The Path Amazon Rejected
nytimes.com
nytimes.com
1. No one forced any of these states/cities to join this bidding contest. They willingly participated. "How dare Amazon put cities against one another in a bidding war?!" Yeah, I put five dealers against one another in a bidding war to get my business the last time I shopped for a car. Amazon can do the same thing.
2. "Jeff Bezos doesn't need our tax breaks!" I bet he doesn't. I don't think Jeff Bezos personally helped elect all the leaders who offered all these tax breaks. At the end of the day, Amazon will create jobs. Will it gentrify these cities? Yes, absolutely. So would Google, Apple, or Facebook moving into a new area. "But those other companies didn't ask for tax breaks." They literally hold hundreds of billions in wealth overseas. I'm not arguing in favor of tax breaks for Amazon. I am saying, however, Amazon didn't stage a coup against these mayors and governors and threaten to hurt them if Amazon didn't get tax breaks. NYC officials (at least some) openly invited Amazon. Good on Amazon for walking out. Private companies don't owe you anything.
The system is broken. Neither party has done anything to fix it. You have a company taking advantage of the perfectly legal rules that the system set up. OH GAWD better grab pitchforks. Yet, all the same lying Congressional leaders get re-elected election after re-election.
This de Blasio character openly invited Amazon. Now that they've backed out, he's angry that Amazon had cities bid against each other and that it was so wrong? Are you kidding me? de Blasio is a prime example of what's wrong with American politics.
Money quote.
These are businesses, not charities. So they have to make business decisions. Amazon was right to walk away. (And yes, I realize that the same business reality will oblige Amazon to put several more thousand jobs in NYC in any case. But guess what? I'd bet any money they won't put as many as they would have. They will put several more thousand in DC instead.)
Before anyone gets mad at Amazon for behaving in this manner, yell at your political leaders for making these offers in the first place.
Surely the reason most upset people are upset is that these deals with governments tend to involve tax breaks, and taxpayers have every right to concern themselves with tax policy. I doubt many of those people would also be upset with your car negotiations.
Now the city doesn't gain anything.
Not anymore. Why would a company want the hassle? Go to New York and have an idiot bartender trash our goodwill or go somewhere else where they roll out the red carpet for us.
People aren't allowed to be upset about something just because it's not illegal?
at the people who made it, "not illegal".
That's not Amazon. The anger, to the extent that it's justified, is misplaced.
You can't have people vote for anything shiny with "JOBS" written on it, and then get outraged when corporations get tax breaks.
Continuous outrage leads to the same results as continuous praise: Leaders who don't feel bound to the laws that their constituents have created.
In both of those cases, the blame lies at the feet of the elected officials. Granted, the implication of that is the blame lies at the feet of those who cast the ballots (George Carlin, we miss you). People always have trouble blaming themselves.
Corporations are jello. They take the shape of the mold they sit in. If they get big enough, the mold is the whole world's economy.
You can justify all sorts of reprehensible behavior this way. "Either be upset that the system incentivizes slavery, or be upset that the incentives against slavery failed." But definitely don't be upset at the slaveowners!
That's not what was said, at all. Be upset at your politicians. This is a democracy despite what the cynics say. The vast majority of people mad at Amazon don't even understand that they weren't being given very special treatment. Most of it came from existing state incentive programs.
Blame also lies at the feet of those people and organizations who twist the imperfect rules and governmental systems to suit themselves at the expense of others.
To put it another way: all software has bugs, and many of them get exploited. While it might feel just to put all the blame on the software engineer who wrote the code (after all, wasn't he supposed to have done a perfect job?), blame still lies at the feet of those people who chose to exploit the bugs to enrich themselves and/or do harm to others. Hackers are not an impersonal force of nature, they're people who made a choice.
Nice analogy!
But I'll grant you, I'm just arguing the analogy.
The real problem seems to me to be that de Blasio is being a weather vane of sorts. He was a cheerleader for Amazon, doing the work to get them into the city. When that failed and political gain was to be had, he changed his tune to "OMG! I can't believe how evil they are! I'm a victim!"
Amazon didn't twist the rules, they played by them (unsuccessfully, as it happens). Nor was this at the expense of others. Whether Amazon got to build a headquarters in NY or not didn't preclude others from doing so. Whether Amazon got tax incentives to go to NY or not, didn't take money away from anyone else. Additional tax revenue that might have been collected is not money that _belongs_ to someone else.
It is reasonable to expect moral behavior from individuals. History tells us that corporations almost never display moral behavior. Partly this is because they permit decisions where each person in the corporation may assume that someone else will be moral; a very ordinary human failing. (Forward thinking beyond the framework of advantage for self and company is rare.)
Corporations as a whole don't have a conscience. That's why we regulate. That's why we create laws with which the harm corporations might do to people is reduced and minimized so that the benefits corporations can bring may still be realized. Anthropomorphizing corporations is only useful for generating anger, which, in turn, is only useful for political gain. (Discounting First Amendment goggles.)
That lands things squarely back on the voter's back in the system here in the U.S. If we go back to your analogy, voters are the ones hiring the designers and not invalidating the contract when the design goes off the rails.
Any company founded in the US is going to use the resources US provides - roads, trade & economic power, the USPS, the talent pool etc for Amazon. When their success is built on that foundation, they owe it to the government (& taxpayers) to return the favor and show some goodwill.
Instead, taxpayers subsidize them when they're growing, then they want to cheat as much as legally possible on their taxes when they're grown up.
If you advocate letting Amazon get those tax breaks, yet yelling at the politicians who allow them, thats a basic mismatch between what you say and your revealed preferences. Don't blame politicians when they cater to those preferences.
If it's legal, it isn't cheating...
That doesn't mean those who take advantage of unfair laws are completely absolved of blame either - they made a choice. You/grandparent seem to be saying businesses (and the real people who make these decisions) have zero responsibility to society besides what is legally forced upon them.
To put your logic back to you, if someone hacks your phone, steals all your data and blackmails you, you should be "outraged" only at the engineers who let the security vulnerability go through (i.e created the incentive), but not the hacker who is actually exploiting that vulnerability.
That isn't an appropriate word. Clearly, the City of NY, or whoever is negotiating with Amazon, is big enough not to be pushed around if they don't want to be. It is a negotiation.
It the political system is screwing over tax payers, that flat out isn't Amazon's problem. It is the voters' problem.
> When their success is built on that foundation, they owe it to the government (& taxpayers) to return the favor and show some goodwill.
The philosophical point of a corporation in a capitalist system is to create goods and services as cheaply as possible. In theory, it would be nice not to charge corporations any tax, to keep prices low, and only tax the income and capital gains of the owner as money flows out to them from the company.
I doubt that absolutist approach works in practice; the situation isn't simple enough and the capitalists would figure out some sort of creative accounting scheme to avoid the money ever making it to them (actually, pretty sure they already do that in America, since American corps usually don't pay dividends). But in theory corporate tax is just bad for everyone.
The executive of the State in conjunction with the executive of the City tried to do an end-run around the City Council by using power in laws that people forgot existed. But this law required an approval from the State Legislature, which was not willing to grant it unconditionally. The political system is working as intended.
This lacks context. Bill de Blasio and Andrew Cuomo participated in the bidding context, basically by themselves. They didn't have a mandate to do this from anybody, since no one ever mentioned groveling on their feet to shovel tax breaks at a corporation. (In fact, Bill de Blasio was pretty much elected on a 'soak the rich' platform, which is a line he is more than happy to push when he knows there is no realistic chance of it actually happening.) They then conspired to do an end run around the legislative branches of their respective jurisdictions, and almost succeeded.
American states and cities are not authoritarian or run by a single emperor. There are built in checks and balances, and quite frankly everyone involved misjudged the pushback they would get by openly trying to ignore all of that.
Now try the same trick with five Bentley dealers. Nope, no discount because they know you can afford list price.
I don't mind that there are incentives for SMEs. I do mind that behemoths like Amazon can drain the pool to the detriment of others.
One thing he's conveniently not mentioning is that he was opposed to giving Amazon any tax breaks or other concessions from the start. The state politicians overruled him.
Although his position, I suppose, is that Amazon should move to NYC, without any concessions. Which is not altogether off the wall. That's how it should work for ALL companies and all places. Corporate welfare is out of hand in this country. It's just a little idealistic on his part, that's just not how things work in reality. He's gonna get overruled by the higher ups every time on that one.
That's certainly one view. Another is that these are just breaks on excessive taxes by one government to compete with other governments that have sane corporate taxes in the first place.
I don't understand how tax reductions are considered welfare. It's not money the government has already being passed out to Amazon. The government would have still made money in this scenario, just less.
https://www.nycedc.com/program/relocation-and-employment-ass...
https://www.nycedc.com/program/industrial-commercial-abateme...
These programs are designed to encourage specific behavior, like companies moving to and making capital investments in particular areas of the city. Any company that does so qualified for a formulaic tax break. NYC did not offer any tax breaks to Amazon beyond its existing incentive programs.
It does appear to be a "don't hate the player, hate the game" scenario which I do think is worth looking at. I would love to see real discussion with details like the link you presented from both side, and not these emotionally charged garbage opinion pieces presented almost as articles with no sources or credibility.
Only they're not. That's not always the case.
For instance, Wisconsin has no corporate tax at all. So they made a deal to just hand over giant boxes of cash to Foxconn at each of several milestones. Think about that. ZERO tax, was just too high.
And I've discovered that Wisconsin is not the only place that has made deals like that. Look at it anyway you like, if corporations are at the point where they are openly saying:
"Paying no tax is not enough, we want you to give us money."
Something is out of place.
The money for these sorts of capital grant giveaway always comes from "somewhere."
[1] https://nyc.streetsblog.org/2010/03/09/albany-didnt-cut-the-...
City: Relocation and Employment Assistance Program (REAP) and the Industrial Commercial Abatement Program (ICAP) programs. REAP credits for instance are not available to retail or hotels. Retail is particularly sensitive subject in NYC as it has been visibly blighted. Also it only applies to business relocating to either above 96th street or the outer boroughs.
State: The $505 million capital grant and $1.2 billion in “Excelsior” credits are most certainly not available to "pretty much any company." The eligibility guidelines are actually very specific[1]
And I know about the state programs, that's why I specified about the city grants.
Some of these employees might even eventually leave Amazon and found new startups in NYC.
Only in NYC, if you average over the whole country, far more poeple benefit if amazon don't get massive unfair tax breaks.
It sounds as that you haven't spent any amount of time in Long Island City then. LIC is is home to the NYCHA housing project called The Queensbridge Houses. It has the distinction of being the country’s largest public housing project[1]. It comprises 26 buildings in various states of decay and 60% of 7K residents live on food stamps. I would say Corey Johnson et al were very much looking out for them. This is the same NYCHA that was sued by the federal government last year and ordered to invest $1 billion in repairs to the dilapidated housing stock and submit to a federal monitor.[2]. LIC's Queensbridge Houses have been very much a poster child for authority's dereliction.
[1] https://en.wikipedia.org/wiki/Queensbridge_Houses [2] https://www.nytimes.com/2018/05/31/nyregion/nycha-federal-mo...
Can pretty much stop there. I think Amazon saw a mayor and governor who thought they traded tax breaks for a say in how Amazon runs its business.
This was a huge loss for the city. LIC will be toxic to big business for years. And now the mayor is passing the blame to the very corporations who would come in and create jobs.
https://www.wsj.com/articles/tax-shortfalls-widen-new-yorks-...
You mean like Citibank, JetBlue, Fresh Direct and Steve Madden who all moved to Long Island City years ago and continue to flourish? Or like Ralph Lauren who just signed a lease for 19K square foot of space and Cornel University's building of their Techion campus? Yeah right.
I'm amazed on the number of people who appear be not only unfamiliar with Long Island City as a neighborhood but also of NYC and it current economic well-being in technology jobs. And yet these same folks feel compelled to make comments about what a "huge loss" this is.
"working with the community" is code for "bribe" among the community organizer types.
Remember, the vast majority of people do not do things long term for altruistic reasons.
I mean, judging by some reporting[1] it sounds like the final meetings involved a framework for unionization efforts which to Amazon was probably unpalatable enough to pull out entirely just based on that.
I guess if you consider "working with the community" to equal "greasing the local union bosses" then maybe. But it's just more logical to just imagine that Amazon doesn't want to exist a blueprint for other unionization efforts nationwide.
1: https://www.cnbc.com/2019/02/15/amazon-held-11th-hour-meetin...
You mean like access to a very large and very skilled labor pool? A 24 hour transit system, 3 major airports? 1 million square feet of available office like they were going to take in Citicorp tower that has a train stop at the bottom of the building? Sure.
There are lots of cities with empty office space. And in most cities parking isn’t a problem so the transit isn’t necessary.
You gotta think like Amazon — most of those things weren’t huge benefits to them. They were benefits to their future employees but only in that city.
The main things they are looking for are tax breaks and rapid development without a lot of red tape. NYC was proving that rapid development was out of the picture and so was the lack of red tape.
Nonsense. It's far more efficient to be able to tap a local labor pool. Google, FB, et al set up shop in NYC for this ver And there are always people who don't want or can not relocate. Or who simply do not want to live in New York City.
>"And in most cities parking isn’t a problem so the transit isn’t necessary"
Please name just one top tier city where parking isn't a problem and mass transit isn't necessary.
When the environment became hostile, the incentives were no longer worth it. So they left.
If you don’t want to believe that then that’s fine. It’ll just happen again.
With a corporation the size of Amazon, US cities aren't just competing against each other. The US is a whole is competing against other countries. And these companies are competing against other global companies. Of course they are going to want the lowest hassle, highest efficiency, and largest margins possible.
Surely helping the poor and encouraging business don't need to be diametrically opposed. One might think the two go hand in hand.
Businesses with lots of money: Let's go where it's easier
What responsibility (if any) do American companies have towards the communities/societies they exist in (beyond delivering value to shareholders -- wherever they may be)?
Exactly my thoughts. Though Amazon should have done this in the first place instead of doing that awful HQ2 search spectacle.
Another thing that jumps out when reading this editorial from the mayor is how strange it is to see him acknowledge Amazons behavior with the min wage tax increase in Seattle that they threw a tantrum about, and yet still he invited them to come to NYC with the tax breaks on a silver platter.
NYC is absolutely stuffed with America's best talent. Amazon needs NYC so much more than NYC needs Amazon.
The entire HQ2 shakedown was always just Amazon seeing how much they could fleece NYC. It's ludicrous New Yorkers are having to do the bargaining they elected a mayor to do for them.
Is it public?