THE BUSINESS BELIEFS THAT SCREW UP STATE ECONOMICS

By Dominique Paul Noth

Two years ago for In These Times, I wrote about the unfortunate impact on Wisconsin hopes when behemoth Caterpillar, headquartered in Illinois, came to Milwaukee with much hoopla.  It had recognized the quality of the mining equipment workers and global financial impact of Bucyrus Erie and, rather than continue to compete, simply bought the Milwaukee company out.  As I described, that optimism soured in the company’s growing disrespect for the accomplished steelworkers that had attracted Caterpillar in the first place, and a corporate culture clash as Caterpillar reacted to international mining slowdowns by laying off Oak Creek workers to protect executive profits, with nary a squeak of protest from Wisconsin government. 

This month,   James Rowen of the respected Political Environment blog, former chief of staff for Milwaukee’s mayor and a JS Purple Wisconsin columnist, picked up on that piece  as a side anchor for detailing how Caterpillar continues to make Milwaukee an even deeper brunt in 2015 of its disappointment in the cyclical mining business. While once Bucyrus survived and later thrived by using the global regard for its Milwaukee workforce as a selling point, Caterpillar’s response is laying off more and more, increasing the devastation in Oak Creek to 55% shelved of a proud and once honored USW workforce.  

In a masterpiece of understatement, when asked the feelings at USW Local 1433, several of whose members have quit to seek new jobs, spokesman Ross Winklbauer noted,  “A lot of people aren’t happy with what Caterpillar has done in the past.”

But Caterpillar is hardly a unique example of how bamboozled Wisconsin business and political leaders have been when corporate execs come a-blandishing and demand public prestige and often tax credit support. These are the red carpets previews to convince citizens that their trumpeted arrival is so vital that taxpayer money is a small price to pay and that big business economic ideas for the state are working.

It’s rather curious, because business is about making money and will happily abandon communities to protect profits and investors in the short-term, and any experienced business person knows that or ought to suspect that.  Principles and deeper employment are touted almost like an advertising campaign and last only as long as necessary to get the goods. Yet again and again, like Charlie Brown asking Lucy to hold the football, business oriented right-wing politicians violate their own ideology of skepticism and are quickly left flat on their backs after promising the voters that tax credits and big business policies will solve the economic woes, rather than add to them.

Sure there are good and ethical businesses, but why do those of suspicious motives always seem to attract the politicians?

A longstanding example has been Frontier Airlines, particularly when it was owned by Republic and convinced city and state elected officials in both parties that their plans would add hundreds of workers and make Milwaukee a hub of national air attention.

Unlike mining, which always has downs and ups internationally that require disciplined and patient response,  the airline industry was ready to explode in demand even three years ago, and in profit terms is now succeeding almost obscenely --  even if passengers feel like peas flash-wrapped in a  compressed  plastic envelope.

Consolidation, carefully full flights, special fees, lower jet fuel costs have all produced runaway profits in the billions and reflect some shrewd  strategizing and power plays  by the big boys of the industry.


As editor of Milwaukee Labor Press, I wrote with anger and sarcastically about how the city and state fathers had been taken for a ride (“Leave the gun, take the cannoli”) by ignoring the views of industry experts about one particular player who wanted to be a big guy and was nowhere close. So they fell without facts for the myth that Republic would convert Frontier Airlines into the new Midwest Airlines of still beloved fame for its service and cookies. Even the pilots and attendants from the old Midwest detected the lie if anyone besides me asked.  Nonunion observers echoed them.  

It all reminded me how it is always easier to sell the Brooklyn Bridge to folks in expensive suits and in my story I singled out the natty suit that should have known better, the Metropolitan Milwaukee Association of Commerce (MMAC).

For those with short memories, CEO Bryan Bedford used the vision of hundreds of jobs and Mitchell Field as a national co-hub with Denver as part of his Frontier pitch and MMAC helped sell the politicians, as they now do with voucher schools and other tax-stealing ideas.  Insiders suggested to anyone who would listen that Bedford didn’t have the clout or the smarts, but our elected goats were desperate for economic good news, believed he would save, add or transfer 1,600 jobs, so they even renamed the downtown convention center in Frontier’s honor, gave the airline prime terminal space and sought state wealth from a new Walker administration even more desperate for equating big business with good government.

Yet Southwest – which also owns AirTran -- is now even lapping Delta out of Milwaukee.  Republic has abandoned Frontier to Indigo Partners, and now Frontier is outsourcing 1,160 ground workers in Denver to a Swiss company while eliminating the last remaining 140 jobs in Milwaukee to a private Nashville company.  Financial savings are the current excuse, which does make you wonder what the Swiss and Nashville privateers are paying. Baggage handlers and ticket phoners are hardly crippling wages to begin with.

These examples are hardly isolated. Almost daily the citizens are being further duped with the pretense that big business will save government and as a consequence government should be more like business. The difference of purpose, intent and results grows more obvious each day.  

Gov. Walker pledged that by emulating big business methods his new job creation replacement for the commerce department, WEDC, catering to state loans and tax credits for luring businesses, would create 50,000 new jobs, though recent analysis puts the number at 5,480. This was a part of his 250,000 new jobs pledge, revealed last summer as more than 148,000 short. 

The person who pointed out that second failure to the media lost the election to Walker.  But now those political ads have faded and Walker’s behavior is becoming clearer in his pursuit of national recognition. The old facts remain to haunt him.  Perhaps such feeble results and blatant kowtowing to the 1% are the national snake oil that will be swallowed in this bizarre political era, but for now they underscore the fallacy of big business being smart about state economics.

Facts just keep getting in the way.  Take Cargill, a wildly successful $135 billion family-owned meat packing company striding atop the international food empire.  Without much thought, like dismissing an ant crawling near its picnic table, it shuttered a Milwaukee  plant in 2014, despite industry optimism about the future but spurred by the temporarily diminished US cattle herd – and then it invested millions in new facilities from Indonesia to Korea.  Of course, that shutdown only costs the jobs of 450 largely immigrant workers in Milwaukee (hardly a core big business constituency), which allowed Cargill to divert its expenditures and packing activities elsewhere. It’s hardly new that the cattle are protected more quickly than the workers.   

Layoffs and closings often translate into profits if it is American workers affected rather than those in South Vietnam who will work for 65 cents an hour.  Independent Sen. Bernie Sanders noticed this trend in a recent economic discussion: “In the 1980s and 1990s, Jack Welch, the CEO of General Electric, laid off over 100,000 workers," he recalled. "His reward?  When he retired he received a golden parachute of over $400 million. This is the kind of corporate greed and irresponsibility that is destroying the middle class and must be ended.”

Sanders is making a political point in response to invitations to run for president. So we can argue certain details, but can we escape the underlying moral question?

Business is about making money. Government in contrast is about providing services and protecting the public with no thought of profit. It is already using the tools of business -- such as accounting, ledger columns and data mining --  more openly, more cheaply and more effectively.  Business will make decisions about profit ignoring the fate of workers who build the company and build the communities we live in if the number crunchers find that closing is better for the bottom line. Wall Street almost always applauds.

So why do we keep asking business leaders for advice about how to run government?

Why does the public keep listening to the right-wing canards that government would be better if it behaved more like or functioned more like businesses? Do they keep saying this because we seem silly enough to believe it? 

Little has changed from my original story three years ago when I wrote: “Somehow the public ignores this growing track record of financial stupidity. It sits silent while MMAC pretends its schemes on education and government finances are best, and that citizens should also buy its machinations to lift the city out of the very poverty and stagnant wages that its own attitudes helped create.”

About the author: Noth has been  a professional journalist since the 1960s, first as national, international and local news copy editor at The Milwaukee Journal, then as an editor for its famous entertainment Green Sheet, also  for almost two decades the paper’s film and drama critic. He also created its Friday Weekend section and ran Sunday TV Screen magazine and Lively Arts as he became the newspaper’s senior feature editor. He was tapped by the publishers of the combining Milwaukee Journal Sentinel for special projects and as first online news producer before voluntarily departing in the mid-1990s to run online news seminars and write on public affairs and Internet and consumer news. From 2002 to 2013 he ran the Milwaukee Labor Press as editor. It served as the Midwest’s largest home-delivered labor newspaper, with archives at milwaukeelabor.org.  In that role he won top awards yearly until the paper stopped publishing in 2013. His investigative pieces and extensive commentaries are now published by several news outlets as well as his culture and politics outlets known as Dom's Domain.  He also reviews theater for urbanmilwaukee.com and movies at domsdomain.