, and fair for a state government—one that has busied itself taking away collective bargaining rights from workers, rights which might to used to moderately improve the salaries of those workers—to give a foreign corporation $86,000 in tax breaks to create a job paying $54,000 a year in that state? No. But this, as you might suspect, is worse than that. As Tim Culpan points out, all of the promises being made by Foxconn today should be viewed with extreme skepticism. Not only is Foxconn’s promised $10 billion investment in Wisconsin wildly out of line with its recent pace of capital investment, but the company has pledged nearly $30 billion in investments in cities around the globe just in the past year—despite the fact that that figure is more than the company “has spent in the last 23 years.” Not to mention the ever-present and completely unchanged incentive in the manufacturing industry to automate jobs out of existence, a dynamic that will certainly cause Foxconn to minimize, not maximize, the eventual total number of human jobs in its Wisconsin plant.
Simple logic tells us that the state’s projections are probably far too rosy. And there’s an even bigger picture here. Foxconn chose Wisconsin over six other states that were also trying to woo it with incentives and tax breaks. So if you do buy the (false) idea that it is healthy and economically rational to have state governments competing with one another to assemble the biggest giveaway to private corporations as a desperate way to lure jobs, you must then also acknowledge that six states lost in proportion to Wisconsin’s “gain.” If you were, say, the president of the United States—the man responsible for the welfare of all of the people in all of the states—it would therefore be odd to hold a White House ceremony to tout the outcome of this process as a win for the entire country, when in fact the more states compete with one another for these things the bigger the corporate welfare packages offered to companies become and the greater the cost to the taxpayers per job. Whereas if there was, say, a federal law banning these kinds of state subsidies for private jobs, the jobs would go wherever it was best for them to go and U.S. states would not compete against one another in a zero sum game in which the eventual “winner” is awarded the right to bribe companies with billions of dollars and pray that it eventually pencils out to an economic gain years down the road. Companies will “create jobs” on their own—that is what companies do, in order to make money for themselves. To celebrate bribing them to locate those jobs in a certain state is to celebrate gangster capitalism in which we allow corporations to extort money from the public unnecessarily. Politicians love this process because it allows them to claim high profile “wins,” and they know that the average voter is not doing an economic analysis of whether or not those “wins” were smart or stupid.
White House Chief of Staff Reince Priebus, who is from [Paul] Ryan’s congressional district in southeast Wisconsin, told WTMJ-TV on Tuesday that Trump, when flying over the area in Kenosha County during a visit to Wisconsin in April, noticed vacant land where a former Chrysler Motors plant used to be.
“He said, ‘That land should be used,’” Priebus said. “So when Foxconn came into the White House, into the Oval Office, the president said, ‘I know a good spot that you should go to, that place in Kenosha.’”
There is the possibility that billions of taxpayer dollars are being wasted in order to stroke the ego of a United States president who displays the mental capacity of a child. But there’s some gangster capitalist shit happening, too.
Unnecessary corporate welfare is not something you celebrate unless you identify more closely with the people extorting the money than the people being extorted.