Posted on 05/12/2015 11:02:12 AM PDT by jfd1776
Reflections on the origin of opportunities, on the opening of UI Labs' new research center in Chicago…
UI Labs’ Digital Manufacturing Center opened today at Goose Island in Chicago – on 94,000 square feet of a property that was once the Republic Windows and Doors factory – and you will celebrate.
It’s an important facility – everybody says so, particularly the people who made it possible, and they should know. It’s going to remake American manufacturing, by figuring out how to modernize the American manufacturing floor.
You should thank Rahm Emanuel (D, Chicago) and Bruce Rauner (R, Wall Street) and Dick Durbin (D, Harry Reid’s HandPuppet), and Barack H. “Don’t Say His Middle Name” Obama (D, Havana), because they made this all possible. This amazing $320 million public-private partnership is going to do everything to save this country that only a public-private partnership can. And we have our esteemed politicians to thank.
Oh, joy of joys.
The Land
The great thinkers of Chicago want us to be grateful to them for establishing this marvelous place on the ruins of the Republic Windows and Doors factory. They want us to forget why the land is available to them, so let’s remember:
The Republic Windows and Doors factory went out of business during what is known as The Great Recession. The housing boom had gone bust, and since the incredibly high-tax city of Chicago was the worst possible environment in boom times, it was a terrible place to be in a downturn.
Republic employed some 260 people when it finally closed its doors in 2008. Its management made some bad decisions, and did violate some labor laws at the end that have given the anti-business crowd carte blanche to treat Republic as a bad guy, but the fact is, it was a fine, normal business, supporting the construction industry, making local housing materials, until the recession hit and homebuilding collapsed.
And what caused that recession? What caused the banking and housing collapse of 2008?
Government.
Lest we forget, it was the Carter-era Community Reinvestment Act, and in particular, the supercharge of it during the Clinton administration, that set the ball rolling to drive mortgage lenders into unsustainable territory. While people have long understood that the CRA did damage to the rationale of our nation’s banking structure, and obviously to the values of individual homes, it is often forgotten that the mess it caused also damaged the construction industry and the vendors who support it.
It’s Big Government, and its specific subset, the Do-Gooder mentality of warping the mortgage rules to help obviously bad risks to buy houses, that caused Republic and thousands of other firms, big and small, to go out of business over these past eight years.
Big Government, and its advocates on the Left side of the political aisle, are responsible for these many bankruptcies, and the unemployment that followed. Big Government is the reason why new business startups are down: the many people who had been saving and investing to open new businesses themselves lost their stakes in the crash, or lost their nerve as they looked around them.
What sane person would open a construction company today, or a factory that manufactures windows and doors, millwork and siding, plumbing fixtures and carpentry? If you’ve been in America over these past eight years, you might just feel you’d do better with your nest egg at the track or the tables.
The Money
Before we cheer this massive new investment in Chicagoland, let’s ask where the money came from.
UI Labs is described as a $320 million public-private investment. While not all of the sources are known, we do know that $70 million came from the US Department of Defense. Early on in the Obama administration, the Resident of the White House directed that $70 million in defense budget dollars be taken from the Pentagon’s control and redirected to this new Digital Manufacturing Center in Chicago, his political base.
If America still had a functioning mainstream media, perhaps there might have been accusations of a conflict of interest, as a president sent $70 million in federal funds to a new facility in his “home town.” But that didn’t happen.
If Washington, DC still had a functioning budget system, Congress might have awakened to this plunder of the defense budget, and raised a fuss over such a re-appropriation in a time of war (remember, we still had active conflicts in both Iraq and Afghanistan at the time).
But that was 2009, a year outside of history, when nationalization of banks, insurance companies, even automobile manufacturers, was allowed, regardless of Constitution or statute, without a devastated nation having the energy to even raise a peep about a “rounding error” like seventy million dollars out of such a bloated and still-ballooning federal budget.
And what of the rest of the money? Well, that $70 million in federal dollars was a base, but the other $250 million in combined private and public funding hasn’t been published in detail. By all appearances, the contributions by genuine industry – defined as privately or publicly held corporations – is in the millions, while contributions by governments and nonprofits – defined as universities and NGOs and city and state and federal moneys and tax credits and grants – are in the hundreds of millions. The financial sources for most such things nowadays – even the theoretically private sector nonprofit agencies and colleges, are largely various bodies of taxpayers, not the voluntary contributors of a free market business.
So, this allegedly public-private partnership isn’t the even pairing it may appear. As the Big Government crowd continues to blur the lines between the private and public sectors, UI Labs is at the forefront of the great con. This is a grant engine, a research model that has provided good construction jobs and will certainly employ many smart people, but make no mistake: this is not a business venture in any normal sense of the term.
The Goal
Ostensibly, the purpose of this research facility is to discover ways to modernize the American factory. They will study such cutting-edge ideas as “wearable technology.”
Wondering how to better utilize RFID in your shop floor? Wondering how to better digitize your inventory data? Wondering if you can combine your millennial employees’ love of the iPhone with your business’ IT processes? Call UI Labs, and they’ll work on a solution for you!
It sounds fine. There’s really nothing wrong with any of what they’re doing (at least, as far as this writer can see). These are normal enough research functions, so as far as that goes, it’s fine. Some manufacturing companies will want to hire them for projects; some manufacturers will likely go to market with ideas that were sprung at UI Labs.
But that’s not the real story.
The Problem
The real story behind the focus on UI Labs is the location, both on land and in the public consciousness.
This is a heavily tax-exempted facility, a massive taxpayer-funded operation, taking up land that used to be a productive private sector factory – a tax consumer, if you will, taking the place of a taxpayer.
And just as that’s the case on physical land, it is also the case in the public dialogue.
When government wants something to champion, it looks to a government-funded, government-backed, government-blessed institution… at the expense of non-government institutions.
Factories aren’t coming to Chicago. Small business start-ups aren’t coming to Chicago. Entrepreneurs aren’t scouting land in Chicago… or if they are, we’re not hearing about it, possibly because they’re spending all their time on the couch of a good shrink.
Chicago – along with the rest of our major cities – has become inhospitable to the private sector. They cannot abide the dirty smoke of a 19th century factory or the locked doors of a sweatshop, and they don’t know how dated their images of factories are, because the Big Government elitists who run our big cities got all they know about factories from reading some book about the Triangle Shirtwaist Factory fire back in college, between courses on Underwater Basketweaving 101 and the Sociology of Exploitation 202.
The business news in Chicago on May 12, 2015 was filled with public sector programs. The opening of the UI Labs building. The announcement that Chicago will be the home of Barack Obama’s presidential library. The music list at the city’s Taste of Chicago festival. The Goodman Theater’s plans to expand its educational offerings.
Where is the news about groundbreakings of new factories? Where is the news about small businesses rending office space, closing deals, moving up to bigger offices, announcing new patents and new production lines?
Such news, once the lifeblood of a newspaper’s business section, are nowhere to be found today.
And yes, these two facts are related.
Every new public sector activity or public-private partnership is funded by tax dollars or donations, by the charitable giving of nonprofits or by the coercively-collected funds of the private sector.
With every such tax increase, the ability of the private sector to grow is curtailed. Every dollar taken from a private investor for some government project is a dollar that can’t be spent in hiring people to put America back to work.
With ninety million Americans outside the workforce, our unemployment and underemployment problem is worse today than it has ever been, and this media cheerleading for public projects is a big reason why.
To solve our nation’s problems, we need to cut taxes, cut regulations, cut government spending, and stop allocating precious land to government projects, freezing out the private sector from both land and capital.
But that’s not going to happen as long as politicians are rewarded with favorable front page coverage whenever they dedicate another couple hundred million of our dollars to another public project.
Eventually, after all, there has to be somebody to pay the taxes that fund all this stuff. And thanks to this very problem, Illinois is driving those crucial people out of our state at a record pace.
Copyright 2015 John F. Di Leo
John F. Di Leo is an international trade consultant and writer based in Chicagoland. A board member of the Illinois Small Business Men’s Association in the 1980s, he has never received a government paycheck… but along with you and many others, he’s funded plenty of them… not always willingly.
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This sounds a lot like the “pre-competitive” consortia that were popular in the 1980s like MCC in Austin. A company that I worked for at the time invested millions in MCC and the return was pretty much squat.
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