WEDC Not A Good Model For Deploying Scarce Resources

The Journal Sentinel actually had a good idea, Governors Should Swear Off Poaching. Our economy doesn't gain anything by Wisconsin stealing jobs from Illinois - the so-called war among the states. It merely realigns jobs without any growth occurring. 

Yet, once the Journal began drilling down further into their editorial's details, things got way off course.

Walker deserves credit for helping launch the Wisconsin Economic Development Corp., which is a good model for deploying scarce resources even if poor management at the agency resulted in a series of embarrassing mistakes.

Good Jobs First actually published The Risks of Privatizing State Economic Development Agencies in January 2011.

Transferring state business recruitment functions from government agencies to private entities is not the panacea that its proponents suggest. In fact, the track record of those few states that have taken the step is filled with examples of misuse of taxpayer funds, political interference, questionable subsidy awards, and conflicts of interest. Rather than making economic development activities more effective, privatization often is little more than a power grab by governors and powerful business interests...

Most of the seven states that currently make use of economic development PPPs have experienced a variety of performance problems. These include the following:

 Misuse of taxpayer funds (Rhode Island, Florida and Wyoming)

 Excessive executive bonuses (Virginia, Florida, Michigan and Wyoming)

 Questionable subsidy awards by the subset of PPPs that have a role in that process (Michigan and Rhode Island)

 Conflicts of interest in subsidy awards (Florida, Utah and Texas, which makes limited use of PPPs)

 Questionable claims by the PPP about its effectiveness (Wyoming, Florida, Utah and Indiana)

 Resistance to accountability (Florida and Michigan)

Why does the Journal continue to push an idea that has failed everywhere it has been tried? Why do they still defend such a bogus program, even after it has been shown to be an embezzling debacle here in Wisconsin?

Starting-Up More Trouble

The cronyism and nefarious activities at the Wisconsin Economic Development Corporation weren't enough. Scott Walker and his Republican henchmen have found another avenue of misappropriation.

The Legislature overwhelmingly voted Tuesday to provide $25 million in taxpayer money to start-up companies..."This is one more way that we move our economy forward," Walker said.  ~ Senate, Assembly OK $25 Million For Start-Up Firms

Venture capital provides just two percent of the capital for new businesses.

More than half of new businesses are gone within five years.

For Further Reading:
Something Ventured, (Virtually) Nothing Gained
A Steaming Pile Of Boldness
Venturing Aimlessly
Venturing Wisconsin's Money

Embezzlement

Have you been paying attention to Scott Walker's initiative to supposedly spur job growth? Transforming the Wisconsin Department of Commerce into the Wisconsin Economic Development Corporation? Yes, even though Republicans always claim government doesn't know what it's doing and must get out of the way. When Republicans are in office, suddenly an entity of their making is the answer for explosive job creation.

In January 2011 Good Job First released, Public-Private Power Grab: The Risks in Privatizing State Economic Development Agencies (which I wrote about in February 2011).

The idea is far from new but it is not a common or standard practice. Economic development PPPs date back more than 20 years, but only seven states currently allow private entities to control their business recruitment functions: Florida, Indiana, Michigan, Rhode Island, Utah, Virginia and Wyoming. 

Several other states previously employed PPPs but abandoned them because of performance problems. Most of the seven states that currently make use of economic development PPPs have experienced a variety of performance problems. These include the following:

• Misuse of taxpayer funds (Rhode Island, Florida and Wyoming);

• Excessive executive bonuses (Virginia, Florida, Michigan and Wyoming);

• Questionable subsidy awards by the subset of PPPs that have a role in that process (Michigan and Rhode Island);

• Conflicts of interest in subsidy awards (Florida, Utah and Texas, which makes limited use of PPPs);

• Questionable claims by the PPP about its effectiveness (Wyoming, Florida, Utah and Indiana); and

• Resistance to accountability (Florida and Michigan).

I followed up on my initial posting with more critiques, ending with Wisconsin Economic Development: Walker's Untraceable Slush Fund. This is what Republicans do. They use government to enrich themselves and their cronies. They really have no concern for public policy and governing. The government is simply a means to easy-money for their pilfering and pet projects.

And now the verdict is in...

More evidence of corruption and misappropriation:

State Jobs Agency A Rule-Free, Fact-Deficient Piggy Bank

State's Flagship Job Agency Failed To Follow Law, Track Loans, Audit Finds

Report Had Warned Of Problems With WEDC-like Agencies 

Best State Pension System: Wisconsin

21 States' Pension Systems Not Fiscally Sound

Pundits, talking-heads, politicos, and other supposed experts warning about an impending Wisconsin pension crisis are merely using false information and scare tactics in an attempt to eviscerate the pension system. Plain and simple. This is another one of those "entitlements" (anything having to do with a fair society, the social contract, or shared prosperity - all of which, Republicans hate) the anti-government zealots complain about with the hope that some of the smears stick.

This situation is very similar to the debt ceiling theater (here, here, and here). Money has already been earmarked for a certain purpose - budgetary items/programs or employee compensation. Creating some phantom ceiling doesn't mean the liability goes away. Because varies entities may have taken pension money and spent it on other purposes, this does not absolve their responsibility to pay previously contracted pension obligations.

As David Cay Johnston explains, "The fact is that all of the money going into these plans belongs to the workers because it is part of the compensation of the state workers. The fact is that the state workers negotiate their total compensation, which they then divvy up between cash wages, paid vacations, health insurance and, yes, pensions. Since the Wisconsin government workers collectively bargained for their compensation, all of the compensation they have bargained for is part of their pay and thus only the workers contribute to the pension plan. This is an indisputable fact."

Some of these pundits and politicos don't want you to have a stable retirement. Well, that's implicating them too much. They really just want that money - in the form of tax cuts, subsidies, and giveaways - for themselves. As far as your retirement is concerned, they really don't care.

Pensions (public & private) are in trouble because slippery mayors, duplicitous governors, gluttonous politicians, and greedy business owners have diverted funds (compensation) away from pension accounts and into other uses - plugging budget holes, subsidizing business parks and sporting arenas, constructing more and more roadways, and even for new vacation homes.

You're going to see more articles and more pundits bloviating about this "we must transform the pension system to save it" talking-point in the near future, feel free to laugh at them, but make sure you're not swept up into their misguided rhetoric.

For Further Reading:
Deferred Wages
More Bad Pension Reporting
Pension Petulance
Politicking With Pensions
Recoiling Retirement
Retirement Revisionists
Scott Walker Is Coming For Your Pension