The Glitter


Article from Issue 241/2020

This month, the Wisconsin state government declined to pay the refundable tax subsidies to Foxconn, the Taiwanese conglomerate that arrived in Wisconsin in 2017 with the promise of a plant that would make LCD TVs and monitors and employ 13,000 people.

Dear Reader,

This month, the Wisconsin state government declined to pay the refundable tax subsidies to Foxconn, the Taiwanese conglomerate that arrived in Wisconsin in 2017 with the promise of a plant that would make LCD TVs and monitors and employ 13,000 people. It seems this "project" never did really get off the ground. The original vision of 13,000 workers soon scaled down to 5,200; then it plummeted still further as no one seemed to have a vision for what these people were going to do. After it became clear that it wouldn't be profitable to make LCD screens (something neither the company nor the state seriously investigated before announcing the deal), Foxconn searched for other uses of the gigantic space they had already built. Casting about for an endeavor that would allow them to hang onto the subsidies, they explored alternatives such as innovation services, fish farming, and storage. Eventually, they just started adding workers to hit the minimum target of 520 employees by the end of 2019, but the government concluded these last-minute employees, many of whom didn't have a clear job assignment, were not eligible to be counted under the terms of the contract. As of now, there is still no plan for what to do with the space, but it seems very unlikely that anyone will ever use it for LCD fabrication or any other high-tech manufacturing.

It is always easy to point fingers after this kind of train wreck. The administration of former Wisconsin governor Scott Walker certainly deserves some heat for their naivetÈ. The national administration didn't help, declaring at the ground breaking that the Foxconn plant would be the "eighth wonder of the world." And, if you're one who believes that all Asian companies are scarily efficient and well run, the recent story of the Wisconsin project at The Verge [1] will surely disabuse you of this preconception with regard to Foxconn.

The real problem is the US has a practice of different states competing against each other and giving away incentives to "win" these contracts with companies from other places. Wisconsin probably wouldn't have given up so much – and would have been more skeptical about this grandiose scheme – if they didn't have to compete with other states for Foxconn's attention.

The ending could have been a lot worse. State and local governments spent an estimated $400 million on infrastructure improvements, but they did manage to stop the tax breaks – at least for now. The one thing they really lost was their time and attention – time to work on a better and more realistic solution and attention to spend dealing with all the details you need to address when you are actually building something real.

Of course, they could have spent their precious time on trying to bring in a different kind of a factory, like a tractor factory or a widget factory, instead of a factory that makes computer monitors. Or they could have spent an equivalent amount of money on nurturing indigenous businesses within their own state. I know it is easy to second guess now, but I can't help thinking the reason things like this become so stratospheric in their ill-conception is that everyone kind of gets stoned on the glitter of high tech. A gentle whisper begins and then crescendos with all the room chanting "Wow, we could be the Silicon Valley of the Great Lakes!"

But it is never so easy. State governments, tape this to your wall and remember it for next time: If it is floating in front of your eyes and it is glowing, it is probably either radioactive or imaginary.

Joe Casad Editor in Chief

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