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Comment by WhompingWindows | Hacker News Reader

Thank you for running the numbers. How can we price in the wasted time/effort of the dozens of other cities who put in bids? How about the many millions or perhaps billions of dollars of free advertising and air-time taken up by this charade? I am neutral on Amazon specifically but surely we should not allow big companies to run roughshod all over our desperate cities? Look at Foxconn and Scott Walker for another example of companies harming and exploiting a metropolis/state. It really rubs me the wrong way.

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I didn't see Bezos pointing a gun at anyone's head to force their city to bid. This is 100% on them, if they thought it would be a waste of money, they could've opted to spend nothing. "Running roughshod all over our desperate cities", while a fun turn of phrase, completely and utterly misrepresents what happened here. Don't blame Amazon for the actions of local governments, though I know it's the easy/lazy way of approaching the problem.

There was still lots of local pressure from Chambers of Commerce type folks to get cities involved. And if they didn't apply, civic leaders would be accused of being anti-jobs. So a lot of pressure to get involved even if not straight from Mr. Bezos.

That's life in government, I guess. It's as if they were elected precisely for the purpose of making tough decisions that affect everyone.

That's rather the point: when all actors are behaving rationally, yet the outcome is not something that is good for society, we need to change the rules to change behavior.

One might make the case that the cities were not acting rationally.

Its rational to not entertain amazon's offer only if you know for certain nobody else will either. The first one to defect gets everything.

https://en.wikipedia.org/wiki/Superrationality

This is like paying Tom sawyer to paint the fence. It's okay to let the other kids outbid you.

I'm not sure I'd agree with that. For instance, I think the Nashville deal is fantastic for my city/state. we are getting 20% of the jobs (5k vs 25k) for "only" about 100 million compared to several billion from NY and VA. It will easily make that back in benefits to the local economy and increased tax revenues.

Indeed, it’s a little disappointing how reliably the tired argument of “no one is forcing them to” comes out on HN, as if generations of social reforms addressing such arguments as “no one is forcing impoverished families to send their children to the factories” never happened. Your observation is an excellent encapsulation: All actors are behaving rationally, to a net social loss, and thus the rules need to change.

"when all actors are behaving rationally, yet the outcome is not something that is good for society, we need to change the rules to change behavior." +1!

How can we price in the wasted time/effort of the dozens of other cities who put in bids?

Be reasonable. That's an absolutely ridiculous counterpoint, and a perfectly reasonable answer is "assign it zero" since no city was compelled to apply. Should we dispense with competitive processes completely? Why have the Olympics, for instance, because it's such a waste of time for everyone that doesn't medal?

Further, the Scott Walker/Foxxcon debacle is a completely different category than the HQ2 situation. However, it is not going to be productive discussing the reasons that an ostensibly large manufacturing site was situated in an electoral battleground state with substantial involvement at a federal/executive level.

Should we dispense with competitive processes completely?

When we're talking about pitting strapped local governments against each other in corporate welfare bidding wars, the answer is, absolutely, unequivocally, yes.

What we're talking about is the time spent putting together a report and emailing it to Amazon in this case. I'm not talking about jurisdiction shopping (which is gross whether it's corporate domiciles in DE, lawsuits in east TX, or if you want to make the case that's what HQ 2's process amounted to).

What was asked, and what I answered, was how to account for the time of municipalities that answered the RFP. Since they do not have to actually offer any of the proposed subsidies since they lost, then I think it's fair to assign no value to the cost. If you disagree, please feel free to tell me what price they paid instead of downvoting.

Cities actually spent quite a bit of money on hiring consultants, site planners, doing impact studies, etc. I don't think it's unreasonable to say mid to high 7 figures.

-https://www.consulting.us/news/290/consulting-firms-recruite...

-https://technical.ly/philly/2017/09/13/site-selection-consul...

This is not to mention that cities likely had to hand over demographic data that would've otherwise been very expensive to collect: https://www.businessinsider.com/amazon-hq2-search-data-2018-....

Look at some of the cities that made the finalist list:

-Columbus (population ~880k)

-Denver (population ~700k)

-Indianapolis (population ~870k)

-Nashville (population ~667k)

-Newark (population ~285k)

For these cities, an additional 25k jobs would have been huge. Scott Galloway has advanced the theory that a large goal of the HQ2 search was to secure competing bids, which Amazon then took back to NYC and DC in an attempt to secure better terms. If these "finalist" cities were simply used as stalking horses with ~0% chances of actually winning, I can't help but feel it was a little wrong to induce them to spend the necessary fees on consultants and planners to put together a decent bid.

If it was actually their plan which it very well seems like from the way everyone is talking about, wouldn't this actually be fraud rather than just unfair?

It sounds like the sort of casual fraud that megacorps routinely get away with.

There was no commitment, and there was no false information. How can there be fraud?

I do the same thing Amazon does all the time, to get the best price. I don’t need to be honest and tell the seller I’m using them to get someone else’s price down. Maybe I do go with the new seller if their price is good, maybe it’s not good enough to sway me from the other seller. It’s just business.

I am of course not a lawyer. But there's a whole lot of difference between casually asking a seller a price or haggle vs. asking for a formal bid for something. I think in a formal bid the expectation is that you have a reasonable chance to win given the expense needed to answer a bid.

> no city was compelled to apply

I think this could be argued. The thing about democratically elected politicians is that while you can't "force" them to do something, there can be enough political pressure to effectively compel them to do something. In this case, any city that passed on this opportunity would have to describe to their constituents why they didn't want to bring 50,000 high-paying jobs to their city. It's much easier to just play ball, hence over 238 submissions.

> Should we dispense with competitive processes completely? Why have the Olympics, for instance, because it's such a waste of time for everyone that doesn't medal?

Do the Olympics change the rules in the middle of a competition like Amazon did?

> the Scott Walker/Foxxcon debacle is a completely different category than the HQ2 situation.

It is different in many ways, but also similar in a number of ways. Specifically, both used the promise of X number of jobs to extract a set of concessions, then proceeded to chop that jobs number in half.

>while you can't "force" them to do something, there can be enough political pressure to effectively compel them to do something.

>any city that passed on this opportunity would have to describe to their constituents

So, democracy in action? Constituency wants something, and politicans have to obey? Or do you prefer politicans to decide by themselves and not having to explain their decisions back to their constinuents?

So the point is that, being a democracy and subject to societal pressures, you can't assign that value to zero as that is unreasonable.

"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

-- H.L. Mencken

Nope, no city was compelled. That was intended to be a rhetorical point, because it's so obviously not the case. Did anyone feel pressure to because of constituencies? Maybe. But compelled? Absolutely not.

You have a point that the Olympics analogy isn't great. One other flaw is that cities aren't contractually bound to deliver the promised incentives, either. Olympic athletes can't change their performance after the fact.

I find myself in an uncomfortable situation, where I'm defending Amazon (who I have no relationship with aside from being a customer) and not even liking the HQ2 selection process, even a little. But it's just hardball negotiation that was conducted a bit more publicly than countless other site selection processes for countless other companies.

fwiw, i think all of the amazon concessions are tied to the number of jobs specifically. at least that was true for the Nashville office which I've followed more closely. i.e. to get all the breaks they have to create all the jobs.

Totally agree with you. I'd like to know what happens if a city doesn't hold its side of the deal, perhaps on a technicality; can the other party sue -- and win? Has it happened before?

Is there also a possibility of an incalculable factor which will yield a return on investment given that this project would bolster a middle class thus creating an increased likelihood of higher education for the next generation? My point is that something like this is never fully thought out and the future isn't written yet. These projects could boom or bust.

>Is there also a possibility of an incalculable factor

I certainly wouldn't base my calculations on it

This is often the case with government grants to cities as well. The cities that put together bids collectively spend more than the amount of the grant back to the winning city.

Unfortunately I think casting Amazon as the villain here is incorrect. I say unfortunately because that would be the convenient thing to do. But Amazon doesn't have an obligation to repair America's infrastructure or create jobs in cities that haven't succeeded in attracting skilled employees in large numbers. If Amazon believed they could legally gain an advantage by having cities compete against each other, they are almost obligated to do so. But perhaps there's a less cynical way to look at it. Maybe Amazon really didn't know at the outset which city they would pick, and only after considering everything submitted to them, concluded there wasn't a strategic case to be made for putting a second HQ in a city other than DC or NYC. I actually believe that to be the most likely scenario, but maybe I'm naive.

The unfortunate fact is that the politicians who emptied their pockets are to blame. But they too are only doing what they believe both benefits their constituents and of course helps them stay in office. To put it another way, if the mayor of Pittsburgh said "we aren't going to play ball and give a handout to one of the largest companies on earth" people who live there probably would have revolted. I don't think there's a good solution except for voters to become smarter about how their budgets are spent and make clear to politicians they don't want tax dollars wasted courting a company that doesn't need any government assistance.

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