Update on the Spectrum Brands State-backed Deal

I wrote earlier about the Wisconsin Economic Development Corporation’s millions for Spectrum Brands (Rayovac, among other brands). The professed purpose was to keep the company in Wisconsin. As it turned out, they took they money, as part of a relocation to Middleton, Wisconsin. There’s scant credible evidence that they truly were prepared to leave.

A reader writing from Georgia took exception to the post, quite sure that he was knowledgeable about these sort of deals. He’s free to assert what he wants, but all of the four points that I made are true:

Millions spent on a business relocation for a corporation that (1) withheld its identity, (2) was already in Wisconsin, (3) used flimsy worries about protests at the Capitol as way to curry favor with the Walker Administration, (4) where the head of the Wisconsin Economic Development Corporation now admits that the Wisconsin business’s move within Wisconsin was something he did not discuss with them.

That Spectrum Brands did withhold its identity for a full nine-months is undisputed. See, for example Emails: Spectrum hid identity in site search.

The reader seems to think that to assert they withheld their identity means they always withheld it, that they withheld it permanently. That’s just silly — the underlying story from on which the post was commentary and a subsequent story from the Wisconsin State Journal refer to a nine-month delay.

If I were to write that parents withheld a child’s dinner (a bad idea, in any event), it doesn’t imply that they starved the child to death.

If these were the extent of his objections, I wouldn’t bother to reply.

There’s another reason for my update. Along the way, the reader asserted that these deals only happen where there is a ‘multiplier effect.’ There was no assurance of any multiplier effect — even assuming one believes so very deeply in such government calculations — in this instance:

WEDC agreed to give the company $4 million in exchange for its promise to keep its 470 existing Dane County employees through Sept. 30, 2016, and invest $40 million in its Wisconsin operations by that time. If it fails to fulfill these requirements, it must pay back the $4 million with interest. Otherwise, it owes nothing beyond an $80,000 origination fee.

That’s no ‘multiplier’ at all — it’s a big corporation doing what it has been doing – in the state in which it has been doing it, with the help of taxpayer-dollars to do it in a new location. If they fulfill none of these terms, they still get a state-backed loan, at interest more lenient than what they’d find in the market.

If they do what they have been doing, they get a multi-million-dollar forgivable loan less eighty-thousand.

Walker Administration, Doyle Administration, etc. — it matters not at all; this is bad policy in any event. The people of Wisconsin owe Spectrum no public help.

State capitalism is sham capitalism. Government should not be making these loans.

Yet, so partisan is our politics, that as long as one’s own party makes these deals, it must be a good idea — it’s all for business, you see. That’s why Walker supporters (mostly) will turn a blind eye to these business-coddling deals. They were and are all for the market, until they take office and dish out public funds.

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