In what President Donald Trump crowed would be a deal worth $30 billion, Foxconn — the Chinese plant best known for making iPhones — announced this week that they would invest $10 billion in a manufacturing plant in Wisconsin, which will employ 13,000 people. While Trump gleefully told New Yorkers they should abandon their houses and move for manufacturing jobs, more analysis has shown that the deal may not be what it seems.
Trump had been trying to get Foxconn to come to American shores as early as January, and it was clear even then that Americans would pay a hefty price to bring those jobs here. But now that a deal seems to be in place, it's worth asking whether the plant would be worth its cost.
Even Americans for Prosperity — the Koch brothers-supported free market economics group — is having second thoughts about the deal. Here's what their Wisconsin chapter had to say about it:
As free market activists who staunchly oppose government tax incentives, we cannot support the expensive refundable tax credits in this package, which are not available to every other business in our state.
Wisconsin is ponying up $3 billion in taxpayer-funded credits. That comes out to $15,000 in subsidies per worker per year. Bloomberg noted Thursday that such a deal likely won't turn out well for the state:
Such incentives are generally an awful way to lure jobs -- expensive, inefficient and fraught with unintended consequences. They can prompt costly bidding wars between states and impede other budget priorities. They have little effect on employment, growth or wages. They may induce unwise borrowing. Companies often come back again and again, as blackmailers tend to, seeking yet more blandishments. And nothing stops them from walking away when times get tough. . .
In short, Wisconsin’s plan is likely to help a few people in an unpromising industry find temporary work before they’re displaced by technology -- and to do so at the expense of everyone else in the state.