IDK that it's an option. Is the current administration in Wisconsin able to walk away from the deal they made with Foxconn? If so, then great, they can ignore the sunk cost fallacy and walk away only slightly injured.
But, and I'm not an expert here, I assumed that deals like these have some kind of protections in place to limit exactly that sort of course reversal from happening. From an outsider, this appears to be a situation where they may not be getting handed the full 4 Billion Dollars that everyone mentions, but they still used deceptive tactics in order to receive a sweetheart deal from the Wisconsin government.
My current understanding is that this isn't as good as some people are trying to make it seem (Net positive for the state! Much Gains!) but also not as bad as others seem to assume (we paid 4 billion dollars and get 0 return on that during the lifetime of the deal) and instead seems to be somewhere in the middle (we are paying more money than this deal is actually worth)
> First, the fact that state passed a law with special benefits for only one party. “It’s a principle of law that you can’t pass a law for the benefit of only one business or person,” Flynn says.
> Specifically, the Wisconsin Constitution has a provision prohibiting special laws to benefit a particular party that are not general in scope. And the law providing a subsidy for Foxconn gives the company different legal treatment than any business in Wisconsin:
> -Foxconn is exempt from state law requiring an Environmental Impact Statement to be filed by any new company building a plant;
> -And Foxconn has been awarded special legal treatment under the courts, whereby any legal claims made against it can bypass the state court of appeals and go straight from circuit court to the Wisconsin Supreme Court. In fact, any decision by a circuit court is automatically “stayed” or delayed, until the Republican-leaning Wisconsin Supreme Court takes up the case.
> No other business in Wisconsin has been accorded these benefits. The Republican-dominated legislature sought to disguise this, Flynn notes, by targeting the benefits to any company in a designed investment area, “but then they said there can be only one company allowed in this area. That’s tantamount to saying only Foxconn can benefit from this, which is unconstitutional.”
> ...
> A second challenge to the legality of the Foxconn deal, Flynn notes, is for breach of contract. The company promised to build a Generation 10.5 plant, with a factory of workers building panels for 75-inch TVs, but it now says it will build a much smaller Gen 6 plant, with most of the manufacturing done by robots.
> The deal, moreover, was supposed to provide a state subsidy in return for 13,000 jobs going to Wisconsin workers, but Foxconn is now considering bringing workers from China, as the Wall Street Journal has reported. The company denies this, but had earlier denied the change away from 75-inch TVs, only to later concede these news reports were correct.
> Moreover the company said that while Wisconsin workers will be the first priority, “We will supplement that recruitment from other US locations as required.”
One extra problem here though is that the outgoing Wisconsin government made several changes to the powers of the Governor during the lame duck period. It wasn't a gut job, but they did kick the legs out of a few powers that could have helped.
There's no "sunk cost" here. The billions Foxconn would get are in lack of taxes. If there's no profit made there's no taxes to collect and give rebates on.
I'm really getting tired of people confusing tax rebates vs tax deductions vs outright grants.
Tax rebates are you get $X off your taxes. No profit, no rebate. There's no grants going on here.
Assuming the only other alternative to making the Foxconn deal is "and nobody else wanted to use the land for anything that would have created any revenue or jobs or benefit to society" you're still not right.That's rarely the world we live in though, so it's worse than that best case scenario.
As part of the deal, it has seemed very likely that Foxconn will use eminent domain to seize property from people. If the whole debacle really does shit the bed and "no profit, no rebate" then I think there's a valid argument to say that there was no "public good" need to seize that land. This isn't even getting into the infrastructure costs the state has to lay out on road work/etc, or the cost of legal fees, court time, etc this project draws.
There are costs. They have nothing to do with rebates. This deal has a really high probability of being a net loss for the state (plus creating a likely "fool me once..." feeling with the voters for the next project that feels similar).
But, and I'm not an expert here, I assumed that deals like these have some kind of protections in place to limit exactly that sort of course reversal from happening. From an outsider, this appears to be a situation where they may not be getting handed the full 4 Billion Dollars that everyone mentions, but they still used deceptive tactics in order to receive a sweetheart deal from the Wisconsin government.
My current understanding is that this isn't as good as some people are trying to make it seem (Net positive for the state! Much Gains!) but also not as bad as others seem to assume (we paid 4 billion dollars and get 0 return on that during the lifetime of the deal) and instead seems to be somewhere in the middle (we are paying more money than this deal is actually worth)