Wisconsin has thrown hundreds of millions of dollars worth of favors at FoxConn and gotten mostly bupkis. Wisconsin should not be surprised:
…States and cities spend an estimated $100 billion every year on an arms race that research shows does little to improve their economic outlook. In fact, corporate handouts actually slow down national economic growth.
This conclusion isn’t controversial; few challenge the idea that bribing companies to choose one jurisdiction over another is a bad use of limited taxpayer dollars. Academic research shows that while subsidies can swing site-specific decisions within a metropolitan area, the handouts don’t sway most corporate location decisions between regions. In other words, in the few situations where subsidies may have a substantial influence on a company’s location decision, they don’t actually increase regional economic growth compared to what would have otherwise occurred without the subsidy — as the Kansas City region has infamously shown [Michael D. Farren, “A Chance for Disarmament in the Economic Development Subsidy Wars,” Governing, 2022.03.21].
Farren’s Mercatus Center at George Mason University is advocating an interstate compact under which states would agree to stop trying to outbid each other in the fruitless and fiscally corrosive Toyota lottery. No South Dakota legislators appear to be participating in this effort. Representative Scott Odenbach (R-31/Spearfish) did push House Concurrent Resolution 6002 this Session to “support[] and encourage[] the free market system,” but HCR 6002, which passed both House and Senate, calls for more tax breaks for housing developers, so I’m not convinced Odenbach and his colleagues get that communities can economically develop and still expect developers to pay their fair share of taxes to support their communities.
Interesting that a conservative institution might actually have something worthwhile to contribute for a change.
The Foxconn con, as negotiated by Walker, was a terrible deal. Not only did it involve massive state subsidies for work that was never performed, but it required the state to build out infrastructure, which required eminent domain to destroy housing developments in Mount Pleasant. Truly fascist in its scope, the Foxconn was supposed to be Walker’s ticket to re-election as Governor, but it turned out to be an anchor around his neck. Once Evers became governor he made sure Foxconn never got a penny, and that drove a re-negotiation. The deal was restructured to be in-line with other job development projects in this state. They all seem to qualify for state tax breaks and subsidies. There is no such thing as “free enterprise.” It’s all some mix of public funding. Business the the US depends on such handouts.
George Mason likely has a definite koch bro bent to whatever hash they sling.
Don and Mike are correct: George Mason’s Mercatus Center is definitely a libertarian/Koch-leaning outfit. Charles Koch is a board member emeritus. But sometimes even libertarians and the Koch mob are right. Corporate welfare is a bad intrusion on the free market.