- Wisconsin tried privatizing economic development years ago, and this experiment was not successful. Walker's WEDC is not "new" nor "bold" -- it takes us back to failed policies.
- Quasi-public agencies remove accountability and transparency from public policies and investments -- misuse of taxpayer funds in common, perhaps inherent, in these deals.
- Creation of economic development agencies composed of governors and the powerful business interests behind them does not make economic development policies more effective. It does the opposite, PPP economic development agencies represent a huge power grabs that create partisan agencies hidden from public scrutiny that rewards politically-connected corporate interests
Good Jobs First (www.goodjobsfirst.org) understands that when taxpayers' money is used to subsidize private interests, they must be held accountable for creating family-wage jobs that benefit for the community. Their website is full of good information, including sections on:
- An Overview of Accountable Development. When taxpayers' money is used to subsidize private business, companies must be held accountable for creating family-wage jobs and other benefits for the community. We research and promote best practices.
- Corporate Subsidy Watch. The worst subsidies are often special deals offered to single companies. Good Jobs First keeps an eye on corporations that frequently go to the public trough, and we critique the most egregious giveaways.
- Green Jobs. Economic development needs to be sustainable as well as accountable. We monitor government efforts to promote the creation of green jobs to make sure that these are also good jobs.
- Smart Growth for Working Families. Suburban sprawl – and the harm it causes cities and workers – is often brought about by subsidies. Learn how smart-growth alternatives can create better jobs, expand commuter options and make communities more liveable.
And despite Walker's misleading statements (more HERE) and reports in the media, WEDC is solely responsible for this fiasco as Rep. Peter Barca correctly explained one-hour BEFORE the results of the first independent audit of WEDC was released.
Wisconsin Has Tried Public Private Partnerships (PPP) For Economic Development. There is nothing new about Walker's WEDC. This quasi-public scheme was tried in 1984, as "Forward Wisconsin" which was officially dissolved until 2009. This quasi-public failure essentially ceased operating in 2007 when the state Department of Commerce took over management seeking to "dramatically improve" efforts to attract business in the Badger State.
Wisconsin's media echo-chamber repeat the disinformation that Walker took a "bold" "prosperity strategy" when Walker actually just re-instituted a wasteful and failed approach that was handed to him by highly partisan proponent of privatization Deloitte and Newmark Knight Frank Consulting (page 2, .pdf):
The August study [Be Bold Wisconsin: The Wisconsin Competitiveness Study] described itself as “independent” and “non-partisan,” yet it was produced by the consulting firms Deloitte and Newmark Knight Frank. Deloitte is a major booster of public-private partnerships: it makes a lot of money providing PPP-related services both in the United States and around the world. Deloitte executives William D. Eggers and Robert N. Campbell III have been described as “two of the intellectual leaders of the public sector privatization movement.”Privatizing economic development removes accountability and oversight. These is no denying that giving private interests public money and allowing them to hand-it-out in secret is not responsible public policies -- yet this is largely what has happened in Wisconsin and across America. And what Scott Walker and the media is not telling you is this: even the study that Walker cites as being "proof" that there was a need to recreate a failed quasi-public agency recommended procedures for transparency and accountability, yet these recommendations were disregarded once WEDC was created.
The Deloitte/Newmark Knight Frank Be Bold report declared that “Wisconsin needs a change agent, a high-profile economic development champion empowered to aggressively pursue business retention, growth, and attraction.” While admitting “there are many ways to structure, govern, fund, and transition responsibilities for this new entity,” the report strongly argued in favor of a quasi-public agency, even offering a catchy name: Accelerate Wisconsin.
The entity, it was suggested, should have flexibility in hiring and firing employees and in setting compensation levels; should have a board with 60 percent of its members from the private sector; and should be funded from public funds already earmarked for the Commerce Department as well as private contributions. The report also suggested that Accelerate Wisconsin could impose private-sector assessments on economic development subsidies, the administration of which would be put in the hands of the quasi-public agency.
Be Bold Wisconsin: The Wisconsin Competitiveness Study from July 2010 outlined a clear plan for governance of the new agency. Be Bold outlined a much stronger board with key responsibilities and major board directives in the report were ignored as WEDC was established.
But it is not just Wisconsin -- socializing costs and privatizing profits via quasi-private agencies has a long history in America of failing taxpayers (8 page .pdf). The study Public-Private Power Grab: The Risks in Privatizing State Economic Development Agencies identifies and documents the following problems that are common in PPP economic development agencies and explains each in detail (pages 7-12, .pdf):
- The Board would include representatives from Wisconsin’s private sector, academia and public/economic development sector (elected local officials and local and regional economic development representatives. The distribution should be 60% private sector, 20% academia, and 20% public/economic development sector.
- When positions are vacant, the Governor would select and appoint Board members from a qualified pool of candidates submitted by the Board of Directors.
- A Finance Committee would be maintained by the Board, consisting of 5 elected Board members. One member would serve as Finance Chairman. The Finance Committee would review and approve proposed incentives deals created by the CFO.
- The Board of Directors would develop a set of performance metrics and indicators to be assessed annually by an independent authority.
- The Executive Director and CFO would be hired by the Board of Directors under a long-term contract.
- An annual assessment of the agency’s performance and financial activities, including incentives disbursed, would be conducted by an independent authority and an annual report would be submitted to the Board of Directors.
- Mishandling of Funds
- Excessive Executive Bonuses
- Questionable Subsidy Awards
- Conflicts of Interest in Subsidy Awards
- Questionable Claims
- Inconsistent Practices Regarding Subsidy Transparency
- Resistance to Accountability
As our January 2011 report showed, the risks of privatizing a state economic development agency can lead to less transparency and accountability for taxpayers. In many respects, Wisconsin appears to be making the same blunders as other states that have gone down the path of privatization: resistance to accountability, questionable claims about the effectiveness of the privatized agency and misuse of taxpayer funds. Better data could ease those concerns.Power grabs that undermine public policies and promote partisan politics. To many, the worst aspect of Walker's Wisconsin Economic Development Corporation and one that the media hides in virtually all reporting, is that it is misleading, and perhaps a lie, that economic development PPP have anything to do with privatization. In Wisconsin and in other states, governors use these agencies to avoid accountability and oversight. By implementing what is misnamed a "quasi-public" entity has no input or oversight from public servants or legislative branches.
And there are also conflict of interest issues. The new private-public agency has past recipients of lucrative subsidies deciding how the agency should operate. Companies represented on the board of directors include Logistics Health and FluGen. Logistics Health received at least $3.25 million in tax credits and loans, while FluGen collected at least $2.25 million. Logistics Health didn’t meet its projected job creation thresholds. According to the Act 125 database, FluGen didn’t even have job creation requirements.
The notion that state agencies do not work and cannot be made to work is a false dichotomy. Even it a problem exists, one partisan executives get exclusive control, essentially monopolies to determine economic winners and losers in a state, a political power machine is not only enabled but it becomes codified in law (page 14, .pdf).
The extreme case of this is seen in Texas, where the PPP controlled by Gov. Rick Perry to run the Texas Emerging Technology Fund has rewarded many of his major campaign contributors. As well, according to a series of journalistic investigations, Perry has also used TexasOne, a nonprofit business recruitment initiative that solicits funds from wealthy businesspeople, as a sort of slush fund to benefit his political ambitions and to cement his relations with the state’s corporate elite.In Wisconsin, not only have we seen WEDC lose track of more than 1/3 of the loans it oversees, but Scott Walker appears to have lied his administration made no commitment to a educational software company called Skyward signed an acceptance of the $11.7 million tax break offer on March 26, four days after it was proposed -- because that deal reeked of pay-for-play. Exactly the opposite from the false bill-of-goods the public, with media complicity, was sold on WEDC, Walker's PPP represents croney capitalism at its worst.
From VOICES "You Can't Make This Crap Up" department, former President of Walker's WEDC publicly proclaimed Paul Jadin that his legal team advised him that WEDC isn't bound by procurement laws that forbid bid-rigging. his is not a glitch -- this is the appears to be the reason that Scott Walker, a man at the center of a John Doe investigation into the criminality behind his ascent to power, pushed for the agency in the first place.
Wisconsin's economy is doing poorly. Scott Walker's "Open for Business" symbolism is a failure. The media fraudulently carries dishonest talking points about the Badger States economic situation. Workers and small-business owners are paying the price. Wisconsin is among the nation's leaders in corporate welfare, but this hasn't resulted in any real benefit to the taxpayers the funded these massive give-aways.
When one looks past the self-serving proclamations by a handful of politicians that have directly benefited from PPP economic development shenanigans and the media that props these charades up, it becomes clear that Walker's Wisconsin Economic Development Corporation cannot withstand scrutiny and more-closely resembles a Wisconsin Economic Destruction Corporation.