GM’s bankruptcy a blessing for Janesville

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It looks like our neighbors to the South could be winning back their jobs in the currently empty GM plant. This haphazard article from the State Journal attempts to explain that the Janesvile plant could become a site for the development of a new, smaller line of GM vehicles. At least the title, “Janesville GM plant in running to build new, small car,” implies that. However, only one sentence in the entire article discusses the proposed product:

“There’s no indication how soon a site will be chosen to build a subcompact car, originally set for production in China.”

Either way, this could be a major development for Janesville, as it has looked becoming America’s next “Flint” right in the face ever since the layoffs at the end of last year. The town has the highest unemployment rate in the state, and it’s not like people are going to be sticking around for the weather. Nevertheless, Janesville has actually received a great deal of attention from the state legislature, which included a $8000  per worker credit in the budget to businesses that move into the Janesville area and that hire workers “from targeted zones.” As Rocknet Roots, a Janesville blogger, explains, the credit targets the hardest hit areas of Janesville, rather than the sprawling suburbs, whose existence is evidence of a number of other tax credits that move people into the area:

It’s doubly important to keep in mind that the 12-plus percent and climbing unemployment rate is a direct reflection of businesses and factories vacating the inner city – not because the city doesn’t give enough away in tax incentives to induce sprawl.

David Brooks, of the NYTimes, has a column on how the federal merger of GM will not save the company, and that if anything, the company is ultimately doomed to the same fate in just a matter of time.

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4 Responses to “GM’s bankruptcy a blessing for Janesville”

  1. Sam Clegg Says:

    I don’t know the specific nature of the tax incentives employed in Janesville, but I can’t imagine them being that successful. It would be similar to offering such an incentive in Detroit; if the place itself isn’t as viable economically as it once was, there is only so much that can be done.
    And while I’m all in favor of tax credits to attract businesses, Ireland is a perfect example of how you can screw this up – jacking up the government deficit to pay for economic growth. Ireland was the first Eurozone country to enter a recession. And while there are significant differences between here and there, a tax break not funded by a decrease in services will be a certain strategy to plunge your economy further down the shitter. Sconz, do you think this will seriously do any good?

  2. Sam Clegg Says:

    But what was most fascinating in any case was…THE ABJECT STUPIDITY OF GM NOT KNOWING WHERE ITS STANDBY PLANTS WERE GOING TO BE.

  3. The Sconz Says:

    Sam, thanks for the insight. I actually forgot to mention that the tax credit fund was capped at $5 million, which is equivalent to tax credits for 625 workers. What I think is significant about the Janesville plan is that it targets specific areas of poverty and unemployment. The idea I suppose is to get a couple companies in there to replace the jobs lost at GM, since the GM closing was obviously not the result of Janesville’s failure, but that of the company’s. But yes, I do think if there had been more aggressive measures taken to encourage investment in the inner cities back in the 60s,70s, and 80s things might be significantly better in places like Detroit today.

    Ireland and Spain for instance, were hit hard specifically because they funded drastic economic development on debt, however, another big problem in Europe is Germany, which is extremely hesitant to spend heavily because of fears of inflation a la Weimar. Because it’s Europe’s biggest economy, the continent is looking to it to stimulate its economy with some heavy investment and its balking.

    I mean, these are huge debates that obviously are too big for a comment or a blog post, but you get what I’m saying.

  4. Sam Clegg Says:

    Naturally, my apologies for bringing in the old country. However, I guess I’m just a little hesitant to embrace the deficit funded growth model; as it not only gives the Scott Walkers of the world a platform to run in, but comes around to bite us in the ass in the long run. And while $5 million is by no means extravagant, I guess (call me a rich white fascist, by golly), that I don’t see the wisdom in expanding state aid (in a sense) right now. Take California and its junk bond rating (sorry to bring in outsiders again). They can hardly get a loan. And while I wholeheartedly agree that the closing was not Janesville’s fault, the loss of employment may be an unfortunate consequence resulting in a smaller, less vibrant city. Stemming the tide should not give way to trying to push it in the opposite direction.

    Although later, if they wanted to take that 5$ million out of corrections I’m sure we’d be in agreement…

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