“political news centered on Georgia, where the GOP governor signed a package of election “reforms” that some mainstream media outlets depict as “Jim Crow 2.0”. Those narratives do a disservice to the African Americans that Jim Crow laws actually victimized, but the legislation—a mix of good, bad, and awful—emanates from Donald Trump’s baseless allegations that election fraud robbed him of a second term.
A number of private executives, in the tech sector and old-line industries, criticized the new law. For instance, Major League Baseball responded by moving the All-Star Game out of Atlanta. Atlanta-based Delta Airlines and Coca-Cola criticized the legislation. Coke’s CEO, for instance, told CNBC that the law “does not promote principles we have stood for in Georgia around broad access to voting, around voter convenience, about ensuring election integrity.”
Republican officials, who have created a cottage industry out of blasting progressives for their cancel-culture habit of boycotting and shaming people who say and do things they don’t like, went into full cancel-culture mode and railed against corporations. The former president championed a boycott of Coca-Cola in zany press releases. One GOP lawmaker introduced a bill to strip Major League Baseball of its antitrust exemption, which is the type of thing one would expect from Warren.
Senate GOP Leader Mitch McConnell (R–Ky.), who has never shied away from accepting corporate donations that advance his agenda, used the Georgia fracas to issue his own warnings to corporate America. “Our private sector must stop taking cues from the Outrage-Industrial Complex,” he said, noting that, “corporations will invite serious consequences if they become a vehicle for far-left mobs to hijack our country from outside the constitutional order.”
As I understand it, our constitutional order is based on the idea that American citizens—including corporate executives—have every right to express their opinions on political issues even if leading senators don’t like the positions they take. That Constitution allows businesses to operate wherever they choose—and do so without threats from federal officials more interested in fighting culture wars than protecting our freedoms.”
“When you subsidize something, the old adage goes, you’ll get more of it.
But some ideas make so little economic sense that even the largest corporate subsidy ever awarded by a state government isn’t enough.
It’s been obvious for quite some time that Wisconsin’s highly touted deal with Taiwanese tech giant Foxconn was going to fall well short of the lofty promises made by the project’s supporters. Then-President Donald Trump, for example, predicted in 2018 that the planned factory on the outskirts of Milwaukee would be nothing less than “the eighth wonder of the world.”
Exactly how short it will fall is now official. In filings with the state, Foxconn says it now plans to employ 1,454 people and invest about $672 million into its still-under-construction factory in Mount Pleasent, Wisconsin. That’s a long way from the $10 billion that the company initially promised to spend building a plant that would have employed 13,000 workers. In response to the amended contract, the state will recover $2.77 billion of the subsidies originally promised to Foxconn—though the company will still receive $80 million from Wisconsin taxpayers, according to a statement from Gov. Tony Evers.
But recovering those subsidies won’t bring back the residential neighborhood that was flattened to make space for the factory. Developers bulldozed 75 homes, some of which were seized through eminent domain, because why should mere houses full of people stand in the way of the eighth wonder of the world?
The town of Mount Pleasent invested more than $1 billion in the project—effectively mortgaging its entire future on the promise of thousands of new jobs and the tax-paying residents who would come to fill them. Those jobs won’t be coming, but the town did have its credit rating downgraded.”
“From the outset, the deal didn’t make sense. Foxconn promised to make Wisconsin a hub for the manufacturing of HD television screens and other high-tech products, but the company never explained how it planned to make the math work. Besides the relatively higher cost of American labor, there were serious supply chain and logistical issues to be overcome for a factory that was, as TechCrunch put it in 2019, “essentially [in] the middle of nowhere, without the sort of dense ecosystem of suppliers and sub-suppliers required for making a major factory hum.””
“The state’s Legislative Fiscal Bureau, a number-crunching agency similar to the federal Congressional Budget Office, calculated that it would take the state until 2043 to recoup the $3 billion handout, which was the largest such subsidy in Wisconsin history. Even if all 13,000 promised jobs went to Wisconsinites, the tab would be more than $230,000 per job created, the bureau found.”
“The entire saga provides an obvious lesson about the wasteful mistakes that state governments make when they throw tax dollars at businesses that promise to create jobs. The best way to create jobs in any state, of course, is to provide a stable economy with comparatively low taxes and a light regulatory touch for all—not to provide special treatment for some and stick others with the bill.
But there’s also a lesson here for politicians who would pursue economic nationalism through greater industrial policy at the federal level. Trump saw the Foxconn deal not only as a way to create jobs, but as proof that reorienting supply chains was a matter of political will rather than economics. The factory, he said in 2018, was evidence that his policies were “reclaiming our country’s proud manufacturing legacy.”
If the largest subsidies ever offered to a foreign company were insufficient to make the Foxconn deal work, maybe that says something about the ability of our political leaders to steer the economy.”
“The 400-plus page report, written by the majority staff of the Democratic members of the House Judiciary Subcommittee on Antitrust, is the result of a 16-month investigation into whether these corporate giants abuse their power, and whether the country’s antitrust laws need to be reworked to rein them in. The report released Tuesday cites numerous examples of each tech titan engaging in acts that the lawmakers believe have hurt innovation and impede competition. While the anti-competitive behaviors cited vary from company to company, they are all linked by the allegation that the four giants abuse their gatekeeper status in various internet industries to secure and grow their market power in those sectors and others.”
“the states that have reopened have seen anemic economic recoveries at best.
Slate’s Jordan Weissman, using data from the app Open Table, notes that restaurant reservations are down as much as 92 percent from last year in those states that have allowed dining rooms to reopen.
A ranking of state jobless claims released yesterday by the personal finance website Wallethub finds that the number of people applying for unemployment is especially high in Connecticut, which had a bad COVID-19 outbreaks and a strict shutdown order, but also in Georgia and South Dakota. The former is lifting its shutdown order, and the latter never imposed one.
This matches with new research showing that economic activity declined at similar rates regardless of when states issued formal lockdown orders. Individuals, not the government, shut the economy down. They’ll also decide when, or if, it reopens.”
“if we can’t expect much of the pre-pandemic economic activity to return, that dramatically weakens the case for propping up businesses as Jayapal and Hawley want to do, or paying workers to stay jobless like the HEROES Act does. Both policies stymie markets’ ability to adjust to COVID-19 while shifting resources from those parts of the economy that can be productive during a pandemic to those that can’t. If there’s no demand for air travel, we’d be better off seeing baggage handlers shift to being warehouse workers or grocery delivery drivers. We want cooks and cashiers to move to restaurants that can figure out a way to stay profitable without dining service.
That doesn’t mean the government can’t provide relief. Even if we allow those readjustments to happen, we’ll still probably have a less productive economy for a while, and the negative effects of that will be concentrated on people who aren’t in a position to adapt. So there’s a reasonable case for cash transfers targeting the poorest Americans. But they shouldn’t be conditioned on staying at their current jobs, and—unlike unemployment benefits—they shouldn’t be conditioned on staying out of the labor force altogether.”
“When you think of the U.S. manufacturing sector, you likely think of General Motors and U.S. Steel, faceless megaliths with armies of disciplined workers. But it’s more like Yellowstone National Park, an intricate ecosystem of small and specialized players, their fates closely intertwined. “If you look at anyone who is a node in a supply chain—a manufacturer, or sub-manufacturer, or raw materials extractor—each of those entities may be partnering with many different customers, as well as many different sub-suppliers beneath them,” says Karen Donohue, an expert on supply chains at the University of Minnesota’s Carlson School of Management. “Their solvency is potentially dependent on the weakest link in both of those networks. And that’s what makes prediction difficult.” A 2018 survey by the consultancy Deloitte found that 65 percent of more than 500 procurement leaders from 39 countries had a hazy view, at best, of their supply chains beyond their most important suppliers.”
“Professional Instruments’ primary customer is a small company in New Hampshire whose ultraprecision machine tools are crucial for manufacturing in the medical device, defense, consumer electronics, and automotive fields. “It’s almost impossible for someone to anticipate the knock-on effects of some businesses being closed down because they’re deemed nonessential, because they’re suppliers for companies that are deemed essential,” says the company’s recently retired former CEO, who requested anonymity to discuss sensitive business matters. “You build a quarter-million-dollar machine, but if you can’t get one $150 component off the shelf, you can’t put it into production.””
“Zoom out further, and the pandemic’s global nature becomes palpable. The future of the New Hampshire company is also uncertain, thanks in part to closures abroad. It has representatives in several countries (including South Korea, Japan, and Taiwan, all of which have implemented lockdown measures) and customers in many more. “Representatives might need to come from the U.S. to help install the machines,” says the former CEO. “But with global travel being affected, how are you going to get that equipment installed? You still need those people to travel. These machines don’t install themselves.” In March the company opened a training center in China, but “whether that center will be utilized for some time remains to be seen.””