Amazon walks from NYC - didn't officials suck up enough?

Profile picture for user Jerry.bowles By Jerry Bowles February 17, 2019
Summary:
Amazon’s stunning decision to give up on New York for HQ2 is baffling and a little bit mysterious.

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Jeff Bezos picked up his marbles and stormed home last week instead of further negotiating with city council members and local activists in Queens New York who were protesting the $3 billion in tax incentives the company would have received from New York for building its fabled HQ2 there.

The unexpected and abrupt departure signaled not only a revolution in relations between Big Tech and communities but also a major disconnect between many ordinary citizens and their own elected officials. Amazon’s unexpected announcement was terse:

For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term. While polls show that 70% of New Yorkers support our plans and investment, 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 with the project we and many others envisioned in Long Island City.

What the press release didn’t say, of course, is that entire population of the combined Queensbridge-Ravenswood-Long Island City neighborhood is 20,030, a tiny fraction of the city’s population, so most of those in the supportive 70% would not be directly affected at all. The addition of 25,000 workers and their families would have instantly more than doubled the size of the community. Said City Council member Brad Lander:

Let’s be clear: we want companies to set up shop in New York City and grow the job base here. That will present real challenges, like the need to improve our infrastructure, create and preserve affordable housing, protect residential and commercial tenants from displacement, and share the benefits of growth widely.

Progressive politics played a role

The announcement was hailed by the newly emboldened progress wing of the Democratic Party as a victory for working people over the usual coalition of traditional centrist politicians and corporate elites who have guided economic development projects in the past.

Senator Elizabeth Warren, who is running for president as a Democrat and has put forward antitrust laws that could affect companies like Amazon, Facebook and Apple, tweeted that Amazon walked away because “some local politicians didn’t suck up enough.”

Opponents listed several reasons for their opposition, among them the size of the corporate subsidy, concerns about gentrification and displacement of long-time residents (a logical fear since it’s a working class neighborhood and the Amazon employees would have had an average salary of $150,000), a lack of public input on the deal, Amazon’s refusal to commit to neutrality if workers wanted to organize, anger over Amazon's dealings with Immigration and Customs Enforcement (the neighborhood is very ethnically diverse), and even the status of Bezos’ helipad.

The rebuke was a rare defeat for the voracious Amazon who for past year has been brazenly and publicly (some would add obscenely) pitting cities and states against each other to see who would give away the most incentives. There is plenty of research that suggests that infrastructure and available talent are the major drivers of development decisions, but many cities and states have taken to offering huge financial incentives to tip the scales in their direction.

New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio have enthusiastically supported the deal. When it was announced in November last year Cuomo effusively praised it as:

the largest economic development initiative that has ever been done by the city or the state or the city and the state, together.

De Blasio called the deal an “astounding return on investment” that would create “literally an unprecedented number of jobs” that “blows away anything we’ve ever seen.”

Traditional politicians generally love these kinds of deals because it allows them to say they brought a lot of jobs to their states and cities and gives them a powerful potential new donor for the next election.

But the Amazon deal has had detractors from the start. The size of the tax break, plus that fact that Cuomo hammered out the deal in secret with Amazon execs with little or no local input soured the agreement from the start. The governor is seen by many as a my-way-or-the-highway kind of guy who is willing to throw money at economic development initiatives that don’t always pan out.

The uncertain fate of Wisconsin’s quickly-going-sour sweetheart deal with Foxconn has quickly become a flashing red light for overly eager officials everywhere.

My Take

Speaking as one who lived in New York City for 47 years, I have never seen a more unlikely David and Goliath story. Like most New Yorkers, I have always lived by the Runyon Rule, named for famous newspaperman Damon Runyon, who said:

The race is not always to the swift, nor the battle to the strong, but that’s the way to bet.

Amazon was still negotiating the day before the announcement and the sudden withdrawal caught even its most optimistic opponents by surprise—many of whom actually wanted the deal to happen with a few crumbs for the neighborhood—maybe a new subway station or some affordable housing.

The way the decision was made and announced is eerily reminiscent of the erratic and unpredictable management style of another billionaire from Queens who now occupies the White House.

I suspect there is more to this story than we already know.

Perhaps, Bezos’ recent unsavory entanglement with the National Enquirer has made him leery of being that close to the media capital of the world?

Maybe he realizes that the era of Big Tech’s unbridled romance with its users is closing?

In any event, he did get out of town before the news that Amazon paid no taxes in 2018 on $11.2 billion in profits, so that's something, eh?