Aug 21, 2017

Scott Walker's Sickening Foxconn Boondoggle

Net benefits calculated as increased tax revenue minus state
payments under August 2017 Special Session Assembly Bill 1,
(dark blue), and cumulative (purple), in millions of dollars,
by fiscal year (2018 indicates FY 2018-19).
Source: Legislative Audit Bureau,, via EconBrowser.
Update: Walker adminstration caught suppressing data on the Fox Con; story ignored but in a rational political culture would dominate journalistic coverage:
Madison, Wisconsin — Macro-economics and state policy guru, Jake's Econ, demonstrates the folly of the Fox Con in his latest analysis.

Long after Gov. Scott Walker has moved from his long slurping off the public spigot, long after Walker has cashed in on anti-public corporate money, Wisconsin will be facing a dangerous deficit from the proposed $3 billion Foxconnn give-away, if Walker gets his way and signs the Fox Con bill.

Jake cites Menzie Chinn, Professor of Public Affairs and Economics at the Robert M. La Follette School of Public Affairs, (University of Wisconsin-Madison), at Econbrowser.

Chinn notes the "uncertainty" that exists around Foxconn corporate conduct and the volatility of the market of Foxconn LCD tv screens, for example.

Wisconsin breaking even over decades is unlikely, so Chinn posits the necessity of intellectual honesty in accessing the Foxconn-Trump-Walker initiative.

Writes Chinn:

The fact that this venture does not seem to be a big positive for Wisconsin seems to match the literature that indicates state tax incentives to relocate businesses do not typically have big payoffs. From a survey by Buss (2001):
Tax literature, nowin hundreds of publications, provides little guidance to policy makers trying to fine-tune economic development. Taxes should matter to states, but researchers cannot say how, when, and where with much certainty. Firms may need tax incentives to increase their viability in some locations, but researchers cannot definitively say which businesses or which locations.
Perhaps more relevant to this specific case:
… declining companies tended to take advantage of programs targeted toward distressed areas, whereas growth companies tended to locate in non-distressed counties. Tax incentives made distressed areas worse or no better off, whereas non-distressed areas always improved ... .
Question: Will we be watching LCD tv screens in 27 years?
In 27 years, it won't matter. Walker and Republicans will be gone from public office, living off a public pension and the people still around Wisconsin then can clean up the fiscal, environmental and economic catastrophe

Scott Walker and his gang will be doing just fine, and that's what really matters.

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