Amazon winners and losers

WINNERS:

Virginia Governor Ralph Northam: He did a good job on the first Amazon deal for Virginia, and now can try to lure more of the company here.  There is a new reason to keep him in office and also to start paying attention to a different issue.

Nashville and the Southeast more generally: That part of the country has fewer local NIMBY activists and is less likely to elect figures such as AOC.  Texas too.  Is it possible that I live in the sanest part of the country?  Wouldn’t that be funny?

The Bay Area: NYC is no longer such a fierce competitor at the macro level, with the potential to become the new center of gravity for the tech world.  The Bay Area can breathe a bit more easily now, at least as long as clustering remains the name of the game.  Yet this one is double-edged, because it also means the Bay Area has less incentive to solve its rather pressing problems and dysfunctions.

Valentine’s Day: It will be used to announce more dramatic break-up events, and thus become all the more emotionally fraught, in both positive and negative directions.

Hoboken and Jersey City: They are nicer than Manhattan anyway and with better day-to-day food options, right?  Right?  Queens won’t be obviously outcompeting them as a home for a new, high-quality business site.

Regional development subsidies: It was awfully easy for Amazon to walk away from this “deal.”  Expect to see higher subsidies and tighter deals in the future.

LOSERS:

Queens: Most of the residents wanted the project to come.

Amazon: The company will find it harder to access the top talent of New York City, and the top talent that is willing to live in New York City.  Let’s hope this is a blessing in disguise, and a new path toward discovering hitherto untapped sources of talent.

New York City: Yes, Google is expanding in Chelsea but more and more NYC is becoming a city of finance and tourism and restaurants.  Can a location have the Dutch disease and cost disease at the same time?  Stay tuned to find out.

YIMBYs: One of the world’s most valuable, efficient, and also popular companies could not make stick a deal to expand and create tens of thousands of high-paying jobs and pay more taxes.  What hope do the rest of us have?

Comments

Other losers:

FedEx: Amazon has spared itself a decade of lawsuits and regulatory harrassment, which means it can focus more on cannibalizing the shipping business. Basically everyone who makes a living delivering products to consumers is wide of than they were a week ago.

Wall St.: Amazon would have been a valuable ally in their battles with progressive DAs and politicians in New York (Hi, Eliot!). Plus, they remain the primary source of funds for the city. Amazon would have shared that burden.

That should be "worse off"

When I originally commented I appear to have clicked the -Notify me when new comments are added- checkbox and from
now on every time a comment is added I recieve 4 emails with
the same comment. Perhaps there is an easy method you are able to remove me from that service?
Cheers!

Very interesting details you have noted, thank you
for putting up.

Like I said in the previous thread, the jobs will still go to NYC. Google has had a Chelsea campus for some years now. Skilled workers are not going to move to West Virginia.

Actual Winners
People who rent in LIC or Queens in general.

Actual Losers
People who own land in LIC

Important point: Do you think Jeff Bezos wants to be spending his time traveling to West Virginia or Kansas City or any of these other “contenders”? No, this whole charade also had a lot to don with the fact that he wanted to spend more time in DC and NYC. Amazon will end up moving to NYC, slowly as you say.
Tyler is just beclowning himself. I remember his posting this same kind of post when Trump won. Laughable.

Well, since today just might be a national emergency day, we can all look forward to Prof. Cowen's reaction.

In 2017 Amazon already announced 2000 new jobs in NYC when they inked a new lease at 5 Manhattan West (this deal got $20million in tax credits from the state btw).

I expect them to quietly expand this Hudson Yards office like Google, especially given Amazon’s increasingly important ad business.

"Top talent in NY City"?

Amazon hires thousands of warehouse workers at $12 an hour. What does talent have to do with it???

Catch up on the news... Amazon bumped their national minimum up to $15 for all employees last fall

No major corporate HQ is moving to some sh*thole like Corpus Christi or Killeen TX just because of tax breaks if they want quality employees that care about location. There are nice places in TX and Southeast (and overrated ones such as Austin) but don't paint the SE as winning over the liberal coasts as there are backwater dumps like MS and LA despite being “tax friendly”. And NoVa is NOT part of the Southeast, any real Virginian would know that.

And without any hint of "straussianism", in the same paragraph, he lists San Francisco as winning.

Northam had 1% to do with the move to NoVa, the 99% was the MIC/Natsec lanyard wearing rentiers since Amazon Cloud service would be more competitive and responsive to its clients by basing there.

I still don’t get why neoliberal centrists give tacit support to the MIC/Natsec state with all the unintended consequences and wasted resources that entail. I guess there is an implied pact with the neocons?

Shouldn't deep cuts to the MIC/Natsec state unleash swaths of productive labor? I knew a lot of guys from the military that would have been great janitors, package handlers, or delivery drivers, and operations managers.

All the subpar engineers employed by MIC contractors and the US govt. can finally face market wages.

And all those poli-sci/econ/international relations majors that are “analysts” of some sort will find they are useless and will have to learn to code! I wonder how many of these guys claim the centrist "socially liberal, economically conservative" since they are so insulated from the effects of the free market.

// @ I Worked With... - you have some deep thoughts but it's too derivative for most readers of the comments. As for coding, who wants to make a paltry $150k as a programmer working long hours, and maybe double that if you become a master coder decades later, when you have make that much just being a rent seeker and b.s. artist of the kind you deride? Also supply and demand dictates the high wages s/w developers currently make will be eventually undercut by hungry Indian and Chinese coders. Sadly science, due to bad IP laws, is a losers game. Better to be a gatekeeper like myself. I dropped out of tech work to beg for my inheritance after age 40, having made 0.5M USD in savings, and have since made a lot more just being the prodigal son. Pays much better and the hours are much less. Cheers!

Winner:
Foxconn

Losers:
Taxpayers in Wisconsin
Scott Walker
Paul Ryan
Donald Trump

Say no to these "private-public partnerships" or whatever they call it these days. They are too easily abused by crooked politicians who spend money that is not theirs and the taxpayer is always left with the bill and an expensive broken promise.

https://www.bloomberg.com/news/features/2019-02-06/inside-wisconsin-s-disastrous-4-5-billion-deal-with-foxconn

You can complain about governments/taxpayers bribing business to come (or to stay), but, it's often the only game in town. Cities, states, even countries compete to land these businesses. Perhaps they shouldn't, but they do.

Politicians have (or should have) a fiduciary duty to taxpayers, and there need to be contractual protections if the business doesn't do all it said it would do in return for the cash.

It's also possible to lose by not playing and, as always, the question regarding any proposed deal remains, "Will you be better off with it or without it?"

The local government and its citizens would be better off ON NET if they simply paid 200 people to sit on their butts holding traffic signs.

NYC reportedly promised $3 billion of incentives for Amazon to come to NYC. I presume that is mostly tax credit. So possibly Amazon wouldn't pay much in taxes. It seems that deserves mention in the OP.

Yeah, I don't agree with framing this as a NIMBY issue, when the opposition focused on 3 billion in subsidies.

While the opposition was driven by far left voices, as a conservative I'm not happy with these subsidies either.

Maybe one can argue that, given the high tax, high regulation environment and political reality in NYC, such deals are the best available option; but that's far from an overwhelming argument in favor.

Sounds like you are being mean to a billionaire, one who is clearly the sort of person who deserves billions of dollars of subsidies.

Or as noted by a wealthy denizen of NYC a generation ago, only the little people pay taxes.

The strongest opposition came from renters who opposed higher real estate prices, higher rents, rental housing being bought and owners turning two or more rental units into a single owner occupied unit.

Three billion in tax credits require Amazon buying a whole lot of real estate, enough to drive up real estate prices and drive out or render homeless the working class who have defined Queens.

Amazon hiring in NYC will be more diffuse and not readily identified and targeted.

I don't doubt that NIMBY sentiment played a role, but it can hardly be reduced to that given the subsidy issue.

Queens is in NYC. Maybe you meant Manhattan?

Regarding "render homeless the working class who have defined Queens."... The population of Queens has almost entirely turned over in a generation. That is almost ridiculous to say that the current mix of recent newcomers there is something to be preserved. Let people buy/sell and move in/out as they wish.

Average people are priced out of the most expensive areas. That's the way market priced housing should work. I don't see a logical alternative to that.

"Render homeless." Ridiculous. That's not their God-given home. They are subject to market conditions like everyone else. They have to bid in the marketplace like everyone else. The price system allocates goods to their highest value uses.

And how much would rents go up with rent control? The only people affected by higher rents would be NEW people, not long time residents. And their wages would have to keep up with local inflation, so this will bid up wages.

As usual, you leftists know nothing about economics or don't care.

It is AOC retarded logic to think that $3 billion is a cost that could be spent elsewhere. The credit is basically a rebate of the state's and city's onerous tax rates so they can compete with low tax areas. To make this clear, if NY suddenly raised its corporate tax rate, the value of these credits would soar if they met the same net effective tax rate.

These credits are not "losses" because now the city and state will get NOTHING. If they would have had taxes due of 5 billion less 3 billion for a net of 2 billion, that is 2 billion MORE to spend than they will get without Amazon. They aren't losing 3 billion by getting Amazon, they would be gaining 2 billion.

Even that part of the deal involving capital expenditures by the city are not really costs but investments. NYC has a vibrant economy because of its public goods: airports, sewers, electricity, population, etc. They are merely extending public goods to a new and desirable tenant. Alternatively, they are offsetting exorbitant costs that they impose on new tenants from public bads and inefficient regulation. Those expenditures certainly come from the budget and certainly have substitution effects on other expenditures, but they were deemed a higher rate of return than, say, elementary education.

Losing them is sheer political and economic idiocy.

Financial illiteracy cannot be underestimated.

83% correct. $500 million out of $3Billion seems to be a cash grant.

https://www.manhattancontrarian.com/blog/2019-2-14-weve-driven-amazon-out-of-new-york

Wrong. Amazon already has locations in NYC. They will just grow headcount there and the full value of tax revenues will be realized. No subsidies needed. Amazon will get the same treatment as Google and Apple. You don't know how to play the game do you?

Absent Amazon, is nothing at all economically productive going to happen on their proposed site?

Amazon would have competed with other employers for workers in the NYC area, especially for top tech workers, and this competition would have increased the price of labor and moved some jobs out of NYC.

Plus Amazon has announced they plan to add some jobs in NYC anyway, without the subsidy.

"So possibly Amazon wouldn't pay much in taxes."

Of course, by not moving to NYC, Amazon will still not pay those taxes. It's also not clear that any firm or combination of firms will replace Amazon and pay those taxes in Amazon's absence, so it's not clear that these so-called "subsidies" would have cost NYC anything. "Subsidies" is a tricky word when applied to reduced taxes relative to some possibly fictitious baseline. If a retailer sells a product below the manufacturer's suggested retail price (MSRP), is that a true discount or does the MSRP just not reflect a true market price?

True. The deal might have been a net financial gain to the city. Often the predicted benefits of these deals are exaggerated, and they don't really pay off. I don't know the details of this one, though, so I can't comment.

However the main problem I have here is the crony capitalism aspect. The government is picking winners and losers, and a situation that is ripe for corruption is created.

When hasn't government picked winners and losers?

More specifically, when hasn't US States and the Federal government picked winners and losers. Its in the Constitution. Slavery is picking winners and losers. And very little since has been more extreme than that.

When did you convert to the religion of limited federal and state powers?

I haven't.

I just find it ironic for those defending confederate statues, States rights, to be condemning "crong capitalism". And Texas is where the tax credit schemes have been honed into the prime method of luring businesses from blue States. The businesses were established and expanded in Blue States by big tax and spend on infrastructure to make locating and expanding easy.

Government sanctioning of slavery could be construed as an example of crony capitalism. But so what? I am very strongly against slavery, and I am also against modern crony capitalism. So where is the conflict?

Yes, there has been a lot of crony capitalism, and the government has picked plenty of winners and losers in the market, through U.S. history. Guess what? I think that is bad, and we should move in a direction of doing that less.

I agree that politicians both on the left and right are doing this stuff constantly. Again: I think that is bad. This an issue where, arguably, the principled position on both left and right should be against it. However, those principles get overridden on both sides by corruption and local special-interest support.

That's economics.

It wasn't TX. Over-taxed, over-regulated NYC's unionists and socialists queered the deal. AOC was orgasmic.

For many decades Industrial development bonds have been employed by state, county, municipal governmental entities to foster business development, job growth, tax bases.

I'm not sure to what tax liability the tax credits applied, but corporate state income taxes are largely independent of where your business is located. Most large states have gone to a model that takes your taxable income times the percentage of sales that in that state divided by total sales. I'm not sure that putting more employees in NY would have increased NY sales relative to their total sales. If it wouldn't have, their income tax in NY will be the same after the HQ2 pullout as would have been before.

Property and other taxes are a different matter.

> it's not clear that these so-called "subsidies" would have cost NYC anything

If $3 billion is basically nothing, how about $30 billion? Or $300 billion?

Newark offered $7 billion in incentives. Austin, TX offered no incentives or tax breaks.

I presume that Newark doesn't have companies like Amazon and is desperate while Austin already has explosive tech company growth, and doesn't need to buy a higher rate of growth.

Not saying that $3B is nothing. I'm questioning whether that $3B is real or just tax reduction measured relative to some baseline that NYC wasn't going to collect anyways. Now that Amazon is not going to NYC, is NYC really going to have $3B more than they would have had Amazon gone? If not, then getting Amazon to go to NYC was not going to cost NYC $3B.

Bingo. Looks like Tyler is suffering from a touch of AOC induced mood affiliation. Hasn't he in the past opposed this sort of job buying schemes?

Winners:
Economics

NYC gets out of the most absurd negative-sum game ever invented

"Hoboken and Jersey City: They are nicer than Manhattan anyway ..."
That is a terrible take. The architecture and planning of all the "nice" parts of Jersey City were designed by developers. They're all superblock apartment buildings, uninviting streets, and generally dead spaces. Yeah, you can find a very nice apartment, with a lovely view of the Manhattan skyline, but there isn't much charm to the surrounding neighborhoods.

Hoboken has some charm, but the best parts of it mimic what's great about Manhattan.

Tyler is shamelessly promoting his home state (with a wink, I think).

Are there nice neighborhoods in Jersey City and Hoboken? Sure, but there are many more in Manhattan. Not sure what Tyler’s definition of nice, but to Manhattan is obviously nice, real estate costs is one objective way to meauaure...

Also, there are many more industries other than finance that cluster in NYC...I don’t see this changing anytime soon.

Tyler MIGHT be being sarcastic there but you have to realize as well that Tyler views Brasília favorably. Tyler’s a weird guy people should not think of him as a normal human being.

Which is why this blog is worth reading.

And the food is shockingly bad. I can't even fathom that take. There is no food at all in Hoboken, and only a small decent Indian enclave in Jersey City.

There's great pizza in Jersey City too. I guess that's nearly everywhere in New York, but still worth noting.

Amazon still has the option to do what Google did. Just buy a few buildings and play by the same rules as every other business. No more sweetheart deals from local governments worth billions paid for by taxpayers.

+1 There’s nothing stopping Amazon from moving to NYC but Tyler thinks Bezos deserves all kinds of special deals that other companies don’t get. Tyler beclowns himself yet again.

+1. Los Angeles spent not one red cent for an NFL team or an NFL stadium. The Rams didn't win the Superbowl but the taxpayers of LA can sleep well knowing their deal with Kroenke won't end up like St. Louis, where last I checked is still on hook for the bill. Tough to pay that off with no team and an empty stadium that bleeds money. Ouch. LA also got the Chargers for free. The same thing with NYC. They can easily attract any caliber company they want without resorting to these terrible deals because they are a world class city and people want to be there. Bezos can't get NYC so cheaply because NYC knows what she's worth.

+1 Most of these anti-NYC comments you're going to here are just mood affiliation from people living in Nowheresville, Kentucky wanting NYC to get her "commuppins".
With these kind of posts Tyler also lets the mask slip, he doesn't really care about markets or free competition. He wants all the little people to just be peasants and pay tribute to the lord for their gruel.

There is no mask, Prof. Cowen's devotion to the belief that the only thing that matters is the rich getting richer has been obvious for decades.

The hate Cowen puts up with in the comments section is astounding. Still, to his credit he won't moderate and lets them slide.

Why would he care about the aggrieved obsessions of an anonymous crank or two? He's so far above this clown I doubt prior registers. In truth prior's pathetic yearning for attention probably enhances Cowen's reputation among most of us.

I don't know how Amazon is using it. In 2013, Amazon purchased a fairly large building on the northwest corner of Fifth Avenue and 34th Street, directly across from the ESB.

Me too!

Many posts seem intended to incite comments from idiots.

I want Tyrone back

But LA (& the state) taxpayers will pay to host the Olympics.

The higher the tax and regulatory burden, the more that politicians have to dole out in favors to select businesses.

The last time LA hosted the Olympics they made $250 million in profit. Let's hope they can make some cash in 2028.

Peter Ueberroth isn't running it this time. That's why the state is offering a subsidy of up to $250 million.

LA will not have to build a single major venue to host the games, which should make profitability (or at least break-even) quite feasible once again.

By comparison, aren't the venues in Rio already mouldering? Someone get Thiago on a plane out of his basement apartment in Cleveland so he can report back!

No, they are great. Some of them are being in use now because we don't host Olympic Games everydsy. Some of them have been dismantled and/or donated to charity to free space for addressing more pressing needs. Some venues need some special maintenance, but everything is under control.

That was an imposter. I cannot fly to Brazil as I am very busy here in Ohio giving the best Cleveland steamers in Cleveland. Please respond here if you would like to book an appointment: $20 for 20 min.

I also say to Lord Bezos - Yes In My BackYard stick it wherever you want!

I am being impersonated.

How much would you charge to put on a Jeff Bezos mask and fill my BackYard?

"The same thing with NYC. They can easily attract any caliber company they want without resorting to these terrible deals because they are a world class city and people want to be there. "

Yes, just imagine how great NYC would be if the subways still worked and "broken windows" policing were still politically possible and the public schools were still at least good at educating and maintaining order and, umm, it could be a lot worse, but NYC is just not the city it once was.

Which may well be the hidden story here: if people had more confidence in NYC's future then Amazon would have been more motivated to move to NYC, and the City would have been in a stronger bargaining position.

Broken windows policing had zero to do with the drop in NYC's crime rate. Their crime rate was declining before it was implemented, and, other cities have had crime rate declines on a par with NYC without using broken windows policing.

The biggest reason for the drop in crime was demographic but NYC saw a steeper, faster, and more prolonged decline in crime that made it the envy of every large city. Broken windows was part of a larger law enforcement boost that certainly did have an impact.

Agree with the naysayers here. Cities and states should not be in the business of negotiating "treaties" with private businesses, however large they may be. If Amazon really wants another headquarters (I still don't really know why), it can compare and contrast the taxes and rents in different jurisdictions and pick the one that it finds most favorable.

States being supplicants to businesses in these ways smacks of what the various East India Companies did back in the 18th century.

How about the more important infrastructure, like transport, utilities, housing and schools?

Lots of tax credits go to offset costs for infrastructure the new development requires be paid for to build the real estate.

When a company grows substantially, they rent or buy existing real estate, utilizing it to the max, over loading infrastructure, driving tax hikes, as well as driving out long term businesses and residents.

Its only when entering and building large factoriess or complexes do the infrastructure needs, and housing needs of workers become obvious, and then the costs get added onto the cost of building the real estate.

Why should building new real estate for 10,000 workers cost more in payments to governments than adding 10,000 workers by taking over 25 existing under used buildings and cramming them with workers, building built when the workers walked or used trolley until they were turned into warehouses, or small businesses. The buildings are used as originally designed, just that a century later, workers drive cars, not walk, and the volume turn over means hundreds of trucks, not dozens of rail cars and an equal number of ox carts or maybe trucks.

"Agree with the naysayers here. Cities and states should not be in the business of negotiating "treaties" with private businesses, however large they may be."

There should be a law against it.

Agreed. Everyone would be better off if freed from this competition- similar to barring restrictions on trade over state lines. The playing field should be level for large and small businesses

Tyler why do you want one set of rules for billionaires and another for everybody else? Shouldn't libertarians want equality for all under the law and be against government intervention or in this case government favoritism? I hate it when the Federal government picks winners. I still hate it when state governments do the same. These backdoor deals are the kind of crony capitalism that even Ayn Rand vilified in her writings. Both the rightwing like Fox News' Tucker Carlson and the leftwing's AOC agree that it was a bad deal. I'm neither and I think its a bad deal.

I thought Rand loved corporate titans and believed they don’t need to play on a level playing field because they are the rightful ubermensch.

In any case, Tyler has always had a soft spot for corporate welfare and never cared about fairness.

"Shouldn't libertarians want equality for all under the law and be against government intervention or in this case government favoritism?"

Not just libertarians, neoliberals as well.

The libertarian perspective is that "deals" such as the one Amazon wanted would not be necessary were the state not abusing its powers to regulate and tax. But given that the state *is* abusing those powers, it is reasonable to ask for a partial reprieve, in exchange for something that is in the interest of both parties. This is no different than telling a restaurant that you'd like to host your company party in its function room, but only if you can get a discount on the price of drinks. The restaurant is free to say no, and you are free to look for another restaurant.

"Shouldn't libertarians want equality for all under the law "

Yes, instead of just Amazon getting a tax break, taxes should be lowered for everyone.

The EU is home to a number of tax havens but they have clamped down hard on these illegal tax deals the past few years. The US Federal government really needs to do the same to put a stop to this. States should compete on human capital and infrastructure not rely on special favors, since they are the very definition of cronyism.

Very good point. Yes, I agree that such limits would be a worthy legislative goal. It's also something the left and right might be able to agree on, in theory at least.

+1. Since Trump hates Bezos so much, someone should hit him up on Twitter and see if he will do something about it. AOC too. Let's see if Tyler's theory of Twitter driven politics works.

+1

put another way: this could easily be -ev for NY but +ev for the US, in which case we should be thanking NY for their principled stand.

No.

First, the federal government has no constitutional authority to interfere with a state's taxing regime, unless it discriminates against out of staters. Second, tax competition between governments is beneficial. It is a good and telling thing that high tax US states are losing population to low tax states. The EU clamping down on "tax havens" reduces competition, and just adds to the rut that EU economies find themselves in.

It is better for governments to lower taxes for everyone rather than specific entities, but I don't begrudge one bit those who succeed in getting a break just for themselves.

"There is a new reason to keep him in office and also to start paying attention to a different issue."

So that is it. The Almighty Dollar has spoken!

Losers: Gov. Cuomo. His job of plugging the state's budget deficit just got harder. Raise taxes on top of losing the SALT subsidy and see how that works out.

+1
Yes, we should not forget Cuomo, he had a very bad week.

Hmm I did always suppose that the whole incentives for Amazon thing from Cuomo’s side was part of some
Deal to get Bezos on board with supporting a future Cuomo Presidential run. Guess that’s up in smoke now too bad for Cuomo!

Without any deal, Amazon would still have been eligible for $2.5 billion as of right, as a business in NYC. The pot was sweetened with $500 million in incentives paid after Amazon met hiring and investment targets.

Okay, yes, we're all opposed to corporate subsidies. But then the ire should have been directed at the governor and the mayor for offering too much. Instead, it's directed entirely against Amazon. Local pols were not saying "Cancel the $500 million post-performance grant." They were saying, "Amazon is not welcomed in NY."

The polls are very interesting. The residents wanted it. The opposition came from white Manhattanites. This was not NIMBY in the traditional sense. It was ideological NIMBY. "I don't want Amazon, Walmart, or Chick-fil-A in my backyard. Apple, IKEA, and another poke joint, sure."

Very good comment.

I agree, Cuomo is no Trump, and my primary objection was how badly the government brokered the deal.

Winner: Me. Highly amusing to see the left devour itself and that thug Cuomo get smacked upside the head.

I like that the left fights itself so openly. They are sassy. The right just bends over for Trump. They are cowards.

No shame in being ass fucked by the President I say. I’m happy to bend over.

I’d say the tone gives you away.

Mr. Mac, I’d like you to meet Bill Kristol and George Will, among others. They used to be sassy, but look at them now.

Everyone who takes on Trump ends up crushed.

The biggest losers are the AOC-types. Most of the time, we don't actually see the economic activity that never happens that has been preemptively stifled by a hostile anti-business climate. Here, the consequences of that hostile climate are exposed for all the world to see.

"One of the world’s most valuable, efficient, and also popular companies could not make stick a deal to expand and create tens of thousands of high-paying jobs and pay more taxes. What hope do the rest of us have?"

Maybe, NYC YIMBYs have lost, but not YIMBYs elsewhere. YIMBYs elsewhere can now point to this debacle as a cautionary tale of what happens when the NIMBYs are in charge.

"One of the world’s most valuable, efficient, and also popular companies could not make stick a deal to .... pay more taxes."

If Bezos wants to pay more taxes, then he shouldn't have asked for all those tax breaks. That's what people are really angry about. Besides, depending on the generosity of taxpayers is a lousy business model and generates a lot of blowback. Social media makes it harder for insiders to hide.

"What hope do the rest of us have?"

I feel more hopeful now that a connected insider has to abide by the same rules as every other New Yorker must. If the laws are unjust, change the laws. Until then, you're not special, Jeff.

I'm informed by reliable sources that Nashville has more spare land than central New York does. If wouldn't have taken a Robert Moses level of Machiavellian scheming to put highways through midcentury Nashville.

25,000 jobs moving to 40,000 after a few years, paying over $100K average. Add health insurance and other standard items, e.g. and you clearly break > $125K. That's >5 billion dollars a year going into Queens. And then add money paid to construct the building.
Tell me why 3 billion in subsidies was terrible.

You’re a fool if you think Amazon won’t end up shifting jobs to NYC anyway.

"If Bezos wants to pay more taxes, then..." he needs to pay workers a lot less, or hike prices substantially.

Not sure how real estate is assessed, but I'm sure Amazon tries to keep assessments well under cost in ever place the own real estate. Labor costs are labor costs no matter who gets paid, and you cant have Alabama delivery drivers do house to house delivers in NH - and amazon must pay NH labor costs with unemployment just over 3% to deliver packages to my house and the hundred others in my town.

So, the only variable is how much Amazon charges over operating and capital labor costs. Over the life of Amazon, workers have been paid more than revenue. Granted, fully depreciated assets often have years of full production vale even when the book price is 10% of original cost.

Amazon market cap is irrational given Bezos will never hike prices to create high profits that justify the implied equity price. When Bezos is no longer in control, Amazon will be five years from Sears peak, and then it will be at most a decade until bankruptcy.

I can't imagine that Tyler really thinks that writing a $750 million check is a complex political skill that someone without Northam's past racist incidents and incendiary abortion views could not have accomplished. When you consider that the recipient of this largesse is a billionaire who clearly wanted to come to Northern Virginia anyway, Northam looks even more like a sucker. No one would be praising this deal if it involved a stadium, but because it's about high-tech offices, seemingly smart people swoon.

Losers: Virginia taxpayers, and those citizens needy enough to have benefited from an additional $750 million in state services.

Jersey City is an impoverished dump (albeit with some decent Indian food by US standards) and Hoboken comprises all of about ten city blocks, was yuppified two generations ago and has nothing of interest that i am aware of.

I am announcing today

that I will transfer all of my talents, skills, ideas (worth millions and millions of dollars)

to the first state which offers to build a road to the new house they will build me for which I will not have to pay taxes.

I was struck by how little Amazon did to actually dig in and address the people who were unhappy with the deal. The process was not transparent, most of the concerns were legitimate (as concerns), AND very addressable by Amazon. A few private meetings, a few commitments to community development and support, and a tiny (compared to the overall deal size) amount of committed funds would have turned around most of the critics.

Amazon was stupid and arrogant to not do a little work to build community support. Imagine what could have been done for peanuts: free prime memberships for every public housing resident in LIC, the "Jeff Bezos Magnet School of Economics and Entrepreneurship", making a commitment to a Green New Deal sustainability goals for all new construction.

Amazon was stupid to miss an opportunity to make friends and create community. They were arrogant to insist on a take it or leave it approach.

I did get a couple of flyers in the mail from Amazon saying how great they were going to be at "improving the community" and I think something about "STEM" resources....

Reporting suggests Amazon is concerned about the anti-business climate in its hometown of Seattle and does not want a repeat of that. They may have been able to appease opponents now, but perhaps they feared that it was an indicator that NYC was not the kind of climate they wanted to be in.

https://www.nytimes.com/2019/02/14/nyregion/amazon-hq2-queens.html

"The company has long been willing to take short-term pain in exchange for maintaining long-term leverage. In Seattle, Amazon’s relationship with officials soured as it grew to become the city’s dominant employer. Last year, when the Seattle City Council proposed taxing large employers to pay for homeless services and affordable housing, Amazon took a rare public stance and threatened to halt its expansion. In the end, the city retreated and got rid of even a pared back version of the tax it had adopted."

"The Seattle relationship looms over Amazon’s growth plans. As much as Amazon wanted New York’s talent, it was not worth facing years of opposition on broad swaths of issues."

Outside of the head tax, I'm not sure why Amazon would think it's so mistreated in Seattle. The city council has been controlled by the neighborhood activist class and therefore not especially friendly to Amazon, but the region is strongly supportive. Also, the city council elections have been changed to district, rather than at-large, which has caused several of the corkiest councilors to bow out. So the outlook for Amazon in Seattle is improving.

But if you're employing 10-15% of the working age population in a city, you'd better be willing to admit that you share some responsibility for the city's problems.

Overall, Amazon has enjoyed a fairly charmed run up to this point. My guess is that from here on out things are going to get rockier.

So Amazon should have paid the Danegeld?

The deal included $5 million for community development. That stuff doesn't matter. The opposition didn't come from residents. It came from local pols trying to flaunt their anti-corporate chops. BTW they also oppose magnet schools. Amazon's mistake was not wetting the beaks of the local pols.

The people who destroyed the deal were the state senate, which just became controlled by the Democratic party. The leader of the opposition refused to talk to Amazon. They literally want to destroy capitalism. You have no idea how bad they are.

Also, Cuomo for years has supported the few Dems that voted with the Republicans to keep the state senate from going crazy. This was the left's chance to stick it to Cuomo.

YIMBY is the wrong way to look at this. The plan would have resulted in several thousand Queens residents being outbid for housing by new arrivals, forcing the locals to move to Hoboken or Jersey City. I propose GAYBY, for Give Amazon Your Back Yard.

Regional development subsidies: It was awfully easy for Amazon to walk away from this “deal.” Expect to see higher subsidies and tighter deals in the future.
No.
First, many people were turned off by the whole Amazon search circus.
Second, this shows grass roots opposition to these incentives. Does Tyler really think it's going to be easy to offer more incentives in the future.
Third, the Amazon announcement came the same day that GE said it was scaling back its Boston HQ and paying back incentives. This makes these deals look worse, not better.

If I were going to put my tinfoil hat on for a moment, I'd suggest that Bezos himself leaked those photos to the Enquirer so this news would seem like a side event. Obviously, that's not what happened, but conspiracy theories are fun.

Enterprise software developers everywhere are the winners. Logistics software developers are the winners. UPS is the winner. Amazon savers and borrowers are the winners, fintech is the winner. Somewhere down the line the local impact diminishes with each new transit point. The loss of New York means a short term requantization, at some cost, but the distribution graph continues to compact. It will continue to compact until the gin from a new transit nodes are the same as the gain from a new restaurant.

Curious interactions here of "capitalism" (invitational subsidy sweeteners and all), "socialism" (someone's yet-unidentified brand), and "democracy" (so-called).

IF "most of the residents of Queens wanted the project to come", then how could Twitter-ensconced Commissar AOC have led the charge against poor Jeff Bezos? Won't she face certain opposition from her unemployed and the underemployed constituents of the Bronx and Queens as early as November 2020 for her bone-headed idealism?

OR: how could the constituent contacts Comrade AOC cultivates through her Twitter account(s) have led her to thwart the aspirations of her constituency? Do only the socialist elements of her constituency have the Twitter megaphone in hand to get Comrade AOC's attention? (If only Bezos, Inc., had bought Twitter before announcing any intent to plant a partial headquarters in NYC, tsk and tut . . . .)

Of course, this world may be so strange by now that Commissar AOC is practicing the ultimate in coyness in order to get around to ingratiating herself to Bezos: what a celebrity couple they'd make!

People vote D for tribal reasons. This puts ideologues, and people of very limited talent, in office.

"Nashville and the Southeast"

Yeah, well, like everything, the blue state NIMBYs are moving in to the southeast from all the places that they screwed up previously and made unaffordable. In Atlanta, anything over 5 years old has suddenly become a historical landmark that needs to be preserved, new buildings greedy developers blah blah blah, roads are racist, and man, they want some trains something fierce and if you don't agree then you're a racist just like the roads.

He could just as easily move to Boston or a few other decent candidates. He could even built in Montgomery County or DC proper and then constantly threaten to shift the jobs to the other side of the state line to keep the three entities in check. It seems to me there are a lot of decent options besides NYC.

Well, the problem is there is no obvious schelling point.

This is a response to your comment and that of Butler T. Reynolds, above. New York is obvious. The next place is not. I myself live in Chicago. I have been wanting to leave for 5 years. I don't know where to go. Atlanta was on my short list but there were too many indicators that I'd have my heart and spirit broken all over again. The Reynolds post makes me think I was right. I don't mind marginalized anything, I can't abide the rabble rousing class that makes a living playing, 'let's you and him fight.' That shit is so pernicious. I mean, these people are social vampires, literally living off public discord. It's a waste in every way.

Somebody--anybody--needs to call it the way Dan Savage called Santorum. Someplace kinda backwater, but one particular place, so the backwater aspect is eclipsed fast. That would be so much wealth generation, right there. Yeah, I'm aware of how Randian that sounds.

NIMBYs are generally property owning Middle or UMC types. I don't think any of those people opposed Amazon in NYC. NIMBYs mostly oppose the wrong sorts of people moving into their school district. Amazon would have brought in more of the right kind of people and priced out the wrong kind of people.

I think this is a story AOC style progressivism getting a scalp, not NIMBYism.


State Capture
: How Conservative Activists, Big Businesses, and Wealthy Donors Reshaped the American States -- and the Nation

Perhaps it would be better instead of politicians making 'deals' to lure vanity projects to their cities if there was something more like a simple price menu.

Start a business in city with 100 or fewer employees and your tax rate is X%

Start a new business and have 1000+ new employees hired in less than 3-5 years and your tax rate will be Y% for some period of time until it slowly grows to the normal X%

Start a business with 5,000+ employees and your rate will be Z% and it will slowly grow to Y% and then to the normal X%

You can do the same with infrastructure investment....build a new skyscraper and so many new buildings and the city will add a road for you, or a subway stop or whatever.

This eliminates the Scott Walker problem where a politicians negotiates the store away to lure some vanity project to his domain so Trump can pat him on the back yet years later his successor has to deal with an obligation to pay billions of dollars and all there is to show for it is two guys working out of a trailer in an empty yard.

It also makes the incentive more known and easy to manage. Boring Corp. that needs to locate ten workplaces with 100 workers each can easily calculate if the deal makes the city worth it. They don't need to do a multi-million dollar PR campaign to get people excited about their business so cities offer them deals.

So in other words, something like the NYC-Amazon deal.

Except the deal wouldn't be bespoke. It would be preset and would apply to any business that hired a lot of people in a very short time period.

@Bontoon's idea is revolutionary! Countries could offer the same standing deal: If you charge no import duties, we will not either. But if you do, we charge the same import duties as you do!

More like a standing wholesale discount. Maybe more like the bulk mail rate.

Interesting. I guess what I’m curious is what the ultimate distibution of the would be NYC employees ends up being (how many end up in NY anyway, verses, Arlington, Seattle, Nashville, etc), and whether this is any sort of significant factor or marker that DC is becoming a serious rival to NY and the other tech hubs in both economic and cultural significance.

You consider living in NOVA living in the southeast? 😂🙈

Meh. I agree with AOC on probably only one issue in the world, and that is that a company that will only set up shop in exchange for massive corporate welfare is not a company that is benefiting the local area businesses.

There is absolutely no logical connection here. NY Democrats (not just one) want to extort newcomers to pay for already sit-arounds.

Amazon and New York broke up so quickly because neither needs each other that much. New York has plenty of companies knocking on its door, and Amazon got no unique benefits from the arrangement besides tax breaks.

Simply put, the "second headquarters" was just an expanded branch office and was wildly overhyped. Amazon still plans to build out its facilities in a number of locations, including those that were passed over in the "HQ2" search (and including NYC!). This was rent-seeking masquerading as national expansion.

Re: The Bay Area as winner

The Bay Area is a winner regardless of this or any other new location scheme Amazon might have in mind, Amazon will continue to grow its presence, apace, in the SF Bay Area in order to remain relevant in the technology world, since the SF Bay Area is the only place it can possibly conduct nontrivial research and product/software engineering/development, as it now does.

For Grammar pedants.

Re: The Bay Area as winner

The Bay Area is a winner regardless of this or any other new location scheme Amazon might have in mind; Amazon will continue to grow its presence, apace, in the SF Bay Area in order to remain relevant in the technology world, since the SF Bay Area is the only place it can possibly conduct nontrivial research and product/software engineering/development, as it now does.

And Amazon will do great with its rent seeking biz in VA.

I think the analysis here is off the mark. Rent seekers getting scared off by a little public protest seems like a positive development to me. If more politicians in the productive, blue areas where companies want to build think they can gain from getting out of the crony capitalist business, it could just as easily lower the number of cities bidding and thus the size of the incentive packages.

I had built up a lot of respect for Cowen over the year or so that I've been reading this blog, and now he pisses it all away in one post. The badness of this post seriously makes me question EVERYTHING Cowen has said that I believed, or at least took seriously. The empirics point unequivocally toward these sorts of market distortions in favor of one company beng bad, yet here he is shilling for it.

I had built up a lot of respect for Cowen over the year or so that I've been reading this blog, and now he pisses it all away in one post. The badness of this post seriously makes me question EVERYTHING Cowen has said that I believed, or at least took seriously. The empirics point unequivocally toward these sorts of market distortions in favor of one company beng bad, yet here he is shilling for it. wtf

He has ONE job

He's a whore for oligopolist corporations.

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