Is Foxconn a three billion dollar con?
By
Phil Mattera for the Dirt
Diggers Digest
 |
| For more cartoons by Ted Rall, CLICK HERE. |
It’s
common for governors to stage publicity events to announce major job-creating
investments in their state.
This allows them to take implicit credit for a
project that was probably helped along with tax breaks and other financial
giveaways.
When
it came to the Taiwanese company Foxconn’s plan to build a $10 billion
flat-screen plant in Wisconsin, the hype was taken to a new level.
Gov. Scott
Walker and Foxconn’s Chairman Terry Gou made the announcement not at the state
capitol but at the White House, where they were joined by President Trump, Vice
President Pence, Speaker Paul Ryan and a host of other high-level officials of
the federal government.
That
apparently was not enough for Trump, who found it necessary to celebrate
himself even more. Referring to Gou, the President declared: “If I didn’t get
elected, he definitely would not be spending $10 billion” in the United States.
The
creation of numerous new manufacturing jobs is something that will be welcomed
by the working people of Wisconsin, but there are reasons, beyond Trump’s
political exploitation of the deal, to remain suspicious.
The
first matter of concern is the company itself. Foxconn has a long history of
abusive labor practices in its overseas plants, including those used to supply
Apple. Conditions in the company’s Chinese plants were so bad that in 2010
there was a rash of suicides among overworked employees.
The company installed
nets on its plants to discourage workers from jumping to their deaths.
Foxconn
later claimed to improve its labor conditions but the company is far from a
high-road employer.
Then
there are the claims about the terms of the Wisconsin deal. Gov. Walker claimed
that the plant would directly create 13,000 jobs. That was good for generating
excitement, but it is a dubious figure. Manufacturing establishments no longer
employ anything close to that number of workers.
Out
of curiosity, I checked with the Bureau of Labor Statistics to see how many
plants currently exist with 10,000 or more workers.
It turns out the BLS does
not have that information because, as an analyst told me, there are so few
facilities of that size. The trend, of course, is toward higher levels of
automation and much smaller workforces.
Then
there’s the issue of who is paying for the plant. While Trump and the others
praised the deal as an example of private sector vitality, Foxconn’s plant will
be underwritten in large part by the taxpayers of Wisconsin.
Walker said that
the state would “invest” $3 billion in the project. That would be the fourth
largest economic development subsidy package ever offered by a state.
Despite
the promises of public officials, extravagant subsidies rarely provide economic
benefits equal to the loss of tax revenue. Wisconsin has a particularly bad
record in this regard. The Walker Administration and its privatized economic
development agency have been at the center of a long string of controversies
about cronyism and poor job-creation outcomes.
The
Foxconn deal will provide political benefits for Walker, Ryan and Trump, but it
is unclear how much good it will actually do for the people of Wisconsin.
