I tend to agree that this is a dumb idea... but think about this. There are a few clusters on the east coast, the clusters could work together to push amazon to one of the other cities in exchange for deals that help the others out.
If I'm being totally honest though I don't think there is much advantage to any of the cities to give Amazon incentives to picking them. I also think that Amazon has already decided.
That's definitely possible they've already more or less decided. Either way, they're pulling off an impressive optimization to obtain maximum taxpayer funded subsidies.
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?
If a city waves taxes for Amazon, they'll still have increased costs - say, increased road maintenance around HQ2 as those roads get used much more. Those costs still need to be paid for, and the burden will then move to smaller companies with less clout to negotiate a special deal.
Trying to get an ever-increasing amount of money out of people and organizations with less ability to pay that amount of money seems bottomish for me.
They also have the opportunity to collect payroll, income, property and sales taxes in respect of the employees; seed a technology district; and collect taxes down the road. It wouldn't make sense for San Francisco to do this. But it can make sense for a Tier 2 city to pay Amazon for densification over sinking a similar cost into the riskier proposition of renovating a downtown plaza or whatever.
Was paraphrasing the article that mentions the race to the bottom, but I believe that there is a net positive on the city that receives the HQ2 and that's why they are competing with each other.
It’s a race to the bottom because it goes beyond tax revenues to include free land (that could be sold to someone else), infrastructure investments (that are likely not needed otherwise), etc.
More relevant to the topic under discussion would be a future where cities go to war to keep each other from winning the favor of massive corporations.
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.
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
Right, but there is always going to be the incentive to defect; if 19 of the cities agree to cooperate, the 20th can just offer slightly more and win the contract.
>But the chosen city would win even more if they were to cooperate.
Right and the 19 losers are cooperating why again?
>Sure, the cooperation would quickly break down
Good job undercutting and highlighting the faults in your own argument. If you can figure it out in two sentences I think there's probably a few people directly involved who this is obvious to. So since cooperation isn't viable in your own estimation, might as well try to win.
>but that is why the federal government should decide on such benefits
Unfortunately that proposition doesn't appeal to everyone, so good luck there.
Just want to add the opinion to the comments section that I think it's completely ridiculous that Amazon gets incentives from cities to go there, as if they need the money. This is monopolistic behavior to the detriment of cities, citizens, and smaller firms.
There is nothing wrong with Amazon getting an incentive. The question is are these cities doing their math and offering incentives that are both competitive and reasonable, that won't leave their citizens out to hang.
There is a fantastic pair of episodes of Citations Needed on exactly this topic. They cover the Olympics, HQ2, and sports stadiums. And you're right: city after city gives the whole farm away for these big ticket things that never really pay out, and cities can't deficit spend the way a country can to eat the loss.
Honestly I think Amazon is as or more interested in the cities' overall plans than just tax incentives being offered. There's a lot of logistics to build a campus as large as they're planning with as many employees as they're planning. I think they're also very interested in zoning and regulatory hurdles. They're probably looking for a city that won't bog the project down in zoning permits, etc. Kinda like how Google Fiber was killed by regulation rather than capital or technical concerns.
The tax incentives play into the overall cost to Amazon for their location, but so does the rest of the plan.
That's sort of like saying because you're rich, you shouldn't haggle over the prices of stuff.
How do you think Amazon got all that money? If cities are willing to cut them breaks for them to open up a headquarters there, of course they're going to squeeze the cities.
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.
Somehow it always ends up there, like that's a "legal no go". I.e. "that would have to go through the supreme court" or "that's the constitution". I realize it's hard to change some things (like how is Gerrymandering for political views allowed?) but is it that hard that it's meaningless to attempt? Doesn't that mean (in the case of the Gerrymandering example) that US democracy is fundamentally broken AND can't be repaired?
Congress could do it just by imposing a 100% tax on income attributable to an agreement providing an abatement of generally-applicable state or local 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.
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.
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.
And it will be amazing if there are actually 13,000 jobs. These things have a magical way of never materializing. The jobs turn out to be temp construction or count jobs created in the "economic impact" of having the company there. It's very rare for these deals to come out with the city on top or even equal.
This is my fear. The cities are offering up fantastic deals so that their politicians can get credit for those mythical benefits that never materialize. By the time the results can be evaluated that politician will be long gone. It's completely impossible to evaluate a proposal like this on the time scale of 50 years.
There’s a technical term for PPP - Public Private Partnership which isn’t exactly what’s happening with HQ2 but the effects are similar. In other words, even though HQ2 isn’t literally a train station, a campus that size functions in many ways like public infrastructure.
> 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.
Amazon doesn't want to spend ten years trying to remake a city into something that might serve its needs. I can see why. It's a huge investment with a very uncertain return.
But, let's turn it around. Why would Amazon want to go to San Antonio, instead of a city like Atlanta?
They also don't want to do what the auto manufacturers did and make the host city completely dependent on them for the local economy.
Shreveport suffered quite a bit after the GM plant closure and drop in oil prices -- being so aligned to one sector was not in Shreveport's best interests.
Take a city like San Antonio. Austin is 80 miles north. Amazon puts HQ2 in the northern suburbs and suddenly you have a major tech corridor along I-35 that will bring growth and investment along with it, bridging the two cities ala San Francisco-San Jose-Berkeley. You would have a similar effect with Milwaukee and Chicago. Sometimes a city becomes so outgrown and gentrified (like Seattle, hence the new HQ) it makes sense to set up shop nearby.
The next best thing is they set up HQ in southern Austin or northern Chicago (both shortlisted cities), and those cities benefit from residual investment.
I can definitely think of worse places than San Marcos. Though being outside Austin proper means giving up anything remotely resembling usable public transit. And in all honesty, Austin could be reasonably characterized as outgrown and gentrified already.
Plus, SA has already played this game. It got them Rackspace. Which, uh, could maybe be going better.
I had Dell in mind (being located north in Round Rock) in mind. I have friends in Austin and most enjoy living closer to downtown, and I guess commuting sucks there going north, so heading south seems like a logical choice to build a HQ.
Besides Rackspace they have a bunch of defense contractors and USAA, but little else I believe.
That's a fairly accurate characterization of San Antonio. The talent pool is somewhat limited and often very specialized. The city is sprawling, so public transit is a bit lacking. SAT isn't really a major international airport, so most major destinations require changing planes at a bigger airport.
It could be argued that UTSA is starting to count as a major university, with recent expansion and investments. But the CS program has yet to really prove itself.
Rackspace is one example of that business, but Amazon is not going anywhere. And there is STILL a lot of space all around San Antonio (far west, anything east) as well as New Braunfels and even (if Amazon spent the $$$ to get land) plenty of space within a mile or two of downtown for a large campus.
I've thought for a while that commuter rail lines:
Along the freeways: 35, 10, 281, 151
Between big retail spots: Downtown, Quarry, Rim, Stone Oak, 1604/Bandera, Forum
Big Business: Rackspace, USAA, Downtown (again), Amazon, Lackland AFB, Kelly AFB, Brooks
And new parking areas near big residential centers: Bandera/Tezel, Helotes, Boerne, Stone Oak, Great Northwest, Brooks City Base
Along with parks renovation, school improvements on the South Side and small business incentives would make San Antonio the best place to live in the country.
San Antonio can't even build a street-level rail line for the densest areas without politics getting in the way and halting it. Until that changes, San Antonio is likely to be Our City Of Lots Of Potential for decades to come.
Personally, I wouldn't move back without massive densification of the "urban" core. Right now the place is a massive suburb where getting by without a car is impossible.
I don't know the details of street rail - but I would say that if you wanted to, you could live anywhere between southtown and Alta Vista without a car, if you could also work there. And you can get across the city with Lyft and uber if you want to go elsewhere.
I won't argue with your qualms on local government.
I lived in Southtown. Right at South Alamo and Flores. I needed a car to be able to grocery shop and get to work. A 10-15 minute drive to the office was anywhere between a one-hour and two-hour bus ride.
In practical terms, it would have been workable if my office had been along the Riverwalk. Otherwise, not really. SA's public transit isn't usable for white-collar professionals in most cases.
I think some of it Amazon doesn't work outside a vacuum of other tech companies. It has to compete against San Francisco and other major tech hubs now so having a developed city is a selling point for Amazon HQ2.
>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.
> 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.
Amazon workers are highly paid, thus bringing the average income up, and contributing to taxes, strengthening the housing market, and much more. That's interesting that you call it pollution. High paying tech jobs are pollution? That doesn't compute to me.
Companies that compete for talent will be pissed, but for lots of others it's a huge win. The only way I see it as a "bad" thing is if you are in a small city that wants to remain small.
It's absolutely nothing like building a McDonalds.
> strengthening the housing market, and much more. That's interesting that you call it pollution.
Talk to anyone who grew up in Seattle or SF pre-tech boom and you might find a different perspective. I think it's worth considering that while it's great for us in tech it's not like it's a net-win for everyone else.
If you work in an industry outside of tech(or a part of tech that doesn't track payscales like the game industry) you may get pushed out of a city/metro just by nature of the impact tech has.
But on the flip side, I can't imagine that people living in Detroit were thrilled by the decades of urban decay there.
I think I'd rather live in a city that's so popular that infrastructure can't keep up than to live in a city where entire neighborhoods are empty and are razed due to neglect and criminal activities.
but sometimes it is a binary choice. Leaders can see their community dying after the former big industry left -- with lots of luck and years of a strong economy they may be able to attract some replacement industries that keep the town prosperous (but not not overly so).
Or they can hit the "Amazon lottery", bringing in billions of dollars of investment and 50,000 high paid jobs (plus all of the ancillary jobs to support these high paid workers).
So a community could very well face a binary choice.
Er, “as many as 50,000 high-paying jobs” is what Amazon claims HQ2 is planned to grow to over an unspecified time horizon. “As many as...” is marketing weasel words for “for some number definitely not exceeding, and probably much smaller than...”; it sets an upper bound, but counts on people treating it as an expected level.
> Leaders can see their community dying after the former big industry left -- with lots of luck and years of a strong economy they may be able to attract some replacement industries that keep the town prosperous (but not not overly so).
That's overly hopeful. I doubt Amazon will seriously consider a dying ex-company town that needs the investment. My bet it's going to pick someplace that's already doing pretty well, overall.
Other than code for "making everything much more unaffordable", what does this mean?
And yeah, it's pollution for those who don't have high paying tech jobs. There are more people living in those cities than Amazon employees; their interests and needs need to be taking into consideration as well.
Unaffordable is relative. If HQ2 brings thousands of high-paying jobs with it, plus creates an ecosystem where tens of thousands of other good paying jobs are created, housing can become more affordable to more people while rising in price.
Owning a house has been a part of the post-WW2 American dream for good reason, and it should remain so. And people buying homes should want their property to retain value
> Unaffordable is relative. If HQ2 brings thousands of high-paying jobs with it, plus creates an ecosystem where tens of thousands of other good paying jobs are created, housing can become more affordable to more people while rising in price.
Shouldn't this have played out just like that in SF then?
I got a bit excited and should add more detail: we're in a time when taxes are being shifted more and more away from those who have (rich & corporations) to those who have not. A public/private partnership seems insane to people because it is. The private companies have all the resources and need to leverage further their wealth from the public sector. They can easily front this by themselves and still be printing money without a care in the world. Didn't the corporate tax rate in the USA just get reduced from 35% to 21%? Private top-tier income tax was something like 96% during WWII and now it's down to what, half of that? So not only do you blatantly and overtly go out of your way to avoid contributing to the public fund but then also get politicians to give you deals and project-specific loans out of that exact same reduced, exhausted public purse? OOkay. Then you tell us that we should be thanking you because you're providing jobs... what kind of jobs and to whom?
I'm always skeptical of these things to say the least. Then to claim that there's proof... umm.... are you referencing Atlas Shrugged?
we're in a time when taxes are being shifted more and more away from those who have (rich & corporations)
Actually the exact opposite is happening. The top quintile is pay a bigger share of taxes than before.[1] In 1960, the top quintile paid 56.5% of all federal tax revenue. In 2005 it was 69%.
[that page may 404 if you have a bunch of anti-spyware on your browser. It worked when I popped open an incog window.]
How should I interpret that chart, considering things like wealth versus income? There's some sort of transition between those -- I would guess more wealth was held in non-taxed trusts or investments back then, compared to now? Does the estate tax change behavior?
I think the point is to look at how much of the government is paid for by the top quintile than the others, over time, compared to each group's wealth. Is that correct?
(I am not an economist, just have an amateur interest in complex systems.)
The stat you cite is actually 1979, but if you look at the income proportions[1] at that time relative to current by-quintile income proportions, the growth in taxation of the top quintile between 1979 and 2005 is slightly greater than linear with that income growth.
Income growth can definitely explain the increase in tax burden, but my point still stands, no? The tax burden is not shifting from the wealthy to the poor.
And if you look at the bottom quintile, their tax burden has fallen, even though income continues to rise.
Again, not true. Look at the effective tax rates. The lowest quintile pays single digit percentage (negative income tax when you account for the EITC).
You're mistaken and given your responses elsewhere I think you're either confused or arguing in bad faith.
The mean tax rate paid by the top 0.1% of earners in 1979 was just over 40%. This fell to about 25% in 2010.[1] Marginal rates followed a similar trend. Meanwhile the US Gini coefficient rose from .415 in 1979 to .476 in 2012.[2] This implies that the top quintile pays a greater share of Federal taxes because they're proportionally richer than the other quintiles. The poor don't pay much Federal tax because you can't get blood from a stone.
First off, the Gini coefficient has a shit ton wrong with it. A country would score better if everyone was poorer, but equal, rather than wealthier but unequal. I for one would choose the later, even if I'm not one of the top earners.
Second your graph shows rates for the top .1% and .01%. I was talking top quintile which you seemed to have forgotten plus you didn't challenge the data I provided.
Their property taxes also go up as well so their actual financial situation might be worse unless their non-tech wages keep pace with the market or they just sell and leave.
But you can only sell a house once so it's the rising tide isn't really raising their boat like it is for the tech workers. It's more akin to winning a scratch ticket that also forces you to move and maybe get a new job.
If you're already landless, Amazon coming in isn't going to help you become landed, outside of a handful of the earliest people to get in before the speculators hit. They'll create high paying jobs, but they'll create equally (or likely more) expensive houses.
Anyone wanting to live in Nashville (just to pick one city from the list) who's capable of working for Amazon is also capable of working for someone in Nashville today. And generally, the economics of being tech talent outside these hotbed markets like SV and Seattle are vastly favorable.
That is to say, you're probably better off buying the cheap house in a smaller market on the salary you can command in that market than you are buying a very expensive house on the salary that the very expensive market offers you. Google would pay me more than my current job, but my cost of living would go up by more than my salary -- massively so.
Against local companies (like for in Seattle), it also creates an issue of competition for employment. In Seattle, every job I'm applying to is also being applied to by ex-Microsoft and ex-Amazon employees. It's a much harder competition to land jobs, but in the smaller markets you could find work much more easily.
House prices going up is only a good thing when you are selling your house. Otherwise, it's just a larger tax payment the owner endures. I know several people that lost their house because values went up in the neighborhood, but their salaries did not increase to match the new monthly tax allotment requirements.
> Cost of housing going up also increases the wealth of homeowners in the area. This is not purely bad.
The local government represents the current residents, not future ones. Raising house prices could be a windfall for current homeowners, but it could negative for the broader group of local residents, which will likely have a lot of renters.
Heavily inflated house prices could also be bad for the current homeowners, who may get stuck in their current home because they could no longer afford the price difference for a needed upgrade. Their kids may be forced to move away because they can't find homes.
> 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.
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.
They're arguing that the states are giving away money.
What money are they giving away? If Amazon never comes, then there is no Amazon taxes and thus no tax breaks.
Right now those towns are starting out at zero. If they are smart, they structure the incentives to make sure they are net positive. If they screw that up, well that's on them.
Why aren't cities and towns already doing this then? Every new business or new resident, of any size or wealth or income, is a potential new "net positive" contributor to their tax base.
What on Earth makes you think they aren't doing this? There's no single corp announcing a possible move to anywhere as big as Amazon to illustrate the incentive to compete, at almost any price.
In other words, construct a hypothetical move for a hypothetical corporation to some example town, and I'm sure that town could come up with an incentive package that would be beneficial to its citizens in place of having the company not move there. Do you disagree?
I am almost perfectly certain that they're not doing this because I was referring to all of the organizations, and individuals, that are not as big as Amazon.
I'm claiming your argument is suspicious because it seems to only really apply to organizations of Amazon's size. Maybe you disagree, but it sure doesn't seem like any cities or towns are interested in luring an Amazons worth of businesses and tax-payers that aren't a single organization. The argument seems pretty agnostic; why is no one else?
New York State offers to waive all state income taxes for something like 10 years if you move there and start a new business in one of their special economic zones. There are more of these programs out there than people realize.
That's a good counter-example, but still pretty far from 'accept any net-positive benefit' (however close to zero).
Moreover, there only seem to be three such zones in the entire state: parts of upper Manhattan, parts of the south of the Bronx, and some parts of Yonkers.
Giving the incentives is the screw up. Not how they implement it. Even though they often implement stupid policies and ignore the things they actually need to pay for. In many cases, states and local governments lose hundreds of millions, if not billions, trying to attract investment which doesn't pay off.
Why is that on Amazon? If the city supports building more housing for incoming employees, then housing prices don't sky rocket and construction works make out like bandits.
I'm trying to understand why when a company like Amazon decides to create jobs in a city, suddenly they are to blame for everything wrong (homelessness, high housing prices, etc). It's absurd.
Arguably they're trying to divert tax monies to be spent on themselves instead of the other problems the city faces, so it is on Amazon.
And they're blamed because they are largely a cause of exacerbating those problems. It's not just a pure good for them to come. Like I said, they cause housing prices to skyrocket. That's on them, and the increased homelessness that would result would be on them, too.
Sorry to say, but if a city gives away so much to Amazon that it's a net negative, it's their own dam fault. Maybe they should take some negotiations or financial modeling classes.
Amazon doesn't control the zoning laws, the city does. If housing prices increase, it's the city's fault.
People act like Amazon is some all-powerful entity that can railroad an entity like a city council that has the power to change laws.
Your opinion here goes beyond "caveat emptor" right to "vae victus". Although you seem to support the idea of cities bargaining with Amazon here, your statements make a good argument for cities to decline.
Yes, the city would be to blame. But so would Amazon. Amazon is run by people who know right from wrong, and are fully capable of taking responsibility for their actions.
Amazon absolutely shares some blame with all of those. You cannot condemn one entity for not having "personal responsibility" and ignore the responsibility the other entities have in contributing to the situation.
> 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.
> 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.
> 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.
> 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.
I don't understand people who are conflating the search for HQ2 with Olympic bids and sports stadium bids. The Olympics are most likely a one time thing for a month, although in the future I could forsee it revolving around qualified sites, it takes a lot to convert facilities used for the Olympics into regular infrastucture (see Atlanta and LA).
Stadiums I think overall have a better impact, as they can create or revitalize an economic area, provide longer terms jobs, and sports teams provide back to their communities.
Amazon is on a completely different level. They will bring thousands of skilled workers, and generate trillions in economic activity. HQ2 will stand for a long time, it can completely change the trajectory of a city. There are many many issues with bringing Amazon to your city, home prices and infrastructure to name a few -- but isn't this a problem you'd rather have than not?
As someone who will probably never work at Amazon, or in any way benefit from their presence, the issues of housing prices and infrastructure are important to me. I'm not willing to pay an effective Amazon-tax in both my rent and commute time for for the dubious honor of saying I live in the same city as HQ2.
I'm not a fan of cities dishing out perks, but what you said amounts to NIMBYism. I'm sympathetic to those concerns but housing prices aren't solved by keeping out newcomers or being against development. There can also be an indirect income boost that comes with an increased demand for labor, and it can help make the local economy more robust.
I do think the concern about unforeseen infrastructure costs are warranted, especially if a city doesn't excel in urban planning or has problems with NIMBYism derailing good plans. But I think most of the cities on the shortlist are fair game and could handle a project of this scale.
Because it's a cheap, lazy insult to throw out at people who have different preferences than you do. It originally applied more to things like power plants that we collectively need but that basically no one wants to live next to. But there's absolutely nothing wrong with a city not wanting an Amazon HQ because of its impact on current residents when plenty of other places do.
But bringing in Amazon is going to necessitate adding housing stock, and that just doesn't happen in like Boston that already have housing issues and rampant NIMBYism.
That fair. However, Austin is already behind the curve and can't keep up with the current influx of people and companies, adding Amazon to the mix will simply exacerbate the problem. Thus my concern. Maybe it'll be a good thing 10 years down the road, but that'll be a tough 10 years and I'm not confident that Austin will even be able to get to that point.
Its reasonable that if you are individually not profiting from it, you should vote against, but most people will benefit (every single landlord, lots of businesses that will sell stuff, and all the people that would move and get a job there). If it were to be put up to a vote, the vote would be positive. If it were to be put up for an economic analysis, the economic analysis would be positive.
"but most people will benefit (every single landlord, lots of businesses that will sell stuff, and all the people that would move and get a job there)"
That's far, far from "most people". Landlords, for instance, would benefit, due to being able to charge higher rents. But everyone else in that town that rents would not benefit. And I dare say there are more renters than there are landlords.
Economic agglomeration is not bad, but if the city is unable to keep up with said agglomerating, then accelerating it is a bad idea. Austin is already behind the curve and can't keep up with the current influx of people and companies, adding Amazon to the mix will simply exacerbate the problem.
Just a small counterpoint - the United Center in Chicago was supposed to revitalize the surrounding neighborhood, but in practice drove it down to the ground. Same deal with Yankee Stadium and Citi Field in New York.
The area around Shea stadium/Citi field was always an industrial area... Re-zoning hasn't happened. ( Shea Stadium was built in the 60s )
The area around Yankee Stadium has always been a vibrant community. Yankee stadium was built in the 1920's
Not sure that you are a new yorker with those two statements...
Shea stadium was never re-zoned, so re-vitalization was never its intended goal... Yankee stadium surrounding area has gone thru the usual cycles every other nyc neighborhood has, and the stadium location is almost 100 years old!
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.
> If the benefits would split 20 ways, collective bargaining might work.
I'm shocked to not see this objection in the article or elsewhere in the comment section. If the shortlist were final and cooperation could be enforced, collective bargaining would still only work if the top 20 cities all had a similar chance without perks.
As is, some of the cities would obviously be out of the running in a no-perks race, so collective bargaining (even over many iterations with many companies) is a clear loser for them. That undermines the entire proposal. It could be repaired if strong contenders like DC agreed to let weaker contenders offer perks up to parity with the strongest players, but that's vastly less plausible or easy to calculate than "no perks".
(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.
Sauga and Markham are outside of Toronto municipality and - strictly speaking - are already not on the list. From the shortlist, they do not look like something Amazon is shooting for. They are in Seattle proper, not Kent or Everett.
Yes, I mean US political climate. Ontario Provincial govt created the commission headed by Ed Clark and issued a bunch of statements[1], but I had the impression that above city level they are like whatever.
Sorry I wasn't clear. Yes, I know they aren't considering the burbs. But if they were (Toronto burbs, at least Mississauga, are something like the 30th largest cities in NA)it would be better than jamming Amazon and 50k employees in to Toronto.
That's right. I actually have a pet theory that Toronto has already been chosen, but all this shortlisting thing is a theatre and removing almost all Canadian cities in the first round is for plausible deniability of the preference for Canada. I know, I know...
> 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.
LOL Toronto is vying for this nickname too. I cannot know why Amazon decided against it for the shortlist, but I suspect that cost of living and housing situation that is even worse than Toronto and lack of the geographic diversity played the role.
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'm not sure the data centers have an effect there. They don't have need for their non-datacenter employees traveling to visit the DCs (those are hyper locked down)
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?
But it is the problem of the city. They absolutely need to keep this in mind while negotiating with Amazon, who has a reputation for driving housing prices sky high, thus exacerbating the homelessness problem.
"Automation is good. Do you want us to ride horses to work?"
Automation is neutral, as it does cost people jobs, not all of whom can be retrained for something else. It also drives down wages. Hell, productivity has been skyrocketing for the past 30-40 years due to automation, yet workers have seen a pittance in rising wages.
Amazon also provides high wage workers who are taxed on their income, and who generate economic activity which can also be taxed and used by municipalities to try to solve homelessness. On net I wonder what the benefit / determent of Amazon moving to a city would have on homelessness.
Another confounding factor is that the workforce tends to be left leaning. Left leaning population, plus new money for taxes means more social services for the homeless. More social services means homeless from less accommodating communities will move in.
I'd also be curious in a study on Amazon's effect on the homeless.
> More social services means homeless from less accommodating communities will move in.
I don't know why this point seems to escape people in SF, LA, Seattle, etc. If you're homeless, you're gonna want to be where the most benefits and relaxed attitudes toward homelessness are. It's not hard to understand why this problem is at its worst in the most progressive cities.
These are all cities without overly harsh Summer and Winter seasons. That makes it easier to be outside year round. The destitute homeless in less favorable regions aren't generally mobile enough to migrate to these places.
I'm sure that plays a part. However, there are small cities around Seattle, with similar climates, that have very few homeless. My interpretation is that these places have less services and the police are more likely to move the homeless. Plus, while living outside in LA doesn't sound so bad, Seattle can't be too high on the list of nice places to live outside.
But this isn't how it works. Political leverage increases with income, and people who don't have to work to survive realized long ago that it's much more efficient to lobby for tax decreases than it is to "generate economic activity".
Our current top tax rate is ~40%, less than half of what it was under Eisenhower, and the owning class continues to push for tax breaks under the guise of trickle-down economics.
Please stop broadcasting propaganda on their behalf.
> Amazon also provides high wage workers who are taxed on their income
Washington has no income tax.
> who generate economic activity which can also be taxed and used by municipalities to try to solve homelessness.
Unfortunately a lot of the taxes that can be levied in Seattle are fairly regressive, so it's easy to end up in a situation where property taxes are raised to generate funds to solve homelessness. It's easy to imagine inefficiencies or fund diversion such that low priced housing raises in cost faster than the funds given to help homelessness. Even worse would be the situation where those funds only help in the form of food & shelters for homeless people.
Is the city does not also allow housing to be built, then all the tax money in the world won't stop the fact that all of Amazon's highly-paid workforce will out-bit existing residents for limited housing.
States need to look at the amount of office space being built and mandate that towns allow additional housing so that there are at least 3 beds per desk.
I think automation has clearly been a net good over the past 200 years. I agree that it does have a cost, and perhaps the compound interest (environmentally) will come due very soon. But it's hard for me to see that it's neutral, given how much better our standard of living is compared to pre-industrial revolution.
Perhaps you meant to say that automation also has negatives? In which case, I apologize if I sounded harsh here -- I find I have a strong emotional reaction to arguments about complex things that don't support nuance.
We would not even understand environmental pollution without automation. You can't send a human to space with binoculars to do a satellite's job, for example.
We also wouldn't have very much environmental pollution without automation. Humanity wouldn't have left much of a permanent mark on the Earth if we had gone extinct before industrialization.
Barring the desertification of the Fertile Crescent (arguably natural climate change had a hand too) and the extinction of the American and Australian megafauna, both of which are relatively insignificant in geological time, we simply didn't have the means to harm the environment very much.
Compared to that, industrialization has had side-effects that will endure for millions of years: the upending of the carbon and nitrogen cycles, and the addition of plastics and radiation. Aliens could come to the Earth 20 million years after we go extinct, and still be able to find traces of us.
Not directly, no. But Amazon is based in a city that has a large homeless population. It is in the interest of their employees to see that population fall, therefore it also ought to be in Amazon's interest.
> Automation is good. Do you want us to ride horses to work?
Of course it is. But I see this reaction a lot - that anyone asking questions about our automated future is some sort of regressive idiot who hates technology. Far from it. You can see and be in favour of the obvious benefits automation brings, while also questioning what society looks like when a lot of the jobs people currently have don't exist. That doesn't mean "stop automation", it just means "think about the effects of it while we do it, ideally before".
If they refuse to answer the points we are raising by attacking us trying represent us as regressive idiots then attack them back. Make them feel like greedy pigs willing to let the world starve to make more money.
Is there any doubt that if Amazon or any corporation would not hesitate to eliminate 90% of the jobs in this world if they had the means to do it cheaper with robotics/ai/cloud tech? They couldn't care less if it meant plunging half the population of this planet into crippling poverty.
Its beyond frustrating the amount of attacks you face for inquiring about the livelihoods and future of people whose jobs are replaced by AWS processes.
You want to automate the world? Great. Ease it in over 2 generations and only when humanity overcomes the greediness that allows us to accept wealth inequality and more money than we can ever dream of spending despite half the world living in poverty.
>Its beyond frustrating the amount of attacks you face for inquiring about the livelihoods and future of people whose jobs are replaced by AWS processes.
That is because jobs aren't a hand-out. Somehow, we still have basically full employment 200 years after society started automating away jobs. You face ridicule for bitching about jobs lost to AWS for the same reason people now ridicule Luddites from 150 years ago.
Those same 200 years have seen an incredible concentration of wealth towards the richest in society at the detriment of the poorest - and it still continues today. It is not unreasonable to ask if there is a better way to accommodate change.
I'm reminded of the quote by Ronald Wright that is perhaps better suited to today's discussion about Switzerland vs the US, but still feels relevant (and, as an immigrant to the US, very true):
“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
I dunno, wealth was pretty darn concentrated in 1800 too. Is it really more concentrated now than in the high medieval period? Wealth concentration might have deeper causes than automation.
There is a vast difference between government policy intended to help its citizens (and thus, the nation as a whole) prosper and grow and adapt as the economy changes, and "hand-outs."
Come on man. I’m not bitching about jobs lost. I’m bitching that as a society we are still petty. We cannot even rally to commit to support ideas like free education or healthcare or even maternal leave. And it’s people like you who choose to completely ignore the obvious point I’m trying to draw attention to — dominant attitude of profits over people — in order to misrepresent me as someone who is bitching over jobs lost to progress. I hope we lose all those jobs. The day we no longer have to have people flip burgers or bag groceries will be a great day. But if those businesses are taking in more wealth now, why not spread it around? Better schools and healthcare. Better opportunity. Why not?
>It is in the interest of their employees to see that population fall, therefore it also ought to be in Amazon's interest.
Amazon is not a humanitarian organization. They are only concerned about the interests of their employees to the degree that the law requires, and their only interest, otherwise is in increasing shareholder value. Amazon doesn't care about the homeless... except maybe as a potential source of cheap labor.
Not caring about the environment you operate in, whether its so much pollution that your rivers light on fire or the human element that might make your workers depressed, just because it doesn't show up on a spreadsheet is an incredibly short sighted move that can and will reduce profits in the long term.
And if a company was willing to fuck over everything as long as it increases shareholder value then it should be regulated. You already implicitly agree with that viewpoint unless you believe that Amazon should be allowed to murder or enslave people as long as it increases shareholder value
I do agree with it, but... Amazon is regulated. They're already not allowed to murder or enslave people - and they still come as close to wage slavery as they legally can in their warehouses. The law doesn't require them to care about the homeless, and the market doesn't seem to care about them caring about the homeless, so Amazon doesn't care about the homeless.
Their culture is legendary for its relentless focus on cutting costs and driving employees hard for the sake of the bottom line, at all levels. I cannot see them spending a dime on fighting homelessness, even as a PR move, unless they expected to make a dollar back, that's just the way they operate.
Ah, I see. Yes, I don't imagine that Amazon would do anything unless they saw a return on investment either. I do think that situations like that do affect their bottom line though, at least in terms of employee morale when it happens in their neighborhoods. I have heard that Amazon tends to churn through their employees, but they are getting big enough where I don't know if they can keep doing that and keep the quality they want
This state had repeatedly failed to fund and support homelessness and low income housing programs. Apparently the state budget for the year "accidentally" doesn't include promised funding for homelessness programs, and just a few days ago a other program to help with low income housing was tossed to the wind.
Combine that with the NIMBYs refusing rezoning, and you get the current housing mess.
There are plenty of countries without automation. And many allow anybody to immigrate to them. But don't expect air conditioning You'll have to hire a person to wave you with a fan.
And don't expect those job-killing tubes to bring you your water. Hire a water carrier like everybody else.
And in the truly pure countries, be prepared to drag your stuff with you without labor saving wheeled contraptions like the wheelbarrow.
I didn't say anything that isn't true. Technologies save us tremendous amount of effort, even ones that we take for granted. It's not hyperbolic to point that out. I'm not exaggerating anything.
But feel free to point out where I am exaggerating.
Automation is a tool that has both good and bad effects.
It is great that we are improving productivity but automation also furthers concentration of wealth by distributing fewer profits to workers.
It is not simply good. If we don’t understand the negative effects we are more likely to become victims of those effects. If we do understand the negative effects we can make sure to prepare ourselves for the change in the landscape.
I certainly don't want you riding a car into a crowded downtown. I personally walked to work in downtown Seattle (to Amazon, ironically). I'd vote for any local candidate who pushed for an aggressive pedestrian-only zone in the city with a strategy for expanding mass transit access and park and rides. The technology for affordable mass transit is almost a century old; I think incremental, sustainable progress on that technology is better than anything the Tesla has to offer. Wide-spread single-user cars are one of the worst things to happen to this country.
And homelessness can, in fact, be reasonably construed as Amazon's problem (or a problem caused by Amazon if we're a city thinking of letting Amazon in). The exacerbation of homelessness is an externality caused in part by Amazon's concentration of high-wage jobs in a small city and the subsequent skyrocketing of property values combined with mindless gentrification. So it's both a cause for concern when courting Amazon, and it's a form of pollution that they bring to town that it is not a priori unreasonable to hold them accountable for (to the extent that they are responsible for it).
Seems to me that more of the blame for homelessness should be placed on the government than on Amazon. Not working at Amazon is hardly the reason for someone's homelessness.
I don't think you understand — homelessness can be seen as an indirect effect of Amazon's presence, based on property values, not whether or not they employ the homeless.
Should they be responsible for this indirect effect? Well, that's the issue at root of a lot of externalities companies produce, like environmental pollution.
I'm certainly sympathetic to the idea that the government should step in and support the homeless, in return for Amazon's tax dollars. But that requires reserving a lot of new housing development for low-income renters, which makes housing more expensive for Amazon's employees, so they have an incentive to discourage doing anything about the homeless.
It's a great example of how market forces can fail a community, actually.
Housing prices are rising in Seattle because it's growing. And while Amazon might be the proximal cause of Seattle's growth, the fact remains that some cities in the United States must grow in order for the economy to, you know, fulfill it's debt obligations. Seattle does not have worse homelessness than other cities which are growing at the same rate, although cities with a population decline tend to have a surplus of housing which therefore becomes cheap. So unless Amazon is to be blamed for America's systemic inability to handle homelessness in growing cities, it's a little unfair to point the finger.
I think we pretty much agree, and I don't think it's fair to blame Amazon more than any other company, proportional to their effect on the community. I'm just saying, there is an effect there, from Amazon and other business, and the market itself isn't equipped to naturally house the homeless in these circumstances. Without government intervention, the homeless population will grow without any support.
A cynic could argue that the market is operating well in this case because the homeless don't contribute much economically — but I try not to go to the same bars as those people.
Cars are pretty terrible, but horses are even worse, if you can imagine it.
Think about all the traffic problems with cars, except the street is covered ankle-deep in manure. And you can't install catalytic converters in their butts to reduce pollution, either.
There's a thing called manure bag which you hang from the saddle and over the horses rump to catch manure on the fly.
Image search the internet for horse manure bag for various examples.
Other problems mitigated by horses as a means of transport include, but are not limited to, the relative rarity of high speed collisions. Although, falling off a horse can be quite traumatic.
>I certainly don't want you riding a car into a crowded downtown. I personally walked to work in downtown Seattle (to Amazon, ironically). I'd vote for any local candidate who pushed for an aggressive pedestrian-only zone in the city with a strategy for expanding mass transit access and park and rides. The technology for affordable mass transit is almost a century old; I think incremental, sustainable progress on that technology is better than anything the Tesla has to offer. Wide-spread single-user cars are one of the worst things to happen to this country.
You responded to a claim about automation, not cars. Trains are automated. Buses are automated. Please contain your virulent hatred for cars long enough to figure out what you're actually responding to.
Automation is only good if the benefits of said automation are shared broadly among the populace. For the time being, that is not the case. Instead the benefits are held closely by only a tiny percentage of the population, who use said automation to collect enormous power and force an increasingly large number of people to live in increasingly precarious circumstances.
80% of corporate stock is owned by a mere 1% of the population. That 1% are the people who, right now, benefit from automation.
If we reach a world where corporations are replaced by worker cooperatives, or a 90% top marginal tax rate (and similar wealth tax) support a generous basic income -- then automation will be good. Right now it's an acute danger to the survival of most people.
Homelessness is only not Amazons problem because corporate charters annul the company of any moral responsibility.
Amazon had 135B revenue and 540k employees in 2016. By comparison (according to the UN) that would have made Amazon the 60th largest economy in 2016, after Hungary (138B / 9.5m people) and before Ukraine (132B / 42m, which has been dropping considerably since).
That is an insane amount of wealth to throw around to influence all manner of people for the sake of a corporate charter. Not only that, but they are only "responsible" for 540k people versus the millions other countries of comparable scale have.
I'm not saying companies should act as governments. I am saying having businesses of that scale is highly distortionary in how governments around them behave, and since the aim of a public corporation is to profit, distortions will be made in the name of profit.
The fact that Amazon is almost certainly more influential on the international stage than Hungary or Ukraine should be horrifying, because nations are at least usually responsible to their people. Amazon is in no way responsible to its employees, nations it operates in, or even its own executives. Its only responsible to the largest stakeholders that own it, and that is terrible for the rest of us.
GDP shouldn't be compared to revenue. Revenue is flow through a company from customers.
It could even be for a loss. If you did 1Bn in revenue but paid 2Bn for the goods you're selling it's not really a win.
GDP is more like the value add of a country. Profit is a better comparison. However, profit is tricky as companies often use it to grow rather than pay out profit.
Amazon's profit was 4B. Even saying, reasonably that they used 20Bn than they made in profit and diverted to growth it makes them much, much smaller compared to a country.
GDP is also flow through a country from productivity to revenue realized. Every country is not adding its flat GDP to its wealth every year because a majority of the value created from GDP goes to buying other countries GDP in the same way a companies revenue goes mostly to paying for its operating costs. IE, the US has a 20 trillion GDP but only sees around 4 trillion growth a year in national wealth the same way Amazon can have 135B revenue and 4B profit. Of course, the US having a "profit margin" of 20% to Amazons 3% demonstrates its not a one to one comparison, but the they are definitely the more apt comparisons for measuring how large an economic system is, rather than just how
much its profiting.
You could also use net worth to quantify how much "weight" Amazon has available rather than what it is actively exerting in influence, in which case it would be around the 35th largest nation considering its 656B valuation. Thats roughly as much as Finland is worth. I didn't use that statistic because I think there is a much wider differentiation between a nations wealth and a companies market cap than USD revenue vs USD nominal gdp.
As things are currently going, I might. Horses are not polluting the environment (in the extent cars do), they don't track me and they can't be turned off remotely if I declined to renew my subscription.
This is a good point. But it would increase compensation for the remaining executive. Perhaps a middle manager could nix the decision for some time, but someone higher up would benefit.
I think it’s also faulty to think that automated executives means fired old executives. Most likely would be that executives are freed up from rote activities and would then do higher value activities.
Kind of like how Amazon Go didn’t fire a bunch of cashiers, but is a new venture.
Automation results in new jobs on the macro level because it removes the boring parts of jobs.
I think the end game would be to have all of Amazon automated except for Bezos. This is an extreme example and don’t think it would go to this level, but this seems to be Amazon’s model.
I'm not really sure how they could negotiate together. They could cooperate somewhat but if a city looks like they weren't going to get the HQ it would be in their best interest to leave their collective bargaining pact and try to undercut it to get the HQ.
It's not a perfect metric, but 86% of people accessing publicly-financed homelessness services in 2016 reported that their last residence was located in King County.
Seattle has always had homeless people, from the time "skid row" meant the place where you skid freshly cut logs to the waterfront to be cut. Likewise, Portland, Vancouver (BC), and (to a lesser extent) Spokane have and have had very similar homeless problems of roughly the same nature. Basically, these three cities have acted as a catchment for almost anyone in BC, Washington, Idaho, Montana, Oregon, that fall through the cracks (and ya, you'll find homeless people from places like Bonners Ferry).
Basically, its the red rural areas around these cities exporting their problems to the cities that actually provide services to deal with them. Couple that with kids from these areas with little education going to Seattle to make it, and not making it.
> Workers used to do better when a larger percentage of them collectively bargained.
What I find interesting is that the unionization rate in Canada today is more or less on-par with the peak unionization in the USA, and is one of the strongest unionized countries in the world. Yet, I constantly hear Canadian workers complain about how they are unfairly compensated compared to Americans, where unionization has practically disappeared, doing the same job.
Most Canadians I talk to seem to think that labour declined in the late 70s-early 80s, which is actually when Canadian unionization was at its peak. However, those are the years we really started to see union decline in the USA. American workers could understandably make that claim. Canadian workers shouldn't. Those should have been the best years for labour ever, based on union strength.
Is this entirely grass is greener syndrome? Canadians do tend to focus on American media more than their own, and the decline of unionization in the USA may have led them to believe that the decline also applied to Canada. Or are their points valid and higher unionization doesn't bring the effects we like to think it does?
In Germany, there are very well paid mostly manual labor jobs in unionized industries, especially at the big car manufacturers. In non-unionized industries, wages can be much lower, down to about 30% of what workers in the car industry earn. That is before taxes, though. After taxes, the difference is about 2:1.
There is also data showing that unionized workers get about 1% more of a scheduled raise each year.
I think it is well understood in economic theory that when you can prevent competition in the marketplace, you can charge significantly more for for your product/service. After all, if the people making 1/3 the amount the union workers were making were allowed to take the jobs in the auto industry, they would. Who wouldn't want to triple their income by simply changing employers?
However, I'm not sure that is the same as the "rising tide lifting all boats" that we're discussing here. The results seen in your example are limited to the lucky handful who have gained market protectionism from the rest of the people in the industry.
> I think it is well understood in economic theory that when you can prevent competition in the marketplace, you can charge significantly more for for your product/service.
Well yes, that's how unions work. What kind of bargaining power would they have otherwise?
> After all, if the people making 1/3 the amount the union workers were making were allowed to take the jobs in the auto industry, they would. Who wouldn't want to triple their income by simply changing employers?
What keeps them from joining the union and then taking the jobs?
Aside from opinion, the numbers from the government of Canada show that incomes were stagnant by the early 70s (which roughly corresponds with income stagnation seen in the US). This is again when unionization started to decline in the US, which could reasonably attributed to the decline of unionization. However, Canada saw strengthening unionization in the same period (peaking in the mid-80s). Based on what people claim unions accomplish, income stagnation is unexpected given how strong the unions were during that time.
> Yet, I constantly hear Canadian workers complain about how they are unfairly compensated compared to Americans, where unionization has practically disappeared, doing the same job.
Sure you're comparing like for like? For people on the high end like software devs you can definitely get paid more in the US, but in most of the developed world no one serving fries is crying out for US wages. It's the latter that are more likely to be unionized.
For reasons already pointed out by others, this isn't a pragmatic idea. i.e. Amazon could just restart their search, etc..
imo what's more realistic is that cities on the top 20 list that are geographically close enough, should band together and offer combined benefits e.g. New York & Newark; Montgomery County & N Virginia & DC
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.
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.
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[ 4.6 ms ] story [ 131 ms ] threadIf I'm being totally honest though I don't think there is much advantage to any of the cities to give Amazon incentives to picking them. I also think that Amazon has already decided.
Trying to get an ever-increasing amount of money out of people and organizations with less ability to pay that amount of money seems bottomish for me.
And damages to reputation are also possible.
The idea of a "collective bargain" in a "winner takes all" situation doesn't make sense.
Right and the 19 losers are cooperating why again?
>Sure, the cooperation would quickly break down
Good job undercutting and highlighting the faults in your own argument. If you can figure it out in two sentences I think there's probably a few people directly involved who this is obvious to. So since cooperation isn't viable in your own estimation, might as well try to win.
>but that is why the federal government should decide on such benefits
Unfortunately that proposition doesn't appeal to everyone, so good luck there.
CN 19 https://www.stitcher.com/podcast/citations-needed/e/52555894
CN 20 https://www.stitcher.com/podcast/citations-needed/e/52636015
The tax incentives play into the overall cost to Amazon for their location, but so does the rest of the plan.
How do you think Amazon got all that money? If cities are willing to cut them breaks for them to open up a headquarters there, of course they're going to squeeze the cities.
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.
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.
I believe you and would like to learn more. Do you have some sources I can look into?
Maybe a good place to start;
https://pppknowledgelab.org/guide/sections/83-what-is-the-pp...
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.
But, let's turn it around. Why would Amazon want to go to San Antonio, instead of a city like Atlanta?
Shreveport suffered quite a bit after the GM plant closure and drop in oil prices -- being so aligned to one sector was not in Shreveport's best interests.
The next best thing is they set up HQ in southern Austin or northern Chicago (both shortlisted cities), and those cities benefit from residual investment.
Plus, SA has already played this game. It got them Rackspace. Which, uh, could maybe be going better.
Besides Rackspace they have a bunch of defense contractors and USAA, but little else I believe.
It could be argued that UTSA is starting to count as a major university, with recent expansion and investments. But the CS program has yet to really prove itself.
I've thought for a while that commuter rail lines:
Along the freeways: 35, 10, 281, 151
Between big retail spots: Downtown, Quarry, Rim, Stone Oak, 1604/Bandera, Forum
Big Business: Rackspace, USAA, Downtown (again), Amazon, Lackland AFB, Kelly AFB, Brooks
And new parking areas near big residential centers: Bandera/Tezel, Helotes, Boerne, Stone Oak, Great Northwest, Brooks City Base
Along with parks renovation, school improvements on the South Side and small business incentives would make San Antonio the best place to live in the country.
There's a lot of potential here.
Personally, I wouldn't move back without massive densification of the "urban" core. Right now the place is a massive suburb where getting by without a car is impossible.
I won't argue with your qualms on local government.
In practical terms, it would have been workable if my office had been along the Riverwalk. Otherwise, not really. SA's public transit isn't usable for white-collar professionals in most cases.
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&...
Whoa. That kind of thing will get you banned here, as you're surely aware. Please post civilly and substantively, or not at all.
https://news.ycombinator.com/newsguidelines.html
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.
Companies that compete for talent will be pissed, but for lots of others it's a huge win. The only way I see it as a "bad" thing is if you are in a small city that wants to remain small.
It's absolutely nothing like building a McDonalds.
Well, not in the case of Chicago http://www.independent.co.uk/news/business/news/amazon-hq2-c...
> strengthening the housing market
Like the strong SF housing market which nobody can afford?
Which is a unmitigated benefit only to some current real estate property owners and an almost-entirely unmitigated cost to everyone else.
Talk to anyone who grew up in Seattle or SF pre-tech boom and you might find a different perspective. I think it's worth considering that while it's great for us in tech it's not like it's a net-win for everyone else.
If you work in an industry outside of tech(or a part of tech that doesn't track payscales like the game industry) you may get pushed out of a city/metro just by nature of the impact tech has.
I think I'd rather live in a city that's so popular that infrastructure can't keep up than to live in a city where entire neighborhoods are empty and are razed due to neglect and criminal activities.
Or they can hit the "Amazon lottery", bringing in billions of dollars of investment and 50,000 high paid jobs (plus all of the ancillary jobs to support these high paid workers).
So a community could very well face a binary choice.
Er, “as many as 50,000 high-paying jobs” is what Amazon claims HQ2 is planned to grow to over an unspecified time horizon. “As many as...” is marketing weasel words for “for some number definitely not exceeding, and probably much smaller than...”; it sets an upper bound, but counts on people treating it as an expected level.
That's overly hopeful. I doubt Amazon will seriously consider a dying ex-company town that needs the investment. My bet it's going to pick someplace that's already doing pretty well, overall.
Other than code for "making everything much more unaffordable", what does this mean?
And yeah, it's pollution for those who don't have high paying tech jobs. There are more people living in those cities than Amazon employees; their interests and needs need to be taking into consideration as well.
Owning a house has been a part of the post-WW2 American dream for good reason, and it should remain so. And people buying homes should want their property to retain value
Shouldn't this have played out just like that in SF then?
I couldn't have said it better.
I got a bit excited and should add more detail: we're in a time when taxes are being shifted more and more away from those who have (rich & corporations) to those who have not. A public/private partnership seems insane to people because it is. The private companies have all the resources and need to leverage further their wealth from the public sector. They can easily front this by themselves and still be printing money without a care in the world. Didn't the corporate tax rate in the USA just get reduced from 35% to 21%? Private top-tier income tax was something like 96% during WWII and now it's down to what, half of that? So not only do you blatantly and overtly go out of your way to avoid contributing to the public fund but then also get politicians to give you deals and project-specific loans out of that exact same reduced, exhausted public purse? OOkay. Then you tell us that we should be thanking you because you're providing jobs... what kind of jobs and to whom?
I'm always skeptical of these things to say the least. Then to claim that there's proof... umm.... are you referencing Atlas Shrugged?
Actually the exact opposite is happening. The top quintile is pay a bigger share of taxes than before.[1] In 1960, the top quintile paid 56.5% of all federal tax revenue. In 2005 it was 69%.
Care to revise your position based on that?
[1]http://www.nbcnews.com/id/29861648/ns/politics-capitol_hill/... (table on right)
How should I interpret that chart, considering things like wealth versus income? There's some sort of transition between those -- I would guess more wealth was held in non-taxed trusts or investments back then, compared to now? Does the estate tax change behavior?
I think the point is to look at how much of the government is paid for by the top quintile than the others, over time, compared to each group's wealth. Is that correct?
(I am not an economist, just have an amateur interest in complex systems.)
[1] https://www.census.gov/data/tables/time-series/demo/income-p...
Income growth can definitely explain the increase in tax burden, but my point still stands, no? The tax burden is not shifting from the wealthy to the poor.
And if you look at the bottom quintile, their tax burden has fallen, even though income continues to rise.
Should think of the marginal utility of their funds. If a $20,000 a year person pays $5,000 - it's much worse than a $10,000,000 paying $100,000.
Top quintile pays an effective rate of over 30%.
To those who have much, more will be given...
You're mistaken and given your responses elsewhere I think you're either confused or arguing in bad faith.
The mean tax rate paid by the top 0.1% of earners in 1979 was just over 40%. This fell to about 25% in 2010.[1] Marginal rates followed a similar trend. Meanwhile the US Gini coefficient rose from .415 in 1979 to .476 in 2012.[2] This implies that the top quintile pays a greater share of Federal taxes because they're proportionally richer than the other quintiles. The poor don't pay much Federal tax because you can't get blood from a stone.
[1] http://online.wsj.com/public/resources/documents/r42729_0917..., page 3
[2] https://www.citylab.com/life/2014/05/mapping-three-decades-i...
Second your graph shows rates for the top .1% and .01%. I was talking top quintile which you seemed to have forgotten plus you didn't challenge the data I provided.
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
But you can only sell a house once so it's the rising tide isn't really raising their boat like it is for the tech workers. It's more akin to winning a scratch ticket that also forces you to move and maybe get a new job.
Now, we could reform our policies so that the landless get a fair shot, but realistically, what are the chances of this happening?
And if that happens to an extreme degree where it becomes unsustainable, maybe an HQ3 would be in order?
Anyone wanting to live in Nashville (just to pick one city from the list) who's capable of working for Amazon is also capable of working for someone in Nashville today. And generally, the economics of being tech talent outside these hotbed markets like SV and Seattle are vastly favorable.
That is to say, you're probably better off buying the cheap house in a smaller market on the salary you can command in that market than you are buying a very expensive house on the salary that the very expensive market offers you. Google would pay me more than my current job, but my cost of living would go up by more than my salary -- massively so.
So what? My taxes go up and so do the costs of all the other houses nearby, so I don't net any more if I sell and buy a new house.
Well then you just pass something like Prop 13. Oh wait...
The local government represents the current residents, not future ones. Raising house prices could be a windfall for current homeowners, but it could negative for the broader group of local residents, which will likely have a lot of renters.
Heavily inflated house prices could also be bad for the current homeowners, who may get stuck in their current home because they could no longer afford the price difference for a needed upgrade. Their kids may be forced to move away because they can't find homes.
Take games workshop in nottingham there is now a large number of spinoff games and mini companies formed by ex GW alumni
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.
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.
What money are they giving away? If Amazon never comes, then there is no Amazon taxes and thus no tax breaks.
Right now those towns are starting out at zero. If they are smart, they structure the incentives to make sure they are net positive. If they screw that up, well that's on them.
In other words, construct a hypothetical move for a hypothetical corporation to some example town, and I'm sure that town could come up with an incentive package that would be beneficial to its citizens in place of having the company not move there. Do you disagree?
I'm claiming your argument is suspicious because it seems to only really apply to organizations of Amazon's size. Maybe you disagree, but it sure doesn't seem like any cities or towns are interested in luring an Amazons worth of businesses and tax-payers that aren't a single organization. The argument seems pretty agnostic; why is no one else?
https://esd.ny.gov/startup-ny-program
Moreover, there only seem to be three such zones in the entire state: parts of upper Manhattan, parts of the south of the Bronx, and some parts of Yonkers.
Giving the incentives is the screw up. Not how they implement it. Even though they often implement stupid policies and ignore the things they actually need to pay for. In many cases, states and local governments lose hundreds of millions, if not billions, trying to attract investment which doesn't pay off.
Kansas City lost 331 million in tax revenue due to horrible policies that incentivized moving jobs a mile across a river to a different state. https://www.npr.org/sections/money/2016/05/04/476799218/epis... http://www.kansascity.com/news/local/article183014956.html (video embedded, pls 2 watch)
Kentucky gave tens of millions in tax breaks to build a Noah's Ark theme park. http://www.cnn.com/2016/07/07/us/noahs-ark-kentucky/index.ht...
New Jersey wants to give Amazon $7 Billion in tax breaks. It still has not invested money in fixing its broken public transit system. https://www.wsj.com/articles/newark-offers-7-billion-in-ince...
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."
I'm trying to understand why when a company like Amazon decides to create jobs in a city, suddenly they are to blame for everything wrong (homelessness, high housing prices, etc). It's absurd.
And they're blamed because they are largely a cause of exacerbating those problems. It's not just a pure good for them to come. Like I said, they cause housing prices to skyrocket. That's on them, and the increased homelessness that would result would be on them, too.
Amazon doesn't control the zoning laws, the city does. If housing prices increase, it's the city's fault.
People act like Amazon is some all-powerful entity that can railroad an entity like a city council that has the power to change laws.
Amazon absolutely shares some blame with all of those. You cannot condemn one entity for not having "personal responsibility" and ignore the responsibility the other entities have in contributing to the situation.
Will you refuse to take the $100?
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.
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.
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.
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.
It's completely capitalist loyalty to business above community to dismiss every concern about selling the farm to Amazon as "whining".
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.
Stadiums I think overall have a better impact, as they can create or revitalize an economic area, provide longer terms jobs, and sports teams provide back to their communities.
Amazon is on a completely different level. They will bring thousands of skilled workers, and generate trillions in economic activity. HQ2 will stand for a long time, it can completely change the trajectory of a city. There are many many issues with bringing Amazon to your city, home prices and infrastructure to name a few -- but isn't this a problem you'd rather have than not?
I do think the concern about unforeseen infrastructure costs are warranted, especially if a city doesn't excel in urban planning or has problems with NIMBYism derailing good plans. But I think most of the cities on the shortlist are fair game and could handle a project of this scale.
Housing prices aren't solved by forcing homeowners to subsidize commercial development, either. Ml
Because a bunch of jerks in SV won't let more housing go in?
Agreed.
https://www.axios.com/the-great-stagnation-americans-stopped...
https://www.nytimes.com/2016/07/04/business/how-anti-growth-...
But bringing in Amazon is going to necessitate adding housing stock, and that just doesn't happen in like Boston that already have housing issues and rampant NIMBYism.
That's far, far from "most people". Landlords, for instance, would benefit, due to being able to charge higher rents. But everyone else in that town that rents would not benefit. And I dare say there are more renters than there are landlords.
Most people are landlords..
how did you reach that conclusion?
The area around Yankee Stadium has always been a vibrant community. Yankee stadium was built in the 1920's
Not sure that you are a new yorker with those two statements... Shea stadium was never re-zoned, so re-vitalization was never its intended goal... Yankee stadium surrounding area has gone thru the usual cycles every other nyc neighborhood has, and the stadium location is almost 100 years old!
Everything I have seen suggests otherwise, eg. https://news.stanford.edu/2015/07/30/stadium-economics-noll-...
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.
I'm shocked to not see this objection in the article or elsewhere in the comment section. If the shortlist were final and cooperation could be enforced, collective bargaining would still only work if the top 20 cities all had a similar chance without perks.
As is, some of the cities would obviously be out of the running in a no-perks race, so collective bargaining (even over many iterations with many companies) is a clear loser for them. That undermines the entire proposal. It could be repaired if strong contenders like DC agreed to let weaker contenders offer perks up to parity with the strongest players, but that's vastly less plausible or easy to calculate than "no perks".
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.
A city is a municipality.
Toronto is not likely to get Amazon for various reason (political climate being probably more important than tax breaks)
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.
Yes, I mean US political climate. Ontario Provincial govt created the commission headed by Ed Clark and issued a bunch of statements[1], but I had the impression that above city level they are like whatever.
[1] https://news.ontario.ca/opo/en/2018/01/statement-from-premie...
A city like Seattle would be comfortable for existing employees. It would do nothing to attract talent that dislikes that political climate.
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.
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?
Automation is good. Do you want us to ride horses to work?
Agreed.
Agreed.
But it is the problem of the city. They absolutely need to keep this in mind while negotiating with Amazon, who has a reputation for driving housing prices sky high, thus exacerbating the homelessness problem.
"Automation is good. Do you want us to ride horses to work?"
Automation is neutral, as it does cost people jobs, not all of whom can be retrained for something else. It also drives down wages. Hell, productivity has been skyrocketing for the past 30-40 years due to automation, yet workers have seen a pittance in rising wages.
I'd also be curious in a study on Amazon's effect on the homeless.
I don't know why this point seems to escape people in SF, LA, Seattle, etc. If you're homeless, you're gonna want to be where the most benefits and relaxed attitudes toward homelessness are. It's not hard to understand why this problem is at its worst in the most progressive cities.
Our current top tax rate is ~40%, less than half of what it was under Eisenhower, and the owning class continues to push for tax breaks under the guise of trickle-down economics.
Please stop broadcasting propaganda on their behalf.
Washington has no income tax.
> who generate economic activity which can also be taxed and used by municipalities to try to solve homelessness.
Unfortunately a lot of the taxes that can be levied in Seattle are fairly regressive, so it's easy to end up in a situation where property taxes are raised to generate funds to solve homelessness. It's easy to imagine inefficiencies or fund diversion such that low priced housing raises in cost faster than the funds given to help homelessness. Even worse would be the situation where those funds only help in the form of food & shelters for homeless people.
States need to look at the amount of office space being built and mandate that towns allow additional housing so that there are at least 3 beds per desk.
Perhaps you meant to say that automation also has negatives? In which case, I apologize if I sounded harsh here -- I find I have a strong emotional reaction to arguments about complex things that don't support nuance.
Barring the desertification of the Fertile Crescent (arguably natural climate change had a hand too) and the extinction of the American and Australian megafauna, both of which are relatively insignificant in geological time, we simply didn't have the means to harm the environment very much.
Compared to that, industrialization has had side-effects that will endure for millions of years: the upending of the carbon and nitrogen cycles, and the addition of plastics and radiation. Aliens could come to the Earth 20 million years after we go extinct, and still be able to find traces of us.
Not directly, no. But Amazon is based in a city that has a large homeless population. It is in the interest of their employees to see that population fall, therefore it also ought to be in Amazon's interest.
> Automation is good. Do you want us to ride horses to work?
Of course it is. But I see this reaction a lot - that anyone asking questions about our automated future is some sort of regressive idiot who hates technology. Far from it. You can see and be in favour of the obvious benefits automation brings, while also questioning what society looks like when a lot of the jobs people currently have don't exist. That doesn't mean "stop automation", it just means "think about the effects of it while we do it, ideally before".
Is there any doubt that if Amazon or any corporation would not hesitate to eliminate 90% of the jobs in this world if they had the means to do it cheaper with robotics/ai/cloud tech? They couldn't care less if it meant plunging half the population of this planet into crippling poverty.
Its beyond frustrating the amount of attacks you face for inquiring about the livelihoods and future of people whose jobs are replaced by AWS processes.
You want to automate the world? Great. Ease it in over 2 generations and only when humanity overcomes the greediness that allows us to accept wealth inequality and more money than we can ever dream of spending despite half the world living in poverty.
So, never.
That is because jobs aren't a hand-out. Somehow, we still have basically full employment 200 years after society started automating away jobs. You face ridicule for bitching about jobs lost to AWS for the same reason people now ridicule Luddites from 150 years ago.
I'm reminded of the quote by Ronald Wright that is perhaps better suited to today's discussion about Switzerland vs the US, but still feels relevant (and, as an immigrant to the US, very true):
“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
There is a vast difference between government policy intended to help its citizens (and thus, the nation as a whole) prosper and grow and adapt as the economy changes, and "hand-outs."
Amazon is not a humanitarian organization. They are only concerned about the interests of their employees to the degree that the law requires, and their only interest, otherwise is in increasing shareholder value. Amazon doesn't care about the homeless... except maybe as a potential source of cheap labor.
And if a company was willing to fuck over everything as long as it increases shareholder value then it should be regulated. You already implicitly agree with that viewpoint unless you believe that Amazon should be allowed to murder or enslave people as long as it increases shareholder value
Their culture is legendary for its relentless focus on cutting costs and driving employees hard for the sake of the bottom line, at all levels. I cannot see them spending a dime on fighting homelessness, even as a PR move, unless they expected to make a dollar back, that's just the way they operate.
Combine that with the NIMBYs refusing rezoning, and you get the current housing mess.
No, but it's not an uncommon opinion in these parts that riding to work on anything other than a bike is a flaw in our land use.
Regardless of whether or not you agree, both a bike and a car replaced a horse, but they had drastically different effects on society.
There are plenty of countries without automation. And many allow anybody to immigrate to them. But don't expect air conditioning You'll have to hire a person to wave you with a fan.
And don't expect those job-killing tubes to bring you your water. Hire a water carrier like everybody else.
And in the truly pure countries, be prepared to drag your stuff with you without labor saving wheeled contraptions like the wheelbarrow.
But feel free to point out where I am exaggerating.
It is great that we are improving productivity but automation also furthers concentration of wealth by distributing fewer profits to workers.
It is not simply good. If we don’t understand the negative effects we are more likely to become victims of those effects. If we do understand the negative effects we can make sure to prepare ourselves for the change in the landscape.
And homelessness can, in fact, be reasonably construed as Amazon's problem (or a problem caused by Amazon if we're a city thinking of letting Amazon in). The exacerbation of homelessness is an externality caused in part by Amazon's concentration of high-wage jobs in a small city and the subsequent skyrocketing of property values combined with mindless gentrification. So it's both a cause for concern when courting Amazon, and it's a form of pollution that they bring to town that it is not a priori unreasonable to hold them accountable for (to the extent that they are responsible for it).
Should they be responsible for this indirect effect? Well, that's the issue at root of a lot of externalities companies produce, like environmental pollution.
I'm certainly sympathetic to the idea that the government should step in and support the homeless, in return for Amazon's tax dollars. But that requires reserving a lot of new housing development for low-income renters, which makes housing more expensive for Amazon's employees, so they have an incentive to discourage doing anything about the homeless.
It's a great example of how market forces can fail a community, actually.
A cynic could argue that the market is operating well in this case because the homeless don't contribute much economically — but I try not to go to the same bars as those people.
Think about all the traffic problems with cars, except the street is covered ankle-deep in manure. And you can't install catalytic converters in their butts to reduce pollution, either.
Many are advocating mass-transit or bike-friendliness.
Image search the internet for horse manure bag for various examples.
Other problems mitigated by horses as a means of transport include, but are not limited to, the relative rarity of high speed collisions. Although, falling off a horse can be quite traumatic.
You responded to a claim about automation, not cars. Trains are automated. Buses are automated. Please contain your virulent hatred for cars long enough to figure out what you're actually responding to.
80% of corporate stock is owned by a mere 1% of the population. That 1% are the people who, right now, benefit from automation.
If we reach a world where corporations are replaced by worker cooperatives, or a 90% top marginal tax rate (and similar wealth tax) support a generous basic income -- then automation will be good. Right now it's an acute danger to the survival of most people.
Amazon had 135B revenue and 540k employees in 2016. By comparison (according to the UN) that would have made Amazon the 60th largest economy in 2016, after Hungary (138B / 9.5m people) and before Ukraine (132B / 42m, which has been dropping considerably since).
That is an insane amount of wealth to throw around to influence all manner of people for the sake of a corporate charter. Not only that, but they are only "responsible" for 540k people versus the millions other countries of comparable scale have.
I'm not saying companies should act as governments. I am saying having businesses of that scale is highly distortionary in how governments around them behave, and since the aim of a public corporation is to profit, distortions will be made in the name of profit.
The fact that Amazon is almost certainly more influential on the international stage than Hungary or Ukraine should be horrifying, because nations are at least usually responsible to their people. Amazon is in no way responsible to its employees, nations it operates in, or even its own executives. Its only responsible to the largest stakeholders that own it, and that is terrible for the rest of us.
It could even be for a loss. If you did 1Bn in revenue but paid 2Bn for the goods you're selling it's not really a win.
GDP is more like the value add of a country. Profit is a better comparison. However, profit is tricky as companies often use it to grow rather than pay out profit.
Amazon's profit was 4B. Even saying, reasonably that they used 20Bn than they made in profit and diverted to growth it makes them much, much smaller compared to a country.
You could also use net worth to quantify how much "weight" Amazon has available rather than what it is actively exerting in influence, in which case it would be around the 35th largest nation considering its 656B valuation. Thats roughly as much as Finland is worth. I didn't use that statistic because I think there is a much wider differentiation between a nations wealth and a companies market cap than USD revenue vs USD nominal gdp.
https://www.forbes.com/sites/timworstall/2011/06/28/gdp-for-...
GDP to market cap is worse. The net worth of a country is not it's GDP. The total wealth of the US is about ~90 trillion.
https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
The estimates for total wealth, however, are really fraught and fluctuate, as does market cap in other currencies.
I will challenge you on this.
Automation is efficient.
The problem is that maximally efficient is minimally robust.
Cars are wonderful, unless something disastrous happens to your roads. Then horses are better.
Amazon just-in-time delivery is great. Until everybody needs the same thing--at which point local grocery stores with inventory matter.
Efficient doesn't always equate to good.
As things are currently going, I might. Horses are not polluting the environment (in the extent cars do), they don't track me and they can't be turned off remotely if I declined to renew my subscription.
I think it’s also faulty to think that automated executives means fired old executives. Most likely would be that executives are freed up from rote activities and would then do higher value activities.
Kind of like how Amazon Go didn’t fire a bunch of cashiers, but is a new venture.
Automation results in new jobs on the macro level because it removes the boring parts of jobs.
I think the end game would be to have all of Amazon automated except for Bezos. This is an extreme example and don’t think it would go to this level, but this seems to be Amazon’s model.
I'd be curious to see any stats on this. How many of the current homeless were actually living in the city 10 years ago?
I'd expect that many Seattle's homeless are migrants from parts of the US with harsher winters.
https://www.seattletimes.com/seattle-news/politics/king-coun...
Basically, its the red rural areas around these cities exporting their problems to the cities that actually provide services to deal with them. Couple that with kids from these areas with little education going to Seattle to make it, and not making it.
What I find interesting is that the unionization rate in Canada today is more or less on-par with the peak unionization in the USA, and is one of the strongest unionized countries in the world. Yet, I constantly hear Canadian workers complain about how they are unfairly compensated compared to Americans, where unionization has practically disappeared, doing the same job.
Most Canadians I talk to seem to think that labour declined in the late 70s-early 80s, which is actually when Canadian unionization was at its peak. However, those are the years we really started to see union decline in the USA. American workers could understandably make that claim. Canadian workers shouldn't. Those should have been the best years for labour ever, based on union strength.
Is this entirely grass is greener syndrome? Canadians do tend to focus on American media more than their own, and the decline of unionization in the USA may have led them to believe that the decline also applied to Canada. Or are their points valid and higher unionization doesn't bring the effects we like to think it does?
There is also data showing that unionized workers get about 1% more of a scheduled raise each year.
However, I'm not sure that is the same as the "rising tide lifting all boats" that we're discussing here. The results seen in your example are limited to the lucky handful who have gained market protectionism from the rest of the people in the industry.
Well yes, that's how unions work. What kind of bargaining power would they have otherwise?
> After all, if the people making 1/3 the amount the union workers were making were allowed to take the jobs in the auto industry, they would. Who wouldn't want to triple their income by simply changing employers?
What keeps them from joining the union and then taking the jobs?
You have to look at total compensation.
We don't go bankrupt in Canada from medical bills.
Sure you're comparing like for like? For people on the high end like software devs you can definitely get paid more in the US, but in most of the developed world no one serving fries is crying out for US wages. It's the latter that are more likely to be unionized.
imo what's more realistic is that cities on the top 20 list that are geographically close enough, should band together and offer combined benefits e.g. New York & Newark; Montgomery County & N Virginia & DC
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.
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.
"Boise, Idaho - previously not even in the running - is officially the home of the new Amazon HQ2!"