Difference of Opinion

I regret the amount of political commentary that keeps landing on this page in recent weeks. I try to stay out of those issues because, as previously noted, I don’t usually feel I have anything to add to most political discourse. I’ve been jumping in lately in places where I feel that politics is intruding into management and/or strategy, which do lie within my area of expertise. In too many cases lately, the problems we have been seeing are coming from politicians who like to pretend that they know more about business than I do about politics – and one in particular who likes to claim that he knows more about business than anybody despite having had to declare bankruptcy on at least five different occasions. This sort of thing becomes particularly dangerous when the political leaders involved turn out to be bad at math…

Consider, if you will, the situation with Foxconn in Wisconsin. The company has promised to build a factory in Racine County, if they were given about $3 billion US in various subsidies. Foxconn initially claimed that the factory would bring 13,000 jobs to Wisconsin, although they have been scaling back that claim while raising the amount of money they want from the state and Federal governments even before the deal was signed. The most recent estimates on the project go as high as $4 billion in subsidies and as low as 3,000 jobs, depending on whom you ask. Even worse, though, is the fact that relatively low unemployment in Wisconsin means that the company will almost certainly need to relocate workers from other parts of the country or the world – and there’s no word on how much money they’re going to demand for that purpose…

Now, one could reasonably argue that increasing the population of Wisconsin by the number of employees Foxconn is going to need will increase the tax base and generally improve the economy of the state, since all of those people will need house to live in, groceries to eat, and so on. The problem is that with over $4 billion in subsidies and under 3,000 workers it would take decades for the project to break even. Independent studies cited by CNN and other sources are projecting that no one other than Foxconn itself is going to see any net benefit from this project until around 2043. All of which assumes that the factory is still in operation in twenty-five years and that the company hasn’t shifted production somewhere else…

Opponents of the deal like to point out that for the kind of money under discussion we could just pay the 3,000 people the salaries they are supposed to be getting every year for the next twenty-five years and not bother building the factory at all. Think about how much infrastructure we could rebuild with 75,000 person-years of work (that’s 156,000,000 person-hours, if you’re keeping track at home). Or, if fixing crumbling roads and bridges isn’t you issue, think about how many teachers, nurses, daycare workers, police officers, firefighters, paramedics, social workers, park rangers, and lifeguards we could employ for that kind of money…

The people who are currently running this country, and in particular the state of Wisconsin, are effectively saying that rather than spend $4 billion of public funds employing people to do things we need done, build things we need built, and take care of our own citizens, that it makes more sense to spend that money in order to enable a Chinese company to send even more money home to their own oligarchs. As reluctant as I am to comment on public-sector projects, this really is a matter of business strategy - and I have a difference of opinion about whether this is really a good idea...