When President Trump announced that he’d brokered a deal with Taiwanese high-tech manufacturer Foxconn to build a new factory in Wisconsin, it sounded too good to be true.
On the surface, the deal looked straight forward and potentially lucrative. Foxconn agreed to invest up to $10 billion and create upwards of 13,000 much-needed jobs in the midwestern state, with promises of more to follow. The price? A mere $3 billion in tax relief and other subsidies.
Once the confetti from the announcement party settled, however, observers began examining the agreement more closely and doing the math. Bottom line: the deal just doesn’t add up.
The first red flag is the subsidies. They will be paid for by Wisconsin’s tax payers, who are literally getting stiffed. If we assume Foxconn will create the full 13,000 jobs they promised – a big if – the Wisconsin tax payers are on the hook for roughly $15,000 per job per year. That figure only rises if Foxconn fails to employ that many people, which their history of backing out of pledges to create jobs should alarm everyone as a real probability.
Bloomberg News analyzed the economic impact of the deal further, and issued a damning conclusion yesterday:
“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.”
Environmentalists are up in arms as well. The deal, which Wisconsin Governor gleefully agreed to, allows Foxconn to bypass environmental regulations during the construction of their manufacturing facility. “The measures proposed by the Walker administration exempt the company from state wetlands regulations and an extensive environmental analysis that some other large projects are subject to,” write Lee Bergquist and Rick Romell in the Milwaukee Journal Sentinel.
Even the conservative Koch Brothers have slammed the President for this bad deal. Their flagship group, Americans for Prosperity, issued a scathing statement yesterday, saying in part, “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.”
And if the mechanics of the deal weren’t bad enough, reporters have been looking into Foxconn’s past, and what they’ve found is a troubling history of worker abuses and shady management practices.
Apple faced an embarrassing PR disaster in 2012 when news reports emerged about the alarming number of worker suicides and employee riots at a Foxconn operated iPhone factory in mainland China. Similar tragedies reemerged in 2016, which forced Apple to conduct a serious review of its relationship with Foxconn.
Also in 2012, CEO Terry Gou said in an interview that Foxconn “has a workforce of over one million worldwide, and as human beings are also animals, to manage one million animals gives me a headache.” Gou even invited the director of the zoo in Taiwan’s largest city to speak to his top managers and advise them on how to “manage different animals according to their individual temperaments”
Trump sure knows how to pick’em.
Colin Taylor is the editor-in-chief of Occupy Democrats. He graduated from Bennington College with a Bachelor's degree in history and political science. He now focuses on advancing the cause of social justice and equality in America.