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Comment by rayiner | Hacker News Reader

The fact of the matter is that cities in the U.S., with respect to each other, are in a race to the bottom. There is nothing they can do about it: the Constitution mandates an unrestricted internal market with no barriers to the free flow of goods and capital between states. That means that companies will go wherever they can get the best deal, and there is no way for state and local governments to restrict that movement.

Cities that aren't named New York or San Francisco can either get with the program, as the southern states have been doing, and benefit from the growth, or they can resign themselves to moribund economies and irrelevancy. If they're smart, they'll do what places like Ireland and Switzerland have done, which is offer low corporate taxes and recover the difference with higher taxes on individuals.

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That's incorrect about the Constitution. While it does not lay down specifics, it does give Congress the power to regulate interstate commerce. Known as the Commerce Clause, it's Article I, Section 8, Clause 3: "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"

The Commerce Clause precludes states from erecting trade barriers between each other. While Congress could in theory do so, (1) it's never to my knowledge ever used its Commerce Clause powers in that way, and (2) provisions like the Privileges and Immunities Clause creates independent prohibitions on erecting barriers between states.

Yet... alcohol can not be freely moved between states. There are clearly cases where interstate trade is prohibited.

There is a narrow exception for public health, e.g. plant quarantine laws. But the usual tools countries use: tariffs, immigration controls, capital controls, etc., are unavailable.

That's just evidence the southern states suck as business locations. They can only get companies to move there by bribing them.

Contrast with San Francisco and New York City, where they have tons of taxes and no shortage of companies wanting to be there.

> That's just evidence the southern states suck as business locations

New York and San Francisco didn't do anything to be New York and San Francisco. Their market power is the product of happenstance. In any event, that's irrelevant. If you're Acer, you can't pursue the same business model that works for Apple. All you can do is internalize reality and do the best you can for your stakeholders with what you've got to work with.

Actually, they did. Times Square was not some place you wanted to take your kids to as late as the mid 80's. Cleaning up the city was a big campaign promise for several successive mayors. And San Francisco is NOT in Silicon Valley, it's 50 miles north of the actual valley. All of the major tech companies were setting up shop in the South Bay and peninsula 15-20 years ago. Successive SF mayors have lured tech companies north with various incentives.

You're saying two entirely conflicting things here. You're saying "cities in the U.S., with respect to each other, are in a race to the bottom" (not that being well-run and having low taxes is a bad thing in my opinion...), and then you said New York and San Francisco don't have to play along, presumably since they're competing on value rather than price. I think it's obvious that Amazon's not looking solely for the cheapest possible city to locate in. I suspect they were never going to choose Gary, Indiana no matter how sweet the tax incentives were.

It's like with PCs. HP/Lenovo/Dell/Acer sit between Apple on one hand, and unlabeled Chinese products on the other. But almost nothing differentiates them from each other. Customers don't necessarily want the cheapest product, but for everyone looking at the mid-range product, nobody is going to pay more for HP versus Dell. And that's reflected in these companies razor-thin profit margins.

Cities are the same way. Between New York and San Francisco on one hand, and Gary on the other, there are dozens of perfectly fine cities and the only reason to pick one versus the other is how good of a tax deal you can get. Nobody is going to pay a significant tax premium to be in Columbus versus Raleigh.

> There is nothing they can do about it: the Constitution mandates an unrestricted internal market with no barriers to the free flow of goods and capital between states. That means that companies will go wherever they can get the best deal, and there is no way for state and local governments to restrict that movement.

Sure there is--DON'T GIVE COMPANIES TAX BREAKS.

This isn't that hard. Tax breaks mean that you lose whatever benefits a company would bring to your area--so you're better off not bringing them in anyway.

Lobby to help nurture your local businesses. If you use the same resources and manage to double the employment at all your local small businesses, you've FAR exceeded anything a big company tax credit will do.

Besides, Amazon's HQ2 just isn't going to employ that many people and is going to be the political rejects unless Bezos actually moves there. Anybody with real ambition knows that they're going to have to go to Seattle, anyway.

It's just going to be an outpost of software slaves where they try to suppress the wages they're having to pay on the West Coast.

As such, this thing is going into where software wages are cheapest and they can extract a big tax break. I would posit Pittsburgh/Columbus/Nashville/Indianapolis. Everything else is a smoke screen.

Interestingly, I'm starting to see resistance mounting against tax breaks in Pittsburgh. Good on them.

The idea that Amazon is contemplating anything in a populated East Coast city near the Boston-Washington corridor is laughable.

That's oversimplistic. It is also depends on the quality of the city. Companies want to locate their best people in cities that are safe, have good airports, good schools, and reliable transportation where people want to live. This requires investment by the city, which must be paid for somehow.

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