Sunday, August 1, 2010

PS427: Be Bold Wisconsin

UpFront with Mike Gousha had a great segment on economic development today with Cory Nettles (former Dem Commerce Secretary) and Bill McCoshen (former Rep Commerce Secretary). They have been part of a new study producing a set of recommendations, including a complete restructuring of the Commerce Department to focus it on economic development.

Here is the link to the segment as it aired.

And here is a link to the "web extra" that extends the conversation.

The full report is here. Read every word and comment below.

Compare with the Wisconsin Technology Council report you read a few weeks ago.


  1. The most demonstrable stance that "Be Bold Wisconsin" took pertains to Wisconsin's perception as unfriendly or unwelcoming to potential businesses. It seems, according to the report, that the state suffers from an image problem. While the report notes that some obstacles - particularly Wisconsin's geographical location - will remain unchanged, policy needs to be enacted that spins the state as more welcoming to startups.

    Through a series of recommendations, the report opined what it felt would best help change Wisconsin, focusing on a few already-present cluster of industries. Included in these industries were food processing, renewable energy, software development, medical device manufacturing and financial services.

    While the previous technology council report touted venture capitalism, clean jobs and even transportation improvements, it did so in a very general manner. By comparison, the Competitiveness Report analyzed key industries in Wisconsin and highlighted their respective strengths and weaknesses as they stacked up to surrounding states. Without access to actual future fiscal figures dedicated to its proposed "Accelerate Wisconsin," the report still managed to outline a comprehensive program that will ease the burden on the Department of Commerce while focusing solely on economic development in the state.

    The report made an effort to constantly compare Wisconsin to the rest of the midwest. A few glaring problems arose through these comparisons. First, although the report indicates that Wisconsin is not the "tax-hell" that it is believed to be, perception outweighs reality. With high personal income taxes, Wisconsin looks bad by comparison for many potential businesses. Secondly, incentive caps and underused programs result in companies straying away from Wisconsin, especially in Software development.

    The last major roadblock that report highlighted is the fact that building permits are too hard to obtain and the development process takes too long. The report wants the state to be more "shovel-ready" instead of having to go through the motions that are tedious and detrimental economically. This point is especially relevant when taken in the context of Madison specifically - since Mayor Dave and the city are constantly fighting neighborhood groups for developmental control and ease of access for potential businesses.

    On the whole, Wisconsin needs better airport access and needs to eliminate a lot of incentive caps. It also needs to be dedicated to building as soon as possible, through shovel-ready initiatives.

    Like any potential employee, it is the state's job to sell itself to companies. It needs to look good on paper and face-to-face. According to the report, this means Wisconsin needs a marketing face lift that highlights its assets and hides its weaknesses. In the meantime, it needs a group specifically tasked with analyzing its weaknesses, like "Accelerate Wisconsin."

    Do I think Accelerate Wisconsin will help? Probably, their input will be valuable and more focused than the Department of Commerce. But in the end it's the legislative officials job to slash incentive caps and re-brand Wisconsin. Tourism isn't enough, we need to literally steal potential startups from our surrounding states. Competitiveness and dedication are the only ways to do this.

  2. An image problem should be relatively easy to correct if the way the state is viewed is incorrect. Dan is correct in noting that while cooperate taxes are not that high, higher personal income taxes can be quite discouraging. This makes sense since while the company may not be taxed, you still need employees, and well, if they get taxed they may be more inclined to live in another state where they will be taxed less.

    My general sense of the report is that they believe all the tools are already in place and they need to be brought out and developed so that they get national recognition. They would target specific industries so they could compete with our neighbors. The Technology Council report was much more focused upon high tech jobs, not the state as a whole. Though Wisconsin should take some recommendation from both reports. With a strong university that can compete in the Midwest and even nationally attracting high tech jobs is certainly possible. Highlighting resources the state already has such as infrastructure already exists with airports in both Madison and Milwaukee. To see if the high speed rail provides a usable way to get around is yet to be seen, but I maintain the belief that it could be invaluable to state businesses.

    The structure of this new organization of a quasi-public state wide group is the right idea. Someone needs to stand back and look at the whole picture of the state. They correctly acknowledge that some authority must be given to local authorities in the larger cities who will have better expertise on what is going on. But the advantage of an all encompassing group like "Accelerate Wisconsin" is that they could use people from these cities to make sure their needs are addressed.

    While all the suggestions would no doubt create some results, what about the budget? If certain tax incentives were given, or lowering certain cooperate or personal taxes what would this do to the budget? It seems the state is walking a very fine line between creating enough incentive to attract business while not letting the state get into such a downward spiral like Illinois. If this suggestions work, it could only be hurtful in the short term, some cutting now, and when business start to go "oh hey, check out Wisconsin! They have got great football, snow, beer, and a highly attractive business climate, and wait, Madison is an awesome city? Lets go there!" more income will be available. It is a gamble.

  3. It seems to me that what Professor Franklin is highlighting is that while the majority of those who commented expressed a positive outlook on Wisconsin’s competitiveness while clearly the article listed here has a very opposite prospective. Perhaps in writing my comment I was more optimistic than I should have been about the current state of Wisconsin’s business economy. Since “this project grew out of the NEED to encourage economic development and create jobs in the state”.

    Looking at five different industries to evaluate Wisconsin’s competitiveness there are definitely some reoccurring downfalls, but I still stand toward my original comments that Wisconsin has the potential to compete, which is expressed in the areas that Wisconsin seems most favorable. If perception shapes reality like the article says Wisconsin in part of revamping its marketing strategy must attack these stereotypes of the state. Since farming and beer aren’t the most marketable calling cards for a state that is looking to be competitive in industries other than the agriculture, dairy and food processing that is. Our state needs to be able to project the image of our excellent educational system along with our real estate accommodations and labor.

    What I find interesting is that the Deloitte-NKF points out every chance it gets that Wisconsin has a less than desirable stance competitively when it comes to our high state taxes. The article states that the income tax burden our state projects affects the very same individuals we are trying to draw to our state. Now while this is one of the major issues that seems to be hindering our business economy; in the recommendations there isn’t a single one that focuses on this issue. On the other hand I can see where the recommendations are going the fixes are geared toward more easily adjusted areas as well as exploiting the states benefits that aren’t as nationally recognized.

    On another note I understand the importance of Wisconsin’s competitiveness in order to create more jobs and build the economy, but must it fill out all five of these benchmark industries or wouldn’t be more resourceful to expand in areas where we are already making leaps and bounds such as agriculture and clean energy. I’m not suggesting that one forget about the other industries but perhaps just let this new marketing plan of Wisconsin’s redeeming qualities draw in the business. I feel again it’s important to note how commendable our educational system is here and even while we are still in the minority when it comes to biomedical engineering isn’t it respectable that we are 83 in the world for information technology. Maybe it real has come down to how we get the message out about all the things Wisconsin has to offer if future prospects can get over our high taxes…. Right? Accelerate Wisconsin sounds admirable I’m just wondering if based on the large negative areas if it will be enough?

  4. The "Be Bold Wisconsin" offers a better comparison of hoe Wisconsin is as compared to other midwestern states and the state of Georgia. I could not express how Georgia left a bad taste in my mouth, given that my hometown in Ohio lost a company, NCR, that once was headquartered in Ohio for over 125 years. I wonder if the business environment of not being a right to work state like Georgia - with its low union involvement of around 5% had anything to do with the leaving. But back to the report. This one offered a better concrete example of a company, ABC, to compare how its taxes would be in several states and way Wisconsin can seek to improve the situation. As such, the article is optimistic in seeking to improve the economic growth in Wisconsin from its current 28th position to the top ten by 2016. This is a more concrete deadline than the previous article sought to do. I am glad that they both offer initiatives to improve the situation; further, I am glad how each highlight the advantages of world-class universities present in the state. Further, both wish to better invovle the private and business sectors of the economy through plans such as venture capital and the previous one and "accelerate Wisconsin" in this one. I hope that many of the plans proposed by both organizations do see some traction in the future governor and Secretary of Commerce regardless of political affiliation. I do like how it wish to makes a targeted marketing campaign similar to what the state of Michigan is seeking to do to reverse its image as a rustic state that is unable to keep up with changes. I do wish the program would talk about a broader Midwestern cooperation to help the entire area as a whole. This would help better attract talent to the entire region, which in turn would spur up growth for Wisconsin as well. I hope the both organizations will work together as well since they are trying to reach the same goal that is to improve the business conditions of Wisconsin. Further, the recent TechCrunch article should be used as evidence that venture capitalist are willing to invest in Wisconsin based business or expand business into Wisconsin.

  5. First off, I thought the football metaphor employed by Deloitte was an excellent way of describing the goals for the state. Especially in the areas of playing defense, it was nice to highlight the ability of Wisconsin to retain the economic building blocks it already has in play. For a state that’s already gearing up to see the 2010 Badgers take us all the way to the Rose Bowl, we will see a lot of usual Wisconsin football—sticking to our game plan of tough, consistent running and overall hard nose football. In the same way, that is how the report treats the state of Wisconsin’s business development. One thing that must be done is shoring up the areas where Wisconsin already is a leader and keeping those industries staples of Wisconsin. For example, solidifying Wisconsin’s status as the nation’s leader in food and agriculture is a great start. At the same time, the economic plan for the state must also contain diversification. In order to hedge against the risks of the market, the state must also focus on new mediums of growth—specifically information technology. The premier superiority of the Wisconsin educational system lends the opportunity to properly invest in new areas of growth like IT start-ups. The Badgers primarily rely on brutal running backs and the big boys that hold down the line but a few connections between Tolzien and Toon this year will help to work some magic and hopefully spawn success. In much the same way, Wisconsin has to adapt to the times in order to stay competitive. The state could become the Silicon Valley of the Midwest if properly raises the incentives and lowers the barriers to entry. Putting out new marketable strategies and the open for business sign is crucial for the economy.

    The report discusses shovel-ready infrastructure as a way to quickly facilitate the opening of new businesses in the state. In the background portions of the report, it highlights the viability of regional economic developments. Because the state is rather large, these regional economic partnerships would be able to market and prioritize which sectors of business would work well in that area. In open areas like Northern Wisconsin, eco-technologies like wind power might work better. For Madison, the regional economic committee could focus on tapping into the research advantage of the city in order to encourage start-ups and thoughtful entrepreneurship. In my opinion, a collection of regional economic developments will help to best determine what the best course of business is and they should be the men and women on the ground that encourage growth; possibly have a Deputy Secretary of Commerce assigned to each region. Of course, the developments would remain under the oversight of the central office in Madison. Overall, the report does an excellent job of picking out the best strategies for long term growth.

    One of the main problems I find with the report revolves around the topic of taxation. Excessive taxation will obviously crush the business atmosphere in Wisconsin but the report place too much of an emphasis on taxing and fails to discuss its benefits. The report likes to tout Wisconsin’s superiority in education but it rags on the taxation aspect of state living. However, these higher personal income taxes go to fund this quality education. When looking at taxation, I believe it is prudent to examine the costs and benefits associated with it. This report fails to properly appreciate the public goods present because of some taxes. Now I am not saying over-taxation is good, in fact it is terrible. But it is important to consider the report with a grain of salt because those taxes go towards public programs for the betterment of the state.

    Side note to my response: I am predicting a Rose Bowl for the Badgers this year. On Wisconsin!

  6. Just another comment I forgot to mention in my initial response. When I referenced the open for business sign, I neglected to add that I believe it is up to public and private leaders alike to build up the economy by openly declaring support for the state. Perception is a key component of business support. By getting the state's leaders out to promote, it raises the profile nationally.

  7. I have always assumed that state government was less complex than national government because it does not need to deal with foreign policy and has a much smaller population to worry about. However, the WTC report made me reconsider this. First, I find it interesting that today, Wisconsin's economy is competing not just with other cities in the region and country, but internationally. While this increases the possible places from which revenue can flow into the state, this monumentally increases the burden of regulation. This definitely helps accomplish the WTC's first point of focus, which is attracting investment capital to Wisconsin for high-growth, early and mid-stage companies.

    I think that the surest route to a successful economy in the future lies in the WTC's second point: developing the workforce. Starting with early education and building up will significantly enhance the quality of the workforce. Unfortunately, the entirety of the suggestions require a huge sum of money which the state simply does not have.

    The same goes for improving Wisconsin's infrastrucre. One of the WTC's first suggestions in this arena is to not roll back recent policy gains, which is simp;y unrealistic given the major cuts that agencies are currently facing.


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