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Comment by dmode | Hacker News Reader

Amazon is playing cities like chump. I had a sense in the beginning of this process that Amazon doesn’t really want to build a HQ2. They just want to open another office. Most large tech companies have large campuses across multiple cities. This exercise is no different than that. But Bezos branded it HQ2 to maximize handout. I also predict that they will end up hiring far less than the 25k projected. There is a recession coming in the near future, which could result in Amazon looking for cheaper developers globally.

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Don't just about all big corporations with some "weight" behind them do this though? A company employing tens of thousands floats the idea that they might leave the city/state due to some new proposed corporate tax legislation or something, and then the city/state exempts them from the increases to get them to stay since they're such a "big employer?" Isn't this just "negotiating from a position of strength?"

This happens in Oregon all of the time with Intel. We don't have a sales tax - we have an income tax and property tax. Everytime we want to raise property taxes, Intel makes a big stink and we give them presents to appease them.

https://www.oregonlive.com/hillsboro/index.ssf/2014/08/intel... https://www.nytimes.com/1999/06/09/us/fighting-sprawl-oregon...

Yeah, but just because this happens doesn't mean we shouldn't be upset about it. This is companies strongarming governments into giving them tax breaks. It's robbing society to enrich a few people at the top.

Amazon is following the Boeing example. I fully expect Washington state to give away massive amounts of money the same way they did before.

I admit not being very upset about it. How are they strongarming governments? A government says no and everyone moves on. Or are you saying communities can't get businesses without this strongarming? I don't believe that. I recognize the art of both sides shopping for the best deal for themselves, and with how many of these governments operate against their companies, it's definitely bidirectional. The leverage does seem to be tipped in favor of the largest governments and largest companies, but the general practice seems reasonable.

The problem seems to be less that the governments are being “strong armed” and more that the people running the government are incentivized to satisfy their own interests when dealing with the corporations, and those interests do not necessarily align with the constituents that they supposedly represent.

Yup, this definitely exists and misrepresentation is a real problem in all legislative contexts. We can only ask their citizens to care and make change (assuming elections are run legally). Being able to affect this change locally is very important and why these abatement decisions deserve to remain in their hands.

Having limited term length elected / appointed government figures responsible for making these decisions, and then free to accept industry positions, is toxic.

If we really wanted to stamp this out, throw some serious sand in the revolving door gears.

This seems to be the way it works with professional sports teams. The city officials and the team owners are all sitting on the same side of the negotiating table and the public has no one sitting in their seat to represent their interests.

Do you have any examples of "many of these governments operate against their companies?" I'm intrigued by this because this isn't how government generally works at all at a local level. They usually work with these companies and give them sweetheart deals knowing that the money will not really come back to the city and the effect will happen years down the road. All the positives for them of working with the company and someone else deals with the issues later that are caused from tax breaks and other deals.

You can see it in auto sales rules against Tesla, alcohol and zoning restrictions that aren't subject to votes, grandfathering old businesses on all sorts of things like parking lot regulations to denials of permits based reasons like too many restaurants in the area, etc. Some may seem reasonable, some may not. The point is in a transaction, neither side has to accept concessions they are uncomfortable with. Quite often cities make laws that harm or destroy business. Even in cases that are subject to citizen vote, the tyranny of the majority can occur. That's what makes bargaining on both sides of the compromise entirely reasonable.

So you're right (and I forgot about it), cities have fought against Tesla but it was my understanding that the push for that was lobbying from the old-school car dealerships and car companies to keep things from changing that would negatively impact their businesses. I don't think most cities have a real dog in the fight and many would welcome new electric car service/business since it's mostly positives for them.

Am I wildly off here?

I believe this is generally done more at the state level (consumer protection), rather than city when it comes to "banning Tesla". It's not actually a ban against Tesla specifically though, although some might be. As I understand it, this generally goes way back to when dealerships were worried about an actual car company, such as Ford, opening their OWN dealerships, and selling them at a price that the other car dealerships couldn't afford, which would be easy to do if you're both the supplier and retailer. Given how the deck is massively stacked against them, it's quite a testiment to their products that they are doing as well as they are. https://www.engadget.com/2014/07/17/tesla-motors-us-sales/

Great comment and insightful. That makes sense.

Yeah, it's unfortunate that often the deck is stacked against a company that could really bring some massive benefit to people, but you're right that they've done surprisingly well against that anti-momentum.

I fully agree. Giving breaks in terms of property taxes directly affects our schools. So we're just shooting the upcoming generation in the foot to keep jobs here "today"

Washington state schools get plenty of money.

WA Supreme Court ruled that schools we not performing at the level demanded by the WA consitution. Funding might or might not be a part of that.

You're saying they get enough money so we should give large amounts of money to corporations? That seems wild and like corporate welfare for the sake of portioning out some money to corporations. Why give corporations a fast-lane to government money because school's are getting some money?

To be clear, is your argument really that schools have lots of money so corporations deserve to get some too?

There is a difference between giving money to corporations and not taking away money from corporations. I realize a lot of people have the opinion that not taking something they already have is equal to giving them a handout but it really isn't.

Boeing went through on their threat IIRC and decimated the economy of Wichita. Amazon has more power than municipal or even state governments in some respects in economic terms.

Why shouldn’t gov’t have to compete for business?

The only other alternative is to force companies to stay in an area, regardless of how attractive the business climate is.

"There is a recession coming in the near future, which could result in Amazon looking for cheaper developers globally." It's dangerous to post speculative things with such certainty. The future is never guaranteed.

The more worried people are that there's a bubble, the less extreme the irrational exuberance. I love all the "shit, the bubble's about to pop" talk. If people weren't worried, it's just make the correction that much worse when it comes. And someday we'll have one, that's a given. It's just a question of when and how bad.

I am just going to leave you with this image here that shows the SP&500 since 1928: https://imgur.com/a/JCMbIvU

We have had 10 years of growth since the last recession (every gray line is a recession).

If you take into account the market corrections that we have seen this year as a sign, most people in finance will agree that there will be a correction in the next three years. It is far from speculation.

The charts was generated from here: https://www.macrotrends.net/2324/sp-500-historical-chart-dat...

Edit: FYI I did not imply that market corrections == recession. The reason I put the image is to show that there hasn't been a recession in 10 years and that we are due for one. We have had a few market corrections this year, but no recession yet.

Market corrections and recessions aren't the same thing, the chart you posted clearly shows Black Monday as not being a result of a recession. A rebalancing of the stock market at large doesn't necessarily result in mass unemployment, followed by mass foreclosure and so on.

That plot appears to show a 20-year-long bull market from 1980 to 2000, so with that precedent set, who's to say we aren't only half-way through the current bull run? (I don't actually have a strong view one way or the other; my point is just that it's hard to conclude anything by reading an S&P 500 price chart by itself.)

Rollback that graph to 1995, and it looks similar to current situation. And then there was 5 more years of high growth.

Stock market "correction" != recession.

It's also not even remotely clear to me that a plot of 500 of the largest corporations in the US SHOULDN'T be growing extremely/exponentially fast.

Now plot a expoential regression on it -- where _should_ we be?

Well, I don't think it's speculative to say that a recession is coming. Predicting exactly when is hard, but isn't it a near virtual certainty that it will happen?

Sure, but that's like saying Yellowstone is going to erupt.

More like saying that a geyser at Yellowstone is going to erupt. If you believe that the timeframe for the next recession is on par with the timeframe for the eruption of the Yellowstone supervolcano, I have a bridge I'd like to sell you.

I’ve lived through four or five recessions and there’s no indication this is any sort of anomaly. It’s more like saying that a hurricane is going to hit Florida. Predicting exactly when and how is nearly impossible, but we can say with almost complete certainty that it’s going to happen within a few years.

If few is three years or less time, you can make money on some options expiring Jan 2022. Have you bought them?

And if it’s three years and a month?

Well, it's useful for me to know that your confidence of it happening in the next 3 years is low when you make your statement. I see that it is.

That's enough for me.

Have you considered that maybe my concept of “few” is not “three”?

Can I make the bet you describe for, say, seven years? I’d say five is highly likely to suffice but I’d rather play it safe.

> Have you considered that maybe my concept of “few” is not “three”?

Yep. Hence "if few is three" earlier.

I'm not interested in a bet. I'm interested in adjusting my priors. Thanks for the help.

Right. You said if a few is three, I responded to indicate that it’s looser than that, and you then basically assumed I’m a liar rather than considering that the “if” might be wrong.

If you’re not interested in a bet, why did you reply to me to ask if I’ve made one?

it's also hard to predict how deep the recession will be

We're currently riding the longest bull market in history. Surely you don't think it will last forever and that we are closer to to it's end than it's beginning?

What's the danger?

Trying to find cheap engineering is not a last ditch effort Amazon is going to resort to because there is a recession.

They have already expanded their engineering foot print in India and have continued to look beyond the US market when it comes to talent.

Unimaginable that Amazon doesn't already do everything it absolutely can to reduce its engineering payroll, which is probably its biggest expense.

Without knowing anything about them, one would assume they're already tapping global talent pools with maximum aggression.

If anything, recession in the US may increase the supply and lower the cost (salaries) of American developers, thus making them more competitive against other countries.

As with most things there's an rms quote for this:

"State legislators in various states are starting to think about how to stop companies from playing one state against another for tax breaks and handouts.

I suggested many years ago that the states should form a union to bargain collectively with these companies. We could call it 'The United States of America'."

https://stallman.org/archives/2007-jul-oct.html#23%20July%20...

I was annoyed that New York was courting them. The last thing our already insane housing market needs is an influx of more highly-paid engineers.

But at least we didn't offer them crazy tax incentives like some other cities.

So are the two cities going to cut their economic package in half considering they're getting half the jobs? Bet you they're not.

This is unfair to cities not making the list like Detroit. If Detroit was judged on only having to provide half the jobs would it not have been disqualified? Amazon changes the rules mid-stream.

This is an internal Amazon decision that is not regulated in any way. They are not obliged to any notion of "fairness".

Amazon just put some cities on a list and negotiated with them.

Any city not on the list is not there because Amazon didn't want it there.

I also doubt that existing talent pool size was such a major consideration. Crystal City VA doesn't strike me as an obvious tech hub, nor does Newark. Amazon is definitely counting on talent to relocate to its new offices, especially if they put them in such locations.

Crystal City and Newark are next door to massive tech areas. In VA there are tons of DoD/Military tech organizations and NYC is right next door to Newark. It's probably cheaper to plant themselves next to those hubs than inside of them.

* Added: Especially if you factor in all the people that would normally commute into NYC or DC/Arlington from the surrounding areas now commuting to a potentially closer office location. Could be really big for lots of people (and of course Amazon).

Maybe I'm thinking about this from the perspective of a young, single guy. I would not move to Crystal City for any job, definitely not with a horde of other young, single men. The number of young, college-graduate women there must be way too small.

That's certainly a fair perspective that I can't argue with at all. I can't guess on specific #s but I'd bet there are lots of single men that would though at the chance of snagging an Amazon job. That number is probably relatively high and would make you a part of the outlier group. Working for Amazon might have stigma on HN but I think generally people have a great impression of them and would love to work for them.

Oh, I completely agree that there are many, many worse places to work than Amazon. I realize I am very fortunate to be able to decline such a job and be able to find good offers at a place of my choosing.

Recession secured

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