Yesterday’s news was that the state Republican Party has filed a complaint with the Government Accountability Board for alleged illegal coordination between Mary Burke’s campaign for governor and Trek Bicycle …

… which is in response to a TV ad:

I’m not an expert on election law (and who wants to be?), but I think this complaint is going to be punted by the GAB for reasons besides its usual bias against Republicans and conservatives. Notice what’s missing in the ad? The word “Mary.” There is also no criticism or even mention of Gov. Scott Walker’s policies, only the ad.

There is great irony, of course, in seeing Republicans attack a business. (More about that later.) On the other hand, Collin Roth notices considerable hypocrisy over how the media treated the last statewide candidate with a background in business, U.S. Sen. Ron Johnson, compared with how the media is treating Burke:

Fairly sure if I asked, I can still get her to give me their definition on command.

“Her” is Sara Sendek, who was campaign press secretary for Ron Johnson for Senate. “Their” is Industrial Revenue Bonds (IRBs), a form of financing tool cities throughout the country use to lure new start-ups to their towns, and is essentially a business loan since no taxpayer money is used and it is completely paid for by the business using it.

From nearly her first day on the job until Election Day 2010, the number of press inquiries Sara got about IRBs and a $75,000 rail spur were almost endless. For many in the press, all they ever wanted to know about was IRBs Ron Johnson’s company Pacur took out in the 1970s and 80s, but nothing about deficits the Obama Administration was piling up. Nor did they want to hear anything about Russ Feingold’s voting record or issues in the campaign.

It was frustrating to say the least.

What is more frustrating for me though is watching the press rally around presumptive Democratic gubernatorial Mary Burke and Trek in the latest volley of attacks in the race for governor. Instead of asking if there is any truth to what Walker’s campaign is saying about the company’s record of outsourcing while Burke was there, the press is more concerned about why he’s “attacking” a Wisconsin company.

The most overtly biased of these pieces is by Scott Bauer of the Associated Press, who calls Trek “a respected company” and a true Wisconsin success story. You know, all the red, white and blue, apple pie Americana that’s supposed to encourage pity in the reader for Burke while reading it.

While no one has little doubt about the humble beginnings of Trek, at issue is not the company, but what Burke did while there. If the press felt in 2010 that a proctologic exam of Pacur was needed, then why are they stopping short on Burke’s years at Trek?

Like it or not, the Burkes (both Mary and her brother John) opened up Trek to this type of scrutiny when Mary announced her intentions to run for public office beyond the Madison school board. No longer was it just “part of her bio” to get her political appointments (like her stint as Doyle’s Commerce Secretary) or charity work around Madison.

Trek is part of who she is. That means every deal it has made, how well its employees are compensated, where its plants are located and so on.

It doesn’t mean, they can hide behind it under a veil of secrecy, nor should the press give it to them. By deciding to run for governor, everything gets examined. For them to think otherwise is to honestly ask if the Burkes were misled upon starting this venture or if members of the media are rooting for a certain outcome.

If Democrats and the Burke Campaign are willing to film television ads inside Trek manufacturing facilities, then they should be ready to defend its business practices. If Pacur was fair game in 2010 because Ron Johnson ran it, then the same ought to apply to Mary Burke’s years at Trek.

As you know, there is a considerable bias against business in the media. There is even more bias against people like Johnson, a certified public accountant. Maybe a reporter who doesn’t like his or her employer anyway can be stirred to write something about an entrepreneur who creates something, but no one has anything good to say about accountants, because accountants are the No people in a business, at least from the reporter’s perspective. Accountants are the people who place and enforce limits — there’s not enough money for raises in your department, there’s not enough money to upgrade equipment, and by the way, did you really drive this many miles in the last month?

None of this is good for the state, by the way. If Republicans were honest about this, and if Mary Burke were not running for governor as a member of the anti-business party, Trek is in fact the kind of business that Republicans would fall all over themselves praising. Instances like this certainly help to convince any business person of what can happen to them if they run for office, and Wisconsin needs more, not less, business people serving in office.

One question that has yet to be asked, though, is whether Burke’s experience with Trek is actually applicable to the vast majority of Wisconsin businesses, or whether Trek is really representative of Wisconsin businesses.

A lefty critic of Burke points out that not even 1 percent of Trek’s annual bicycle production takes place in the U.S. On the other hand, the critic adds, in volume Trek is still number one in domestic bicycle production among the high-end bike manufacturers. Apparently Trek and every other bike manufacturer has determined that building bikes in the U.S. is too expensive, which means that bike manufacturers are indeed concerned about production costs, a concept Democrats appear to not grasp. (Despite, by the way, the absurdly weak American dollar, which is supposed to help manufacturers.)

Trek and its competitors make bicycles for serious bicyclists. I would bet Trek and its competitors therefore make pretty healthy profit margins (and profit is never a bad thing; all those things the ad lists that Trek is able to do are the results of years of profits) because its customers make buying decisions based on the bike’s features and brand reputation, not on price. If you’re looking for a bike because your child suddenly demands a non-one-speed bike, you’re probably not buying a Trek, and if price is an object, you’re not buying a Trek.

Every Wisconsinite should know that this state has three main business sectors — manufacturing, agriculture, and tourism. High-end manufacturing is a pretty small subset of manufacturing. Most businesses operate on small profit margins, and so production costs are absolutely a major factor in their being able to price their products appropriately to make money and therefore stay in business.

Which brings to mind Burke’s adamant anti-business agenda from a candidate touting her business background. The only actually pro-business aspect of her agenda is increasing exports, which is a no-brainer. Trek can pay its employees whatever Trek wants, but increasing the minimum wage — which forces every business to pay its minimum-wage employees more — means giving employees money they haven’t earned by working harder or better. Increasing wages increases costs, which forces businesses to reduce costs by, in this case, reducing employment. And there is nary one mention of the two biggest issues businesses face — taxes and regulations — particularly in this state, which has much too much of both.

Burke’s campaign is a great failed opportunity for Burke to critique her own party’s anti-business history and present, not to mention the Democratic Party’s two biggest support groups — organized labor and teacher unions — in a manner that certainly worked well for Bill Clinton when he was successfully running for president. As I pointed out here yesterday, a debate about business incentives — particularly the business incentives designed to counteract our uncompetitive corporate and personal tax structure — would also be a good thing. Of course, that debate isn’t happening, and isn’t going to happen.

Burke is basing her candidacy on her business experience, so critiquing her business experience is absolutely legitimate. (Including whether her business experience is typical of a typical Wisconsin business.) Attacking a Wisconsin business because one of its owners is running for governor is not the right thing to do.

The correct thing for Republicans to say during this campaign (to channel my inner Lyn Nofziger for a moment) is along this line: Trek Bicycle is a great Wisconsin business. Trek has made business decisions over the years that Trek felt was correct for its business. Businesses should have the right to make business decisions based on what they feel is right for their business, not have those decisions made for them by government in areas like wages. The policies Mary Burke espouses would be, in fact, bad for Wisconsin businesses, because they would increase costs (by opposing tax cuts and espousing minimum-wage increases) without making Wisconsin businesses more profitable. And without profit, businesses can do nothing, including pay their employees.

Until Scott Walker became governor, economic development was the province of the state Department of Commerce.

That model proved flawed in the late 2000s not only because of logic — similar to the Federal Aviation Administration, the same agency that regulated business also promoted business — but because of ineffectiveness. Government is bad at running businesses, and bureaucrats aren’t in business.

Collin Roth points out the DOC failures during the administration of James Doyle, for whom Mary Burke was Commerce secretary:

A television ad launched earlier this month from Gov. Walker’s campaign exposed a deal gone bad from 2006 where a company called Abbott Labs was given $12.5 million in taxpayer dollars but failed to develop a vacant lot – or create any jobs. Then-Commerce Secretary Mary Burke approved a deal.

The story got worse for Burke when the Milwaukee Journal Sentinel reported that the federal Department of Housing and Urban Development (HUD) was demanding that the state repay $12.3 million for the failed deal. …

The Walker team bounced back this week by documenting how Mary Burke’s Trek Bicycle received $875,000 in taxpayer loans in 1995 before closing plants and outsourcing the vast majority of their manufacturing overseas.

“Mary Burke claims to want to help bring more jobs to Wisconsin, but her own company received taxpayer money and then outsourced jobs to China,” Walker Communications Director Tom Evenson said. “Mary Burke can’t be trusted on jobs and her hypocrisy on the issue is unbelievable.”

A blistering new television ad accompanied the attack.
https://www.youtube.com/watch?v=wGhFTBVv5S8

Trek Bicycle had an answer for the TV ad …

… which, you’ll notice, doesn’t mention Mary Burke.

The solution, or so the Walker administration thought, was to create the Wisconsin Economic Development Corp., the statewide model of the numerous regional economic development corporations.

Yes, but, WKOW-TV in Madison reported …

In 2011, WEDC awarded Eaton Corp. with up to $1 million in tax credits if the company met job creation and retention goals at its manufacturing facility in Menomonee Falls. WEDC officials say the company has received $190,000 in tax credits so far.

In April of 2013, Eaton laid off 163 employees at its Cooper Power Systems plant in Pewaukee and announced it was moving those jobs to Mexico. Less than a year later, WEDC awarded Eaton Corp. with up to $1.36 million in additional tax credits for a proposed $54 million expansion at that same Pewaukee plant. But on Wednesday, WEDC Spokesperson Mark Maley told 27 News Eaton Corp. “recently notified WEDC it will not seek any tax credits for this project.

Eaton Corp. is based in Dublin, Ireland, but has numerous offices and interests in the United Kingdom, United States, Indonesia, Singapore, France, Germany and Mexico.

WEDC awarded Plexus Corp. of Neenah with tax credits of up to $2 million in 2011 and up to $15 million in 2012. Maley says Plexus has received $4.7 million in tax credits to this point.

In July of 2012, Plexus announced it was laying off 116 workers from its Neenah facility. The U.S. Department of Labor has since ruled those employees, as well as all Plexus employees laid off since December of 2011, are eligible to receive federal Trade Adjustment Assistance (TAA) benefits. Those benefits are only available to employees who were laid off because their jobs were outsourced to foreign countries.

Plexus Corp. did not identify where it relocated those jobs to in 2012, but also has offices and interests in the United Kingdom, China, Germany, Romania, Malaysia and Thailand.

Is it possible that both approaches are wrong? Roth continues:

Politics aside, the central theme running through each of these stories is the often misguided and wasteful attempts by the government to use taxpayer dollars to “create jobs.”

Mary Burke previously served as Jim Doyle’s Commerce Secretary and as Walker’s ad on Abbott Labs reveals, she doesn’t exactly have a perfect record. Furthermore, Burke’s “Invest for Success” jobs plan is chock-full of more government sponsored financing and loans to “industry clusters.”

Gov. Walker on the other hand dumped the Department of Commerce in favor of the quasi-public Wisconsin Economic Development Corporation (WEDC). WEDC was supposed to be more nimble in helping businesses, but has had a myriad of problems like millions of dollars in “lost” loans and the case of companies taking money and outsourcing jobs.

Perhaps instead of debating who has lost more public money in failed business ventures, the candidates ought to take a look at the very idea of handing out public dollars to businesses in the first place.

After all, if conservatives don’t believe government should pick winners and losers, they should act like it. And if conservatives don’t believe government creates jobs – they shouldn’t try.

So who’s right — Walker or Burke or Roth? The short-term answer is based on the evidence in front of your eyes. No, Walker won’t get close to his 250,000-jobs-created pledge, but jobs are being created, and the state’s unemployment rate is below the nation’s. That was not the case during the Doyle administration, when job losses exceeded the ability to blame them on a bad national economy, and for the first time in many years the state’s unemployment rate was higher than the national average.

The long-term answer depends in large part on the difference between theory and practice. There are two reasons for government to be active in economic development. The first is, of course, that your neighbors — truthfully, every state and every metropolitan region of any size — are, so you had better be.

The second reason for government to be active in economic development is to attempt to counteract bad economic policy. The U.S. has the highest corporate income tax rate in the world, and Wisconsin has one of the highest corporate tax rates in the U.S., which means Wisconsin has, adding federal and state taxes, one of the highest corporate tax rates in the world. That is something the Walker administration has done nothing about, by the way, nor has the Obama administration since Japan cut corporate income tax rates to make the U.S. number one.

The state’s only tax incentive worth mentioning is the Tax Incremental Financing district, in which is more a funding mechanism than a tax break. TIF districts fund construction of infrastructure of a blighted or undeveloped area, with the increased property taxes from the developed property paying for the infrastructure. TIFs are useful for their purpose, though the units of government that get no immediate benefit from TIFs — namely, schools, technical college districts and counties — don’t like them because they don’t get the increased property tax revenue from the improved property until after the project is paid off.

TIFs, however, don’t overcome the state’s bad business tax structure, including but not limited to corporate income taxes. Businesses organized as subchapter-S corporations aren’t assessed income taxes, but their owners are. Businesses also are assessed personal property taxes on their buildings and equipment, though machinery, equipment and computers are exempt. And if business owners pay high personal income taxes, their high-paid employees pay them too.

Burke has made the incredible (not as in “I can’t believe you said that!”, but as in the opposite of “credible”) claim that Trek has never considered taxes in making business decisions. Taxes are a major cost of doing business. If Trek was unconcerned with business costs, Trek wouldn’t have outsourced manufacturing of its bikes. (One reason to outsource, by the way, has little to do with taxes — the cost of getting product from manufacturing plant to customer.)

Wisconsin also is a master at overregulation, thanks to Burke’s own Department of Commerce (now the Department of Regulation and Licensing, and what a business-friendly name that is), Damn Near Russia — I mean, the Department of Natural Resources — and other shining state and local examples of what government does to business instead of for business.

The business boosters accentuate the positive, of course, pointing to our schools and quality of workforce and life. Several surveys of those who make location decisions indicate that schools and quality of life are far down on the list of criteria for deciding where a business’ next expansion is located if that business isn’t located in this state already.

As for the workforce, a Wisconsin Taxpayers Alliance report predicts future economic problems due to a shrinking workforce. I am also somewhat surprised that no one has observed the economic damage the Act 10 controversy and Recallarama has done to this state’s economy. It’s not because the purchasing power of government employees has been trimmed by making them pay for some of their employee benefits; it’s because the coast-to-coast video of the protesters may well have given the impression that Wisconsin workers are more concerned about their benefits than actually working.

The owners of businesses that were created in this state usually decide to stay here for subjective reasons, or because shutting the doors and moving everything elsewhere would be too costly and too disruptive. That probably describes Trek Bicycle, though not entirely, since, again, Trek makes most of its bicycles outside Wisconsin. Such businesses would certainly take tax breaks or tax cuts, but they may not be the deciding factor. Businesses that were not created in this state, and businesses with facilities in Wisconsin and elsewhere (for instance, Abbott, Eaton,  Plexus and Trek) have to be convinced to come here or expand here, and on those objective, bottom-line criteria — particularly in our historically high taxes — when competing against other states with not just lower taxes but more incentives to offer business, Wisconsin usually loses.

Other than deny the reality of all of this, what would Mary Burke do about that? What would Walker, who hasn’t pushed business tax cuts, do about that? Incentives don’t overcome bad business policy.