The truth about taxes

Facebook Friend Michael Smith:

Taxes suck. Some taxation is necessary but in general, taxes suck. They especially suck when they are used in social and economic engineering because, like anything that becomes political, they are subject to manipulation as politicians attempt to curry favor in the class war.

I was part of a discussion on a friend’s post where a person actually thought the income tax was implemented as a tool to “equalize” incomes and that’s why a progressive tax scheme was “popular”.

No. Just no.

Income taxes were initially implemented as temporary tools used to pay off debts for wars – that was before politicians figured out taxation was a gravy train and the 16th Amendment was ratified. Then things got nuts and we got the Current Tax Payment Act of 1943 which authorized withholding – allowing the government to take a percentage of your earnings before you even see them.

The fundamental premise that we should enact tax policy to “reward working people” or to “penalize the idle rich” is flawed and why there will never be agreement on tax “reform”. Of course any across the board tax cuts “benefit the rich” – the top 20% now pay 95% of all income taxes.

The idea that investment income isn’t taxed enough is just a collectivist back door to wealth taxation, as are estate taxes. What right does any entity have to confiscate a percentage of what someone has earned or built? Sure, wealth is concentrated – it always is – but as some have noted, 20% of the tax filers pay 95% of all income taxes. How is that by any definition a fair distribution, especially when each vote counts the same?

Taxes should never have become a tool of social or economic engineering. Taxes are to fund the activities of government – that is it. Cut government to its constitutionally enumerated powers, create a flat percentage so that all pay an equal share based on income and force government to live within that budget.

High tax rates on the “rich” is a feel-good fiction. If rich people are smart – and they are or they hire smart people – they will never pay a top tax rate. As Thomas Sowell pointed out in 2011, progressive tax lovers are completely unburdened by the weight of knowledge of history. We have seen this movie and it premiered in 1921 – the “rich” won’t stop working but their capital will:

>>>”Ninety years ago — in 1921 — federal income tax policies reached an absurdity that many people today seem to want to repeat. Those who believe in high taxes on “the rich” got their way. The tax rate on people in the top income bracket was 73 percent in 1921. On the other hand, the rich also got their way: They didn’t actually pay those taxes.

The number of people with taxable incomes of $300,000 a year and up — equivalent to far more than a million dollars in today’s money — declined from more than a thousand people in 1916 to less than three hundred in 1921. Were the rich all going broke?

It might look that way. More than four-fifths of the total taxable income earned by people making $300,000 a year and up vanished into thin air. So did the tax revenues that the government hoped to collect with high tax rates on the top incomes.

What happened was no mystery to Secretary of the Treasury Andrew Mellon. He pointed out that vast amounts of money that might have been invested in the economy were instead being invested in tax-exempt securities, such as municipal bonds.”<<<

Taxation should be about financing the necessary functions of government, not social engineering.

Raising taxes on millionaires only punishes successful people for being successful. Taxes “punish” whoever has to pay them. Anyone who says with a straight face that government deserves to take 40-50 cents of every dollar in income or confiscate someone’s estate after they die to fund spending without end is an idiot, an ideologue, or a liar…or more likely just economically and historically ignorant.

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Time to write about time zones

With Daylight Saving Time ending Sunday morning, this 2013 idea from Quartz showed up on my social media news feed:

Daylight saving time in the US ends Sunday, part of the an annual ritual where Americans (who don’t live in Arizona or Hawaii) and residents of 78 other countries including Canada (but not Saskatchewan), most of Europe, Australia and New Zealand turn their clocks back one hour. It’s a controversial practice that became the official standard in America in 1966 and adjusted throughout the 1970s with the intent of conserving energy. The fall time change feels particularly hard because we lose another hour of evening daylight, just as the days grow shorter. It also creates confusion because countries that observe daylight saving change their clocks on different days.

It would seem to be more efficient to do away with the practice altogether. The actual energy savings are minimal, if they exist at all. Frequent and uncoordinated time changes cause confusion, undermining economic efficiency. There’s evidence that regularly changing sleep cycles, associated with daylight saving, lowers productivity and increases heart attacks. Being out of sync with European time changes was projected to cost the airline industry $147 million a year in travel disruptions. But I propose we not only end Daylight Saving, but also take it one step further.

This year, Americans on Eastern Standard Time should set their clocks back one hour (like normal), Americans on Central and Rocky Mountain time do nothing, and Americans on Pacific time should set their clocks forward one hour. After that we won’t change our clocks again – no more daylight saving. This will result in just two time zones for the continental United States. The east and west coasts will only be one hour apart. Anyone who lives on one coast and does business with the other can imagine the uncountable benefits of living in a two-time-zone nation (excluding Alaska and Hawaii).

It sounds radical, but it really isn’t. The purpose of uniform time measures is coordination. How we measure time has always evolved with the needs of commerce. According to Time and Date, a Norwegian newsletter dedicated to time zone information, America started using four time zones in 1883. Before that, each city had its own time standard based on its calculation of apparent solar time (when the sun is directly over-head at noon) using sundials. That led to more than 300 different American time zones. This made operations very difficult for the telegraph and burgeoning railroad industry. Railroads operated with 100 different time zones before America moved to four, which was consistent with Britain’s push for a global time standard. The following year, at the International Meridian Conference, it was decided that the entire world could coordinate time keeping based on the British Prime Meridian (except for France, which claimed the Prime Median ran through Paris until 1911). There are now 24 (or 25, depending on your existential view of the international date line) time zones, each taking about 15 degrees of longitude.

Now the world has evolved further – we are even more integrated and mobile, suggesting we’d benefit from fewer, more stable time zones. Why stick with a system designed for commerce in 1883? In reality, America already functions on fewer than four time zones. I spent the last three years commuting between New York and Austin, living on both Eastern and Central time. I found that in Austin, everyone did things at the same times they do them in New York, despite the difference in time zone. People got to work at 8am instead of 9am, restaurants were packed at 6pm instead of 7pm, and even the TV schedule was an hour earlier. But for the last three years I lived in a state of constant confusion, I rarely knew the time and was perpetually an hour late or early. And for what purpose? If everyone functions an hour earlier anyway, in part to coordinate with other parts of the country, the different time zones lose meaning and are reduced to an arbitrary inconvenience. Research based on time use surveys found Americans’ schedules are determined by television more than daylight. That suggests in effect, Americans already live on two time zones.

It’s true that larger time zones would seem to cheat many people out of daylight by removing them further from their true solar time. But the demands of global commerce already do that. Many people work in companies with remote offices or have clients in different parts of the country. It’s become routine to arrange schedules to coordinate people in multiple domestic time zones. Traders in California start their day at 5am to participate in New York markets. True, not all Californians work on East Coast time, but research by economists Daniel Hamermesh, Catlin Meyers, and Mark Peacock showed communities are more productive when there’s more time coordination. Californians who work on Eastern time require services that can accommodate their schedule and see less of their families on Pacific time.

Frequent travel between the coasts causes jet lag, robbing employees of productive work time. With a one-hour time difference, bicoastal travel would become almost effortless. It might make international business harder, but it’s hard to say for certain. The east coast would be seven hours behind continental Europe, but one hour closer to time zones in Asia. Also, the gains from more frequent inter-state communication might outweigh the cost of extra international coordination. …

Spain technically should be on Greenwich Mean Time but it is on Central European time. Many Spaniards believe being out of sync with solar time lowers productivity. But that is because the Spanish workday has not fully integrated with the rest of Europe. One major factor that used to throw workers off was a three-hour lunch break, but this practice of siesta has largely been abandoned in cities. Still, this shows that optimal time zones account for commerce and common cultural borders, not just longitude. The problems Spain has, being on Central European Time, wouldn’t apply to America because states are better economically integrated and already follow similar work schedules.

Sure, moving the continental states to two time zones would cause two-hour jumps between adjacent time zones and America won’t line up with the time zones of countries directly north and south, unless this catches on as a global trend. But the discontinuity ship already sailed when rich Western countries haphazardly adopted daylight saving and most other countries didn’t. Time is already arbitrary, why not make it work in our favor?

As someone who has lived in the Central Time Zone my entire life, I guess I would be fine with this, although I can only imagine the complaints of people when the sun doesn’t rise until 9 a.m. in another month.

Michael Barone evaluates:

This would result in late dawns in the eastern United States and early dawns on the West Coast, and it would result in no place in the continental United States being more than one hour different from each other. [Economist Allison] Schrager points out that time zones were first created in 1883 for the convenience of the railroads; before that, each local community had its own time zone. But convenience changes with changes in transportation modes. In the railroad age, almost no one moved across more than one time zone line in a single day. Today, in the jet airline age (which started, let’s remember, more than 50 years ago), it’s routine for many people to move across three time zones in a single day. And for people to have occasion to speak with others across similar distances.

As Shrager points out, the difference in the way people actually live would be less than many people think. As I’ve often observed, people in the Eastern and Central time zones do things at the same time; the only difference is what it says on the clock. People arrive at work in Washington at 9:00 and Chicago at 8:00–that is, simultaneously–they have lunch at 12:30 and 11:30, the watch local newscasts at 6:00 and 5:00 and they dine at restaurants at 8:00 and 7:00.

I’ve found a variation on that theme in traveling to Mexico City, in the Central time zone, and Los Angeles, in the Pacific time zone, two time zones away. People in these two cities also do things simutaneously–lunch in Mexico City is at 2:00 and in Los Angeles at noon and dinner in Mexico City is at 10:00 and Los Angeles at 8:00. Meanwhile, Texas, also in the Central time, seems to work and dine in pretty much its own times, not simultaneously with either the East or West Coasts, just as it has its own separate electric grid.

As sensible as Shrager’s proposal is, it would be bound to meet with determined resistance, just as Indiana Governor Mitch Daniels’s proposal rearranging the line between the Eastern and Central time zone within Indiana received great opposition in the years after he was first elected governor in 2004. People get used to their time, and develop an attachment to early (or late) sunrises and sunsets and the like. Shrager points out that Alaska went from four time zones to one in 1983 (with very minor exceptions); but the large majority of Alaskans live in the zone running north from Anchorage to Fairbanks, where the time didn’t change much at all. The minorities elsewhere adjusted, as they are used to do in a latitude where the sunrise moves 20 minutes earlier every week from December 21 to June 21. Similarly, China declared itself one time zone in 1949, though it spans give geographical time zones. But more than 90 percent of Chinese then and now lived in the Chinese equivalent of our Eastern and Central time zones, making the adjustment to a similar time zone relatively minor–and also, if anyone has forgotten, it was a vicious dictatorship which imposed much more onerous adjustments on the people it ruled than a single time zone.

I could certainly live with two time zones, just one hour apart, in the continental United States, as someone who lives on the East Coast and makes multiple short trips to Central, Mountain and Pacific time zone places every year. It would be convenient also, as Schrager notes, for West Coast financial traders who start work at 5:00am. Presumably these are two significant demographics in the Atlantic’s readerships, though as Schrager concedes, “not all Californians work on East Coast time.” That’s a pretty grand concession; I’m guessing that “not all” equals about 99.9 percent of the state’s working population.

But the Atlantic’s demographics do not encompass all of America, and as convenient as having two time zones would be for some of us, and as logical as the case for this reform is, I feel sure that resistance will heavily outweigh support. We will continue in many cases to act as if we had only two time zones (eating simultaneously in New York and Chicago) but will resist like the dickens erasing those only-somewhat-adjusted-since-1883 time zone lines on the map. Time has an emotional, even spiritual, as well as a rational component.

One thing about the “coastal elites” (but not necessarily limited to them) is their belief that everyone is an internationalist doing business all over the world every day. That is a ludicrous belief. Unless you ship something overseas or your customers are overseas, the vast majority of retail businesses have customers within miles of their front door. Even business services companies’ customer bases decrease as distance from the office increases.

One thing that would need to accompany this is something that is unrelated yet overdue — starting school later in the day. In rural areas children already have to get on buses in the dark even under standard time, and this would obviously make that problem worse. An increasing number of studies suggest that children are sleep-deprived as it is, and most may be in school physically but not mentally when school starts around 8 a.m.

The author did address this and other objections in a subsequent post …

What about living in darkness?

Many people were concerned about losing daylight and being further out of sync with solar time (when the sun is at its zenith at noon). This may increase rates of depression from less sun exposure. This is especially true in New England with its very long nights. And this may be especially worrying now that more people bike to work. But we already live in darkness. The demands of work and increased economic integration with other time zones has already removed us from solar time. Interesting research from the University of Texas showed that Americans are more likely to set their schedules with television viewing—not the sun. …

Is this just coastal elitism?

Another commenter felt the fly-over states were being punished to accommodate people on the coast. But really the opposite is true. People on central and Rocky Mountain time keep their current time and longer days. The east coast goes on central time and the west on Rocky Mountain time.

What about the children?

It is true that some children, especially on the west coast, will arrive at school in the dark. But a high school teacher writes that most of his students would prefer more daylight at the end of the day when they are done with class and playing sports.

… though not necessarily persuasively. (One high school teacher does not a counterargument necessarily make, and parental safety concerns undoubtedly will trump the teacher’s claim, though I already addressed that.)

After the first time I wrote about DST, I also wrote about a pair of hair-brained ideas, to get rid of time zones entirely and to adapt a new calendar. This showed up again from the Washington Post in early 2016:

Last Summer, North Korea did something a little odd. On the 70th anniversary of Korea’s liberation from Japanese occupation, the closed and authoritarian state announced it was permanently turning its clocks back half an hour. The country was creating its own time zone: Pyongyang time.

As a plan, it didn’t make a lot of sense. Many, understandably, interpreted it as just another example of Pyongyang’s characteristically illogical policy logic. Yet Pyongyang time also highlighted something else. All around the world, time zones make little sense. Russia currently has 11 time zones, while China just has one. Spanish people are said to be constantly tired because they are in the wrong time zone. Nepal is –inexplicably – the only country in the world to have a time zone that is set to 45 minutes past the hour.

Looking over this chaotic landscape, it’s reasonable to ask: Are time zones inherently flawed? That’s what Steve Hanke and Dick Henry think.

A few years back Hanke, a prominent economist with Johns Hopkins University and a senior fellow with the CATO Institute think tank, and Henry, a professor of physics and astronomy at Johns Hopkins, teamed up to propose a new calendar designed to fix the inefficiencies of the current one. The plan was dubbed the “Hanke-Henry Permanent Calendar.” Last month, after reading a WorldViews story about Pyongyang time, Hanke reached out to us to detail another idea that he and Henry had devised to fix the chaos caused by time zones.

The plan was strikingly simple. Rather than try to regulate a variety of time zones all around the world, we should instead opt for something far easier: Let’s destroy all these time zones and instead stick with one big “Universal Time.” …

The logic of Universal Time is strikingly simple: If it’s 7 in the morning in Washington D.C., it’s 7 everywhere else in the world too. There are no time zones. Wherever you are, the time is the same.

While it may ultimately simplify our lives, the concept would require some big changes to the way we think about time. As the clocks would still be based around the Coordinated Universal Time (the successor to Greenwich Mean Time that runs through Southeast London) most people in the world would have to change the way they consider their schedules. In Washington, for example, that means we’d have to get used to rising around noon and eating dinner at 1 in the morning. (Okay, perhaps that’s not that big a change for some people.)

But in many other ways, Hanke and Henry argue, the new system would make communication, travel and trade across international borders far, far easier.

Again, though, most people neither communicate nor travel nor trade across international borders. This would be another reason for Americans, who already look askance at business in their current swing to left-wing and right-wing populism and for the most part dislike their employers, to hate business more.

The Post interview revealed:

WV: So, the Universal Time Zone system. What lead you to argue so strongly for that option?

HH: Because from a physics point of view, there IS only one time! And this principle of physics lines up perfectly with the principles of economics. That is precisely why Hanke and Henry addressed this topic in a segment of a Johns Hopkins course on problems in applied economics.

What? Maybe there is only one time (although would you ask economists for physics information?), but the fact is that the sun rises and falls differently everywhere every day. From the perspective of human beings, which is the only perspective that counts, time is in fact not the same.

WV: But why would it work better than, say, regulating time zones so they tie in better with the local solar time?

HH: Local solar time was fine, when almost all activity was local! Today, much activity is global, and ONE time is called for. You’d quickly get used to the new reading on your watch and your clock. I (Henry) recall when my elderly mother in Canada said to me, oh, it was hot today, 30 degrees! If she could change [from measuring temperature in Fahrenheit to measuring it in Celsius], everyone can change!

Someone might want to point out Henry that (1) the U.S. has not adopted the metric system and specifically Celsius temperatures, which (2) are less accurate than Fahrenheit temperatures, since 1 Fahrenheit degree equals 1.8 Celsius degrees.

WV: Are there any drawbacks that you could see?

HH: Not really. Except that the tricky part of implementation is the setting up of hours-of-work around the world. This is where even China, with its single time, has not fully succeeded: there must be local regional “opening and closing” hours for government offices and for businesses. No one wants people having to work without the sun being up.

WV: But isn’t China’s system – in effect, having a local time and Beijing time – in some way inefficient?

HH: No it is NOT inefficient. It combines the best of both systems: One universal time, combined with local work time connected with the sun being up. This is not rocket science!

WV: People have been suggesting variations on the idea of a worldwide time zone for at least a century. Why has a system based on local political decision prevailed?

HH: Everything based on local political decisions always prevails: We need to get the politicians on board! In fact, with our scheme, local political influence on hours of work would be local to the city or the state. You preserve local control of hours of work! Having said that, hours of work based on the boundaries of the present “time zones” likely would prevail as “hours of work” zones.

WV: You’ve also written extensively above calendar reform. Do you see this as part of the same problem, or a separate issue?

HH: We propose worldwide adoption of the Hanke-Henry calendar on 2018 January 1 Monday, and adoption of world wide use of Universal Time at that moment. It is ONE issue, and should be implemented world wide, all at once, on 2018 January 1 Monday. One common standard, world wide, overlaid with local and religious calendars as people want, no problem! Please see (and publish if you wish) the attached Hanke-Henry Permanent Calendar!

That would be …

If this strikes very conservative readers as being steps toward one-worldism, well, they are.

WV: Do you think a move toward a Universal Time Zone and a new calendar system is possible without some sort of supranational body taking charge?

Teump vs. the First Amendment

I suppose we should not be surprised that private citizen Donald Trump, famous for suing or threatening to sue those who wrote things he didn’t like about himself, shows as much disrespect for the First Amendment as president.

Last week Trump threatened to pull the broadcast lucense of NBC, something presidents would have no authority to do even if network licenses existed. (Neither networks nor cable channels have licenses. Radio and TV stations, some of the latter of which are owned by the networks, are licensed by the Federal Communications Commission, over which the president has no authority except to appoint commissioners.)

Trump’s fans defend his off-the-wall statements by claiming that Trump has a right to say such things under the First Amendment.

Eric Boehm suggests otherwise:

One of the truly great things about the First Amendment is that it applies to everyone. Well, almost everyone.

With very few exceptions, the free speech protections enshrined in the U.S. Constitution give Americans the right to say pretty much whatever we want, whenever we want. And the courts have carefully protected that right for a long time—even that silly thing about not being allowed to shout fire in a crowded theater was later overturned by the U.S. Supreme Court—guided by the wisdom that free speech is vital for a vibrant, democratic, pluralist society to function.

You can talk, yell, tweet, post, and publish pretty much anything you want. You can even say that you want to stop other people from having free speech rights—which would be a bad thing to do, but hey, man, free speech!

Unless, of course, you happen to be the President of the United States, or another public official. Then the First Amendment works a little bit differently.

This is important because the current occupant of the White House, a certain Donald Trump, is in the midst of a slap-fight with NBC over what the president views as “fake news” about his administration. Twice on Wednesday, Trump tweeted that “network news” could have licenses revoked over reporting “distorted” and “partisan” information.

Reason’s Matt Welch has already covered the reasons why Trump is very wrong about this—in fact, Trump’s own FCC chairman, Ajit Pai, gave a speech last month where he sounded the warning that “free speech in practice seems to be under siege in this country.”

But, somewhat ironically, Trump’s attacks on the First Amendment may themselves be a violation of the First Amendment. And not in the philosophical sense—they are that too, of course—but in the very real sense of actual law regarding the First Amendment.

As Trever Timm, executive director of the Freedom of the Press Association, writes in the Columbia Journalism Review today, Trump doesn’t even need to act on his threats against NBC to be violating the constitution. “There’s a compelling argument Trump is in violation of Constitution right now—after he crossed the line from criticism of protected speech to openly threatening government action,” Timm writes.

Timm cites quite a bit of case law to support his claim. Perhaps the most important bit comes from Judge Richard Posner, who wrote the Seventh Circuit ruling in BackPage LLC v. Thomas Dart, Sheriff of Cook County, Illinois. In that case, law enforcement officials were trying to threaten credit card companies, processors, financial institutions, or other third parties with sanctions intended to ban credit card or other financial services from being provided to Backpage.com (here’s Reason’s Elizabeth Nolan Brown’s take on the case and ruling). Dart wasn’t taking direct legal action against Visa and Mastercard, but he did send threatening letters to their offices, pressuring them to cut off services with Backpage.com.

That’s not something government officials are allowed to do, said Posner, citing earlier case law on the matter.

“A public official who tries to shut down an avenue of expression of ideas and opinions through ‘actual or threatened imposition of government power or sanction’ is violating the First Amendment,” the judge wrote.

As Timm points out, some Trump defenders—including Vice President Mike Pence—have said that Trump is merely exercising his own First Amendment rights to say what he wants to say about NBC and the media in general. But are threats to use government force part of the First Amendment? Posner suggests otherwise:

“A government entity, including therefore the Cook County Sheriff’s Office, is entitled to say what it wants to say—but only within limits. It is not permitted to employ threats to squelch the free speech of private citizens. “[A] government’s ability to express itself is [not] without restriction. … [T]he Free Speech Clause itself may constrain the government’s speech.”

This makes sense. Like the other rights protected by the Constitution, the right to free speech is a right that resides with the people, not the state. Enumerating those rights, as the Founders well knew, was important to protect them from infringement by the state. The government does not have the same right to free speech because that speech can always be backed up with coercive force. Allowing government officials to make threats like the ones made by Trump or Dart would strip away free speech from their respective targets who would have to live in fear of government action.

And it doesn’t matter that Trump does not have direct authority to revoke NBC’s license. As Timm points out, the Second Circuit Court of Appeals has ruled that public officials free speech can be curtailed when it “attempts to coerce,” rather than attempting to convince. There is little doubt that Trump’s tweets—and, don’t forget, those tweets count as official statements from the White House—are a form of coercion.

Trump is no longer a private citizen. As the head of Trump, Inc., he could threaten to revoke NBC’s licenses as many times as he wanted. Someday, when he returns to being a private citizen, he can do that too.

As long as he sits in the Oval Office, though, Trump’s free speech rights are necessarily curtailed.

Presidents and other elected officials (and members of the Armed Services) swear to, in the words of the presidential oath of office, “preserve, protect and defend the Constitution of the United States.” Presidents and other politicians must respect your First Amendment rights; you are not required respect theirs.

Selling Foxconn after the sale

Right Wisconsin reports:

Speaking to the Independent Business Association of Wisconsin (IBAW) Manufacturing Summit in Milwaukee on Friday, Department of Administration Secretary Scott Neitzel took the opportunity to address some of the concerns of the critics of the Foxconn legislation that recently passed the legislature.

Neitzel addressed the question of what happens if Foxconn does not follow through on its promise to create a $10 billion manufacturing facility in southeaster Wisconsin. “The state isn’t just going to issue them a check for $3 billion,” Neitzel said. “The way the $3 billion is given out, it’s over time, over a 15 year period.”

“Part of it is the capital investment, which is $1.35 billion,” Neitzel said. “$1.5 billion is based on employment, about $150 million is just a sales tax exemption for construction materials while they’re building it.”

The tax credits will only be given as Foxconn reaches the capital investment and employment targets in the agreement with Wisconsin.

“It grows as they grow,” Neitzel said.

The project is expected to create 10,000 construction jobs for the project and will create as many as 22,000 “induced jobs” from the economic activity statewide. The facility will hire 3,000 permanent employees to start, with growth of up to 13,000 permanent jobs. One estimate has the state receiving $3.90 for every $1 invested by the state. Once completed, the Foxconn development could have a $7 billion annual impact on Wisconsin’s economy.

Neitzel said from a personal perspective, the people that the Walker Administration dealt with were completely sincere in their dealings with Wisconsin. “They continue to work with the local communities,” Neitzel said. “They are talking to people about how they can integrate themselves into the community. They are making a commitment for the long term.”

In answer to the concern about how long it will take before the state “breaks even” on the investment, ” Neitzel said, “Government doesn’t usually spend money to make money.”

“Under the most, what I would call, conservative estimate, it breaks even the fiscal bureau said in 25 years,” Neitzel said. “What do we get for that from a society perspective?”

Neitzel said the Foxconn deal will create “high-paying, family-supporting jobs.”

“Another thing we want, is we want to give our best and brightest a reason to stay in Wisconsin,” Neitzel said. “We want to attract the best and brightest from around the United States and around the globe to come to Wisconsin.”

The new Foxconn manufacturing campus will also spur entrepreneurial activity and small business growth, according to Neitzel. It will also bring more venture capital to Wisconsin.

“With Foxconn here, the venture capital community now has Wisconsin at closer to the upper tier than we have ever been,” Neitzel said. “That’s a good public policy objective.”

Neitzel praised the legislature for improving the Foxconn bill before they passed it.

“It went to the Assembly. They made changes. They were all improvements,” Neitzel said. “That bill then went to the Senate. They made changes. They were all improvements. The bill that is before the governor, which he will sign soon, is a very, very good bill.”

“[The bill] allows us to accommodate Foxconn and to protect the environment and to make sure that the taxpayers of Wisconsin are protected,” Neitzel said.

Neitzel said that opponents of the Foxconn legislation are treating the development as just another manufacturing facility. “What it really is, is bringing a whole new industry to North America and planting it right here in Wisconsin,” Neitzel said. “So the whole supply chain has to come with Foxconn. They have to create a supply chain in North America and in Wisconsin.”

For example, Neitzel said, wherever the plant is built, there will have to be a glass plant right next door.

 

Park this in the back of your mind

Michael Cizek:

There is a silent movement happening all over the country. It largely goes unnoticed because of its simplicity, but it has a dedicated following. The movement? Backing your car in.

It may sound simple, but backing your car can say a lot about the person who drives it.

Ever since I was sixteen, I’ve backed my car in because that’s what all the “car guys” at school did. But in parking this way for years, I’ve learned that it’s not just cars guys who should back in—leaders should back in. Why? Leaders are called to vigorously plan, do what is best for others, and be confident in themselves—actions that are taken when backing your vehicle in.

By backing your car in, as a leader you will learn how to…

Plan for the Unknown

When I finally find a spot in a busy parking lot (bonus points if it’s close to the entrance), I pass it first to see if the spot is clear of pedestrians and shopping carts. I can then back into a known situation. When it’s time to leave, I can fully see my surroundings and safely pull out instead of backing into unknown traffic. Choosing to back in (planning) alleviates risk of a collision (failure).

Whether it’s parking or leading others, the best leaders understand the importance of planning. The first three habits in The 7 Habits of Highly Effective People by Stephen Covey describe planning:

1.     Be Proactive (Don’t wait to react to problems, but be proactive in planning ahead to avoid them)

2.     Begin with the End in Mind (Envision your future and make everything you do revolve around getting you there)

3.     Put First Things First (Know each task’s importance and urgency, and spend your time only on the highest priority tasks)

Planning keeps everyone working towards the same goal, alleviates misunderstandings, and maximizes efficiency. By backing in, leaders have successfully planned for an unknown future parking lot situation.

Provide Safety for Self and Others

In the Midwest winters after WWII, the wisest drivers would back in. If the battery died in the sub-zero temperatures, it was safer and easier to jump the car with the engine facing the street.

But cold weather isn’t the only prime time to back in. The National Highway Traffic Safety Administration found that accidents involving cars backing into traffic, known as a backover collisions, account for an estimated 18,000 injuries and 292 fatalities annually. This happens backing out of both parking spaces and driveways.

When driving a vehicle, you are charged with the safety of others in and around your vehicle. When leading a team, you are charged with the safety of those in, and impacted by, your team.

Maslow’s Hierarchy of Needs states that basic human needs must be met before being able to focus on higher needs. One basic need is safety. If the people we lead do not feel safe, we cannot expect them to perform. We must make sure that our team feels safe in all aspects of life: physically, mentally, financially, socially, and spiritually. For example, discussing personnel issues in a private environment provides safety from embarrassment, while praising team members publicly provides job security.

Backing in keeps you and everyone around you safer—an action every leader should take.

Grow in Self-Confidence

When I catch a ride with a friend, I’ll sometimes give them a hard time when they park head-in. The common response is that backing in is too difficult. The ironic part? It is often more difficult to back out of a space safely than it is to back in. Most people simply lack self-confidence, but their driving abilities fully enable them to back in.

If we can’t lead ourselves, how can we be expected to lead others?

What if we decided to have confidence in our abilities?

To become more self-confident, I say “we will” not “we will try to,” practice being comfortable with the uncomfortable, come prepared, and do what I say I’m going to do. If all else fails, I fake it ‘till I make it.

Having confidence in your ability to lead (park) will give you the ability to overcome adversity (back in).

The Bottom Line: Intentionally backing your car in might sound trivial, but it showcases leadership. Backing in shows that you are a planner, put others before self, and are confident in yourself.

This is also the sort of thing firefighters and EMTs, or prospective firefighters and EMTs, do.

Of course, there’s always a cynic in every crowd, shown in this Facebook comment:

“…(bonus points if it’s close to the entrance)…” ~ why? Because “leaders” are lazy SOBs? You wanna be a leader, park farther away and walk. Set a better example than the clowns who spend 5 minutes driving around, looking for a spot 50 feet closer than all the empties farther out. Also, by doing that, you don’t have to mess around with backing in or out and delaying the cars around you. You can pull through 2 spots and already be in position to just pull straight out.

Now THAT’S leadership and planning.

… and someone who may or may not be kidding:

I back in for one reason: so that I can make a fast get-away (just because I’m paranoid doesn’t mean that people aren’t really after me)

 

As journalism sinks into the abyss …

Brigham Young University may not be known as a powerhouse journalism school. But given the state of journalism these days, that’s not necessarily a bad thing.

In fact, BYU Magazine has interesting insights from its faculty and alumni about the state of journalism today from a more, well, flyover-country perspective than the navel-gazing you’re likely to read from the sophisticates on the coasts:

Journalism has a lofty goal—one epitomized by the career of R. John Hughes.

The emeritus BYU professor won the Pulitzer Prize in 1967 for his coverage of an attempted communist coup and its bloody aftermath in Indonesia. Over his career as a writer for and then editor of the Christian Science Monitor, he covered revolutions and interviewed world leaders.

“Journalism was almost like a religion to me, to get the story, and get it right, to help evince change,” Hughes says. “It’s a kind of love affair for most journalists, shining light in dark corners.”

Journalists call themselves the watchdogs, the truth seekers. The press is dubbed the Fourth Estate after all, the final check on all three branches of government. Democracy requires informed citizens; the press make up the informants. “Democracy Dies in Darkness” goes the new Washington Post tagline.

That’s the why of modern journalism.

The how—being objective, non-partisan—“is rather a new phenomenon in the history of news,” says Campbell.

It has always depended on who’s paying.

Wealthy traders and merchants underwrote the first news in the Americas, and it was all route intel. In the colonial period political parties footed the bill for most papers—party organs that were far more partisan and acrimonious than what we cry foul at today. It wasn’t until the penny-press era—the 1830s on—that a new funding model developed: scale up the circulation, then sell readers’ attention to advertisers. That advertising revenue could bring the cost of the paper down to something many could afford.

Writing to a mass audience, publishers began to recognize there was a market for real, honest news that could cross political divides and speak with a relatively neutral voice. This paved the way for professional journalism standards. And for most of the 20th century, it made newsrooms the information power brokers.

Then the internet smashed the model.

“For the last decade, we have seen a steady erosion of the advertising economy for newspapers,” says Campbell. That’s the nice way of saying it. Revenue streams have been gutted.

Department stores and auto malls, the go-to advertisers, cut back on ads, facing their own disruptions: e-commerce competition and recession. Craigslist happened to the classifieds. And reader eyeballs, once concentrated among a few media outlets, are now diverted to Facebook, YouTube, and that thing you just Googled—and the bulk of advertising has followed them.

As they say in the industry, the digital transition traded print dollars for digital dimes and, in turn, digital dimes for mobile pennies.

One thing is certain: it’s a fascinating time to study the news. Alum Seth C. Lewis (BA ’02) holds the Shirley Papé Chair in Emerging Media at the University of Oregon and is a leading scholar on the digital transformation of journalism.

“We’ve gone from media monopoly to media disruption and ubiquity,” says Lewis. And in ubiquity, no one gets a sizable piece of the economic pie.

Lewis suggests that maybe the last century of advertising-based news subsidy—which fostered these objective, non-partisan notions—“was just a happy accident. Maybe instead we’re returning to other forms of funding and thinking about the news.” …

Jon M. Du Pre (’85), anchor of ABC’s KTBS 3 in Shreveport, Louisiana, used to pass a day creating stories for the 6 and the 10 o’clock news. Now it’s the 4, 5, 6, 9, and 10 o’clock—plus posting on five digital platforms and Facebook Live-ing throughout the gathering process.

“It’s sometimes physically impossible to . . . feed all those beasts,” he says. It’s the hardest job he’s had in 32 years in TV.

Gone is the production cycle where a reporter would work on a story all day, turn it in, and see it published the next morning. Event coverage has to be up immediately, even if it’s just three paragraphs, the rest written via updates.

Accuracy—or, at the very least, thoroughness—has become a casualty, contends Lewis. “You cannot have your news instantly and have it well done,” he says. “More content created by fewer people makes the likelihood for mistakes and problems greater.”

That’s the story at the news organizations that still exist. Countless others have been forced to close.

The hardest hit: local news, the most important news, in Campbell’s eyes. “That’s where we need watchdogs,” he says—most government money is spent locally.

“We’ve moved from deathwatch to life support,” Campbell says of the local-news survivors. Yet the equation remains: “To do in-depth—to give it context, to really understand a community—costs money.” The budgets for watchdogging, more and more, don’t exist.

And then there’s lost turf. A majority of Americans now get news from Facebook and the like, making social-media giants the new gatekeepers and distributors. In addition, the boundaries of the journalism profession are blurring: anyone with a Twitter account can disseminate news, and institutions of all sorts now post their own articles rather than leave their narratives to the press.

Lewis says this leaves consumers wading through an overabundance of sources. “News now populates spaces you might not have expected, and we haven’t really understood how to interpret news we see in those places. This has led a lot of people to throw up their hands and tune out, to say, ‘Because I can’t trust much of what I see, therefore I can’t trust anything.’”

Americans once took in news by appointment—making time for it at the breakfast table or watching the evening newscast before bed. Appointment reading fostered breadth—maybe a baseball story caught your eye, but you got bits on Iran and EPA regulation along the way.

“That used to be a great function of newspapers, the serendipity of falling into something,” says Edward L. Carter (BA ’96, JD ’03), director of the BYU School of Communications.

News consumption now is largely incidental. We seek it out less; our attention span for it is shorter. On a given day, it may be reduced to what pieces of journalism are trending in our social media streams. “And the stories that catch on social media are different,” says Sarah Cannon Weaver (BA ’94), editor of the Church News.

Incidental consumption online pits the news against the juggernauts of Internet clicks: cute babies, cat videos, and all the other stuff Facebook has deemed “news” to you. There have always been things competing for our attention—but never so many on one screen at one time.

In the fight to be heard, journalists now turn to search-engine optimization (SEO)—tagging every story with its most trend-worthy terms. They bend stories into clickbait.

It’s a trend that can’t be ignored, says D. Hunter Schwarz (BA ’12), coauthor of CNN’s Coverline, a politics–pop culture mash-up. “Your average person is not watching a bill progress,” says Schwarz. And so his newsletter and podcast weave Britney Spears and the Kardashians into the political coverage.

Because of the all-mighty click, story selection and presentation are changing: newsrooms are increasingly chasing the stuff we like.

“It’s eye-candy journalism,” says Campbell: sports, “list-icles,” the slideshow of 10 things. “The eyes stay with them a long time. They make money.”

It’s celebrity anything, says alumna Marti Johnson, a freelance reporter for the Associated Press and a C-SPAN announcer. “[Americans] just hoover up information on celebrities.”

Whatever it is, it represents a seismic shift in journalism. “We’ve gone from where news editors selected what they wanted the public to see to where now the public says, ‘No, this isn’t what I want to read about,’” says Weaver. “You can’t make people interested in city council. . . . We can’t thrust it upon them the way we used to.”

Further complicating the news mix: the fact that most traditional news outlets are now owned by publicly held corporations—companies that answer to stockholders. “They care about profit,” says journalism professor Dale L. Cressman (BA ’85, MA ’89), “not news.”

Advertisers can see in real time exactly what catches the audience’s eye, putting the press at the public’s mercy.

There’s no other way to say it, says Campbell: “SEO and analytics are driving a stake into the heart of journalism.”

Suspend the question of media bias for a moment (we’ll get there) and allow the journalists to turn the table:

“Are the consumers of the products we produce biased?” asks Du Pre.

At least on this point—in an America more polarized politically than at any point in recent history—the answer is clearly yes.

Du Pre says that no matter how straight the attempt, there is no longer a news topic that isn’t a lightning rod. “You do a story on crime, it turns into a political debate,” he says. “The environment? Political debate. Health? Somehow, it turns into a political debate.”

Meanwhile, for news outlets desperate for traffic to translate into ad revenue, polarization creates tempting target audiences.

“Some practitioners of journalism . . . have taken to an entirely different business model,” says Du Pre. “And that is ‘Which audience do we want to seek out?’”

Fox News, for example, set up shop as an alternative to mainstream media. A slew of outlets have taken root on the left and right. Where there used to be just a handful of TV and radio broadcasts, newspapers, and magazines driving the national news agenda, there are now scores of websites, each trying to carve out a niche and then pander to it relentlessly. For Fox and MSNBC, it seems to pay the bills.

This model is reinforced by—and fuels—another internet phenomenon: the echo chamber. The term describes how, in our online worlds, we are interacting more with the information we like and less with information that challenges us.

McKay A. Coppins (’10), who covers politics for the Atlantic, says many aren’t even seeking truth anymore—they’re seeking confirmation of their beliefs. “They can kind of ensconce themselves in an information and media bubble where that’s all they hear,” he says. “Whatever little media bubble you’re in is telling you the rest of the media is wrong.”

Some of this selective credulity is deliberate: readers tend to pick media teams and loyally drown out other news sources. Some of it, however, comes courtesy of social media and search engines, which get to know you better with every click. Based on your interests, views, and likes, Facebook algorithms serve up your Daily Me.

On your streams there is no equal airtime for different views. “These systems we interact with really have no function for saying, ‘Maybe that’s enough extremism for you today,’” says Lewis.

Research is digging into the effects of the social media echo chamber: we share stories without reading more than a headline, place more trust in who is sharing the story than who produced it, and clearly give our time to stories that reinforce our own views. …

The First Amendment is pretty clear that all can have their say, agree the experts. Carter says, “At BYU we teach the ‘marketplace of ideas,’”—the philosophy that embraces discordant voices under the premise that the best ideas rise to the top. “The function of journalism is to help us sift through them.”

But he says there’s a catch: “The marketplace ultimately depends on the wisdom of the people, that they won’t be deceived.”

It would be easier if bias were found only at outlets with an obvious bent. Bias seeps in across the board, in varying amounts, concede our experts.

But, they caution, it’s not as one-sided as we might think.

The claim that the mainstream media are liberal, says Cressman, first gained traction in the civil-rights-era South. “Southerners did not like national media coming in and reporting on segregation.” The liberal-media accusation was lodged then—and countless times since. More journalists identify as Democrats than as Republicans, says Cressman (though even more identify as independent). But he suggests that what is judged as bias may be merely core journalistic values.

“Part of journalism’s ethos is giving voice to the voiceless, afflicting the comfortable and comforting the afflicted,” Cressman says. “Those can be perceived as liberal ideas.”

Also at play, says Coppins, are cultural and geographic biases. With the collapse of newspapers nationwide, there’s been a sort of coastal-ization of news; the national news, especially, is made in urban enclaves. “Readers and viewers increasingly don’t see their values represented,” says Coppins. “They increasingly feel like they are getting news from people who are sort of outside their world, and it can often feel condescending and patronizing.”

The quality of reporting in the mainstream media ultimately comes down to the individual reporter, says Campbell. And while the goal is to pursue truth as objectively as possible, our experts say journalists can’t help but approach the truth with their own predispositions.

“The whole idea of journalistic objectivity is a false god,” says Coppins. “No human being is truly objective.”

Though journalists cannot be impartial, their methods, like the scientific method, can, says Cressman. Through a rigorous discipline of verification and transparency, a consistent method of testing information, journalism can uncover not just facts, but the truth.

“The best we can do,” says Du Pre, “is practice journalism as best we can, telling every story in a way that’s true to the facts and fair to the people involved and the people who are impacted by that story. And then hope there are enough people who are enlightened enough that they recognize it when they see it—and then they demand it.”

OutFox(conn)ed

The Chicago Tribune editorializes:

Illinois recently got a humiliating rejection notice from Foxconn, the Taiwanese tech giant. Foxconn picked Wisconsin over struggling Illinois and other states for the proposed site of a $10 billion LCD panel factory that will employ up to 13,000 people. These mega-projects don’t happen every day, so Foxconn’s decision hurts because job growth is the only way to solve Illinois’ fiscal crisis: More jobs means more tax revenue.

What really stings, though, is how the winning site is just across the state line in southeast Wisconsin. It’s as if Foxconn settled on the Midwest as a location and then decided: We want to be as near as possible to Illinois without actually being there.

Foxconn Chairman Terry Gou gave an interview to Steve Jagler, the business editor of the Milwaukee Journal Sentinel. Gou gave Jagler eight reasons why Foxconn chose Wisconsin. Two of them were — literally — proximity to Illinois: First, Wisconsin is conveniently located in the central U.S., “close to Chicago, a global hub,” the Journal Sentinel reported. Second, Wisconsin has the transportation and logistics to accommodate Foxconn’s growth, and is … near O’Hare International Airport. Feel free to smack your forehead.

Now play along as we study more of Foxconn’s list of Wisconsin attributes to see how many also match Illinois. A manufacturing mecca? Yes, that’s Illinois, too. Strong university and technical college systems? Yes. Energy reliability? Yes. Proximity to Lake Michigan water supply? Well, duh. Foxconn also likes Wisconsin because it’s home to allied companies such as Rockwell Automation, but Illinois is just a quick drive south.

The final reason Foxconn picked Wisconsin over Illinois is the difference-maker: government cooperation and competence. The Journal Sentinel wrote that Gou believed “the responsiveness of the public and private partners in Wisconsin far exceeded those of other states.” Gou singled out the cooperation of Gov. Scott Walker, U.S. House Speaker Paul Ryan, R-Wis., and local business groups: “These key people pushed very hard.”

In other words, Foxconn liked everything about Illinois, but Wisconsin officials convinced Gou they made the best business partners. How could that be? Wisconsin will provide $3 billion in tax benefits over 15 years, but incentives are the norm and Illinois, one of seven finalists, was willing to offer some. National politics could have been a factor, given that Foxconn would benefit from pleasing President Donald Trump, who hopes to win Wisconsin again in 2020. But companies don’t make huge investment decisions just to make a president smile.

Here’s the takeaway: Foxconn chose the state that has stable government, healthy finances and pro-growth policies for employers. Illinois has none of the above.

This state is deep in debt and badly run. A 10-ton anvil dangles overhead in the form of at least $130 billion in unfunded pension obligations. Taxes are too high, yet Illinois still can’t pay its bills on time. Republican Gov. Bruce Rauner recognizes that Illinois isn’t competitive. He wants to cut onerous regulations and make other reforms to attract business investment, but he’s been stymied by House Speaker Mike Madigan, Senate President John Cullerton and their Democrat-controlled General Assembly.

None of this is secret. Business leaders looking to invest see Illinois, with its worst-in-the-nation credit rating and embarrassing Springfield stand-off that left the state without a budget for two years, and they cross Illinois off their lists. They don’t trust Illinois government and don’t want to be paying taxes here when the day of reckoning comes for the pension crisis.

Larry Gigerich of Indiana-based Ginovus, a site-selection firm, tells us Illinois will continue to miss opportunities until it stabilizes its public finances. Political leaders also will need to convince investors that tax increases and other necessary pain will be temporary, lest they scare off business permanently — and residents, too, we’d add.

But to accomplish anything, Gigerich notes, Illinois officials can’t continue to undercut each other. “It looks like the legislature and leadership are just trying to run the clock out until the next election,” he said. “People don’t think that is the right way, or a sophisticated way, of running government. And that has really hurt with chief executives looking at Illinois, saying, ‘There is no adult in the room’.”

Nevertheless, Wisconsin liberals persist in opposing Foxconn. To them, Facebook Friend Tim Nerenz writes:

If someone cannot grasp the difference between allowing a person or a firm to keep what they have earned (the tax credit) and taxing more from one person to give money to another (the way she describes it), they should not be allowed to display such ignorance as a feature columnist in a prominent paper. If Foxconn goes forward or if it is struck down by a Dane County judge it will not cost Emily a penny or save her a penny respectively. What it will do is provide up to 13,000 people who do not write ignorant columns for the MJS with the opportunity to earn an average of $54k and bring additional international investor attention to Wisconsin and add many billions in new tax revenues – even after the credits have been applied. What is troubling to Wisconsin’s progressives is that something good is being done in spite of them, and with private capital over which they have no control and which was not confiscated from rich Republicans in the suburbs.

Nerenz recalls the incentive package given to the Italian owner of Marinette Marine:

… former Governor Jim Doyle … gave Italian shipbuilder Fincianterri Marine (Marinette) $50 million in refundable tax credits for a $100 million investment in 2010 and here is how it was reported : “The company would receive the state tax credits only as it makes its own plant and personnel investments, which could reach $100 million, Doyle said. ‘Nobody’s handing over $50 million in cash.’ Doyle credits 50% of a foreign investment – good. Walker credits 30% of a foreign investment – bad.

 

Why Wisconsin needs more billionaires

The New York Times writes about Beloit’s Diane Hendricks:

When Diane Hendricks sees something she doesn’t like here, she buys it.

A bankrupt country club. A half-empty mall. Abandoned buildings. The rusting foundry down by the river.

Beloit used to be a town that made papermaking machines and diesel engines. Ms. Hendricks thinks it can be a place where start-ups create the next billion-dollar idea, and she is remaking the town to fit her vision. She can do so because she is the second-richest self-made woman in the United States, behind only Marian Ilitch of Little Caesars Pizza, according to Forbes magazine.

“I see old buildings, and I see an opportunity for putting things in them,” says Ms. Hendricks, 70, who got her start fixing up houses here as a single mother and made her billions selling roofing felt, copper gutters and cement with her late husband, Ken.

Now Ms. Hendricks is fixing up Beloit.

She took the library from its historic location downtown and resurrected it inside a failing mall at the edge of town, replacing the original with a performing arts center where dance and music students from Beloit College can study and perform each year. Then she scooped up nearly every building on a downtown block and knocked each one down, making way for a sushi restaurant, a high-quality burger joint and modern apartments with marble countertops and exposed-brick walls.

She called the complex the Phoenix. “It looks like we’re beautifying the city, but we’re really beautifying the economy,” she says, casting her piercing blue eyes out of the window of her office in Ironworks, the old foundry complex she converted into a commercial space.

She has wooed several start-ups, persuading them to set up shop in the old foundry building — one with the help of Wisconsin’s governor, Scott Walker, who personally called the co-founders on her behalf.

Ms. Hendricks, a major Republican donor, was briefly thrust into the national spotlight a few years ago when she was recorded asking Mr. Walker to break up the labor unions. He then introduced a bill limiting the ability of public workers to bargain over wages. In response, protesters occupied the halls of the Capitol for weeks.

Not long ago, Beloit’s economy was ugly. Like many American cities — Detroit, Youngstown, Gary — it had fallen victim to the damage that is wrought when one major industry vanishes from town, reversing local fortunes.

Beloit is different today. That’s because this town of nearly 37,000 has a billionaire who has gone to great lengths to help it turn a corner.

In a nation with countless struggling towns and small cities, Beloit is not a model for economic revival that is easily replicated, although a few others have tried.

In Kalamazoo, Mich., a group of well-to-do town “elders” pay for every public school student in town to go to college. And Columbus, Ind., has become an architectural mecca thanks to the support of J. Irwin Miller, whose family made its riches manufacturing engines.

Ms. Hendricks’s project has not been cheap.

Buying and fixing up the foundry alone has cost Ms. Hendricks around $40 million, according to Rob Gerbitz, the president and chief executive of Hendricks Commercial Properties. The Phoenix complex has cost $7 million (with a $1 million assist from the city).

And, of course, money doesn’t solve everything. Ms. Hendricks’s overhaul faces challenges big and small, including skepticism. Early on, some residents joked about giving the city a new name: Hendricksville. Unemployment remains stubbornly high, as does poverty.

Her activities on Beloit’s behalf are complicated by the fact that not everyone agrees with Ms. Hendricks’s political views. She was an early supporter of Donald J. Trump’s presidential campaign here in Wisconsin, a state with a history of progressive politics, and that has pitted her against some current and former students at Beloit College, a liberal arts school and one of Beloit’s other big employers. (Ms. Hendricks sits on the college’s board of trustees.)

“Diane Hendricks is the most powerful woman in Wisconsin,” says Charlie Sykes, a former talk-show host in Milwaukee.

In Beloit, she’s so influential that some worry about what would happen if someday she walks away. “Will the kids take over?” asks Rod Gottfredsen, a local barber, referring to her seven adult children.

Mr. Gottfredsen has had a front-row seat to Beloit’s travails for nearly 40 years. He’s been cutting hair and trimming beards since 1978, when he took over Austin’s Barbershop on one of Beloit’s main streets downtown.

On a clear June day, one of Ms. Hendricks’s sons, Brent Fox, is in his white Ford Super Duty truck driving through the lush tree-lined streets around Beloit College. This is the neighborhood where Ms. Hendricks and her husband got their start a half-century ago, buying and fixing up homes, in the 1960s.

“Mom wanted me to show you these,” Mr. Fox says as he stops outside two Craftsman-style homes where trucks marked CCI, a Hendricks-owned construction company, are parked. “One of the biggest problems we find is suitable housing stock, so we decided to buy old, stately houses,” says Mr. Fox, who is also the chief executive of Hendricks Holding Company.

“As long as we can break even or make a dollar, we’ll keep doing it,” he adds.

Mr. Fox drives north, past Beloit’s industrial sites, through the town’s history. The red roof of ABC Supply comes into view, overlooking Beloit from a slight hill. When the Hendrickses bought the property in the 1990s, it was an abandoned factory that had once made diesel backup engines for military submarines.

We pass the Eclipse Center, which in its heyday in the 1960s was the biggest mall in Rock County. By the 1980s, it had become better known for a notorious double murder at the Radio Shack. The place was half empty when the Hendrickses stepped in.

He stops at the Beloit Club, a beleaguered country club near the Rock River, which cuts through the town. Ms. Hendricks bought it several years ago, possibly saving the club from an ignominious fate as a gravel pit.

“From a business perspective, it was a horrible decision,” he says of the purchase. But if Beloit was to be reimagined as a modern city, the thinking went, it needed a club for golf.

Beloit’s Hendricks-fueled revival happened largely by chance.

Ms. Hendricks grew up 200 miles away from Beloit, on a dairy farm, with eight sisters. As a child, she yearned to work outdoors on the farm, but her father forbade it. A surprise pregnancy at 17 and her short marriage to Mr. Fox’s father brought her to Janesville, to work briefly in the Parker Pen factory, where women assembled fountain pens.

Soon she divorced. She had to find a way to support herself on her own, as a single mother. She switched to selling real estate, and had gotten her broker’s license by the time she turned 21.

Before long, she had found a business partner, a roofing contractor who had dropped out of high school, named Ken Hendricks. Together the two bought old houses in Beloit, fixed them up and rented them out. They married in 1975 and moved on to buying industrial spaces at around the same time. They found a rundown sugar beet plant in Janesville, 20 miles up the road from Beloit.

When Mr. Hendricks went to a Janesville bank to finance the purchase of the plant, he was turned away. “The banker said, ‘We don’t do business with entrepreneurs, and we don’t want your business,’” Ms. Hendricks recalls.

It was a turning point. The couple turned their backs on Janesville, focusing instead on Beloit.

They would move from renting local apartments to starting ABC Supply in 1982, buying up distributors nationwide.

Beloit at the time was on the cusp of a steep decline after successive economic blows, among them the grinding to a halt of Fairbanks Morse, a diesel engine maker and a onetime major employer.

Like struggling cities and towns across the country, Beloit went through a period of Band-Aid-like efforts. By the 1980s, local businesses were petitioning the city to change its image by cleaning up the riverfront, where vacant stores sat along the banks of the river, and by reviving the withering downtown. The initiatives barely made a dent.

Into the 1990s, at least, the town still had its foundry, Beloit Corporation, by that time owned by a Milwaukee company, Harnishfeger Corporation. At its height, Beloit Corporation had employed more than 7,000 people building papermaking machines. Late into the night, the flickering light from the welding in the foundry would light up the Rock River.

In 1999, the foundry went bankrupt, leaving behind an empty, sprawling complex the size of 15 football fields. Beloit’s downtown became a bleak landscape of “decayed, bombed-out buildings,” recalled Jeff Adams, who moved to Beloit to teach economics at Beloit College in the early 1980s and was involved in early initiatives to try to fix the town.

But if Beloit was sinking, the Hendrickses were riding high. Their business was booming, and they saw opportunity in the desolation.

One day, a few years after Beloit Corporation went bust, the two were riding their Harley-Davidsons past the abandoned factory and noticed someone wandering around the property. They stopped to ask what he was doing. The man, Samuel Popa, turned out to be looking for a place to put his aluminum business.

On a whim, the Hendricks decided to buy the 800,000-square-foot building. They knew it had the potential to one day become commercial space, perhaps residential, too. They ended up becoming a partner in Mr. Popa’s company, American Aluminum Extrusion.

Next, they bought the old mall on the edge of town, which they planned on turning into “a community and civic center,” Ms. Hendricks says.

Around the same time, Ron Nief, the director of public affairs at Beloit College, and two of his friends had an idea that in almost any other dying industrial town would not have gotten out of the starting blocks: Let’s start an international film festival.

They approached Beloit’s billionaire benefactors about the idea, and in 2006, the festival opened on a frigid Wisconsin weekday in January.

Despite the fact that its debut occurred the same week as the much more famous Sundance Film Festival, it has thrived. Jon Voight, Melissa Gilbert and David Zucker, the director of “Airplane!,” have attended

Mr. Nief recalls a conversation with Mr. Hendricks, who had told him to aim high with the film festival idea. Mr. Nief said to him, “It needs to be special, but it doesn’t need to be, say, the Toronto Film Festival,” referring to the giant on the festival circuit.

“Ken said: ‘Why not? Why don’t you want to be the biggest and the best in the world?’” Mr. Nief said.

But tragedy struck one evening, just days before Christmas in 2007. Mr. Hendricks fell through the roof of his home after inspecting some renovations; he died from the injuries.

Mr. Hendricks’s death led residents in Beloit to worry that Ms. Hendricks would sell ABC and abandon the couple’s efforts to revive the town.

Then came the 2008 economic crisis. Housing and construction, the very businesses on which the Hendrickses’ fortune had been built, suffered through one of the worst downturns in decades.

ABC pulled through, and grew in part by buying its biggest rival, Bradco. Today ABC is a private company and the largest wholesale distributor of roofing, windows, siding and gutter materials. It has 715 stores across the United States and employs 656 people in Beloit alone.

Ms. Hendricks also began putting to use the industrial buildings that she and her husband had bought over the years. She turned the foundry into a commercial space with high ceilings, dubbing it Ironworks, and turned to a political ally, Mr. Walker, to help attract at least one tenant.

The move worked.

“I had 17 employees at that moment, and the governor of Wisconsin told me my business mattered to him,” recalled Kerry Frank, the co-founder with her husband, Dude Frank, of Comply365, which makes software used by airline pilots to complete their flight paperwork. Started in the Franks’ basement, the company is now housed in Ironworks and counts Southwest Airlines among its biggest clients.

In 2011, after Illinois created a new law to collect sales tax from online shoppers, the Rockton online coupon company FatWallet needed to find a Wisconsin town for its headquarters. Ms. Hendricks worked with the city to make Beloit, just over the state border, FatWallet’s first choice. The company is now based in Ironworks.

“The advantage here in Beloit is that the same type of engineer that you hire in Silicon Valley can have a large house,” says Ryan Washatka, general manager in Beloit for Ebates, FatWallet’s parent company.

Still, few people in the start-up world outside of Wisconsin know much about Beloit. It certainly was not on the radar of Chris Olsen, a former executive at Sequoia Capital, the Silicon Valley venture capital firm, whose Ohio venture capital firm Drive Capital is now one of Comply365’s biggest investors.

After several airlines told him to look at Comply365, Mr. Olson found himself looking at a map. “I didn’t even know where Beloit was,” he jokes.

In part to address problems like that, Ms. Hendricks has sent members of her property company, Hendricks Commercial Properties, to Madison to talk to venture capitalists. “Candidly, I wasn’t looking at Beloit,” said Joe Kirgues, a co-founder of Gener8tor, a tech incubator, who one day found himself at a table with Ms. Hendricks’s team.

He said the pitch to him had boiled down to: “Tell us what resources you need.” Today, Gener8tor has an office in Ironworks and is working with several local start-ups.

Mr. Bierman credits Ms. Hendricks for providing a vision of how things can be. Still, he says, “I worry a lot.”

While he does see signs that what Ms. Hendricks has built can be sustainable, “We’ll know a lot more once we get through the next recession,” he said.

For now, around 1,000 people currently work out of Ironworks, according to Mr. Gerbitz of Hendricks Commercial Properties. “Our goal is to get to 5,000, which was what was lost when Beloit Corporation went away,” he said.

Ironworks today is a far cry from its foundry origins. At AccuLynx, the software firm, there is a giant slide running down from the second floor to the first, a video-game console and a giant gold bell that is rung when sales are made.

AccuLynx’s founder, Rich Spanton, described the day his grandfather, who had worked at the foundry as a superintendent for nearly a half-century, visited the building, where he had spent a career assembling steel parts for paper machines. He was astonished at what he saw.

“He walked in,” Mr. Spanton recalls, “and he said, ‘Jeez, we couldn’t have gotten any work done if this had been our office.’”

A benefit to Wisconsin, no thanks to Trump

Matt Tragresser:

This past June, Lt. Gov. Rebecca Kleefisch traveled south of the border to strengthen the economic relationship between Wisconsin and Mexico, a growing interest the Badger State has had for the last 20 years.

The week-long trade mission featured stops in Mexico’s two largest economic hubs of Mexico City and Monterrey, with officials from the Wisconsin Economic Development Corporation (WEDC) joining Kleefisch to promote Wisconsin industries.

With the adoption of the North American Free Trade Agreement (NAFTA) in 1994, trade between Mexico and Wisconsin has grown by 926 percent thanks to low trade barriers including minimal tariffs and overall little government intervention.

In just two decades, Mexico has become Wisconsin’s second largest export market in the world, with exports totaling more than the state’s exports to China, Japan, and Germany combined. This past year alone, trade with Mexico generated $3 billion for Wisconsin and accounted for 15 percent of all exports, an all-time high.

Despite being known as the dairy state, Wisconsin’s top exports to Mexico last year were motor parts and battery waste, followed by centrifuge parts and soybeans.

Increased free trade with Mexico has certainly sparked enormous economic growth for Wisconsin. Apart from the revenue generated from exports, 96,000 jobs in the state have been created or rely heavily on trade with Mexico. Nearly 5,000 of these jobs have been brought to Wisconsin by Mexican companies.

“Mexico is a vital partner to grow businesses and add jobs here in our state. As we’ve recently seen, Wisconsin is a top target for foreign direct investment that can create jobs and factories in our communities,” Lt. Governor Kleefisch told the MacIver Institute.

Free trade between Wisconsin and Mexico has also brought a larger variety of lower-cost products to Wisconsin. Since free trade creates an environment where companies specialize in products that they can cheaply produce in high volumes, goods become less expensive for consumers.

For example, motor vehicles in Wisconsin have become more affordable thanks to trade with Mexico. With a large labor force whose average wage is much lower than other countries, thanks to a very low cost of living, Mexico has become a hot market for vehicle assembly. In Mexico, a worker for a standard car manufacturer will make about $8 an hour, while a worker in the United States can make close to $60 an hour. Mexico’s lower average wage leads to lower prices for Wisconsinites and explains why motor vehicles remain one of Wisconsin’s top imports for 2016.

Importing lower cost products from Mexico has become popular in Wisconsin. Just last year $2.7 billion worth of goods were imported from our southern neighbor. Electric storage batteries, motor vehicles, and tractors were the state’s most popular imports in 2016.

Future trade between the two regions looks promising. Of Wisconsin’s current top 10 export markets, Mexico was only one of two countries that showed positive export growth in 2016. Since 2014, Wisconsin’s increase in sales to Mexico has been larger than its sales to any other country on the entire planet.

Mark Maley, WEDC’s Public Affairs and Communications Director, told the MacIver Institute that Mexico offers many business opportunities for Wisconsin and expects the relationship to continue in the future.

“Wisconsin and Mexico share a mutually beneficial and comprehensive trade and investment relationship. We have hosted three trade trips to Mexico in the last two years to help state businesses find new markets for their products, to encourage Mexican businesses to invest in Wisconsin, and to strengthen industry collaboration between Wisconsin and Mexico in areas such as advanced manufacturing, water technology, and food and beverage production and processing,” he said.

Despite having the pieces and mutual interest to strengthen trade in the future, the partnership could face some troubles within the next year. President Donald Trump aims to renegotiate NAFTA and potentially add a 20% import tariff on all Mexican goods to help fund his proposed border wall. These changes could hinder trade between both regions and ultimately hurt Wisconsinites and Mexicans.

With tensions high at the moment between the United States and Mexico, it is important to recognize the positive impact our southern neighbor has had on Wisconsin’s economy. With billions of dollars generated in sales, more job opportunities, and lower-cost products, free trade with Mexico promises to benefit Wisconsin workers and consumers into the future.

Foxconn and its impacts

As you can imagine, the announcement of Foxconn’s building a southeastern Wisconsin plant and bringing with it 3,000 to 13,000 jobs reverberated throughout Wisconsin.

And beyond. The Chicago Tribune editorialized:

Early this month, when they hit taxpayers with a 32 percent jump in the individual income tax rate, many legislators broke a promise they had made: No more tax hikes without major reforms to help Illinois’ moribund economy. Don’t worry, said Democrats who pushed the tax hike. We’ll get to those reforms soon enough.

But not soon enough, we now see, to keep electronics giant Foxconn from bypassing Illinois to make a jobs-rich investment in southeast Wisconsin. This is a huge win for Scott Walker, the Republican governor of Wisconsin whom Illinois Democrats loathe. Just as this is an embarrassment for Illinois House Speaker Michael Madigan and Senate President John Cullerton.

Once again, the people of Illinois see how Madigan and Cullerton, with their combined 86 years in Springfield, have left Illinois ill-prepared to compete for 21st-century jobs. Their agenda is about raising taxes, not about delivering those reforms. As we wrote a few days ago, every other state on Foxconn’s short list looked better than Illinois by the basic measures of financial stability and pro-growth economies.

No wonder, then, that Illinois is starved for jobs. We expect to learn more in coming days about Foxconn’s thinking. We don’t know details of whatever federal, state and local government incentives lured the company Beyond the Cheddar Curtain. And we can’t be certain how many billions of dollars in investment, and how many thousands of jobs, Wisconsin will gain.

But we do know this: Wisconsin boasts a freshly burnished global image. One of the planet’s largest tech firms, with a million workers worldwide, says its search led it to bet a fraction of its future on Wisconsin. Assuming that happens, expect robust economic growth from suppliers, subcontractors, construction companies and other businesses that will serve Foxconn and its workforce.

Cranky Springfield apologists for Madigan and Cullerton will say we’re overreaching, that Gov. Bruce Rauner is somehow to blame for losing Foxconn to Wisconsin. Except Rauner has been pushing exactly the kinds of employer-friendly reforms that Madigan and Cullerton have resisted, often to please their allies who lead labor unions. …

Enough of their games. Foxconn’s choice of Wisconsin offers a fresh opportunity to act on what’s wrong with Illinois:

We await the reforms legislators promised, so that Illinois doesn’t keep driving employers to other states.

RightWisconsin compares and contrasts:

So here’s the deal. Wisconsin gives Foxconn $3 billion in tax incentives over 15 years, provided they meet their performance targets, and in return Wisconsin gets a manufacturing facility that will have a $7 billion annual impact on Wisconsin’s economy.

The factory will eventually employ 13,000 workers earning on average $53,875 plus benefits. The new Foxconn facility will bring 22,000 “indirect and induced jobs” to the state. In addition, the construction of the new Foxconn facility will mean 10,000 construction jobs as well as 6,000 indirect jobs.

Let’s compare that to “the one that got away.”

Wisconsin Democrats will never forgive Governor Scott Walker for rejecting the proposed high-speed rail between Milwaukee and Madison. That project would have cost the federal government $810 million. That amount did not include local costs for building stations, the cost of former Governor Jim Doyle’s secret train deals with Talgo, and other ongoing costs.

Despite Democratic false claims that the high-speed rail (which was slower than taking a car) would lead to more economic development, that project would have only created 55 permanent jobs.

It’s amazing how many jobs the private sector can create while manufacturing 21st century technology for consumers compared to the government using 19th century technology to create a service that would have to be subsidized by the taxpayers. We’ll take the factory manufacturing LCD screens over Democratic toy trains.

Foxconn will pay, based on a minimum 3,000 and a maximum 13,000 jobs, $161.625 million to $700.375 million in payroll. That is not counting those estimated 22,000 “indirect and induced jobs” from companies that serve Wisconn Valley. Nor does that count those 10,000 direct and 6,000 indirect construction jobs that building LCD World will create. As stated here and elsewhere, those tax incentives cost the state nothing, because nothing stated in this blog would have happened without Foxconn choosing Wisconsin.

 

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