A Wisconsin Waste

When I taught Public Choice, I liked to give my undergrads a news story for their take-home final, and just say "Discuss with reference to the theory developed in your lectures and readings."

Dan Kaufman's story in the New Yorker on Wisconsin's Foxconn mess would have been a bit late in the year to make the final, but it was final-worthy.

A snippet:

But as the public has become aware of the spiralling costs for these jobs, the Foxconn deal has become something of a political liability for Walker, particularly among voters outside of southeastern Wisconsin. Those costs include taxpayer subsidies to the company totalling more than $4.5 billion, the largest subsidy for a foreign corporation in American history. Since Wisconsin already exempts manufacturing companies from paying taxes, Foxconn, which generated a hundred and fifty-eight billion dollars in revenue last year, will receive much of this subsidy in direct cash payments from taxpayers. Depending on how many jobs are actually created, taxpayers will be paying between two hundred and twenty thousand dollars and more than a million dollars per job. According to the Legislative Fiscal Bureau, a nonpartisan agency that provides economic analysis to the Wisconsin state legislature, the earliest citizens might see a return on their Foxconn investment is in 2042.

Oh - and much of the land for the deal was stolen by the Wisconsin government under eminent domain provisions.

To make space for Foxconn’s development, which will also necessitate many miles of new roads, the Village Board has been buying properties, sometimes using the threat of eminent domain to force reluctant homeowners to sell at a price determined by the village. Several weeks before the groundbreaking, the seven-member board went further. By a 6–1 vote, the board designated the entire twenty-eight-hundred-acre area “blighted,” which will allow Mt. Pleasant to issue bonds that are exempt from both federal and state taxes, and may also grant the village a more expansive use of eminent domain to seize the property of the few remaining holdouts, a small if highly visible group, whose property-rights fight embodies a wider sense of disenchantment with the Foxconn deal.

And it looks like Wisconsin's post-Kelo move to restrict takings was a sham.

Kim reached out to her political representatives, including her congressman, Speaker of the House Paul Ryan. “His response was: this is not a federal issue,” Kim said. “And that I should reach out to my state representatives.” That surprised her. In 2005, Ryan co-sponsored the Private Property Rights Protection Act, which was written in reaction to the Supreme Court’s decision in Kelo v. City of New London. That ruling allowed New London, Connecticut, to use eminent domain to take several homes for an economic-development project. “When someone works years to secure a home or establish a successful family store or restaurant, only to be forced by the government to give it up so a corporation can redevelop the land, that’s wrong,” Ryan said in a statement supporting the measure. The bill passed the House, 376–38, but failed in the Senate. (Ryan also attended Foxconn’s groundbreaking ceremony in Mt. Pleasant.)

The same year, Wisconsin passed its own law in response to Kelo, co-sponsored by Leah Vukmir, now the Republican U.S. Senate nominee. It outlawed the use of eminent domain to seize a property for use by a private corporation, with one exception: if the property was “blighted.” Kim believes the state law was written in such a way as to protect a new home like hers—it defined blighted property as one that is “detrimental to the public health, safety, or welfare.” However, the Village Board has relied on a different statute, one that applies the designation for property that, among other things, “impairs or arrests the sound growth of the community.”

New Zealand needs to be very careful in giving Councils expanded powers for takings with urban development authorities. We need not follow America into that asylum.

For Kim Mahoney, the issue reinforced her determination to keep fighting. She pointed to the Creuziger’s Land of Giants Pumpkin Farm, the last big holdout. The four-hundred-acre property has been in the Creuziger family for ninety-two years, but the family was ordered to vacate on October 8th. (After the Cruezigers challenged the move in court, the village withdrew the order, saying it won’t need the land for another year.) “If they’re allowed to do this, they can do this to anybody at any time,” Kim said. “Wisconsin’s eminent-domain laws and private-property-rights laws are meaningless. All they have to do is rezone it and call it blighted.” On my last visit with the Mahoneys, the big Caterpillar machines were working closer to their house than usual, and the noise was louder. Jim and I were standing outside in his driveway. A brilliant orange-red sunset lit up the horizon, but it was hard to escape the sound. “It used to be so quiet here,” Jim said.