Republican Tommy Thompson, who served for fourteen years as governor, has written in opposition to the Wisconsin Economic Development Corporation’s loan program. It’s the right position to take, and shows that Thompson understands the problems with WEDC. Explicitly, Gov. Thompson’s opposition to WEDC-style loans includes local communities’ doling of loans through their own programs. (Whitewater’s Community Development Authority has been one of several cities Capital Catalyst communities making a practice of this, and seeking more money to keep doing so.)
(There’s an irony here, of course. Some of the local development men who have claimed close ties to Tommy Thompson are also the ones so strongly tied to the loan programs Gov. Thompson rejects.)
Here’s Tommy Thompson, from his recent essay in the Milwaukee Journal Sentinel :
My time away from public office has further convinced me of one thing: Government shouldn’t operate in the business lending space. I served our state for 14 years as governor and another 21 years in the Legislature, believing and operating under the assumption that there are few things that government does better than business. I left public service in 2004 and have spent more than a decade helping build companies in a variety of industries. I’ve repeatedly helped secure capital, meeting with successful institutional and private investors and have never once during the investment process been asked, “Why isn’t government investing in this company?”
What do all of our neighboring states have in common besides wishing they had Aaron Rodgers as their quarterback? Neither Michigan, Illinois, Minnesota nor any of the other states we share a region with provide a state-backed business loan program — and for good reason. Government — federal, state or local — shouldn’t be in the loan business; it’s neither built for the necessary rigors of the financial due diligence process nor is it best structured to withstand the political pressures that may be inserted into the process.
So very well said.
Thompson’s opposition, and the inquiry into state-backed loans, isn’t the end of these stories. As I’ve mentioned, there’s a cluster of communities – including Whitewater (http://inwisconsin.com/entrepreneurs/assistance/capital-catalyst/) – that have embraced this idea, with development gurus imagining themselves bankers of the highest order.
Significantly, even the dodgy WEDC provides no oversight of these loans (“WEDC does not provide direct funding to businesses or review business applications under the program.”) It’s all in hands of the men who have styled themselves development gurus, public relations experts, business lobbyists, etc.
Having watched these same men make significant mistakes, pick the wrong priorities, and declare all of it a floral bouquet, one should not expect something different now.
No matter, they’ve embraced the wrong policy, and the consensus (of policy and politics) against their efforts grows stronger each day.