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When I was growing up in Dubuque, Iowa, my best friend’s father had an appliance store on Main Street. Its windows were crammed with wonders: blurry color TVs, clock radios with glow-in-the-dark radium dials, hi-fi consoles. Before leaving for college, I purchased a little stereo there from an up-and-coming Japanese company called Panasonic. Back then, blue-collar workers were firmly part of the middle class, and a hardworking high school graduate could support a family by working the line at the John Deere Dubuque Works or at the Dubuque Packing Plant, home to the famous Fleur de Lis hams... But even during my childhood this world was already in transition... In the late 1970s, a line worker at the Dubuque Pack made $25,000, the equivalent of $87,000 in 2020 dollars. Employment at the factory peaked at 3,500. But these high wages and associated benefits, along with an outmoded factory floor, made the plant noncompetitive against newer facilities elsewhere that were hiring lower-paid, often immigrant labor. There were layoffs and salary cuts, and in 1982 the plant shut down, pushing the town’s unemployment rate over 17 percent... In the 1990s, I landed an assignment to do a story for Ingram’s, Kansas City’s business-friendly city magazine, on a proposed $90 million ($160 million in 2020 dollars) expansion of the convention center, Bartle Hall. Not only was the expansion promised to reinvigorate flagging convention traffic; it also was promoted as a major cog in revitalizing a moribund downtown. After a deep dive into the topic, I submitted a story that detailed how the investment was destined to disappoint—both in terms of ancillary downtown development and in the balance sheet for the facility itself. Something of a countrywide civic arms race to expand convention space was under way; overbuilding and the unlikelihood of sufficient expansion in convention business would lead to financial jeopardy for most of these facilities. I also found plenty of support for the notion that the economic impact studies that endorsed the building craze were deeply flawed and perhaps even cynical. One of my sad discoveries was that cities were encouraged to throw good money after bad: consultants would explain shortfalls by pointing to lack of exhibit hall space or hotel rooms and claim that for a city to make good on its current investment, it would have to spring for bigger halls and subsidized hotels—often at considerable civic expense... In July 2017 I was thinking back on that story while watching President Trump and Wisconsin’s governor Scott Walker on the news. They were at the White house, announcing a major industrial development for Wisconsin, where I live. A Taiwan-based company, Foxconn, had committed to building one of the largest factory complexes in the United States, promising to spend some $10 billion and to hire 13,000 workers. As I read about the frantic interstate bidding that had gone on for that factory and the grand projections of economic benefits, I couldn't help but think of the convention center arms race. Wisconsin offered Foxconn up to $3 billion in incentives to build the factory there, a figure that would expand to $4.5 billion when combined with infrastructure expenses incurred by utilities and the local municipalities. This amounted to $346,000 per job, an absurd figure. And it wasn’t only the size of the subsidies—the announcement at the White house signaled a new level of politicization for economic development... It was soon apparent that Foxconn's proposed factory had driven interstate bidding wars to new highs. The cost per job was as much as ten times more than the usual public incentive levels. Over the following year, as hundreds of municipalities piled into the bidding for a new Amazon headquarters, America seemed like it was in the midst of out-of-control auction hysteria. Achieving the highest bid might be cause for short-term celebration, but it would likely lead to “the winner’s curse,” a well-studied auction phenomenon in which the prize goes to the bidder who has most overestimated the coveted object’s value. But Foxconn and Amazon were just the high-visibility cases. There is a broad and steadily growing trend of state and local spending on economic development. Every large city, region, and state in the country has a fully staffed, well-compensated economic development authority that fights to outbid or outmaneuver all the others in courting corporate investment. These are the real buyers. The shoppers are not just corporations but also their hired hands— site-selection and incentive specialists who are wooed by economic development professionals much the way that wedding planners are by country clubs. Keeping the engines of this process roaring is a cadre of consultants who pump out reports that make every dollar devoted to development look as smart as buying Microsoft stock at its initial public offering. Where does all this money come from? The story of Foxconn might be exceptional in scale, but otherwise it is a window onto a deeply established, institutionalized process of city-versus-city and state-versus-state competition that beggars public coffers while enriching corporations. The love of economic development spending crosses party lines, but it has proved particularly popular in states like Wisconsin under the control of Republican governors and legislatures... Trump’s promise in 2016 to bring back manufacturing jobs—like those in the Dubuque of my childhood—was a major part of his appeal in the Upper Midwest. It was welcome news to Racine County, in southeastern Wisconsin, the eventual site for the Foxconn complex. Even more so than Dubuque, the city of Racine had once been a bustling manufacturing center with abundant well-paid jobs. During and after World War II, factories short on labor recruited workers from the Deep South, making Racine a destination in that wave of the Great Migration. But like Dubuque, beginning in the mid-1970s Racine entered a period of steady economic decline. So Foxconn's promise of 13,000 “family-supporting” jobs was irresistible to local representatives of both parties. When it came down to designating which land to grant to Foxconn, not everyone was so accommodating. Lucky for the boosters, the village of Mount Pleasant—just outside of Racine, population 26,000—had not only plenty of wide-open farmland but also a Tea Party-led village board who jumped at the opportunity. Mount Pleasant’s boosters believed—or said they believed—that by falling in line behind the Foxconn project, they would be helping make America great again. Digging into the Foxconn project unveils the cozy relationships among corporations, contractors, consultants, and municipal and state governments. It illuminates a deeply ingrained economic development complex that rewards corporations with generous taxpayer-funded grants, politicians with political capital, and connected contractors and vendors with lucrative business. Public incentive spending engineers public support through promised job creation but ends up enriching the few. Our current means of economic development satisfies the definition of “plutocratic populism,” developed by the political scientists Jacob Hacker and Paul Pierson. Plutocratic populism is a system in which the majority of voters end up supporting a process that helps concentrate wealth. Modern economic development is a below-the-radar machine that steadily moves money from public coffers to enrich the already affluent, helping to power the accelerating income disparity in the United States that is not only a national disgrace but also a looming danger to the republic. We are all being Foxconned, every day.
