I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprises which reside there.
At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.
My personal opinion is cities should be talking about the Billions they will be committing to supporting infrastructure improvements rather than the billions in tax cuts. HQ2 needs a fuck ton of support systems, akin to building an Olympic City which never shuts down.
Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents. Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.
Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks - and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.
In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment. We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got. I certainly hope my city would do everything possible to roll out the red carpet. It’s the most effective dollars they could possibly spend, because it’s effectively corporate matching of public funds.
> Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset
It's not though. You purposefully used examples of public or non-profit groups to make it sound like a benefit. But it's not. A more fair comparison would read:
It's like someone came to your town and I said, "I want to build a $20m McDonalds, Mobile Gas Station, WalMart and a Best Buy". I would hope your town says "good luck with that" and not "that's amazing, how should we corrupt the local market to make it easier for you to do that". Amazon is no different in any way except scale.
In a sane world, Amazon HQ2 would terrify cities, who will need to ensure they have extra taxes in place for Amazon, to ensure the city can handle the massive pollutions Amazon HQ2 will generate in the local housing markets, local economy, and local infrastructure.
> We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got
Proven? Can you cite some examples? I've only seen "Public/private partnerships" used as a label to mask corruption and theft; as a way to socialize any losses but privatize any gains.
> At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.
Back in 2004 when I was working at Microsoft, I remember sitting in a bar in downtown Redmond and tossing back some local brew IPAs. This guy sitting next to me was an older dude and longtime fisherman. He was going on and on about how in the 80's, the eastside (the collective suburbs i.e. Redmond, Bellevue, etc) was just farmland, and that Seattle's main industries were fishing and logging. He was both lamenting and boasting how Microsoft came in and transformed Seattle and surrounding area into the tech mecca it is today.
So you are right. All it takes is one anchor company to totally transform an entire city. Too bad they chose cities with established infrastructures and talent pools, and not a city like Milwaukee or San Antonio that would have had the same dramatic transformation as 80's Seattle.
> I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprises which reside there.
I think the idea is that cities definitely should compete to provide the best services for the commercial enterprises, but that those service should not include breaks on taxes or land giveaways. If building a new transit station, boosting spending on public schools that the Amazon engineers would want, and restructuring building and zoning codes to increase the housing supply will make your city more attractive to Amazon, by all means go ahead, since those should redound to everyone, regardless of whether they work for Amazon. But Amazon seems rich enough to me that they would be just fine even without tax breaks on construction materials or payroll taxes.
> I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprises which reside there.
Part of the problem here is the people negotiating don't really have much skin in the game. It's easy to negotiate with other people's money. There's virtually no recourse for their poor decisions. See: suburbia.
> At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions
We're projecting what a theoretical second campus of a 23 year old company will be 50 and 75 years out? Please. Did we learn nothing from the nearly homogeneous business cities like Detroit and "coal country" today? Cities built around one industry or one company will fail.
> Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents
Amazon developed out of an existing city. Cities should invest their efforts to nurture their own businesses that one day may grow and provide jobs. Importing an existing business is a rather short-sighted proposition akin to a get rich quick scheme.
> Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
Agreed. Amazon is going to go where they're going to go. Cities should stop clamoring over themselves to give bigger tax breaks to one of the biggest businesses on the planet.
> Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.
Nothing. We exist to support our tax-paying residents and local businesses, and so you will have to work with everyone that's already here if you want something in particular. You can probably expect a new bus line, an extension of the road, sewer, and water system, one new police station, one new firehouse, two new elementary schools, half a middle school, and a new wing of classrooms at the nearest high school. The quality of all that will depend on how much your company improves the local tax base, so don't get too stingy, or the local news will have no problem airing all the dirty laundry for Amazontown a couple years down the road. The zoning board will be busy changing colors on their map so that your people can eventually spend money on drive-through coffee and dog-walkers without having to go all the way downtown.
Amazon needs to come to the table with the attitude "We're going to increase your tax base by $X. What's your plan for spending it?" The ideal city just has to blow the dust off the growth plan they already have and write new names and dates in all the blanks.
Any city that says, "we're going to give you a tax discount" is basically saying "we would rather you send your money off to Wall Street than actually spend it to improve the community that you intend to join here."
I suppose a city could also offer a bureaucrat dedicated to expediting issues related to the new HQ, like building permits and inspections and NIMBY lawsuits, if they wanted to pay the cost of that person's salary as a donation to the city. I just never quite understood the concept of offering discounts to rich people.
> We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got.
No one has proven this. There is plenty of evidence pointing to the opposite conclusion.
> It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard.
On the contrary, it is 100% rational for cities to want to get HQ2 and give away absolutely nothing, and possibly even get some concessions from Amazon itself.
They have to have another headquarters, and there are less than twenty cities that make any degree of sense for them to move to. I would bet that there are only two or three serious contenders, and the only way they're not going to go with whatever first choice they have currently would be a truly enormous handout. The whole bidding war going on here is, in my opinion, to try to get a sweeter deal from whoever they've already picked.
You make great points. There is a concern that not all of the incentives will be in terms of infrastructure improvements. Look at Wisconsin's deal with Foxconn - they're literally paying Foxconn money and giving them a license to pollute wetlands and waterways in exchange for 13,000 jobs.
> If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!”
This sounds very similar to the Garden Bridge project in London. It was eventually canned because it was going to take huge amounts of public funds and provide not a lot of benefit.
> It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks - and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
When the incentives cross the line from tax breaks to free stuff, it's capitalism, all right - crony capitalism. Not the type I and other libertarians care to see.
Never thought I'd see the day where I'd be nodding along to a Keith Ellison tweet.
They're arguing that the states are giving away money. Not that they aren't providing services.
And nobody thinks Amazon moving to their town will create a silicon valley 2. Plenty of cities host huge employers. They don't become magnets for that industry. They just get fat tax breaks.
Many cities actually get worse with these giant companies throwing their weight around. Under Armor is single handedly reshaping southeast Baltimore, which of course is not only upsetting neighborhoods but pushing people out, not to mention small businesses replaced by national chains.
Finally Amazon has hundreds of billions. They do not need a handout from a poor city.
>At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.
What are you talking about? Put those numbers back where they came from - your ass.
>Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
Agree but that's not the point. Amazon isn't really considering twenty cities, they're considering maybe three but they really want these cities to think they're on even ground so they can extract as much tax breaks as possible from one of the cities they would choose regardless. It's about maximum short-term extraction from their existing long-term choice.
>It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks
Let's not use 'irrational' this way, it's perfectly rational to be against this but...
You're right, this is exemplar of capitalism, it's also why I lot of people are turning their noses up at it. HQ2 really illustrates we've moved from seeing markets as a tool which are sometimes useful and sometimes not to being a market society which sees markets as the outsourcing of morality. No ideas have to be considered, the market will decide (and it's always right), it's a strange faith.
>and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
What is that outcome? That Amazon locates where it would have located regardless but with enough tax concessions that it's benefit to the community is substantially reduced? That Amazon's size allows it to pit cities against each other to lower costs, achieving economies of scale that upstarts just won't be able to match and further entrenching it? That Amazon shareholders get a nice dividend next year, funded directly from the concessions that Toronto or Atlanta gives them?
>If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!”
If someone came to your town and said, I want to build a $20m sports stadium — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.
Giving a bunch of concessions to Amazon isn't going to benefit the average Atlantan. Lots more people but without the corresponding taxes to keep public services up. Just like stadiums, this isn't a company working to benefit the surrounding community in the best way possible like some PR might tell you, it's Amazon trying to save as much money as possible, nothing else. Benefits to the surrounding community is a side-effect, a leakage and Amazon has every incentive to plug that leak wherever possible, here it happens to be taxes.
>In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment.
This is just sick, it's corporate welfare. If I'm paying for Amazon, then I want part of the profit.
>We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got.
It's also a significant contributor to our inequality problem. Growth at all costs isn't the answer so neither is making Amazon's costs public but allowing it's profit to remain private.
Because the cities are rivals in a competition for Amazon's HQ, not colleagues who all stand to benefit from a collective bargain. In this case, there will be one winner so the incentive to cooperate is greatly diminished.
But the chosen city would win even more if they were to cooperate. Sure, the cooperation would quickly break down but that is why the federal government should decide on such benefits (basically to ensure companies stay within the country, if that is deemed beneficial) rather than local government. It’s for me mindbaffling how anyone believes HQ2 would bring back billions of USD - even if you include secondary and tertiary effects
(suggested) competing cities form a non-aggression pact
That's been suggested before at the state level. But it runs into a Constitutional limitation. Interstate compacts have to be approved by Congress. Article I, Section 10: "No State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State." US cities are legally parts of states, not standalone entities.
Trying to get an anti-business deal like that through the current Congress would not work.
I commend the position of Toronto's mayor John Tory who said (I am paraphrasing here): "no tax breaks, if you come - come based on our merits as a city alone".
Toronto is not likely to get Amazon for various reason (political climate being probably more important than tax breaks)
To clarify, you mean the current US political climate?
In all honesty, unless Amazon was going to go to Mississauga or Markham or something like that, I'd rather not have them. We need more jobs in the burbs, not more pressures on the inadequate Toronto infrastructure.
> Toronto is not likely to get Amazon for various reason
Which is the reason this competition happens. The top few candidate cities could all call truce and trust that they'll come out ahead over many iterations, but cities that expect they're not in the running without perks will never win the collective bargaining game. So they put up money, and the original strongest players respond to secure their positions, and the race begins.
Collective bargaining is probably the wrong metaphor. This is the principle-agent problem.
The citizens would be better off if the elected officials worked to make their city the best possible place to do business for all companies on an even playing field. The city would then attract plenty of good companies simply on its merits.
The elected officials instead benefit from granting favors, being able to brag about how they brought in a big name like Amazon, and getting Jeff Bezos on their personal speed dial.
This is also why collective bargaining will not happen here. The interests of the elected officials are not at all aligned. They're competing for a scarce resource, and they themselves largely do not bear the costs of trying to acquire it.
Here's an idea: don't let states make targeted tax breaks to race to the bottom. That seems to work in the EU. Apple paid 1% in Ireland and simply had to pay up the difference to the normal tax rate.
What is being suggested here is a cartel. Yes, if one city didn't agree to signing up for the non-aggression agreement at all, they may stand to win, but if everyone agrees on non-aggression, then whomever the eventual winner is wins the deal for much cheaper. Of course, in practice, defining what constitutes aggression and tax cuts would be quite difficult, but in theory players competing in a winner takes all market could still work.
Is this a race to the bottom? 19 cities won’t get any tax revenue by definition. The one that gets the building will probably wave taxes so it’s getting the same amount of direct tax revenue as it was before namely 0. So the city does get sales tax revenue from the new jobs due to new spending. It might get income tax that it didn’t get before. Where is the bottom?
The reason is game theory. Every city has an incentive to leave the bargaining group and make its own proposal.
Taxes in general are a similar topic.
In a functioning democracy, the government/legislator should set the taxes as they see fit, yet with increasing globalization, countries become price takers (https://www.investopedia.com/terms/p/pricetaker.asp), because many taxable goods become more mobile.
This is in line with this observation:
> Rep. Keith Ellison, D-Minn., has also offered a dissent to the process.
> “Something is deeply wrong with our economy & democracy when local government offer up their
> tax base to a corporation worth over $500 billion,” he wrote on Twitter.
Game theoretic constructs, where the social optimum solution is not reached can be seen in other topics as well. Take climate change for example, where a lot of governments know what the best outcome for the world(and thereby themselves) is, yet act in their own best interest and emit CO2. A collective "bargaining" solution would make sense, but has yet to happen.
Finding solutions for this is challenging and not as easy as the article puts it.
> The reason is game theory. Every city has an incentive to leave the bargaining group and make its own proposal.
Except 3: Montgomery County, Washington DC, and Northern Virginia.
If Virginia gets Amazon, the other two benefit with increased commercial activity. Even if the taxes aren't directly collected from Amazon HQ2, the increased shopping, increased services, and all that will lead to major benefits for the entire region.
There's one group that can collectively bargain, and benefit even if its rivals win over. That gives that particular group a major edge.
Its unusual that three of the top20 positions are within a 20-mile radius. Amazon must be really considering that area.
If the benefits would split 20 ways, collective bargaining might work. But it doesn't seem that they would, especially given the geographical dispersion of the finalists.
Regions (such as US Northeast, or Nashville - Atlanta - Raleigh) might be able to assemble a useful coalition to share the bennies and any pains.
Not sure if BOS and NYC wouldn't stab each other in the back.
The main reason is the devolved nature of government in the USA in the UK Amazon would have its arm twisted by the government in a you scratch my back ill scratch yours.
For example BT had development centres in all 4 countries that make up the UK mainly for political reasons - and why the BBC forcibly moved people to Manchester as part of the negations over the BBC charter.
Odds are in favor of Virginia (look up AWS and other data centers in that area). But it is still interesting to see how these cities are competing with each other and are throwing out tax payers money to lure in Amazon to moving in their backyard. I wonder if they would give similar incentives to small and upcoming businesses and startups.
I found this whole competition for Amazon absurd. Lets think about the prisoner dilemma:
If A and B each betray the other, each of them serves 2 years in prison
If A betrays B but B remains silent, A will be set free and B will serve 3 years in prison (and vice versa)
If A and B both remain silent, both of them will only serve 1 year in prison (on the lesser charge)
Now A, B are cities and the can compete(betray) or not compete(stay silent). If they both compete (1th case) is the worst outcome because Amazon does not need a tax break or incentives. It's one of the richest companies in world already!
A competes, B does not (2th case). Good for city A because they can offer an small incentive an still get Amazon, bad for city B.
A and B do not compete. Good for both as the overall economy of the country would improve.
Because they’re all starry-eyed about the possibility and don’t care what it costs.
I live in the DC area. We’re on the list three times: DC itself, plus VA and MD suburbs. The prospect of cooperating on a bid was brought up, but they’re not willing to do it. They want to win and they want it all for themselves.
Large corporations often make deals with other large corporations, and they prosper. Workers used to do better when a larger percentage of them collectively bargained. But somehow, the possibility that citizens, who are represented by various local governments, would use those governments to cooperate with each other across the lines on the map sounds like science-fiction and is disparaged as far-fetched and unworkable in many of the comments here. What is it that Americans don't understand?
Do they understand that Seattle, home of HQ1, has home-grown homelessness that is rising?
Do they understand that Amazon will automate away any job outside the executive suite that it can?
Do they understand the power that Amazon will have over the lucky city that makes the investment?
Do they understand that 50 years is now the standard term for the tax breaks that Amazon will be offered?
Because Amazon will make a point to go to the one or two defectors. Iterated Prisoners Dilema dynamics only work when you have iterated interactions. In large economies where you don’t have repeated interaction with other players there is incentive to cheat.
This is so charmingly naive. I'll tell you why they don't collectively bargain. Because what will happen is, one or more of the cities will take advantage, cut a backroom deal, and win. That's why.
[+] [-] zaroth|8 years ago|reply
At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.
My personal opinion is cities should be talking about the Billions they will be committing to supporting infrastructure improvements rather than the billions in tax cuts. HQ2 needs a fuck ton of support systems, akin to building an Olympic City which never shuts down.
Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents. Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.
Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks - and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.
In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment. We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got. I certainly hope my city would do everything possible to roll out the red carpet. It’s the most effective dollars they could possibly spend, because it’s effectively corporate matching of public funds.
[+] [-] maxsilver|8 years ago|reply
It's not though. You purposefully used examples of public or non-profit groups to make it sound like a benefit. But it's not. A more fair comparison would read:
It's like someone came to your town and I said, "I want to build a $20m McDonalds, Mobile Gas Station, WalMart and a Best Buy". I would hope your town says "good luck with that" and not "that's amazing, how should we corrupt the local market to make it easier for you to do that". Amazon is no different in any way except scale.
In a sane world, Amazon HQ2 would terrify cities, who will need to ensure they have extra taxes in place for Amazon, to ensure the city can handle the massive pollutions Amazon HQ2 will generate in the local housing markets, local economy, and local infrastructure.
> We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got
Proven? Can you cite some examples? I've only seen "Public/private partnerships" used as a label to mask corruption and theft; as a way to socialize any losses but privatize any gains.
[+] [-] joeax|8 years ago|reply
Back in 2004 when I was working at Microsoft, I remember sitting in a bar in downtown Redmond and tossing back some local brew IPAs. This guy sitting next to me was an older dude and longtime fisherman. He was going on and on about how in the 80's, the eastside (the collective suburbs i.e. Redmond, Bellevue, etc) was just farmland, and that Seattle's main industries were fishing and logging. He was both lamenting and boasting how Microsoft came in and transformed Seattle and surrounding area into the tech mecca it is today.
So you are right. All it takes is one anchor company to totally transform an entire city. Too bad they chose cities with established infrastructures and talent pools, and not a city like Milwaukee or San Antonio that would have had the same dramatic transformation as 80's Seattle.
[+] [-] rflrob|8 years ago|reply
I think the idea is that cities definitely should compete to provide the best services for the commercial enterprises, but that those service should not include breaks on taxes or land giveaways. If building a new transit station, boosting spending on public schools that the Amazon engineers would want, and restructuring building and zoning codes to increase the housing supply will make your city more attractive to Amazon, by all means go ahead, since those should redound to everyone, regardless of whether they work for Amazon. But Amazon seems rich enough to me that they would be just fine even without tax breaks on construction materials or payroll taxes.
[+] [-] the_gastropod|8 years ago|reply
Part of the problem here is the people negotiating don't really have much skin in the game. It's easy to negotiate with other people's money. There's virtually no recourse for their poor decisions. See: suburbia.
> At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions
We're projecting what a theoretical second campus of a 23 year old company will be 50 and 75 years out? Please. Did we learn nothing from the nearly homogeneous business cities like Detroit and "coal country" today? Cities built around one industry or one company will fail.
> Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents
Amazon developed out of an existing city. Cities should invest their efforts to nurture their own businesses that one day may grow and provide jobs. Importing an existing business is a rather short-sighted proposition akin to a get rich quick scheme.
> Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
Agreed. Amazon is going to go where they're going to go. Cities should stop clamoring over themselves to give bigger tax breaks to one of the biggest businesses on the planet.
[+] [-] logfromblammo|8 years ago|reply
Nothing. We exist to support our tax-paying residents and local businesses, and so you will have to work with everyone that's already here if you want something in particular. You can probably expect a new bus line, an extension of the road, sewer, and water system, one new police station, one new firehouse, two new elementary schools, half a middle school, and a new wing of classrooms at the nearest high school. The quality of all that will depend on how much your company improves the local tax base, so don't get too stingy, or the local news will have no problem airing all the dirty laundry for Amazontown a couple years down the road. The zoning board will be busy changing colors on their map so that your people can eventually spend money on drive-through coffee and dog-walkers without having to go all the way downtown.
Amazon needs to come to the table with the attitude "We're going to increase your tax base by $X. What's your plan for spending it?" The ideal city just has to blow the dust off the growth plan they already have and write new names and dates in all the blanks.
Any city that says, "we're going to give you a tax discount" is basically saying "we would rather you send your money off to Wall Street than actually spend it to improve the community that you intend to join here."
I suppose a city could also offer a bureaucrat dedicated to expediting issues related to the new HQ, like building permits and inspections and NIMBY lawsuits, if they wanted to pay the cost of that person's salary as a donation to the city. I just never quite understood the concept of offering discounts to rich people.
[+] [-] cirgue|8 years ago|reply
No one has proven this. There is plenty of evidence pointing to the opposite conclusion.
> It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard.
On the contrary, it is 100% rational for cities to want to get HQ2 and give away absolutely nothing, and possibly even get some concessions from Amazon itself.
They have to have another headquarters, and there are less than twenty cities that make any degree of sense for them to move to. I would bet that there are only two or three serious contenders, and the only way they're not going to go with whatever first choice they have currently would be a truly enormous handout. The whole bidding war going on here is, in my opinion, to try to get a sweeter deal from whoever they've already picked.
[+] [-] nindalf|8 years ago|reply
[+] [-] apercu|8 years ago|reply
It's possible that Amazon will be a drain on a region.
The cost of housing goes up for everyone.
The best and the brightest of the region get sucked back to HQ1
The startup ecosystem in the region gets drained to work at/for Amazon
[+] [-] Angostura|8 years ago|reply
This sounds very similar to the Garden Bridge project in London. It was eventually canned because it was going to take huge amounts of public funds and provide not a lot of benefit.
[+] [-] Cyberdog|8 years ago|reply
When the incentives cross the line from tax breaks to free stuff, it's capitalism, all right - crony capitalism. Not the type I and other libertarians care to see.
Never thought I'd see the day where I'd be nodding along to a Keith Ellison tweet.
[+] [-] peterwwillis|8 years ago|reply
They're arguing that the states are giving away money. Not that they aren't providing services.
And nobody thinks Amazon moving to their town will create a silicon valley 2. Plenty of cities host huge employers. They don't become magnets for that industry. They just get fat tax breaks.
Many cities actually get worse with these giant companies throwing their weight around. Under Armor is single handedly reshaping southeast Baltimore, which of course is not only upsetting neighborhoods but pushing people out, not to mention small businesses replaced by national chains.
Finally Amazon has hundreds of billions. They do not need a handout from a poor city.
[+] [-] unethical_ban|8 years ago|reply
It's completely capitalist loyalty to business above community to dismiss every concern about selling the farm to Amazon as "whining".
[+] [-] refurb|8 years ago|reply
Doing things better and cheaper is the reason why our standard of living keeps increasing.
I for one would love to live in a city that said "we need to do more with the money we currently have."
[+] [-] gech|8 years ago|reply
[deleted]
[+] [-] frgtpsswrdlame|8 years ago|reply
What are you talking about? Put those numbers back where they came from - your ass.
>Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
Agree but that's not the point. Amazon isn't really considering twenty cities, they're considering maybe three but they really want these cities to think they're on even ground so they can extract as much tax breaks as possible from one of the cities they would choose regardless. It's about maximum short-term extraction from their existing long-term choice.
>It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks
Let's not use 'irrational' this way, it's perfectly rational to be against this but...
You're right, this is exemplar of capitalism, it's also why I lot of people are turning their noses up at it. HQ2 really illustrates we've moved from seeing markets as a tool which are sometimes useful and sometimes not to being a market society which sees markets as the outsourcing of morality. No ideas have to be considered, the market will decide (and it's always right), it's a strange faith.
>and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
What is that outcome? That Amazon locates where it would have located regardless but with enough tax concessions that it's benefit to the community is substantially reduced? That Amazon's size allows it to pit cities against each other to lower costs, achieving economies of scale that upstarts just won't be able to match and further entrenching it? That Amazon shareholders get a nice dividend next year, funded directly from the concessions that Toronto or Atlanta gives them?
>If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!”
If someone came to your town and said, I want to build a $20m sports stadium — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.
Giving a bunch of concessions to Amazon isn't going to benefit the average Atlantan. Lots more people but without the corresponding taxes to keep public services up. Just like stadiums, this isn't a company working to benefit the surrounding community in the best way possible like some PR might tell you, it's Amazon trying to save as much money as possible, nothing else. Benefits to the surrounding community is a side-effect, a leakage and Amazon has every incentive to plug that leak wherever possible, here it happens to be taxes.
>In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment.
This is just sick, it's corporate welfare. If I'm paying for Amazon, then I want part of the profit.
>We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got.
It's also a significant contributor to our inequality problem. Growth at all costs isn't the answer so neither is making Amazon's costs public but allowing it's profit to remain private.
[+] [-] RangerScience|8 years ago|reply
I believe you and would like to learn more. Do you have some sources I can look into?
[+] [-] root_axis|8 years ago|reply
[+] [-] thesumofall|8 years ago|reply
[+] [-] typomatic|8 years ago|reply
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[+] [-] Animats|8 years ago|reply
That's been suggested before at the state level. But it runs into a Constitutional limitation. Interstate compacts have to be approved by Congress. Article I, Section 10: "No State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State." US cities are legally parts of states, not standalone entities.
Trying to get an anti-business deal like that through the current Congress would not work.
[+] [-] Cyberdog|8 years ago|reply
[+] [-] mynegation|8 years ago|reply
Toronto is not likely to get Amazon for various reason (political climate being probably more important than tax breaks)
[+] [-] apercu|8 years ago|reply
In all honesty, unless Amazon was going to go to Mississauga or Markham or something like that, I'd rather not have them. We need more jobs in the burbs, not more pressures on the inadequate Toronto infrastructure.
[+] [-] Bartweiss|8 years ago|reply
Which is the reason this competition happens. The top few candidate cities could all call truce and trust that they'll come out ahead over many iterations, but cities that expect they're not in the running without perks will never win the collective bargaining game. So they put up money, and the original strongest players respond to secure their positions, and the race begins.
[+] [-] burfog|8 years ago|reply
A city like Seattle would be comfortable for existing employees. It would do nothing to attract talent that dislikes that political climate.
[+] [-] walshemj|8 years ago|reply
[+] [-] tc|8 years ago|reply
The citizens would be better off if the elected officials worked to make their city the best possible place to do business for all companies on an even playing field. The city would then attract plenty of good companies simply on its merits.
The elected officials instead benefit from granting favors, being able to brag about how they brought in a big name like Amazon, and getting Jeff Bezos on their personal speed dial.
This is also why collective bargaining will not happen here. The interests of the elected officials are not at all aligned. They're competing for a scarce resource, and they themselves largely do not bear the costs of trying to acquire it.
[+] [-] walshemj|8 years ago|reply
[+] [-] kevin_b_er|8 years ago|reply
This reminds me of how NFL operates at extracting huge concessions and expenses from cities for the privilege of having their team stay in town.
[+] [-] grasshopperpurp|8 years ago|reply
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[+] [-] nielsole|8 years ago|reply
Taxes in general are a similar topic.
In a functioning democracy, the government/legislator should set the taxes as they see fit, yet with increasing globalization, countries become price takers (https://www.investopedia.com/terms/p/pricetaker.asp), because many taxable goods become more mobile.
This is in line with this observation:
> Rep. Keith Ellison, D-Minn., has also offered a dissent to the process.
> “Something is deeply wrong with our economy & democracy when local government offer up their
> tax base to a corporation worth over $500 billion,” he wrote on Twitter.
Game theoretic constructs, where the social optimum solution is not reached can be seen in other topics as well. Take climate change for example, where a lot of governments know what the best outcome for the world(and thereby themselves) is, yet act in their own best interest and emit CO2. A collective "bargaining" solution would make sense, but has yet to happen.
Finding solutions for this is challenging and not as easy as the article puts it.
[+] [-] dragontamer|8 years ago|reply
Except 3: Montgomery County, Washington DC, and Northern Virginia.
If Virginia gets Amazon, the other two benefit with increased commercial activity. Even if the taxes aren't directly collected from Amazon HQ2, the increased shopping, increased services, and all that will lead to major benefits for the entire region.
There's one group that can collectively bargain, and benefit even if its rivals win over. That gives that particular group a major edge.
Its unusual that three of the top20 positions are within a 20-mile radius. Amazon must be really considering that area.
https://i0.wp.com/www.thedailychronic.net/wp-content/uploads...
"Northern Virginia" is basically Arlington. As you can see, Arlington / DC / Montgomery County are literally next to each other.
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Newark NJ and New York City are the other city-grouping that could work together on the Amazon deal.
[+] [-] squozzer|8 years ago|reply
Regions (such as US Northeast, or Nashville - Atlanta - Raleigh) might be able to assemble a useful coalition to share the bennies and any pains.
Not sure if BOS and NYC wouldn't stab each other in the back.
[+] [-] intrasight|8 years ago|reply
[+] [-] walshemj|8 years ago|reply
For example BT had development centres in all 4 countries that make up the UK mainly for political reasons - and why the BBC forcibly moved people to Manchester as part of the negations over the BBC charter.
[+] [-] CodeSheikh|8 years ago|reply
[+] [-] yumario|8 years ago|reply
A competes, B does not (2th case). Good for city A because they can offer an small incentive an still get Amazon, bad for city B.
A and B do not compete. Good for both as the overall economy of the country would improve.
[+] [-] mikeash|8 years ago|reply
I live in the DC area. We’re on the list three times: DC itself, plus VA and MD suburbs. The prospect of cooperating on a bid was brought up, but they’re not willing to do it. They want to win and they want it all for themselves.
[+] [-] lucas_membrane|8 years ago|reply
Do they understand that Seattle, home of HQ1, has home-grown homelessness that is rising?
Do they understand that Amazon will automate away any job outside the executive suite that it can?
Do they understand the power that Amazon will have over the lucky city that makes the investment?
Do they understand that 50 years is now the standard term for the tax breaks that Amazon will be offered?
[+] [-] rdlecler1|8 years ago|reply
[+] [-] Bud|8 years ago|reply