30.7.17

RESIDUALLY INHABITED BY BURNOUTS?

Our President, perhaps enjoying himself after liquid crystal screen manufacturer Foxconn might have picked a parcel of land he recommended to establish a large assembly plant in Wisconsin, now suggests displaced workers migrate to Wisconsin.

The locals are calling the area Wisconn Valley and making much of the size of the plant: Eleven Lambeau Fields!  More corridor space than the Pentagon!  For perspective, this works will occupy about the same acreage as the Gary Works, with a similar work force, that is, before oxygen impingement and ladle metallurgy and the rest augmented the power of men (and provided safer working conditions for men and women) and reduced the labor requirements in a steel works.

And Milwaukee's Journal-Sentinel, with an aggressively Democratic editorial board, is skeptical of Project Foxconn paying off.
Stripping away the hype, this is a raw-bones business deal: Taxpayers forgive Foxconn’s taxes for 15 years and deliver the tax credits, and Foxconn delivers thousands of good-paying factory jobs and makes a $10 billion investment in Wisconsin.

Nonetheless, it's an enormous subsidy by Wisconsin taxpayers. In a perfect world, it's a deal that would not be made. Unfortunately, in the real world, states and localities do compete and bid against each other for business, and tax breaks are the coin of the realm.
Tax breaks are a part of the deal, yes. The editorial writers also wonder if the project will provide work opportunities for the poor and long-unemployed residents of the blighted parts of Milwaukee.  Probably not: the project appears to expect workers to commute by car, or perhaps by bus from Racine or Kenosha.  Fix Milwaukee first.  "[T]hird world cities all have one thing in common: an absence of free and open markets."  And those industrial robots?  A steel mill is no place to show up for work stoned.
“The difficult part about marijuana is, we don’t have an affordable test that tells me if they smoked it over the weekend or smoked it in the morning before they came to work. And I just can’t take the chance of having an impaired worker running a crane carrying a 300,000-pound steel encasement,” [Warren Fabricating co-owner Regina Mitchell] said.
Neither is a boiler factory.
It’s not that local workers lack the skills for these positions, many of which do not even require a high school diploma but pay $15 to $25 an hour and offer full benefits. Rather, the problem is that too many applicants — nearly half, in some cases — fail a drug test.

The fallout is not limited to the workers or their immediate families. Each quarter, Columbiana Boiler, a [Youngstown area] company, forgoes roughly $200,000 worth of orders for its galvanized containers and kettles because of the manpower shortage, it says, with foreign rivals picking up the slack.

“Our main competitor in Germany can get things done more quickly because they have a better labor pool,” said Michael J. Sherwin, chief executive of the 123-year-old manufacturer. “We are always looking for people and have standard ads at all times, but at least 25 percent fail the drug tests.”
But the burnouts have been taking over the Rust Belt towns for a long time.  "[A]n industrial era in which monopoly rents attenuated the incentive for some people to invest in human capital, followed by an era of do-your-own-thing nonjudgementalism could only end badly for the people who didn't make the investment, who have been left behind by their neighbors who did."  "Leave Garbutt" became a meme during last fall's presidential election.  National Review's Kevin Williamson is still on the theme, suggesting that the likes of Garbutt, or much of Appalachia, or Lancaster, Ohio, aren't exactly promising places to build technology factories.
You could build a new Apple or Google facility in one of those towns, or a Tesla battery factory, or a Lockheed Martin plant, but you’d have to bring in many if not most of the workers from outside the area. In these places, industrial and blue-collar workers are a lot like municipal bonds: The ones you want, you can’t get, and the ones you can get, you don’t want. If that cold economic comparison offends your romantic view of blue-collar labor, then you probably are too sentimental to be making public policy.
There are parts of Wisconsin, away from that part of Greater Chicago along the state line, and away from Madison, that you probably wouldn't want to build a technology factory either. We'll see how Wisconn Valley plays out.  With the Packers back in camp, perhaps Mr Williamson is thinking of spiking the football.  "I assume my mailbox at Buckley Towers will be full of apologies and retractions now that Nurse Trump is recommending the same prescription as Dr. Williamson."

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