By Tom Still

– During a debate over what to do next about Wisconsin’s lead economic
development agency, a Republican member of the Legislature’s budget-writing
committee took an openly skeptical stance.

don’t really agree with the main mission of (the Wisconsin Economic Development
Corp.),” said Rep. Dean Knudson, R-Hudson. “I never did. It’s really not a
proper role of government to be doing this.”

to Knudson apparently means all state economic development programs run through
WEDC. Those programs include business grants, loans and other initiatives aimed
at encouraging startup companies, attracting new businesses, retaining
companies already here or generally working to improve Wisconsin’s business

a legitimate laissez-faire view, undoubtedly shared by others on both sides of
the partisan aisle, but one that is hard to reconcile in an increasingly
competitive world.

some policymakers in Wisconsin have talked of doing away with state business
loan programs or WEDC altogether, other states continue to march ahead with
their own loan programs – and much more – in the race to create companies and

fact, 47 of 50 states directly operate state business loan programs and the three
that don’t – North Dakota, Wyoming and Alaska – do so through coalitions of
cities and other groups. In 45 of 50 states, direct loans, participation loans
and loan guarantees are among the top five economic development programs in
those states’ toolkits.

many cases, state business loan programs are needed to qualify for federal
programs that match state and private dollars.

The state-by-state data comes from
the State Science and Technology Institute, the Center for Regional
Competiveness, the Center for Community and Economic Research and the Praxis
Strategy Group, all organizations with a history of tracking state economic
development trends.

“We are not aware of any state of
Wisconsin’s size that doesn’t offer (small business) loans,” said Dan Berglund,
director of the Ohio-based State Science and Technology Institute.

A recent example of a state going above-and-beyond
simple loan programs is Arkansas, where Gov. Asa Hutchinson, a Republican, has
called the state’s General Assembly into a May 26 special session to adopt a
bond issue to help Lockheed Martin bid on the opportunity to build military
vehicles in Arkansas.

The goal in Arkansas is to land a
contract to manufacture the Joint Light Tactical Vehicle, the successor to the
Humvee. Lockheed Martin is competing with AM General Corp. and Wisconsin’s
Oshkosh Corp., which submitted its proposal to build the new Army and Marine
Corps vehicle in February.

In other words, while Wisconsin
talks about doing away with business loan programs and other incentives because
of a few bad apples, other states are doing more to compete against the Badger

Unilateral disarmament is not an
option in the competition of companies and jobs in the United States or
globally. What’s needed from Wisconsin policymakers is a strong debate about
the proper mix of economic incentives, which includes three main categories –
encouraging entrepreneurial activity, spurring business attraction and
retention, and a “green field” approach to setting the right tax, regulatory
and infrastructure climate.

SSTI’s Berglund, who follows state
economic development efforts in all 50 states, said it’s more about adopting
the right policies than how a state agency is organized. In Wisconsin, the WEDC
is a quasi-public agency established in mid-2011 as a successor to the former
Department of Commerce, which was public.

have long believed that whether an (economic development organization) is a
state agency or quasi-public is immaterial to its success,” Berglund said. “It
appears to be more about the processes that are in place and the people leading
the organization and implementing those processes. It is most important that
any of these organizations be set up with transparency – while protecting
confidential business information – and accountability in mind.”

Legislature and the WEDC board will revisit the agency’s mission and procedures
soon enough. While there are many ways to prioritize the state’s economic
development efforts, walking away from a competitive world isn’t one of them.