Wisconsin’s Radical Right – Believers in a Big Role for State Government?

Radical Right Wants to Guide Economic Development

An article in the Post-Crescent on April 25, 2013 described a new plan being promoted by Gov. Walker and the Radical Rightists in the legislature to create an organization that would funnel state and private funds into investments in start-up companies in Wisconsin. Under the proposed plan, the new organization could invest in a company if the public funds were no more than one-third to the total invested. The bill would target emerging companies in five industries: agriculture, information technology, engineered products, advanced manufacturing, and medical devices and imaging. According to the article, “… the state would be a limited partner in the program … it would share the risks and rewards with private investors.”

In other words, the new organization would do two big things. First, it would promote development of companies in certain industries,  and second, it would in effect become a shareholder or a partner in new companies.  By promoting this plan, Wisconsin’s Radical Rightists make it clear that they do not really believe that the free market economy left to itself will favor our state. Instead, we need a strong involvement by the state government, which will invest our tax money in private companies.

Radical Rightists in other states share this lack of faith in the private sector. I recently read that Alabama has invested hundreds of millions of dollars to bring the production of Airbus’s A320 to the city of Mobile. Not to be outdone, Kentucky awarded $146.5 million in tax credits to Toyota to induce it to produce the Lexus ES at its plant in the state.

I do not wish to criticize the politicians who propose to invest tax money in luring companies to their respective states, but I do find it hypocritical that they do so after stigmatizing progressive politicians as “socialists” because they want to invest tax money in education or health care. For a state government to guide our state’s economic development by investing in selected companies is as “socialist” as anything currently being done in Washington.

What Should the Role of Government Be?

 It is time for Radical Rightists to come clean. They know that in a global economy, the state needs to play a large role. The question is what should that role be? Well, our Constitution lays it out when it says,

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Some of these things are controversial but others are not. We can all agree that providing for the common defense and securing the blessing of liberty are among the roles of government, but what about the others? How can a government work to establish justice, insure domestic tranquility or promote the general welfare?

The Radical Rightists who control the government in Madison seem to think that if they give money to businesses, the businesses will create so much wealth that justice, tranquility and the general welfare will take care of themselves.

The Role of Government Should Be Broader Than Promoting Economic Development

We know that this is not true. Education does not happen automatically. Health care does not happen automatically, and wealth created by companies does not always trickle down to the rest of us. In fact, over the last 30 years, household incomes for most people have stagnated while the top 1% have enjoyed huge increases in their wealth. This sort of imbalance cannot be sustained. It does little to establish justice, and it will surely lead to social conflict and a loss of domestic tranquility.

 Moreover, companies in search of profits may damage the environment or even kill people as we see in the recent accident in Bangladesh, where more than 300 people died in the collapse of a factory, where garments were being made for popular, international clothing brands. The factory owners’ lack of concern for the safety of their workers was due to the corruption of Bangladesh’s regulatory agencies combined with the mercilessly low prices and tight schedules demanded by the clothing companies, who have shown in this incident that they will kill without mercy in order to meet the demands of a competitive market.

The dire effects of unregulated competition or government corruption are not limited to faraway places like Bangladesh. Here in Fox Cities, we know about the pollution of the Fox River with PCB’s, and we have just seen the Radical Rightists in Madison pass a Mining Bill that will allow Gogebic Taconite to develop an iron mine in our state without much environmental oversight.  We have learned that a competitive market without public regulation to insure the general welfare will lead to a loss of justice and of domestic tranquility.

Moreover, there are things like education and health care that cannot be provided effectively by the free market. We have always maintained public schools because we know that if we did not, many people would not be able to go to school, and we have recently come to understand that depending on the market to provide health care for people leads to radical inequity in its distribution. We can see that if we change a well-known song only a little to say, “If health care were a thing that money could buy, the rich would live and the poor would die.”

Clearly, promoting economic development, while useful, is not the only thing that our state needs to do. So, while I applaud the Radical Rightists’ belated recognition of the importance of government in a modern economy, I wait hopefully for the day when they will see that the role of government cannot be limited to giving money to business.

Immigration Reform and Food Stamps

Let’s Be Glad We Finally Have a Bill

We should all be happy that the US Senate has proposed a bill that offers a path to legal status and ultimately citizenship for most of the 11 million undocumented immigrants who are living and working in the United States. It’s great that we are finally going to deal with them in a realistic way. The bill is not perfect, but often the perfect is the enemy of the good.

Denying Food Stamps Would Be Counterproductive

One of the provisions of the immigration bill is, however, counterproductive. The bill specifies that during the 10-year period during which the immigrants will have the status of Registered Provisional Immigrants, they will be ineligible for Food Stamps or other forms of federal assistance. This is a very foolish provision.

Food Stamps Supplement Inadequate Wages

Our economy depends on the Food Stamps received by workers who earn low wages. Millions of people work in jobs that do not pay enough in wages to allow a person – much less a family – to live. They are able to live because their incomes are supplemented with food stamps. This situation is the result of forty years of declining wages and increasing inequality in our country. Many businesses now depend entirely on workers who could not live on their wages if they did not receive food stamps.  This situation is not going to change soon, and while it lasts, we need to be prepared to supplement people’s wages so that they can live, and Registered Provisional Immigrants are no exception.

Denying Food Stamps to Immigrants Will Lead to More Crime

To deny food stamps to Registered Provisional Immigrants will make them poorer. It will be harder for them or their children to succeed in our society. Fewer will go on to advanced education. More of them will turn to crime because it is better than hunger. More crime will mean a need for more prisons and more law enforcement. Food stamps are cheap compared to prisons or law enforcement. So, we would probably save money by allowing Registered Provisional Immigrants to receive food stamps.

Some people will say, “Yes, but people who are here illegally should not be rewarded. They are law-breakers and should be punished.” Perhaps so, but that does not mean that we should cut off our nose to spite our face. We should not harm ourselves merely to give us the satisfaction of sticking it to the immigrants. It would be very stupid of us to spend our limited resources on more prisons and more crime merely to avoid giving food stamps to Registered Provisional Immigrants.

Food Stamps Create Jobs and Profits in Our Community

There is still another way that denying food stamps to Registered Provisional Immigrants would be cutting off our nose to spite our face.  The federal money behind those stamps is money that would come into our community. It would bring profits to grocery stores and wages to the workers in those stores. They in turn would spend the money on food; clothing, shelter and entertainment in our community. That spending would create profits and jobs. By refusing to allow Registered Provisional Immigrants to receive food stamps, we would again be hurting ourselves.

This is a time when we need jobs, and we need business confidence.  If our economy is to grow and thereby to provide better lives for all of us and a reduction in the federal deficit, this is not a time to be stingy with food stamps.

Be Careful What You Wish For

Layoffs at Oshkosh Truck

On April 10, 2013, the Post-Crescent reported that Oshkosh Truck will lay off 900 people this summer because of reduced demand for its military vehicles. As the war in Afghanistan winds down, our armed forces need fewer vehicles, and foreign governments have not picked up the slack. So, 900 people will lose their jobs this summer.

I bring this to your attention because so many politicians on the right keep telling us that government spending does not create jobs. The politicians tell us the best way to create jobs is to reduce government spending and taxation. If we do that, companies will have money to invest and expand their operations, and therefore, there will be plenty of jobs.  

Well, tell that to the people at Oshkosh truck. Their jobs depend entirely on government spending. Ask yourself this: if we gave a tax credit to Oshkosh Truck to allow them to expand their operation, would they hire more people to build trucks that cannot be sold because there is no demand for them?

Government Spending and Economic Development

The situation at Oshkosh Truck shows the true relationship between government spending and economic development. Radical rightists love to say that government cannot create jobs. Only private business can do that. The layoffs at Oshkosh truck show us that, while Oshkosh Truck is a private company, the jobs there are created by government spending. This example also shows us that reductions in taxes cannot take the place of direct spending if we want to create jobs. Oshkosh Truck will lay people off because the market for its main products is shrinking, and no reduction in taxes would make it profitable to build trucks for which there is no demand.

Government spending at the local state and national levels has always played a large role in our economy, and far from stifling job creation, it has created many new jobs both directly and indirectly. Governments create jobs directly when they hire people or when they buy goods or services. In the Fox Valley, Oshkosh Truck and School Specialty are examples of companies that sell their products to governments. Public school teachers are examples of employees of government. 

Government spending creates jobs indirectly when the people who receive the money from government spending turn around and buy things in the marketplace. For example, the employees of Oshkosh Truck buy food, clothing shelter and other things from private businesses in Oshkosh.

Governor Walker Doesn’t Understand

Governor Walker doesn’t understand that, or perhaps he prefers to ignore it. He promised to create a quarter of a million jobs in Wisconsin by reducing taxes and regulation, and of course, the jobs have not appeared. Mr. Walker rejected $1.2 billion for high speed rail, although that would have created a lot of jobs. He intends to reject the expansion of Medicaid, although that would create  a lot of jobs in the Fox Valley because we are a major, regional medical center. Mr. Walker’s approach has been to give money away to businesses in the form of loans or tax credits on the theory that the money will lead those businesses create the jobs we need. It hasn’t worked. Wisconsin is now 44^th in job creation as Michael Muoio pointed out in a letter to the PC on April 9.

Why Loans and Tax Credits Do Not Create Jobs

Why don’t loans and tax credits create jobs? The reason is that businesses never hire people merely because tax credits make it possible Businesses hire people because they need them to produce goods or services to meet the demand for them.  If the demand weakens, they will lay people off, as the Oshkosh Truck example shows.

Creating Demand

How can we create demand? We create demand by buying things from businesses or by hiring people. Wars require lots of goods and services. So, wars create lots of jobs, but it would be awful if we had to keep fighting pointless wars just to maintain employment here at home. Fortunately, we don’t have to. We can fix our roads and bridges. We can support scientific research through grants. We can improve our schools. And we can do many other things.

Be Careful What You Wish For

So, as the war in Afghanistan winds down, and we spend less on military hardware, we should look for ways to use the money for useful things here at home.  Don’t wish for lower taxes. You might get them. Wish for useful government spending because it creates jobs. 

The Bankruptcy of Privatization Exposed

Contractors the Only Winners in Iraq

An article by Trudi Rubin in the Post-Crescent on April 4, 2012 illuminates the bankruptcy of the Radical Right’s policy of privatization, which is the solving of public problems by giving money to private business instead of working to improve our public agencies.  Ms. Rubin’s piece points out that the only winners in the Iraq War are the private contractors who were paid tens of billions of dollars. Ms. Rubin also points out that “a hefty chunk of those billions was wasted due to overbilling, shoddy work and fraud.” Why was the work given to private businesses instead of being handled directly by the US Military as it had been in previous wars?

The Radical Right Has a Religious Faith in Private Business to Solve All Problems

One reason is that giving the work to private companies allowed Bush and Cheney to pursue to the war without reinstating the military draft, but a more important reason was the Bush administration’s  doctrinal, indeed almost religious, commitment to the idea that money paid to private business is always well spent because private businesses are always honest and efficient.  Why can we count on their honesty and efficiency? We can count on them because the discipline of market competition keeps them honest and efficient.

Private Contractors Were Corrupt and Inefficient in Iraq

Unfortunately, the “discipline of market competition” does nothing of the kind. As Ms. Rubin’s article shows, many of the contractors in Iraq were neither honest nor efficient. Fraud and inefficiency were widespread. Stuart Bowen, the special inspector general for Iraq has documented “scores of scams,” and Dick Cheney’s company KBR paid $559 million to the US government to settle corruption charges.

In Wisconsin, The Right’s Faith Remains Undimmed

None of this has made even a little dent in the Radical Right’s religious faith in the honesty and efficiency of private business. Here in Wisconsin, Governor Walker’s administration has given millions of dollars to companies with very little oversight on the theory that doing so would create lots of jobs. The jobs have not appeared, but the governor’s faith in private business remains undimmed. The recent mining bill relaxed environmental restrictions to allow Gogebic Taconite to operate a strip mine without proper environmental oversight. After all, why would we need oversight when businesses are always honest and efficient? The discipline of competition guarantees that. Right?

Private School Vouchers Are the Latest Expression of the Faith

Now, we have private school vouchers, the latest expression of the rightist faith that private businesses – in this case private schools – will solve our problems.  Proponents of vouchers tell us that competition among schools will insure that the schools improve. No matter that in other parts of the country, children have been victimized by fly-by-night schools that opened to take public dollars and provided inferior education to their clients. No matter that school vouchers have not improved education in Milwaukee.

It is Time to Expose the Faith in Private Business as a Failed Religion

It is time to confront the Radical Right’s faith in privatization directly. It is time to stand up and say that giving public money to private businesses is not always the best solution to every problem. Private businesses are not always either honest or efficient. Sometimes, they are fraudulent, sometimes they are inefficient, and sometimes they are completely ineffective. Outsourcing military functions did not win the war in Iraq, and school vouchers have not improved education in places where they have been tried.  Privatization is a failed religion, and vouchers are a failed solution.