It probably didn’t seem that way at the time, but Wisconsin Gov. Scott Walker may have been fortunate the election ending his political career took place when it did. Just a week later, a major national announcement revealed the horrendous $4 billion deal Walker negotiated with the Taiwanese electronics company Foxconn was by far the most astronomical taxpayer giveaway in U.S. history producing the fewest jobs.
If voters had received such glaring proof of political incompetence before the election, Walker’s narrow defeat could have been a massive landslide even if he escaped getting tarred, feathered and chased out of the state with pitchforks.
The Tuesday after Election Day was when Amazon announced the grand-prize winners of the largest economic development jackpot in American history: New York, Virginia and Tennessee would gain 55,000 high-paying Amazon jobs in exchange for more than $2.4 billion in state subsidies.
It didn’t take long for Wisconsin taxpayers to realize exactly what Amazon’s announcement meant for them. They’d been taken to the cleaners by Walker, President Donald Trump and Terry Gou, Foxconn’s billionaire chairman. Walker’s deal with Foxconn provided $4 billion in state and local taxpayer subsidies in exchange for an actual guarantee of only 3,000 jobs paying an average of $53,000 a year in a Mount Pleasant electronics plant.
Compare that to the enormous number of higher-paying jobs costing far less for the winners of the great Amazon lottery. Amazon split 50,000 headquarters jobs averaging $150,000 a year with 25,000 going to New York, which bid $1.5 billion in direct state subsidies, and 25,000 to Virginia bidding only $573 million in direct subsidies plus infrastructure, transportation and educational improvements. Nashville, Tenn., was a surprise last-minute addition, winning an Amazon operations center providing 5,000 new jobs in exchange for $102 million in state subsidies.
Economic experts who track politicians frantically throwing enormous bundles of cash at multibillion-dollar corporations in exchange for jobs question whether such one-sided deals ever pay off for taxpayers. Wisconsin’s nonpartisan Legislative Fiscal Bureau estimated state taxpayers wouldn’t recoup their obscenely high cash payments to Foxconn for a quarter-century. Economists thought New York’s $1.5 billion for 25,000 Amazon jobs already was a gross overpayment. That puts Wisconsin’s $4 billion to Foxconn for fewer jobs than Nashville got for $102 million on another planet somewhere.
“The Foxconn deal is one of the all-time historically bad tax giveaways by any state,” said Jeffrey Dorfman, an economics professor at the University of Georgia, “whereas the Amazon deals look more like an average bad tax giveaway to a big business.”
Walker outrageously exaggerated the jobs from Foxconn from the day in July 2017 he joined Trump in the White House for the honor of being selected to pay Chairman Gou billions of dollars to manufacture electronic LCD screens in Wisconsin. The three celebrants — Walker, Trump and Gou — all had a history of promising unbelievable jobs numbers that failed to materialize.
Walker rhetorically added 10,000 to the 3,000 jobs Foxconn actually was required to provide contractually. Trump and Gou backed up that dubious claim with vague references to one day possibly providing “up to 13,000 jobs.” Or possibly not.
Many state taxpayers immediately were concerned they might actually be subsidizing jobs for residents of Illinois with the border only 20 miles away. Despite the billions in state tax dollars going to Foxconn, Walker’s agreement didn’t require preferential hiring for Wisconsin residents.
Then on Election Day, The Wall Street Journal broke the story Foxconn would import engineers from China for many of the most highly paid jobs because it couldn’t find enough qualified engineers in Wisconsin. It had been an open secret in the tech industry for some time that Chinese engineers would be required to run the first plant to mass produce LCD panels in the U.S.
The far more serious concern after Foxconn milks Wisconsin taxpayers for as many billions as it can under Walker’s contract is how many actual living and breathing human beings from any state or nation will ever be needed in the plant. Gou has told his investors he plans to replace 80 percent of his company’s global workforce with “Foxbots” within 10 years. That’s Foxconn’s term for the advanced robotics technology it has been developing to replace human workers.
In early 2017, Foxconn began laying off employees at its iPhone factories in China, replacing 60,000 workers, more than half the work force in one plant, with robotic technology. That might even be considered an act of human kindness. Chinese workers complain of harsh working conditions, standing for long hours on swelling legs seven days a week. Protests have included mass suicides.
Foxconn obviously was attracted to Wisconsin’s anti-worker political environment under Walker, but clearly the deciding factor was the terrible contract Wisconsin negotiated. Walker’s going at last, but recovering from his $4 billion taxpayer giveaway could take decades.
Joel McNally writes a regular column for The Capital Times.
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