Saturday, December 22, 2012

When Corporations Win, Why Do We Have To Lose?

The incredible incompetence of Scott Walker has been well documented, he and his administration have proven they can not even give our tax dollars away without there being problems!  This incompetence has led to turning WI into a mess of state that is lagging behind all of our neighbors in every category we used to lead

However I want to be fair here, so as not to be accused of only bringing in one side of the story.  Which leads us to ask, would we be doing better economically if the WEDC that Scott Walker created was actually competent and not just a way to reward donors with our tax dollars?  

Studies say, no we wouldnt!   That however you slice it the taxpayer gets screwed

In the end, the money that towns across America gave General Motors did not matter.

When the automaker released a list of factories it was closing during bankruptcy three years ago, communities that had considered themselves G.M.’s business partners were among the targets. 

For years, mayors and governors anxious about local jobs had agreed to G.M.’s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would “further G.M.’s strong relationship” with them and be a “win/win situation,” according to town council notes from one Michigan community. 

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times. 

Some officials, desperate to keep G.M., offered more. Ohio was proposing a $56 million deal to save its Moraine plant, and Wisconsin, fighting for its Janesville factory, offered $153 million. 

But their overtures were to no avail. G.M. walked away and, thanks to a federal bailout, is once again profitable. The towns have not been so fortunate, having spent scarce funds in exchange for thousands of jobs that no longer exist.
 It's not just the auto plants its every company that can get their hands on our money and its any town/city/state/village in the country willing to hand them our money:

 In 2010, Rhode Island, which has the nation’s second-highest unemployment rate, recruited Curt Schilling, a former Red Sox pitcher, to move his video game company from Massachusetts. The company, 38 Studios, had never released a game and was not making money, but the governor at the time had the state guarantee $75 million in loans.

The company failed and dismissed all of its roughly 400 workers this May. Rhode Island taxpayers are now on the hook for the loans. 

Officials said part of the difficulty was that communities do not get much say in a company’s business strategy. 

“We, as communities, stake our futures with these people who are supposed to know what they’re doing, and sometimes they don’t,” said Arthur Walker, a businessman in Shreveport and former chairman of the city’s chamber of commerce. 

Mr. Walker and other officials in Shreveport know firsthand. In 2000, they were worried that G.M. would close a plant in their area and responded with a generous proposal: the city would cut the company’s gas bill and provide work force training grants. In addition, G.M. would benefit by a recent increase in one of the state’s income tax credits. 

Eager to encourage innovation, Shreveport officials suggested ways the city could assist G.M. in building electric cars. “We wanted to be part of the future,” said Mr. Walker, whose brother worked at the plant.
G.M. took the city’s incentives but not its business advice and began building the giant Hummer there. 

“We knew they needed to build green cars — I mean, who builds a Hummer for the 21st century?” Mr. Walker said. “It was a losing proposition that we found ourselves in. We couldn’t win because those people weren’t making the correct business decisions, in my view. When it didn’t work, we’re the ones left holding the bag.” 

The Hummer was discontinued in 2010, and the Shreveport factory closed this August, the final victim of G.M.’s bankruptcy.

I recommend reading the whole article here and  digging into their data here!

Finally if you just want to look at the data from Wisconsin, here it is!

Wisconsin spends at least $1.53 billion per year on incentive programs, according to the most recent data available. That is roughly:
  • $268 per capita
  • 10¢ per dollar of state budget

1 comment:

  1. Bullseye...corporate welfare and a form of taxpayer extortion...because we're desperate for jobs and corps know that and milk it.