I have walked the walk, listened to the talk and concluded that the "jobs" issue leads to a dry hole in Wisconsin and an unpromising trip to the bank in Washington.

No government is in the job creating business, wants to be in the job creating business or knows anything about the job creating business. And even if one went into the job creating business, it would not be able to stay the course given the public criticisms of the inevitable failure rate that attends the job creating business.

Government stimulus money instead goes to going concerns whether public or private. The public money for the most part goes to shovel-ready contributions to infrastructure restoration and creation or provide what are considered vital services, such as education, where revenue streams are shrinking.

The government-funded stimulus programs for the private sector can be classified as geographical or do-good welfare. Some consist of very narrow or very specific grants or loans designed to create jobs in depressed and depopulating areas. The Wisconsin Department of Commerce, for example, will lend money to anyone who will set up a business in a town of less than 3,000 or 1,000. Geographical welfare.

Other Commerce Department grants are available to companies that will invest them in energy efficiency and greening up existing enterprises. Do-good welfare.

All of this is okay. None of it creates jobs in or for a new economy.

There is an initiative being considered in the Wisconsin Legislature which would provide some money, tax and investment incentives, and support for private sector job creating. Funding is going to be the problem since the state is trying to dig out of a multi-billion dollar deficit hole, but it is the only real sign of stimulus life in the state sector.

Until and unless this happens the only organizations trying to create jobs outside the angel and venture investment businesses that I have found in Wisconsin are the quasi-governmental non-profit CAPs [leftovers from the 1960s losing war on poverty] and also non-profit development districts that have been created to bring jobs to depressed areas anywhere.

This doesn't mean there isn't anything the governments can and should do to create jobs. They can provide incentives and inducements to private sector investors to do those things that need to be done which the government can't and shouldn't do.

Incentives can be created that are patterned on the TIF [tax incremental financing] model that local governments have used for years to give tax breaks to developers who will build things with long-term revenue potential for the tax postponing government.

Treating capital gains even more kindly than they are currently being treated is another possibility.

Certainly investors and economists in the private sector have many more ideas about how to get more money flowing to the funds, the funds of funds, and to places where the best and the brightest believe our economic future lies.

What is clear is that the government should not, cannot do this and the private sector investors will not do it until and unless they can see that there is money to be made commensurate with the risks involved.

I wonder if all those candidates talking about how their priority in their stump speeches is jobs know this.

-- Kraus is a longtime politico and campaign finance reform advocate who served in Gov. Lee Sherman Dreyfus' administration.

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John Torinus and Tom Hefty have weighed in and given the state an F on their economic test. They are tough graders, but it is hard to argue with their facts about lost jobs, low family incomes, shrinking wages. So what will reverse these discouraging trends? I don't hear anyone suggesting that the mainstays of the 20th century Wisconsin economy like paper, heavy machinery, and auto-related manufacturing are likely to return to their glory years.

The same article touts the cluster strategy which would build on still lively assets like GE's medical equipment and Milwaukee's hundred-plus water-related companies. They do not emphasize the prospects of the small, fledgling idea-driven companies being spawned by Wisconsin's research universities and institutions in, mostly, Madison and Milwaukee but they have in the past.

Happily they do not dwell on the usual government suspects: taxes, fees, regulation, attitude. They lament instead the lack of a new economic strategy for the state by the state.

They do view the dismal state of providing the kind of high-risk venture capital that is the mother's milk these aforementioned start-ups and early second stage enterprises need with rightful alarm.

This, happily, is something that state government can do something about. Or can it?

The Democrats in the state Senate have put together a stimulus proposal that would put modest amounts of state money into the hands of entrepreneurs to nourish and encourage job creation.

Why not a full-fledged venture capital program that would grow the state's economy with a tiny percentage of the money (over $70 billion at the moment) being invested by the state investment board on behalf of the thousands of people who have retired or will retire from their jobs in state and local government and education?

As it happens, I can tell you why not. This idea surfaced some 30 years ago and was immediately and vigorously opposed by the state employees' union, the directors of local government organizations, and the state teachers' union.

These risk-averse organizations preferred investments in the blue chips like, say, General Motors. So how well did that work out?

It would be foolish to pretend the safety firsters (if indeed there are any safe places) don't have a point. Venture investing is a risky business, and the rules of venture investing make its operatives easy marks for the advocates of the more traditional AAA stocks and bonds, even though these are unhappily in some disrepute these days.

But this doesn't make venture investing less risky or protect it from criticism.

This is why:

Venture investing, not unlike baseball, is mostly about failure. Even the best of the best in baseball and in venture investing rarely bat .300. This is bad.

What is worse is that those venture investments that go bad do so quickly. So right out of the box, the most canny practitioners have to own up to and abandon -- this is another unpleasant aspect of successful venture investing -- the early losers.

To succeed, venture investors have to spread their money around. If they want to get three successes they have to make 10 investments, seven of which will either fail completely or simply slog along and produce little if any in the way of earnings and growth. Those that fail, what's more, have to be jettisoned. Successful venture investors are ruthless about adhering to a "no good money after bad" strategy.

It is not hard to imagine what kind of public outcry will ensue from early failures and fast reinvestments with what is essentially public money because the public will have to replace those losses with more tax money if the three winners in this hypothetical example don't come through.

Can any elected official stand up to this kind of criticism? Does a chicken have lips? These are the same people who caved in on indexing the gas tax when the talk radio people raised the decibel level on that penny ante burden during the $4 a gallon trauma.

If they can and will, however, the rewards are provably worth it. Those three winners -- and the potential for one heroic success -- represent the future, the next Wisconsin economy. No one knows what they will be. No one knew a century ago that a salesman and a hardware dealer in the Fox River Valley would have an idea that would become Kimberly-Clark or that a man who built a dam in Wisconsin Rapids would find a way to use the excess power it created to make coated paper.

Wisconsin has the money. What Wisconsin needs is the will and the expertise and the guts to stand up to the inevitable criticism.

The alternative is another richly deserved F from John and Tom.

-- Kraus is a longtime politico and campaign finance reform advocate who served in Gov. Lee Sherman Dreyfus' administration.

Labels: Bill_Kraus

A man named Sunil Krishman has an idea for a startup company that would create something important for Wisconsin and the economy: instant jobs in rural areas.

Logic would indicate that this is a project that is worth stimulating.

So I recently set off on a quest to find out who I should contact to show me a route to the start- up money the project needs.

I started with a call to the governor's office where my neighbor and acquaintance Susan Goodwin holds sway.

I didn't get her. I got instead the voice mail of her executive assistant, Mike. I told him what I wanted and left my number.

Two days later I called again. This time the person who takes calls at the governor's office told me that neither Mike nor Susan or anyone else in the east wing of the Capitol would have an answer to my question. She gave me the number of a state office with "recovery" in its name.

After two days worth of fruitless calling and leaving voice messages, serendipity struck. I was having coffee with a man who wants to run for lieutenant governor next year. I mentioned my frustration with the recovery office. He said he knew someone there and would make a call.

Sure enough the next day I got a call from a woman who told me that she couldn't help but that I should call the Department of Commerce. I did. I left a message.

A day later a man called me to say his department doesn't have any stimulus money except for "green" projects, but he might be able to help me. He would call back, he said.

In the meantime I had a visit with Democratic state Sen. Julie Lassa of the Stevens Point area and her staff. They liked the idea and wanted to include Sunil's plan in her effort to revive the vetoed "farmshore" provision in the budget. I thought at the time the reason it got vetoed was that the governor or his people couldn't figure out what "farmshore" was or meant. I didn't say so, but I did suggest that Sunil's concrete plan to bring IT functions that had been shipped all over the world back home might get a more favorable reaction from the governor with or without a more descriptive name.

In the course of this discussion, Julie gave me the name of a woman in Congressman Dave Obey's office in Wausau who might be helpful. I called her. She was out of the office. I left a message. She did not call back, but somebody else did. He told me the best routes to stimulus money were through the SBA or at the office of Rural Development in Stevens Point.

He didn't have a name there, but he gave me a phone number.

I called. The telephone tree said if I knew the extension of the person I wanted to talk to, I should dial it; if I didn't, I should hit 8 on my phone and get the agency's phone directory where I could enter the first three letters of the name of the person I wanted to talk to; if I didn't know that, I should stay on the phone and someone would answer.

No one did. Instead I kept getting the original telephone tree message over and over again.

So there I was with a number that went nowhere and no way to get past it.

I decided to call the Rural Development office in Madison and see if anyone there knew the name of anyone in the Stevens Point office. Luckily someone did. So I had three digits to enter when next I called and got -- wonder of wonders -- a human being instead of voice mail. It was, of course, not the human being who could answer my question but a human being who knew who could answer my question.

Justin Kirking was his name and he told me that the Rural Development office funds something like 40 programs -- none of which include a job- creating startup like the one I was pushing. He added the depressing information that like the SBA, they respond only to requests from banks.

Fortunately while I was waiting for phone calls to be returned and trying to find ways to get past phone tree dead ends I had sent the executive summary off to former Dane Co. Executive Rick Phelps of the M&I Bank on the long shot chance that someone at his institution might think this was instantly bankable. So that door was open, and I sent an addenda to my original request asking for the M&I's help with the feds and the SBA in particular.

All of this is a work in process at the moment, although given the banking industry's (a) problems and (b) indifference to the problems of companies like Sunil's, I am not sanguine.

In the meantime, Sunil is keeping Julie Lassa in the loop and hoping that she's able to revive her initiative so the state can put an oar in the water. I might even hear from the Department of Commerce.

If I live long enough.

-- Kraus is a longtime politico and campaign finance reform advocate who served in Gov. Lee Sherman Dreyfus' administration.

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