America worships at the altar of free markets. Except we don’t actually have free markets. We have politically manipulated markets. We have crony capitalism.
Corporate titans schmooze politicians and play the elected representatives of the American people for chumps. They play states off against others, they pit communities against each other, promising investments and jobs in exchange for tax breaks, outright subsidy payments and exemptions from environmental regulations. Whoever is the highest bidder, whoever serves up the juiciest cuts of corporate welfare, is declared the winner.
The real winners are the big corporations who game the political system to pad their own bottom lines. Small businesses can’t compete with the subsidized giants, and end up closing their doors. Main Streets wither and die. Downtowns become ghost towns.
In place after place after place, big promises are made. Promises are bent if not broken. Communities pay a hefty price and have little or nothing to show for it when all is said and done.
Still, remarkably, there is no shortage of willing chumps. Wisconsin is one of the latest to fall under the spell. The state’s former governor, with the current president of the United States cheering him on, handed over one of the largest corporate welfare packages in U.S. history to Foxconn, the Taiwanese multinational electronics manufacturer with a lengthy track record of broken promises.
A technology columnist for Bloomberg News saw all the markings of a sham in Foxconn’s expressed desire to invest $10 billion in Wisconsin to manufacture large LCD panels mostly for televisions. For starters, he said, making these screens in Wisconsin or anywhere in the U.S. for that matter is too expensive to make business sense to Foxconn. Besides, he’d seen this movie before and suggested that “$10 billion figure should have been the first warning sign for the people of Wisconsin — including those responsible for looking after the interests of its citizens — because it’s more than Foxconn spends in five years worldwide.”
Sure enough, Foxconn’s plans for Wisconsin keep changing. The company backed away from its original intentions and now is sending terribly mixed signals about what it will do in Wisconsin. First came news that Foxconn was rethinking its commitment to make large LCD screens for TVs and was considering making smaller displays for cars, personal computers, tablets, mobile devices and niche products instead. Then came word that plans were being scaled back and the Wisconsin factory would be smaller than originally planned. Next there were rumblings Foxconn would import workers from China rather than rely on Wisconsin labor.
More recently the company hinted it might not build an assembly plant at all and would have no need for many blue-collar assembly line workers, but rather was looking to develop a research and development facility employing mostly white-collar engineers and researchers. The next day, Foxconn reversed course again in response to negative news coverage and political blowback, claiming it still had every intention to build a factory in Wisconsin, but it would be what’s known as a Generation 6 facility, a downgrade from the Generation 10.5 plant the company originally set out to build.
Despite Foxconn’s dubious track record, despite the bleak history of these kinds of corporate welfare deals proving beyond a shadow of a doubt that government and business do not make good bedfellows, the state’s new administration is keeping its hopes up and says Foxconn is “at the front of the governor’s agenda and it’s part of Wisconsin’s agenda moving forward.”
Yikes. Will the spell of crony capitalism ever be broken?
In true capitalism where there are real free markets, there are no guaranteed profits. Corporate welfare makes this uncomfortable reality disappear for those receiving it. It allows corporations to hedge their bets in the marketplace. It lets them shift their risk to the public while keeping the rewards to themselves. They win even when they make bad business moves. They win because they have us to cover any losses. They count on us being chumps.