Far Less Than 10.7%

Whitewater’s residents may have recently read (3.7.17) another City of Whitewater press release from the Wisconsin Economic Development Corporation (WEDC) – this time concerning more public spending on selected businesses.  (For remarks on a prior release, please see The Simplest Condition for a ‘Shovel-Ready’ Site is an Empty Lot.)

There are few better ways to argue against WEDC’s approach than by publishing press releases in full from that organization and its boosters.  (I have done so again with the latest release, at the bottom of this post.)

1. A tiny fraction of the award. On its face, there is something sadly desperate in saying Whitewater received only 10.7% of something: of the $700,000 awarded, 89.3% went elsewhere.

2. Tens of millions in public money has poured into Whitewater (state money, federal money, adding into the mix municipal bond debt) over the last decade. Even excluding the vast public sums supporting our local campus, this $75,000 is small compared to prior public spending in the city. If it’s 10.7% of the current totals, it’s far less than 1% of all that’s already come Whitewater’s way.

3. Alternative uses. These public funds are meant to be spurs to business development, but far greater sums have produced only paltry results – just about any allocation would be better than still more of the same.

4. ‘Technology-based, early stage companies.’ All of this is meant to awe and impress, but a level-headed person should be neither awed nor impressed. Public policy is more than a manufactured, unrealistic sense of astonishment.

Butterflies are amazing (truly); public allocations are practical decisions among many alternatives.

The best opportunity for a critic of these spending programs would be for the municipal government to put the full releases on giant billboards around the city. The more one hears of this, the less realistic it is.

Admittedly, we’d not be any richer for a billboard campaign…unless becoming an example of an unsound municipal economic policy somehow, itself, proved lucrative.

WEDC press release follows:

Wisconsin Economic Development Corporation Press Release: Organizations in Milwaukee, Oshkosh, Whitewater to match state’s investment in technology-based early-stage companies

MADISON, WI. March 7, 2017 – Three economic development organizations have been awarded a total of $700,000 in matching grants from the Wisconsin Economic Development Corporation (WEDC) to be used to provide seed funding for technology-based startups and early-stage companies.

The Milwaukee Development Corporation has received a $500,000 grant under WEDC’s Capital Catalyst Program for the creation of a $1 million seed fund to support companies in advanced manufacturing and other technology sectors. The fund will target seed-stage ventures, including graduates of local accelerator programs such as The BREW, WERCBench Labs, FaBCAP and Gener8tor to provide additional capital for activities leading to investment readiness or revenue generation.

The fund also aims to support growth-focused projects of existing tech companies, as well as other eligible seed-stage businesses with technologies outside the scope of existing area accelerators. The Milwaukee Development Corporation is the operating entity of the Milwaukee 7 economic development organization, which in January received a $60,000 Entrepreneurship Support Grant from WEDC to support its efforts to increase collaboration and develop common strategies to optimize Milwaukee’s entrepreneurship climate.

“Finding and filling gaps in funding for these growing companies – especially those in our most promising cluster industries – is critical to the success of individual businesses and the entire Milwaukee 7 Region,” said Pat O’Brien, Milwaukee 7 executive director. “We are grateful to WEDC for recognizing this need and providing a needed boost to these efforts.”

The Greater Oshkosh Economic Development Corporation has been awarded a $125,000 Capital Catalyst grant to fund a $250,000 program that will provide seed capital to local technology-based businesses likely to scale and grow to benefit the area workforce and economy. The seed fund will focus on sectors including aviation/aerospace, advanced manufacturing, information systems, agriculture/food processing and medical devices.

“This fund is the first of its kind in Winnebago County, the I-41 Corridor and northeastern Wisconsin,” said Jason White, CEO of the Greater Oshkosh Economic Development Corporation. “Greater Oshkosh’s economic development success is predicated on helping our existing businesses grow and showing our entrepreneurs that they are well-supported here in the Fox Valley.”

The Whitewater Community Development Authority has received a $75,000 grant for a seed fund that will provide a diversified portfolio of micro-investments and grants aimed at increasing the number of startups in the city and supporting emerging growth companies.

This marks that the fourth year that WEDC has awarded Capital Catalyst grants to the organization, which has provided capital to 21 technology-based companies to date. Those businesses have successfully raised $4.9 million in additional capital, have achieved over $2.4 million in revenue and employ more than 100 workers.

“I’d like to thank WEDC for this additional investment, which will help ensure that Whitewater continues to be a hotbed of entrepreneurial spirit,” said Jeff Knight, chairman of the Whitewater Community Development Authority. “The many startups that this program has already assisted is truly amazing. We’ve supported many new innovative businesses that would not have had a chance to get started without this very timely help.”

“These three organizations are playing a critical role in facilitating the development of high-growth business ventures in their communities,” said Aaron Hagar, WEDC’s vice president of entrepreneurship and innovation. “The Capital Catalyst Program has a proven track record of results, and we’re looking forward to continued success as we collaborate with these organizations to support next-generation companies.”

Since its inception in 2012, the Capital Catalyst Program has helped organizations and communities provide $3.5 million in seed funding to more than 100 businesses statewide that employ nearly 500 full-time workers. Those companies have generated $127 million in additional investment and revenue.

The program provides matching grants to seed funds managed by local communities or other organizations dedicated to stimulating entrepreneurship. These funds provide grants, loans and/or investments in startups or early-stage, innovative small businesses that operate in their region. Loan repayments and returns on investment stay within the fund to assist additional startups and create a supportive environment for entrepreneurs.

The Capital Catalyst Program is one component of WEDC’s suite of entrepreneurship resources, which includes support for startup accelerators, investor tax credits and technology loans. In addition, WEDC supports and engages an existing statewide network of partners that offers business training, mentorship and financing to aspiring entrepreneurs.

About the Wisconsin Economic Development Corporation The Wisconsin Economic Development Corporation (WEDC) leads economic development efforts for the state by advancing and maximizing opportunities in Wisconsin for businesses, communities and people to thrive in a globally competitive environment. Working with more than 600 regional and local partners, WEDC develops and delivers solutions representative of a highly responsive and coordinated economic development network. Visit www.inwisconsin.com or follow WEDC on Twitter @_InWisconsin to learn more.

Via http://www.whitewater-wi.gov/residents/recent-news/3270-wedc-awards-700-000-in-grants-to-support-local-efforts-to-provide-seed-funding-for-startups.

The Simplest Condition for a ‘Shovel-Ready’ Site is an Empty Lot

Whitewater’s residents may have recently read (just yesterday) a City of Whitewater press release about a Wisconsin Economic Development Corporation (WEDC) designation for the city’s thirty-five empty acres of tech park land.

I’ve reproduced the release in full at the bottom of this post. A few key points:

1. The simplest condition for a “shovel ready” site is a vacant lot. Whitewater has (at least) thirty-five acres of vacant lot space. The city doesn’t need a ‘certified in Wisconsin’ designation to meet that condition; she only needs lots of empty space.

2. Millions upon millions of state money for businesses in this city, over so many years, and still here we are with another I-feel-it-this-time program.

3. The announcement is old news. The WEDC announced this program on December 15th, and a story about it ran in a local paper on December 16th. If this news were really so important, the municipal government wouldn’t have waited 75 days from the WEDC announcement date. (One should be fair: conservatively, it’s only been 74 days from the newspaper story.)

4. Now that the city’s raised the subject, how has Whitewater performed with the many grants and loans she’s already distributed, all these many years? Before actual performance, has the city been in compliance with even the weak standards the state has imposed on these programs?

There must be some way to determine that: what’s a five-letter word for an official inspection of an individual’s or organization’s accounts?

(If Whitewater ever came across something like that, surely they’d let the community know in full, promptly, as these are publicly-paid officials, extending publicly-funded grants and loans, and they’ve a publicly-fund funded website on which they could post that information.)

5. Where are those other “elite” locations the City of Whitewater press release mentions? Here they are: Beaver Dam, Beloit, Chippewa Falls, DeForest, Fitchburg, Green Bay, Howard, Janesville, Menomonie, Prescott, Stevens Point, Verona, West Bend, Westport and Wisconsin Rapids.

All black-tie locations, I’m sure.

6. Why is it so hard to speak in simple language (without describing everything in grandiose terms)? Whitewater has a high school and a university – is there no one in all the city who can teach officials to speak or write plainly?

City of Whitewater press release follows:

A Whitewater Site Joins the Elite List of Certified in Wisconsin Locations

Whitewater, Wis. February 28th, 2017 – The Whitewater University Technology Park joins 15 other locations statewide as a Certified in Wisconsin® site, allowing businesses and developers to have many questions answered and possible delays prevented prior to purchasing land for their growing companies.

The Certified in Wisconsin Program, offered in partnership by the Wisconsin Economic Development Corporation (WEDC) and Deloitte Consulting was created in 2012 in hopes to make the process easier in purchasing industrial “shovel ready” properties, 20 acres or larger in the state of Wisconsin. It has since seen 17 development projects completed or underway on 10 of the 16 sites, expecting to create more than 1,600 jobs and generate more than $315 million in capital investment when completed.

A site classified as Certified answers a wide range of concerns such as utility and infrastructure capacity, zoning property rights, environmental and geological factors, transportation access, and that the site is ready for industrial development. This information is already compiled and confirmed, allowing the decision process to be easier and less stressful for those in the market to build on a timeline.

The 35-acre site in Whitewater is located less than one mile from the University of Wisconsin-Whitewater. The new park will help to cultivate successful businesses and research by collaborating closely with UW-Whitewater and the City, serving as a foundation for a diversified and robust regional economy.

Lt. Governor, Rebecca Kleefisch and UW-W Chancellor Beverly Kopper have both spoken on behalf of the new site and discussed the positive opportunities that a partnership may burgeon between the university and the newly certified Whitewater University Technology Park.

“I know that property managers searching for industrial land want to minimize their risks,” says Whitewater Community Development Authority Chairman, Jeffery Knight. “They can be assured that when they look at Whitewater there is certainty, and what they get is the best the state has to offer”.

Whitewater will also have an ad in the Site Selection Magazine with details about the site and be included in the state database which allows site selectors to search for desired sites that meet their criteria in a fast and simple fashion.

To learn more about the Whitewater University Technology Park and other “shovel-ready” Wisconsin destinations, visit www.inwisconsin.com.

Via http://www.whitewater-wi.gov/residents/recent-news/3265-a-whitewater-site-joins-the-elite-list-of-certified-in-wisconsin-locations.

‘WEDC has been a disaster from the get-go’

After years of defending the Wisconsin Economic Development Corporation, one newspaper (out of several in the area) finally concedes the obvious:  ‘WEDC has been a disaster from the get-go.’

See, from 11.28.15, http://www.gazettextra.com/20151128/our_views_consider_two_steps_for_salvaging_state8217s_job_creation_agency, subscription req’d.

Yes, it has been a disaster, as politicized intervention in the economy, to the benefit of one’s well-fed, white-collar executive friends, will prove to be.

Only eighteen months ago, when it should have been clear to a properly read man or woman that WEDC was conceptually wrong, Whitewater’s leading officials touted a second round of WEDC funding as though it were manna from God:

“For us to have gone through that first cycle so quickly means a lot of jobs and new entrepreneur start-ups here in Whitewater, including here in the Innovation Center,” he said. “This is a recognition of a great success story. They have invested in us a second time. Our job now is to drive that to even greater success.”

– Jeff Knight, Whitewater CDA Chairman

“I am selfish,” he said. “The reason I am selfish is that I want Whitewater to be a better city and our university to be a better place. Part of what we do is try to make this a better place to live, work, play and learn. I think that is very important. For the university, my selfish thing is that I want to keep the professors here, and keep our graduates here, and whatever we can do to make that happen, we need to do.”

– Richard Telfer, Chancellor, UW-Whitewater

It feels a bit like déjà vu to be standing here before you all today,” Clapper continued. “It’s been a little over a year since our first event; today, we are celebrating the start of round two and the first grants of that round….”

“In the physical sciences, a catalyst is defined as any substance that works to accelerate a chemical reaction,” Clapper explained. “Without the help of a catalyst, the amount of energy needed to spark a particular reaction is much greater. When a catalyst is present, the energy required for the reaction is reduced, making the reaction happen more efficiently. Without the help of a catalyst, chemical reactions might never occur or take a significantly longer period of time to react.

– Cameron Clapper, Whitewater City Manager

See, from 6.9.14,

Knight speaks in empty platitudes, Telfer should have stopped after his first three words, and Clapper’s idea of chemistry is more like alchemy.

From the beginning, this was an empty ideology, a Third-World-style cronyism.

Whitewater deserves better.

Theranos as a Cautionary Tale

Theranos is a much-hyped biomedical start-up that’s fallen in valuation and reputation (not always the same thing) following published doubts (e.g., @ Wall Street Journal, Fortune) about its supposedly revolutionary technology.

Here’s the meaning of this story for Whitewater: Theranos had the participation (and attention) of some of the most gifted men and women in America, yet its (likely exaggerated) claims escaped serious scrutiny for years.

When Whitewater’s city government, Community Development Authority, and local university administration receive fawning stories from the Daily Union, Gazette, Register, Banner, or whatever, does anyone believe that those economic development gurus are receiving anything like the scrutiny Theranos or any American project should receive?

Theranos’s problems have not been for lack of talent (CEO Elizabeth Holmes, is undeniably intelligent, persuasive).

And yet, and yet, intelligent and persuasive do not assure successful new technologies. Doubt not how very much I and others would wish the Theranos story to have a successful outcome: a new & powerful blood-test technology, that would save lives, time, and money from a compelling American entrepreneur would be to humanity’s benefit.

Prof. of Finance Aswath Damodaran of NYU’s Stern School writes about the problems of Theranos – in part problems that are ours for believing so much in the company’s tales – in a post entitled, Runaway Stories and Fairy Tale Endings: The Cautionary Tale of Theranos @ his Musings on Markets Blog.

Here’s Prof. Damodaran:

I can offer three possible reasons that should operate as red flags on future young company narratives:
  1. The Runaway Story: If Aaron Sorkin were writing a movie about a young start up, it would be almost impossible for him to come up with one as gripping as the Theranos story: a nineteen-year old woman (that already makes it different from the typical start up founder), drops out of Stanford (the new Harvard) and disrupts a business that makes us go through a health ritual that we all dislike. Who amongst us has not sat for hours at a lab for a blood test, subjected ourselves to multiple syringe shots as the technician draw large vials of blood, waited for days to get the test back and then blanched at the bill for $1,500 for the tests? To add to its allure, the story had a missionary component to it, of a product that would change health care around the world by bringing cheap and speedy blood testing to the vast multitudes that cannot afford the status quo….
  2. The Black Turtleneck: I must confess that the one aspect of this story that has always bothered me (and I am probably being petty) is the black turtleneck that has become Ms. Holmes’s uniform. She has boasted of having dozens of black turtlenecks in her closet and while there is mention that her original model for the outfit was Sharon Stone, and that Ms. Holmes does this because it saves her time, she has never tamped down the predictable comparisons that people made to Steve Jobs. If a central ingredient of a credible narrative is authenticity, and I think it is, trying to dress like someone else (Steve Jobs, Warren Buffett or the Dalai Lama) undercuts that quality.
  3. Governance matters (even at private businesses):… Theranos illustrates the limitations of these built in governance mechanisms [that is, the desire of founders and venture capitalists to protect their investment in a way managers might not], with a board of directors in August 2015 had twelve members:
Board Member Designation Age
Henry Kissinger Former Secretary of State 92
Bill Perry Former Secretary of Defense 88
George Schultz Former Secretary of State 94
Bill Frist Former Senate Majority Leader 63
Sam Nunn Former Senator 77
Gary Roughead Former Navy Admiral 64
James Mattis Former Marine Corps General 65
Dick Kovocovich Former CEO of Wells Fargo 72
Riley Bechtel Former CEO of Bechtel 63
William Foege Epidemologist 79
Elizabeth Holmes Founder & CEO, Theranos 31
Sunny Balwani President & COO, Theranos NA
I apologize if I am hurting anyone’s feelings, but my first reaction as I was reading through the list was “Really? He is still alive?”, followed by the suspicion that Theranos was in the process of developing a biological weapon of some sort. This is a board that may have made sense (twenty years ago) for a defense contractor, but not for a company whose primary task is working through the FDA approval process and getting customers in the health care business….

So-called ‘Whitewater Advocacy’ has done a huge disservice to Whitewater by flacking wasteful ideas that have only diverted time and money from higher priorities.

It can’t last, of course, just as the outcomes of similar schemes elsewhere show.

The real question for Whitewater is who runs dry first: public schemes that divert resources to cronies’ projects or the local press that touts these projects?

They’re both destined for the ash can, but I’m not sure which one will arrive first.  As it is, I’d say it’s likely to be a close race between the two.

The State’s WEDC and Whitewater’s Facsimiles

Ongoing revelations about the Wisconsin Economic Development Corporation are a double concern: they’re stories of statewide malfeasance, and those revelations beg the question of how local officials in Whitewater are managing their own pools of public money.

First, the latest stories (it’s a steady stream) of state-level error, waste, and negligence:

Madison— Failing to run adequate checks, Wisconsin’s flagship jobs agency gave two awards worth more than $1.2 million to a financially troubled De Pere businessman who had not disclosed his problems to the state, a Milwaukee Journal Sentinel review has found.

Despite those omissions in 2011 and 2012, Gov. Scott Walker’s administration kept working with Ron Van Den Heuvel and his clean energy company, Green Box, into 2014, state records show.

There is no record of the Wisconsin Economic Development Corp. notifying the city of De Pere about the company’s money troubles even though Green Box was working with the city in an unsuccessful attempt to get tax-exempt bonds — in part to repay the state’s soured loan.

It’s the second case disclosed in recent weeks in which WEDC failed to catch omissions by businesses about their troubled finances and then continued to work with them….

Via Jobs agencies loaned $1.2 million to businessman with troubled finances.

Yet make no mistake – even after being thrust into the spotlight WEDC is pressing on in issuing unmonitored awards. Just this past Monday [7.20.15] – four days ago – Walker took a break from his campaign to drop in on the agency’s quarterly board meeting. While that $500,000 loan [for William Minahan] was on the public agenda and one board member openly wondered why there hadn’t been “a giant red flag to cease and desist all activities,” the agency’s staff quietly presented a different proposal: to cut the number of tax credits [that] the agency audits from a required 100% (which it has never managed to comply with), to just 25%.

Via Brian Murphy @ Talking Points Memo

Second, inevitable concerns arise about local distributions after a stream of state-level reports: should a reasonable man or woman believe without careful inquiry & verification that state officials have managed these kinds of public funds poorly but that local officials (the CDA, Tech Park Board, etc.) have performed better? 

Put another way: Does anyone think that state officials are less competent and diligent than their local counterparts?

I don’t know.

At the very least, Whitewater – her city government, her Community Development Authority, all with pools of taxpayer money to dole to so-called startups, etc. – the officials responsible owe as much of an accounting of actual performance as any state official. 

In a well-ordered community, these local distributions would be periodically and independently audited. 

Libertarians (and others of different views) know well that any number of special interests – business, labor, political – will seek to ensconce themselves into government positions, directing government work to their own selfish ends. 

One would prefer a community requiring no political concerns.  A serene place like that would perhaps be a world only of cat videos and puzzles; we do not live in such a place. 

Grants and loans of public money to white-collar firms, an addiction to tax incremental financing, sketchy claims of job creation, expensive buildings at public expense, public men who present themselves as development gurus, the selling of public property to business interests too cheaply – this gutter economics infects the CDA and other public agencies in Whitewater. 

In a city with so many who are poor, these distributions to white-collar professionals have been utterly ineffectual for the many, and useful only to a few (for their immediate gain or in scrapbook headlines).

In any event, no one owes these few their claims on faith alone; they’ve wasted too much already in this city. 

Perhaps it is enough – Dieu aidant – that some are naturally inclined to review, first from curiosity and thereafter in root-and-branch scrutiny. 

Conservatives Against WEDC

Only a generation ago (not long, really), most conservatives would have rejected something like the Wisconsin Economic Development Corporation’s ineffectual, wasteful attempts to manipulate the economy for the benefit of a few insiders’ friends.

Today, communities across our state are beset with any number of unctuous men hawking a kind of big-government conservatism, with false promise after false promise about community development or job-creation. It’s junk economics, to be sure, but for every oily salesman there’s an obliging, oily toad among the press happy to flack these shams.

Fortunately, there many who see though this, including conservatives who have not descended into hucksterism. (I’m a libertarian, not a conservative, yet I well know that there are varieties of conservatives, and conservatives who have not abandoned the truth of economic uplift through markets free of state interference.)

Consider the men and women of Wisconsin’s MacIver Institute as a positive example:

According to an article in the May issue of State Legislatures Magazine, states offer billions of dollars in subsidies with little to show for it.

“Today, every state offers at least some sort of tax incentive for businesses,” according to the article by Jackson Brainerd, a research analyst for the National Council of State Legislatures. “Yet, despite lawmakers’ enthusiasm for corporation-specific incentives, many economists, experts and other observers, from the left to the right, doubt they are an efficient use of public money.”

Groups including the conservative Madison-based MacIver Institute question whether states should even be in the business of subsidizing business.

“We believe government does not have a role in this arena,” said Brett Healy, executive director of MacIver, which promotes a free-market approach. “Any time the government gets involved in this type of corporate welfare, picking winners and losers, all sorts of problems crop up.

“If we take a step back and be honest with ourselves, this is not a critical or core mission of state government,” Healy said.


Via What should Wisconsin do to boost business? @ State Journal.


Education: Substance & Spending

Following comments to yesterday’s post on proposed cuts to the UW System schools (Caution arrives late, doesn’t recognize its surroundings), here are nine quick comments about education.

1.  Act 10 as a budgetary tool.  This centrally-planned idea didn’t work.  Reductions in public-union bargaining powers in exchange for the ‘tools’ to balance school and other public budgets hasn’t brought balance.  If it had, districts across the state wouldn’t have felt the need to go to referendum so often (or so easily). 

2.  Act 10 as a matter of labor policy.  Here’s one libertarian, from an old, movement family, who will always believe that any worker, peacefully and conveniently, should have the right to assemble, associate with others, and bargain collectively against the government.  Collective bargaining rights should be – but sadly aren’t recognized properly – as rights of association.   

There are those who don’t believe that public workers should be able to bargain collectively against government.  They’re not libertarians; they have different names.  They’re called conservatives, Republicans, etc.  

3.  How WEDC spending matters within a given budget.  It’s true that within any given budget, if one municipality doesn’t take white-collar welfare, another may.  Practically, this means that funds appropriated within a given year will probably be scarfed by one glutton or another.  Stopping what’s been authorized and appropriated immediately is hard.

4.  How WEDC spending over time affects budgeting.  Use of these funds for insiders’ programs signals demand for insiders’ programs.  The problem of the WEDC is that bad spending after bad spending compounds a distorted, government-driven incentive to fund undeserving cronies and projects.

The Innovation Center predated the WEDC; Whitewater’s eagerly lapped two rounds of WEDC funding, and wants a third.  Most – but not all of it – has gone to white-collar projects undeserving of the cash.

5.  What officials’ commitment to WEDC spending (for example) says about education.  It says they’ve substituted a true learning in the humanities, social sciences, and natural sciences for a hyper-politicization of the academy. 

Government support for business insiders is a distortion of properly functioning markets, a perversion of a sound teaching in markets and economics.  (That’s why I’ve described corporatism as a gutter ideology – it’s like a junk science.)

It’s repulsive because it doesn’t work as advertised, and advocacy of it rests on dishonesty that’s inimical to a genuine commitment to the truth. 

One might look upon some of this this as finger-pointing, but I’ll always believe that the embrace especially of these software-startup-whatever projects is simply alchemy, not legitimate science, so to speak.  In these eyes, it’s a significant degradation of education and university life. 

I don’t think it’s high and sophisticated; I think it’s low and base.

6.  On state budget cuts generally, for the last two budgets and the next. I would have spent and would spend (or borrow) nothing on road construction (just the least possible repairs), nothing on the WEDC or its proposed successor agency, and would have frozen overall state spending in Gov. Waker’s first term (it’s been rising).  This would have meant state employee layoffs, but it would have preserved (as much as possible) spending on the poor and for education.  

A spending freeze produces a smaller government. 

7.  State university or K-12 education cuts, specifically, would never have been to my thinking. An overall freeze may act as a cut, of course, but even so one much smaller for education than anything we’ve seen or likely will see. 

Billions might have been and yet could be saved apart from education. 

8.  Autonomy for the UW System.  The System would benefit from strong autonomy; the farther it’s away from politics, the better. 

9.  Legislatively-imposed tuition freezes.  I’d let universities decide what to do about tuition; competitive (not regulatory) pressures should influence their choices. 

There is a love of education, a true one, that rejects both how state officials and local university administrators have managed these last few years. That’s the place in which I and others of like views find ourselves.  

At Council Tonight…

At Common Council tonight, there’ll be, among other items, ongoing consideration of the proposed 2015 budget, and a presentation from Chancellor Telfer on the Tech Park.

Both items offer curiosities. As in past years, City Manager Clapper will stand back from the discussion of the bus, but happily accept any money Council offers for it. It’s an unavailing position: his administration either supports funding or it doesn’t support funding. Mr. Clapper is not somehow disconnected from his own administration, as though a bystander to this proposed budget (one that is, in a 289-page document, of his own drafting).

The second curiosity is Chancellor Telfer’s scheduled presentation on the Tech Park. It’s hard to fathom why Richard Telfer thinks this tech park will be a legacy for him. It’s a shabby affair, and won’t get better. He was a favorite of many as chancellor because, as a longstanding resident, it seemed as though he’d be able to manage city-campus relations fairly well. He’s made hash of those relations, and student and non-student residents are as far apart as ever. A few new buildings on campus, or a multi-million-dollar home for CESA 2 near a dog park, will not cement a worthy legacy.

Both topics are well worth following.

Innovation Center Offers a Seminar on How to Go Out of Business

Nutty, but true: the Innovation Center – the Disappointment that Keeps on Disappointing™ – is apparently offering a program entitled, “What you Will Need to Know When You are Ready (or Not) to Sell Your Business.”

It’s part of – wait for it – the Center’s ‘Elements of Success‘ series.

Honest to goodness, for all the talk about marketing the town – about a comprehensive marketing plan – one would think that a seminar on getting out, folding, quitting, cashing in, giving up, etc., would not be a PR man’s first topic choice.

Chancellor Tefler, in particular, repeatedly & laughably hails his multi-million-dollar boondoggle as a great success.

Forget their ill-considered seminar.

There are opportunities to grow, build, and expand in Whitewater, and they’ll come in places wholly unconnected to a publicly-funded Tech Park and so-called Innovation Center.

Local Crony Capitalism via the WEDC (and similar schemes)

Whitewater’s had a decades-long problem of a few town insiders manipulating government and public resources for their own private ends.  That time is drawing to a close, but there are yet some years ahead in which aging, mediocre town figures will push their self-promoting lies. 

As their chief motivation is personal vanity and pride, they’ll not let go.  On the contrary, they’ll look for any impressionable bureaucrat or politician they can find to perpetuate and extend their manipulations for another generation. 

(They’ll know whom to find; like confidence men searching for an easy mark, they’ll find those they can dupe, cajole, or intimidate.)

There are three reasons these efforts will fail.  It’s not commentary or criticism that will make the difference, but broader social forces that will make Whitewater inhospitable to this kind of trickery.

Economics.  First and foremost, when Reed Hall of the Wisconsin Economic Development Corporation peddles crony capitalism and white-collar welfare at taxpayer expense, he peddles a false economics, a greedy policy, and a gutter ideology. 

It is impossible that any number of these men have somehow developed an economic scheme more productive and more efficient than free transactions in the marketplace among private, voluntary parties. 

One would have to believe, against all reason, that Reed Hall, Chancellor Telfer, former City Manager Brunner, and CDA Chair Knight have established a set of relationships superior to the market, superior to the teachings of Nobel laureates Hayek, Friedman, and James Buchanan. 

They’ve done nothing of the kind.  They’ve simply adopted the practices of vulgar banana republics abroad, and sprinkled them with legitimate economic terms used in illegitimate ways.

Mr. Clapper, at the so-called ‘special meeting’ for round two of taxpayer-grants to white-collar recipients, declared that these distributions were akin to chemical reactions, as though this were a true science.

No, Mr. Clapper, it’s not chemistry, but alchemy, you were extolling.  

Politics.  The building coalition against these sort of projects, nationally and statewide, of small-government conservatives, liberals, and libertarians will overwhelm a few oily flacks and their few duped friends.

There’s a whole series that could be entitled, “How a Few Conservatives Ruined Conservatism in Whitewater.” No one has done more damage to the GOP brand in Whitewater than a few local, big-government Republicans, a couple of big landlords and real estate agents, and the few misguided liberals and bureaucrats they’ve collected along the way. 

The Right is reduced to hoping on red waves elsewhere to win here.  It didn’t need to be this way – they did it to themselves. 

It’s impossibly sad that local insiders ruined a party’s reputation this way.  A new generation will have huge local damage to repair. 

Picking this as a stand for the future is politically misguided.  If one wanted something persuasive for the community – rather than persuasive merely for a few who’d like to bigfoot the rest of the town – no one would pick this.  

One of Wisconsin’s major parties is now slamming the WEDC, no one in the Tea Party believes in it, and libertarians have never supported these proposals. 

If one had to pick a political consultant, I’d suggest someone other than the flacks behind these handouts to the well-fed. 

Selfishness.  Richard Telfer contends, predictably, that this selfishness is a virtue, does he?  He did all this for you, you see, so it’s not selfishness at all, but altruism

Where are his supposed gains, great successes, and jobs, and at what price?  Let him enumerate each job, the work performed, the true public cost, whether these few already have jobs (including public ones), etc. 

Not merely names of so-called startups, but an actual accounting, based on accepted national standards of accounting and evaluation

Statewide, when looking at what the WEDC has really done, it’s lies, exaggerations, and shoddy work

But Mr. Telfer claims that he did it all for you, Argentina Whitewater:

Oh, no.  These few did it for their own self-aggrandizement on the backs of ordinary wage-earners.

And that, truly, is why all of these schemes are heading for the dustbin. 

Would They Run On It?

When local government’s politicians and bureaucrats propose big projects, they should ask themselves: would we run on it?  That is, would they run on a standalone vote for (or against) their proposal? 

The open secret of local politics is that I’d guess many – if not most – of the big projects proposed would fail if put to a vote. Often, that would not be a matter of cost, but of priority: Many projects are generally needless, benefiting only a few well-placed businessmen. Genuine needs of a truly disadvantaged few are ignored

Local politicians and bureaucrats know this well, so they (1) conceal fiscal costs, (2) conceal or lie about other reasoned objections to a project, (2) conceal or lie about the actual beneficiaries (their cronies) of a project, and (4) use their willing toadies in the local press to trumpet imaginary successes after a project is completed. 
I’ve no doubt that if the Innovation Center, for example, had been put to a referendum in Whitewater, it would have failed.  Claims for it have been false promises, exaggerations, or outright lies.  Not one of the boosters of that project would have won a stand-up contest on its merits. 

Those gentlemen imagine themselves town notables, but they’ve an effective political circle only of hundreds, in a town of thousands. 

Now, someone might propose a question on principle, and run on it regardless of the chances for success.  Most local town squires are not like this – they’d rather win behind closed doors than contest an issue fairly before all the public. 

They feel this way, surely. 

Then again, everyone else knows this about them, too.  

What’s an Entrepreneur?

I would think, and perhaps you would think, too, that an entrepreneur is a man or woman who runs a private business, bearing the risks and demands of his or her enterprise. 

For this reason, Americans are sympathetic to entrepreneurs and entrepreneurial efforts – we admire the creativity and effort of business men and women who take risks to build something productive.

Knowing Americans admire entrepreneurs, a small class of publicly-funded men, and the lobbyists and press flacks who represent them, frequently take the concept of genuine private entrepreneurship and apply it to big, taxpayer-funded projects for their white-collar friends. 

They use a clear word for their darker needs.

They’re neither poor nor otherwise disadvantaged, these public men.  Nor are they among those who deservedly seek modest assistance for genuine hardships. 

Instead, these well-fed few push themselves to the front of the line, seeking large payments (often amounting to millions), for their projects and those of their oily friends, on a public tab. 

It’s in this way that – absurdly – public institutions, managed by public men who have never worked in private enterprise, fund so-called entrepreneurs in residence at public schools, build innovation centers, and pay for the marketing services of press agents and lobbyists to lap still more from a public bowl.

For all that they take, they take one thing more: they distort language and steal words in an attempt to make their public, white-collar welfare look like private enterprise.

It’s not. 

Innovation as a Fad

Innovation is both a genuine development and a fad.  

In a free society, with unrestricted flows of information, capital, labor, and goods, it’s nearly inevitable that people will improve products and services in powerful, clever ways.   

Innovation – the word, the idea, etc. – is also a contemporary fad, the jargon of our time.  It may be one of the greatest fads of our time, this ceaseless chattering over ‘innovation’ in our politics and economics.  Read, watch, and listen and one finds that – from any direction – America must innovate, must be innovative, desperately needs Innovative Ideas, Innovation Centers, Innovation Programs, Innovation Projects, Innovation Cats & Dogs, Innovation Cereal, etc.    

Over at the New Republic, there’s an essay entitled, Our Naive “Innovation” Fetish that describes how vacuous the term innovation has become.  (The essay mostly criticizes the fad of innovation from the left, because that’s the orientation of the magazine.  Still, author Evgeny Morozov rightly sees over-use of the term as an across-the-spectrum problem.)

I know that there’s a section in the local Gazette that focuses on innovation.  The New Republic‘s essay pre-dates the section in the Gazette, but nicely illustrates the over-use of the word.  

The term – repeated in communities incessantly as though it were a mental tic – is mostly empty when so repeated, borne of insecurity and the chicanery that feeds on insecurity.  

‘Innovation’ has the nature, if not the illegality, of a confidence game to it: “It all begins with ‘you really, really need to do this,’ ‘I just know you can do it,’ and ‘let me be the one to help you.’

In so many cases, and certainly in Whitewater, projects for innovation are (1) schemes to take public money, (2) pretend it has a productive or civic purpose, (3) while actually using it to enrich undeserving, white-collar business people and their connected friends.   

That’s not a crime, but it is repulsive corporate welfare.  

It is the truly needy who have a claim to public support, not a collection of cunning, insatiable men.

Among those who flack innovation as a political solution, one will find, principally, the scared and the scheming.  The first group is sadly desperate; the second is a white-collar group using others’ desperation for its own private profit at public expense.

About that iButtonLink Announcement…

An aspiring musician tells his friends that he performed to a standing-room-only crowd at Carnegie Hall. Needless to say, they’re impressed. “It’s great that your songs drew such attendance,” they observe.  

“Why, yes,” the musician replies, “it must have been my music, although I suppose the free tickets and fifty-dollar gift packages might have had something to do with it.”  

In November, to much fanfare, UW-Whitewater proudly announced a new tenant for the publicly-funded Innovation Center. (I’ve reproduced the press release, in full, below.)

In those eight paragraphs and three-hundred seventeen words, one reads about what a great deal it is, how much space they’ll occupy, how long they’ve been in business, and that they’ll move a handful of employees over from East Troy.  

All this is meant to show how very skillful the tech park’s leaders have been in landing someone, anyone, to move into the Innovation Center.  

It’s just that there’s one relevant and material aspect of the relocation that the university’s press release conveniently omits – that iButtonLink also received a one-hundred thousand dollar ($100,000) public loan from Whitewater’s Community Development Authority.  

See, from the 12.18.13 CDA packet, the notes from the 11.20.13 CDA meeting, at Item 8(3), loan approved unanimously.   

Maybe it’s not just the music…

Press release immediately below – 

iButtonLink, a research and manufacturing company focused on networked sensor solutions, is moving its operations to the Whitewater University Innovation Center.

The company signed a five-year lease on Thursday and will occupy five suites (4,063 sq. ft.) on the Innovation Center’s first floor, making it the largest private tenant in the building.

“We are excited at this opportunity,” said Rob Olson, iButtonLink CEO. “For a technology company like ours, the ability to collaborate with the university, the excellent labor pool in Whitewater, and the great support of the community all enable us lead in the ‘Internet of Things’ space.”

“iButtonLink will bring new energy and technological expertise to the community,” said Richard Telfer, UW-Whitewater chancellor. “I am particularly excited about the company’s plans to engage UW-Whitewater students, faculty and staff members in its business operations.”

Much of that collaboration will happen because of iButtonLink’s participation in the Whitewater Incubation Program. The program is designed to provide coaching, mentoring, and support services to businesses linked to the Innovation Center. UW-Whitewater faculty experts and students assist with growth opportunities, business plans, and marketing and branding.

Founded in 2003, iButtonLink produces and distributes high-quality sensors and solutions that can be outfitted to fit any business needs. Products include temperature, humidity, voltage and light sensors, to name a few. iButtonLink serves clients ranging from Fortune 500 companies to small start-ups, and its products have been used in the harshest environments around the world, from the Antarctic to the African savannah.

“iButtonLink is a great addition to the Innovation Center,” said Jeffery Knight, chairperson of the Whitewater Community Development Authority. “They will add a well-established product line and also create a research facility for future product development. Our building and their needs are a perfect fit together.”

Olson said the company and its 10 employees expect to relocate from the current headquarters in East Troy to the Innovation Center sometime in December.

Yet Another Exercise in Standards Beneath Whitewater

It should be a universal truth that Whitewater and Wisconsin deserve a far higher standard of diligence and review than whatever our CDA chairman believes his “gut” tells him would be good for our city and nearby area.

In fact, that kind of intestinally-based level of judgment has failed this city time and again, and is beneath the level of care that any well-organized, reasonable American city deserves.

You’ll see another example of this sort of serial mediocrity in a breathless story at Whitewater’s news site that a recycling company, unable to get a permit to mix toxic substances into (supposedly safe) floor tile, was denied (so far) permitting in Wisconsin. The company now insists it will build in Arkansas.

A company known only to a few, develops an industrial process that the State of Wisconsin won’t even certify, apparently created at a third-tier school far away, using ingredients known to be toxic, with grand financial claims that have no independent verification whatever, and one is supposed to accept it all at face (or stomach) value.

To accept these contentions would require a child-like credulity unsuited to normal men and women. It’s as though any bad idea, however silly or dangerous, should fly into one’s ear, and from ear to brain to keyboard to ordinance.

It’s just another simple-minded attempt to prey on a city’s legitimate economic concerns to stampede acceptance of whatever ill-considered proposal a few unelected men shove forward, including proposals to give themselves additional authority.

Add a logo at the top of the story, I suppose, and suddenly all the necessary and legitimate questions of safety, value, cost, accountability, etc., just melt away.

They don’t, and they won’t.

No, That’s Not Why There’s an Innovation Center

Perhaps, just perhaps, Whitewater’s a laboratory for testing the theory that if one repeats a flimsy explanation long enough, it will become true.

Over at the Daily Union, there’s a recent story about a university project that’s developed a smartphone app that allows users “to link organized recreational activities with social media.” One reads that it’s a “mobile community engagement platform.” (See, UW-Whitewater professor’s app helps park, recreation programs.)

Here’s what it reportedly does:

Strive is an app that can be downloaded to cell phones for free. It works with formal, often municipality-sponsored, recreational programs such as little league baseball teams, soccer teams, dance lessons, nature walks, or any recreational activity with the participants.

Fair enough, it’s an app for the limited number of smartphone-using people who often visit municipal parks, dances, nature walks, etc., and need an additional application to schedule their visits.

University Chancellor Telfer, predictably, sees all this in the grandest terms:

UW-Whitewater Chancellor Richard Telfer said the Strive app represents what the Innovation Center is all about.

“This product is the result of UW-Whitewater faculty members, students and the community sharing their creative talents,” he said. “This is exactly the kind of collaboration we envisioned when we conceived of the technology park. Companies like Slipstream have found the Whitewater Innovation Center to be a supportive base to grow their businesses.”

No, and no again: the millions in EDA funds and millions more in municipal debt were not spent so that Chancellor Telfer could crow about a smartphone app for scheduling park visits. Here’s why the federal government really spent that money (and why the city borrowed millions more):

September 7-September 11, 2009

….$4,740,809 to the Whitewater Community Development Authority, the University of Wisconsin Whitewater, and the City of Whitewater, Wisconsin, to fund construction of the new Innovation Center and infrastructure to serve the technology industrial park, including a road linking the project with the University of Wisconsin’s Whitewater campus. The goal of the project is to create jobs to replace those lost in the floods of 2008 and those lost from recent automotive plant closures. The Innovation Center will serve as both a training center and technology business incubator and will be constructed to meet Leadership in Energy and Environmental Design (LEED) green building certification standards. A portion of the project’s cost will be funded through EDA’s Global Climate Change Mitigation Incentive Fund. This investment is part of an $11,051,728 project which grantees estimate will help create 1,000 jobs and generate $60 million in private investment.

Those thousand jobs from blue-collar industry will not be replaced with money spent on white-collar welfare for smartphone-using residents.

No one needs or deserves a smartphone app created at public expense. No one. We’ve people who need food, clothing, and shelter in this very city and across Wisconsin.

Not only isn’t this the stated justification for these millions, it’s a shockingly slight justification at that.

The Truth about the Wisconsin Economic Development Corporation

A person should be able to make simple distinctions, as between the sensible and foolish, or practical and impractical. Sometimes those distinctions should be clear, and as stark as the difference between the contents of a sample cup and a glass of Chardonnay.

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You’ll hear a lot locally over the next few days about a ‘partnership’ between Whitewater and Gov. Walker’s Wisconsin Economic Development Corporation (WEDC), the public-private hybrid replacement for the Wisconsin Dept. of Commerce.

You’ve probably read in these last few days that there’s more to the WEDC than grant funding. This agency has been a train wreck since its formation. It’s an inefficient, mistake-prone exercise in crony capitalism on a grand scale.

Here’s what publicity-mad insiders don’t want you to recall about the Wisconsin Economic Development Corporation:

The WEDC wanted hundreds of millions in people’s pension funds. See, WEDC request rejected | $200 million was sought from state pension fund.

This supposedly private venture relies on public money, from ordinary taxpayers, to pick and choose businesses it prefers. Greedy for more, the current head of the WEDC

….Reed Hall asked the State of Wisconsin Investment Board in November for the venture capital seed money. The board rejected the request late last year, saying that the use of pension funds to pay for economic development initiatives “does not meet our fiduciary duty.”

These aren’t private men investing their own money – they’re public men avariciously looking for every last dollar of public money they can control, even from the pensions of ordinary workers.

That’s their vision, their proactive approach, their supposedly new idea: to take from weaker people while ignoring people’s basic needs.

The WEDC has neglected millions in taxpayer funded loans. See, Neglected WEDC taxpayer-financed loans grow to $12.2 million.

Borrowers have fallen behind in making payments on taxpayer-funded loans worth $12.2 million in total that were neglected by officials at the state’s top jobs agency – $3 million more than was previously believed to be at risk.

As of Nov. 2, borrowers were late in making payments totaling $2.5 million, but the state could easily end up losing more than that, records show. One late borrower, Flambeau River Biofuels, is unlikely to repay $2 million of its outstanding loans from the state, though the amount currently past due is only a fraction of that total, according to state figures and past interviews with its owner.
The Wisconsin Economic Development Corp. Friday afternoon turned over the information on the 67 past-due loans and a stack of other documents in response to an open records request by the Milwaukee Journal Sentinel.

There’s Whitewater’s new ‘partner’: a negligent organization that doesn’t properly account for the people’s money.

The WEDC has tried to conceal its problems. See, WEDC won’t say whether past-due loans top $9 million.

…the state’s top jobs agency isn’t saying whether the total amount owed to taxpayers by scores of unnamed businesses could go higher than the $9 million figure that officials first estimated.

A spokesman for the Wisconsin Economic Development Corp. told the Journal Sentinel that the agency wouldn’t provide information on the total owed until it finishes an internal review that will take an unspecified amount of time. “WEDC is developing a corrective action plan. It is reviewing each loan and the status of each loan. We will provide additional information when we have completed the review,” WEDC spokesman Tom Thieding said.

Last week, the newspaper [MJS] reported that the agency had discovered it had failed to systematically track nearly $9 million in loans that are not current. As a result, WEDC’s chief financial officer resigned and GOP Gov. Scott Walker, a champion of the quasi-public agency created last year, brought in a new interim leader.

If one had a drunk, coma victim, or skid-row bum for a partner, he’d still be more responsible than this agency.

The WEDC has been the subject of federal complaints. See, Walker aide apologizes over handling of WEDC federal complaints.

Most people shy away from misconduct in public affairs, and one good reason would be when a state agency is under federal investigation:

Gov. Scott Walker’s top cabinet secretary apologized to the state’s flagship jobs board Thursday for not telling them about sharp criticism from the federal government about legal violations by the state and promised to keep them better informed in the future.

The apology by Department of Administration secretary Mike Huebsch came after a member of the Wisconsin Economic Development Board told Walker that he is frustrated about the lack of communication and will resign if it doesn’t improve. Huebsch, a nonvoting member of the WEDC board, had said he had first wanted to resolve the outstanding issues with HUD – initially raised more than a year ago.

“I should have brought this to the board earlier and it was my mistake not to do that. . . . I thought it was premature but it clearly wasn’t,” Huebsch told the board in a telephone conference Thursday. “I will certainly err on the side of providing greater information in the future.”

The WEDC has a mediocre jobs record. See, Second review gives low marks to state jobs agency.

Even a second review’s not the charm:

Another independent report has found that the tracking of millions of dollars of taxpayer-funded loans at the state’s flagship jobs agency hasn’t measured up, and Gov. Scott Walker could soon be interviewing finalists to turn the agency around.

The latest report by a subsidiary of the state bankers group showed that the Wisconsin Economic Development Corp. didn’t have the right bookkeeping policies, computer systems and collection procedures to track the loans that the agency made to businesses. Walker, who also serves as the chairman of the WEDC board, last year signed legislation creating the organization as a replacement for the former Department of Commerce.

In a four-hour meeting of the WEDC board Tuesday at the Marshfield Clinic in Eau Claire, Walker acknowledged and pledged to correct the failures in basic accounting practices at the quasi-public agency that in recent months have drawn attention away from its mission of creating jobs.

There we are. Just a quick survey of the Wisconsin Economic Development Corporation shows it to be one of the worst-performing organizations in the state.

A sensible man or woman would do well to stay as far away from the WEDC as possible. It’s only the foolish or the gluttonous who’d hold out their hands, asking from this agency for as much public money as they could carry away.

In any event, it’s worth watching and tracking what happens to these grants, as it is for all the money the Wisconsin Economic Development Corporation has taken from the public.

The New Whitewater Start Up Grants (in Proper Perspective)

Whitewater’s Community Development Authority has been working on a seed capital fund (working on this fund for some time), and today the Wisconsin Economic Development Corporation has announced a $150,000 matching contribution to the CDA, and two grants – each in the amount of $10,000 – for entrepreneurs from that fund.

The matching grant from WEDC “is providing a $150,000 “Capital Catalyst” matching grant to the CDA which will be used for grants to new-start companies and to take a debt or equity position in the emerging businesses selected. The CDA is providing a dollar for dollar match of the award.”

Here’s more about the program:

WEDC’s Capital Catalyst program provides grants to regional organizations or communities to leverage matching funds to provide seed funding for start-up and emerging companies. This is the second investment made by WEDC in a regional fund. The first was made in October 2012 to the Innovation Fund of Western Wisconsin in Eau Claire.

The CDA will create an investment committee which will establish criteria for awarding grants and an application process, and oversee the administration of the seed funds. Funds are to be invested into Wisconsin innovation-based businesses. Some of the industry sectors of focus include advanced manufacturing, agriculture/food processing, information systems/software, medical device, renewable/green energy.

The award made by WEDC requires at least one-third of funds allocated by WEDC ($50,000) as direct grants not to exceed $10,000 per business. The CDA must award the remaining two-thirds of the funds awarded by WEDC and the match (total of at least $250,000) to Wisconsin start-up businesses.

The two start ups are Date Check Pro and Got Apps, Inc. There’s a relationship between the two: Date Check Pro is a customer of Got Apps, Inc. The City of Whitewater is now providing rent assistance to the companies, and the two share office space in the city.

A few remarks:

1. Best wishes. I hope the two start up businesses take off and do well.

2. Public funding. Better to have no public funding, but in the scheme of all possible projects, this is a fairly modest investment. Consider that the federal and city governments spent almost eleven-million on the Innovation Center, a quarter-of-a-million on a Janesville bus, and hundreds of thousands for the North Street Bridge in Whitewater.

This matching grant is far less than those efforts, each of which – by the way – brought almost no jobs to the city.

3. Jobs. Each of these two start up companies has a few employees, and success may bring more. One hopes so.

And yet, and yet, it’s worth noting again that the Tech Park’s Innovation Center alone was supposed to lead to a thousand jobs and sixty-million dollars in private investment. See, Whitewater’s Innovation Center: Grants and Bonds.

When Gov. Walker looks around today, he’ll see an ‘Innovation’ Center building that took millions in public money and millions more in public debt (bonds). He won’t see anything like the promised benefits of that vast expense – just the shuffling of some existing public workers from Milton to Whitewater.

4. The Press. If you’re writing this up as a regurgitated press release and gubernatorial campaign ad, why bother? The WEDC and Gov. Walker already have a release, ready to go as is.

No reason to manufacture a knock-off, when they’re offering the original, free to anyone.

5. Exaggeration. Whitewater’s leading officials have the bad habit of trumpeting sparrows as eagles, not to make others gain confidence, but to promote themselves and their supposed triumphs.

It’s a bad habit – a mental tic – of a few people in this town. Everything has to be monumental, amazing, unparalleled, or stupendous (often all of these, at the same time).

That kind of exaggeration is bad for our politics, distorting actual accomplishments for insiders’ supposed benefits, and makes the town look small, not big.

Whitewater’s a good and beautiful place, but genuine, enduring prosperity calls for a more level-headed perspective on the town’s economy and accomplishments.

This city should be more than a stage prop for an incumbent governor’s public spending and political messaging.

In time, it will be.

Amps, Business, and the Innovation Center

There was a story recently about a tenant at the Whitewater Innovation Center that makes a device for controlling a guitar amplifier.

The story’s notable for four reasons: (1) it under-reports the actual cost of the Innovation Center and Tech Park by about half, (2) the current uses of the Innovation Center are so different from the stated purposes of the main federal grant that those uses are wildly odd, (3) the tenant’s product is similar to one that Neil Young created years ago without subsequent market interest, (4) the rent-free deal that the tenant received is a bad idea.

The Innovation Center is a ‘business incubator’ with few actual businesses.

The Cost of the Innovation Center and Tech Park so far.

The story reports this public cost as “$5.7 million,” but that’s nowhere close the cost of a project that received a $4.7 million-dollar-grant and then additional millions in local municipal bonds (debt) to which the City of Whitewater is now obligated. The total cost is over eleven million in public money, not $5.7 million. Reporting of costs in the story conceals the true public expense.

What was this Center for, anyway?

It’s been described along the way variously, as public relations needs have shifted. This was a slapdash effort, where officials took grant money as soon as they could, and then thought up uses (tenants, descriptions, etc.) only afterward. Here’s what the Economic Development Administration proudly declared when the Tech Park Board took a multi-million-dollar grant:

September 7-September 11, 2009
….$4,740,809 to the Whitewater Community Development Authority, the University of Wisconsin Whitewater, and the City of Whitewater, Wisconsin, to fund construction of the new Innovation Center and infrastructure to serve the technology industrial park, including a road linking the project with the University of Wisconsin’s Whitewater campus. The goal of the project is to create jobs to replace those lost in the floods of 2008 and those lost from recent automotive plant closures. The Innovation Center will serve as both a training center and technology business incubator and will be constructed to meet Leadership in Energy and Environmental Design (LEED) green building certification standards. A portion of the project’s cost will be funded through EDA’s Global Climate Change Mitigation Incentive Fund.

This investment is part of an $11,051,728 project which grantees estimate will help create 1,000 jobs and generate $60 million in private investment.

The goal: “….to create jobs to replace those lost in the floods of 2008 and those lost from recent automotive plant closures.”

Here’s what tenant Renwig wants to do:

The founders of Renwig have added robotics to a tube amplifier that allows guitar, bass and piano players to change the volume, tone, gain and equalization of their amps with the press of a foot switch. An initial design features four switches allowing four preset sounds to be used. Future designs could allow for dozens of preset sound changes.

One wishes Renwig well – sincerely — but there are reasonable questions to ask about their venture and their tenancy at the Innovation Center.

Neil Young’s Whizzer.

It was Twain, I think, who famously quipped that the Ancients stole all our ideas from us. If not the same ideas, then perhaps similar ones.

Guitarist Neil Young created something for amps, called the Whizzer, that’s similar to Renwig’s described design. My point is not that Renwig copied the idea, but merely that Neil Young’s idea seems similar — and there’s a market implication to that similarity.

See, from an article that originally appeared in Guitar Player magazine, a description of Neil Young’s Whizzer:

On top of the amp is a Whizzer, a device that physically turns the amp’s knobs. Neil came up with the idea, and Sal Trentino, his amp tech, made the first one. This was a 2 position Whizzer that he used starting on Rust never Sleeps in 1978. The new one was made by Rick Davis in 1991. It’s got four presets that completely control the three knobs on the top of the amp. He locks in the preset he wants, and it will always go back to that particular spot. We find that when you have the volume and tone all the way up, by turning that second volume knob up to about 10, it starts to fade away. But right before it starts to fade away, something else happens, and that has to be in exactly the right position. You can’t breathe on it, or it fucks it all up.

Here are Neil’s Whizzer settings: For the highest volume, we have both the tone and the main volume on 12 and the second volume knob is at about 9.9. When it really compressed and breathing and screaming, that’s whats going on. You can hear it on “Cortez”. If we push it past 9.9 the sound goes away. The next button down moves his volume to 10, which just cleans it up. It’s still broken up but its less garbled. The third button sets his volume on 6 with his that other volume still at 9.9 and the tone just down a little. The fourth preset moves one volume to 3,the other volume to 0, and backs the tone off a bit, its really bright and clean, almost country sounding.

He activates the settings via foot switches on the red box that’s always in front of him. Across the slanted part that’s always closest to him are five buttons: Four for buttons control the volume on the Whizzer, and one for the reverb kill. Inside the box are all these relays and the actual effects devices. There are seven buttons on the top plateau of the box. The one on the left hand side is mute and tune: You step on that and no sound comes out of the amplifier. We have 5 Strobe-O-Tuners up there, one for each note in standard tuning. The next one is for a green, AC powered MXR analog delay that’s mainly used in conjunction with the next button, an ancient Mutron octave divider. That’s used for ” Out of the Blue”, when we really want to fatten up the octave divider. The next button is for a master loop that switches any of the top devices in and out, except the tube reverb. The next one is for a real strange unit, a large very old Boss flanger in a blue cast metal box. He hits that only when he wants to get totally crazy.

Other guitarists have remarked on the Whizzer (dating it from decades ago) and one has remarked that the Renwig device seems similar.

There’s mention of robotics with Renwig’s device, but this may be a distinction without a difference.

These similarities to Young’s Whizzer — a device dating back decades — are significant because it’s a good way to measure market demand for Young’s device, or similar devices.

Quite candidly, the Whizzer is known to guitarists, yet decades after it was first described, there’s still no robust production of a device like that.

There are two principal possibilities: (1) the time wasn’t right until now, or (2) the time’s still not (and may never be) right for commercial production of the kind Renwig contemplates.

That doesn’t make Renwig’s idea inauthentic (I am sure they arrived at it on their own). It does make it commercially questionable. Had demand been greater these many years, there would likely have been an earlier Renwig by now, so to speak.

That’s a reasonable– in fact almost obligatory — observation when thinking about their prospects.

Rent and Equity.

One reads that Renwig has three years’ free rent at the Innovation Center in exchange for a 5% equity stake in their business. I’m opposed on principle to a deal like this: government should not be taking equity in private business ventures. Private funding should support private deals.

There’s vast private investment money in America (the wealthiest and most technologically-advanced nation on earth). Businesses should not rely on taxpayer subsidies in a society where banks and private investors can back ideas like this.

In any event, I think that any equity stake in lieu of rent reduces the Center’s immediate revenue on the highly speculative hope that there’ll be something valuable years from now.

Officials make these deals with only limited accountability. They offer public officials the shiver of excitement from wheeling and dealing without private accountability.

One can easily understand public money for public safety, the administration of justice, or emergency needs for the poor.

Commercial speculation should sit beyond those uses, in the realm of private risks and private rewards.