“Amazon on Thursday canceled its plans to build an expansive
corporate campus in New York City after facing an unexpectedly fierce backlash
from lawmakers, progressive activists and union leaders, who contended that a
tech giant did not deserve nearly $3 billion in government incentives.” – The New York Times, February 14
That was the story. How
did it get to that point?
We start with Amazon’s 14-month-long search for a second
headquarters, which we were led to believe had the honest objective of building
it from the ground up. In November that
company announced that it had not chosen the likes of Baltimore, Little Rock,
or Salt Lake City, but gone with perhaps the most obvious location, from which
it extracted an agreement for $3,000,000,000 in subsidies and tax savings. That fetched the remarkable amount of
resistance, ostensibly about the money but under the surface as much or more
about Amazon’s strength, the strange concern that the 25,000 new or brought-in
jobs with average annual compensation said to be $145,000 were not unionized, the
bad side of gentrification, and the catchall concern of “income inequality.” Then Amazon suddenly backed out, saying that
“a number of state and local politicians have made it clear that they oppose
our presence and will not work with us to build the type of relationships that
are required to go forward.”
Many were in favor of the project. They included both Governor Andrew Cuomo and
Mayor Bill de Blasio, most owners of nearby Long Island City, Queens businesses
of all sizes, nearby public housing residents hoping the area’s jobs situation
would improve, many others around the city and state, and the Times Editorial Board, which, despite
having decried the deal in a November 14th piece, called Amazon’s
withdrawal an “embarrassment to the city” and “an opportunity lost,” and said
that as a result the city could get “a reputation for the smugness of its
politicians and their hostility to business.”
De Blasio was particularly loud and colorful in showing his anger at the
cancellation, saying that day that “you have to be tough to make it in New York
City,” and writing a piece, published two days later also in the Times, including the unchosen solution
of “if you don’t like a small but vocal group of New Yorkers questioning your
company’s intentions or integrity, prove them wrong,” calling Amazon’s move a
“capricious decision to take its ball and go home,” saying that “they didn’t
want to be in a city where they had to engage critics at all,” and that “a
project that could’ve opened a path to the middle class for thousands of
families was scuttled by a few very powerful people sitting in a boardroom in
Seattle.” Amazon has now stated that
they will not build this second head office anywhere, but will instead enhance
their existing and planned locations.
So, who won and who lost?
The largest winner was Alexandria Ocasio-Cortez, a U.S. representative not
even of that district, who spearheaded the opposition and took center stage in
what, when combined with the proposed Green New Deal and Senator Bernie
Sanders’ presidential bid and quick fundraising, has been a sudden burst of
activity from the leftmost part of the Democratic Party. Local community activists in general and
specifically, who now know what they can do, also benefited.
From there, though, almost everybody lost. Amazon, who seemed arrogant anyway in
choosing New York after its seemingly-necessary-only-to-milk-it search, now also
comes off as petulant, spoiled, and oversensitive. As put by Doug Herendeen, show host for WRTA
Radio in Altoona, Pennsylvania, they may now be replacing Walmart as the large
company people on the left most love to hate, which is quite an achievement,
especially for a firm, per Kevin Roose, with a “bedrock” principle “that being
loved by customers is all that matters.”
Cuomo, de Blasio, and New York City, who now all seem like impotent
bystanders, also lost heavily. The people of Long Island City, Queens, the city,
and New York state, since per de Blasio will not have their employment,
infrastructure, or cost of living issues helped by the withdrawal, were
defeated as well.
Where will we go from here?
There will be fewer large subsidy offers for a while, but I doubt they
will go away permanently, as the appeal of bringing in good jobs is just too
strong. The Sanders/Ocasio-Cortez
Democrat wing will continue getting attention, and will garner more votes in
next year’s presidential primaries than we would have thought a month ago. And Amazon, though reviled now by many more,
will keep cruising along – a cherry on the top of this debacle was the news
four days later, per Niall McCarthy in Forbes,
that “Amazon Paid $0 In Federal Income Taxes Last Year.” That on $11.2 billion net profit, and the
difference between the “statutory” 21% corporate levy rate and the $129 million
“tax rebate” they received, actually giving them a negative levy, is $2.48
billion in Amazon’s favor. Whether they
get the last laugh, though, is very much unknown.