• WisBusiness

Thursday, January 28, 2010

Stumbling down the stimulus trail

By Bill Kraus
I have walked the walk, listened to the talk and concluded that the "jobs" issue leads to a dry hole in Wisconsin and an unpromising trip to the bank in Washington.

No government is in the job creating business, wants to be in the job creating business or knows anything about the job creating business. And even if one went into the job creating business, it would not be able to stay the course given the public criticisms of the inevitable failure rate that attends the job creating business.

Government stimulus money instead goes to going concerns whether public or private. The public money for the most part goes to shovel-ready contributions to infrastructure restoration and creation or provide what are considered vital services, such as education, where revenue streams are shrinking.

The government-funded stimulus programs for the private sector can be classified as geographical or do-good welfare. Some consist of very narrow or very specific grants or loans designed to create jobs in depressed and depopulating areas. The Wisconsin Department of Commerce, for example, will lend money to anyone who will set up a business in a town of less than 3,000 or 1,000. Geographical welfare.

Other Commerce Department grants are available to companies that will invest them in energy efficiency and greening up existing enterprises. Do-good welfare.

All of this is okay. None of it creates jobs in or for a new economy.

There is an initiative being considered in the Wisconsin Legislature which would provide some money, tax and investment incentives, and support for private sector job creating. Funding is going to be the problem since the state is trying to dig out of a multi-billion dollar deficit hole, but it is the only real sign of stimulus life in the state sector.

Until and unless this happens the only organizations trying to create jobs outside the angel and venture investment businesses that I have found in Wisconsin are the quasi-governmental non-profit CAPs [leftovers from the 1960s losing war on poverty] and also non-profit development districts that have been created to bring jobs to depressed areas anywhere.

This doesn't mean there isn't anything the governments can and should do to create jobs. They can provide incentives and inducements to private sector investors to do those things that need to be done which the government can't and shouldn't do.

Incentives can be created that are patterned on the TIF [tax incremental financing] model that local governments have used for years to give tax breaks to developers who will build things with long-term revenue potential for the tax postponing government.

Treating capital gains even more kindly than they are currently being treated is another possibility.

Certainly investors and economists in the private sector have many more ideas about how to get more money flowing to the funds, the funds of funds, and to places where the best and the brightest believe our economic future lies.

What is clear is that the government should not, cannot do this and the private sector investors will not do it until and unless they can see that there is money to be made commensurate with the risks involved.

I wonder if all those candidates talking about how their priority in their stump speeches is jobs know this.

-- Kraus is a longtime politico and campaign finance reform advocate who served in Gov. Lee Sherman Dreyfus' administration.

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