From The Department Of I-Told-You-So

Back in February 2011, I warned about the nefarious implications of Scott Walker's plan to turn the public Department of Commerce into the semi-private Wisconsin Economic Development Corporation.

I have been critiquing it ever since. My most recent screed, as of July 2012, Walker's Untraceable Slush Fund, pretty much called it.

As the Journal Sentinel notes, Walker promises dramatic moves to correct loan oversight problems at WEDC.

"The Milwaukee Journal Sentinel reported Wednesday that since its creation in July 2011, the Wisconsin Economic Development Corp. failed to track whether 99 businesses were repaying a total of $8 million in past-due loans - or 16% of the agency's $51 million loan portfolio."

These types of redevelopment initiatives (privatization, tax credits, subsidies, etc.) are actually studied by academics. As cities and states try these different supposed catalysts, social scientists are measuring the results. This is where the "best practices" guides come from. And, where the "things to avoid" recommendations come from. That is, if one is willing to actually read the reports.

Whether public or private investment, certain questions must be addressed and answered with any initiative. Especially when public dollars are at stake, most would ask: What's the return on investment? How many jobs have been created? What's the cost per job created? Were there noticeable income gains in the area due to the initiative? Etc.

Good Jobs First actually published The Risks of Privatizing State Economic Development Agencies in January 2011. But Wisconsin did it nonetheless.

The same was found for film industry tax credits, yet we still do those.

Similarly unimpressive results were discovered for venture capital, nevertheless we are still pursing this mirage.

It's well past time to stop buying this snakeoil.

Update:

Here comes the Journal Sentinel to Scott Walker's rescue; putting the proverbial lipstick on this Walker pig.

WEDC: A good idea, but so far, poorly executed.

This [the WEDC] is another one of these supposed game-changers where the evidence indicates it is not a good idea. But the Journal wants it to be, so it must be. We just need to accept it.

Maybe if the Journal actually did the heavy lifting before getting behind all these harebrained ideas they wouldn't have to spend so much space qualifying, contorting, and making excuses. And, heaven forbid, maybe they'd actually provide some insightful policy analysis, rather than just practicing sycophantic boosterism for Scott Walker.

Film Flam

Here we go again...

I guess Tom Barrett feels he can't allow Scott Walker to have all the stupid to himself. As the Journal Sentinel notes, "Both gubernatorial candidates support film tax credits."

Yes, a big economic development - jobs - strategy for both candidates is luring the film industry.

These two think "creating jobs in new media and film [is] a priority" and are "central to our prospects for a brighter economic future."

I've previously posted, "The Wisconsin Department of Commerce issued a report showing that film tax credits as an economic development strategy are not cost-effective." The Journal Sentinel found the state reimbursed Public Enemies every dollar spent here.

Economists have shown deficit spending during economic downturns works, food stamps are stimulative, as are infrastructure investments and aid to state and local governments. Social scientists have also shown that film credits as some sort of economic development policy do not work. Yet, for some reason, we condemn the former as wasteful and unnecessary, while bellowing about the need to increase the latter.

Film credits as an economic development strategy shouldn't even be part of the discussion deciding our next governor.

For Further Reading:
Economic Incentives
Economics Incentives Package Heavy On Film Subsidies
Film Credits Won't Transform Illinois Economy
Film Tax Credits Are Bad Economics
Food Stamps And Unemployment Insurance
More States Yell "Cut" On Film Tax Credits
On The Chopping Block
Voodoo Economics Of The Silver Screen

(Not So) Bright Lights

The Wisconsin Department of Commerce issued a report showing that film tax credits as an economic development strategy are not cost-effective. But so much for reasoned analysis, Wisconsin has maintained the incentives.

Cost Benefit Analysis of Wisconsin's Film Tax Credit Program