It is easier to do this when there is no single dominant company involved

Or is it that real estate developers are somehow especially popular these days?:

New York was riveted for weeks by a debate over whether Amazon should receive $3 billion in tax breaks and other incentives in return for setting up a headquarters in Queens and creating 25,000 jobs. But with far less public attention, the city government has for more than a decade been funneling even more aid to Hudson Yards, a 28-acre complex of gleaming office buildings and luxury residential towers that is one of the nation’s biggest real estate projects in recent years.

In all, the tax breaks and other government assistance for Hudson Yards have reached nearly $6 billion, according to public records and a recent analysis by the New School.

Here is more from Matthew Haag at the NYT,


'Or is it that real estate developers are somehow especially popular these days?'

Well, enough that one was elected as president, compared to all those professional politicians he bested.

Yes, prior, that was the joke. And you almost got it, good job!

5 points to Gryffin_Clock for approaching the tangent of reading comprehension.

Can we do a points system.

Here I was, thinking that answer to the headline's implied question was 'we love being mean to billionaires.'

Especially as there is one commenter here that loves to point out that Trump is not a billionaire.

And to spoil the joke - Trump lost the popular election by millions of votes to a professional politician, of course.

Who knows whether someone might have had fun pointing out that Trump remains less popular than any professional politician in any of our life times after two years in office.

But Prof. Cowen has found his anti-hero, an apparently towering Amazon that deserves every tax break they can lasso.

-15 points to Gryffin_Clock for immediately abandoning reading comprehension

+5 points to Gryffin_Clock for not linking unrelated Wikipedia articles

+5 points to Gryffin_Clock for not mentioning eugenics whilst simultaneously conflating IVF with Mengele

'whilst simultaneously conflating IVF with Mengele'

That one is hilarious - I am sure you have a link, because you would never make things up the way a couple of other commenters do these days, right?

-20 points to Gryffin_Clock for refusing to acknowledge that he has repeatedly conflated embryo selection with the Holocaust

-5 points to Gryffin_Clock for not using his catchphrase when conflating IVF with the Holocaust

Prior: “And to spoil the joke - Trump lost the popular election by millions of votes to a professional politician, of course.”

I’m no fan of that elusive entity, Trump’s intellect, but even he had a great riposte to your kind of inanity: “I would have won California if I’d campaigned there.”

Not sure what makes it great, because that's a total crock of shit he had zero chance of winning CA visiting or no.

Maybe he’d never win Cali’s electoral votes. But he could perhaps have gained enough votes to equal or surpass Hillary’s popular vote figures. Stranger things have happened. And in 2016 they did.

Actually, he didn't lose the popular election because there is no such thing:

Likewise, the popular vote has no constitutional status.

myth's a funny thing and its influence profound. all the time, people confuse myth for reality, in its way, that's founding of fairy tale. the founding of fairy tale--human nature--take Benjamin Franklin and his junto. well what is a library at is core? its the separation from hate.

The professional politician won the popular vote but lost the election because she apparently forgot to read the rule book for the race she was running, despite the fact that another professional politician had won the popular vote but lost the election the same way.

Professionals have a sophisticated understanding of their means and goals.


See "Solve for the New York Equilibrium" four posts down.

Exactly. The Dems in NY certainly have nothing against corruption. They’ll throw their own in prison for nonviolent “crimes“ unless they can shuffle some millions’ worth of government monopolies to their cronies.

Amazon walked away when they realized that once it reached local Democrat City Councilors and #activists it became a shakedown operation. Google and fb were much smarter, slowly increasing their footprint and collecting tax breaks without being noticed.

The future may be one in which expansion/success is under the radar as to not attract the attention of the Mafia local activists.

They're called "community organizers"!

Once you pay the Danegeld, you never get rid of the Dane.

"They’ll throw their own in prison for nonviolent 'crimes' unless they can shuffle some millions’ worth of government monopolies to their cronies."

Those "non-violent" crimes are destroying lives, families, communities, cities, states, regions, countries and continents. As President Captsin Bolsonaro says, if one doesn't want to be jailed, one should not commit crimes. Being a criminal is wrong.

criminals confuse subtext for meaning.

Sometimes they do.

Every group in New York is a shakedown artist. Blacks wanting free money, real estate developers want free tax money, tech companies want free money, the grand-daddy of them all Wall Street loves the free taxpayer money.

Such is life in Trump's America.

American corruption never ceases to amaze me.

It's orders of magnitude lesser in degree and societal penetration than Brazil. So yeah. Truly amazing.

No, it is not. Corruption is antithetical to the Brazilian character. Just compare and contrast President Captain Bolsonaro and dishonest Donald.

here is what we think it would look like
just before paully Krugman
gets eaten by a pod of killer whales in chile

This is par for the course for NY style politics. It should be no surprise that the last election was between two New Yorkers.

So that is it: the spirit of Tammany Hall is alive and well in Trump's America.

The real estate developers are integrated into New York's political machine. They know who to talk to and which palms need to be greased to get a project approved. They've been doing it for decades and I'm sure at this this point they are quite experienced at routine, subtle, and informal bribery. Amazon as an outsider cannot fully predict which stakeholders matter or which politicians need to be bribed. Even if they figured it out, they are a large company under a microscope and would never take the legal and reputational risk.

All politics is local. Easier to get your way when you play the game every day.

In other words, Trump as a corrupt NY real estate developer has what it takes to be a GOP candidate elected president, and Jeff Bezos just doesn't qualify to merely get any GOP nomination?

Trump must have greased some palms to have such a prime spot at the forefront of your thoughts. Then again, the property was probably pretty cheap.

I have quibbles with the New School methodology re Hudson Yards, but regardless, the type of accounting they present cannot answer the fundamental questions: 1. what would have happened if no action was taken; 2. will the City and its residents benefit economically from the 30 million sq.ft. of new development; and 3. how do these benefits compare to the net subsidy cost (less than $2 billion to over $6 billion depending on how you count it)?

Hudson Yards and Amazon were very different deals in one key respect. The issue at Hudson Yards was huge infrastructure costs to provide subway access and to deck over the rail yard. And these investments needed to precede the private investment as a matter of timing. For this reason a TIF-style deal was a good fit. You could call it a subsidy to the developers, but much of the actual cash went into publicly-owned assets. This was much less true with Amazon.

With the Hudson Yards TIF, the actual taxes paid by the developer will be on par with what they otherwise would have been. Much of their tax payments are going to finance the subway and other improvements rather than going to the City's general fund. So the question is whether the sole beneficiary of the 7 line extension is the developers. Clearly they benefit, but it's not correct to argue they are the only beneficiary. If others benefit, then it is not correct to count the full cost of the subway extension as a 'developer subsidy.'

"Clearly they benefit, but it's not correct to argue they are the only beneficiary."

There would be no subway extension without the project. The extension is merely to let the developer's customers/tenants get there.

So, yes, the developer is the sole beneficiary.

In fairness, it is now quite a bit easier to get to where Megabus picks up. So there's that.


"The city ... set aside $1.2 billion for about four acres of parks and open spaces called Hudson Park and Boulevard."

$400 million per acre? Must be quite a park.

10 million for the park, 390 million for the graft

And 2.4 billion to extend the 7 subway. So almost 2/3 of the 6 billion was spent on the subway and a park (lets guess how efficient NYC used that 3.6 billion). Tax breaks were 1 billion; I'd say this was a very misleading article as it is not comparing apples to apples.

+1, I came to write something similar.

It's a huge stretch to count money for parks and subway extensions as "tax breaks".

To be fair, the NYT's used the phrase "tax breaks and incentives" to cover themselves. So, I suppose the article headline is more click bait and misleading than a direct lie.

Rene Girard's idea of the scapegoat is relevant here.

Real estate developers are usually among the best politically connected, and most crooked, in any major city. This story should not be surprising.


I believe the net graft vector points the other way. Developers have to pay up because crooked politicians and labor unions put up countless arbitrary and confusing obstacles in their way.

Imagine a city that let people build whatever they wanted, wherever they wanted, using whatever labor they wanted, within the bounds of a few easy to follow rules that didn't require jumping jurisdictions or appeasing special interest groups. Would there be a need for graft?

Imagine a Hollywood without paparazzi. You think there's low inflation in America? The last decade has been the print, print, print decade. You don't think movie stars suffer mental health issues? You don't think "infidelity" is a mental health issues?

Everything government does, by definition, reflects political criteria. This includes zoning and taxing policies. The only way to minimize crony capitalism, the determination of economic outcomes by political rather than economic criteria, is to minimize government economic activity, including taxes and zoning regulations.

This is a bit misleading. Most of the public benefits at Hudson Yards are for public facilities, including transit ($2.4 billion to extend subway service and $1.2 billion for public parks). Tax breaks to developers is about $1 billion. Not a small sum, but smaller than what was offered in tax breaks to Amazon. To be clear, I oppose offering tax benefits to firms to lure them to locate to the place offering the tax benefits. It's a form of bribery. But what's interesting here is that Cowen is equating public facilities (transit, parks, etc.) built in connection with development with direct tax breaks to firms for relocating.

Whoops, JMCFS made this very point. Anyone who actually read the NYT article would have done the same. Do readers of this blog, you know, read?

is this a corollary to the early post about weed legalization in New York?

File under: The culture and polity that is New York.

governments often just follow private contractors. the three decade fall of manufacturing was met with a bailout and trade plan. nowadays, real estate is most prominent "investment" for private equity companies. just follow the breadcrumbs from lehman brother. it turns out, financial companies want a strong, "unionized" workforce. What's a union? It's the power of employment to arrive at an a conclusion.

Could New York City itself somehow have become our leading National Sinkhole of Corruption?

Lingering suspicions of Wall Street cronyism going back as far as you please.

Home to our corrupt and corrupting Media Establishment.

The alleged co-capital of New York State corruption (said to be in league with corrupt Albany).

Center of the DC-to-Boston Corridor, home to our corrupt elites in business, government, media, and entertainment (sports, academics, et cetera).

Sounds as if all of these contemporary cases of professional corruption in the top tiers of our Elite Establishment are specific to the Boomer Cohort, except in those cases where they've already helped corrupt other Boomers, GenXers, Millennials, et al.

Or is it that real estate developers are somehow especially popular these days?:

An aspect of economic development is incorporation of that development into the built environment (which includes loads on public works and common property). These understandings can be reached with municipal government and superordinate local government. They seldom require the intervention of the provincial authority. Albany needs to be looking after supralocal public works (the three highway systems, the canal system, the St. Lawrence Seaway), the quality of the state system of higher education, performance audits of primary and secondary schooling, performance audits of the court system, and looking into welfare improvements which might be had from regulatory reform.

Tax supported

Affordable housing

For the


Of note: "Amazon bringing 2,000 employees to N.Y.C. with Hudson Yards office"

Hold on. This would mean AOC is full of shit. Inconceivable!

I can't stop thinking about her!

And yet, I've grown accustomed to the trace of something in the air. Accustomed to her... face.

Here are some leads: Mahatma Gandhi, Jack Kerouac, Ed Ricketts

New York loves taxing property but then nothing gets built, so they give developers tax break. See the new pied a terre tax. Same thing with hotels in most cities. Taxes are so high, as the taxed don't vote, that new hotels always get tax breaks. Reforming the system would lower taxes for properties that already got development tax breaks, so that won't happen. What should happen is an automatic new development break on property tax for the first n years. But politicians love to meddle with discretionary tax breaks.

Some of this is anecdotal, but as a New Yorker, I think a lot of people miss some very important components of the reaction to the Amazon HQ.

1) Process Matters: The process was quite secretive. The New York Times broke the Amazon HQ story on November 5 -- the day before election day. Both Gov. Cuomo and Mayor De Blasio were up for re-election the next day. The story leaked from anonymous sources, and both offices refused to comment about it. The plan was "officially" announced a week later. There may have been legitimate reasons for all of this, but it certainly creates the appearance of impropriety when a politician tries to keep something out of the news until after the election. That's typically how you handle a scandal, not good news.

2) Residents of NYC perceive a different set of challenges than residents of nearly everywhere else (excepting northern California). People aren't worried about jobs, they're worried about transportation and housing. 9 of the top 10 communities in the nation for percentage of residents who are renters are in the NY metro area. With unemployment as low as it is now, people are much more worried about new business developments that drive up rents than they are about jobs. Many people I know will explicitly tell you that they're hoping for an economic downturn to drive down housing costs.

So, in terms of Hudson Yards, you don't have the bad look process-wise, and it's a mixed use with residential development. Hudson Yards promised, I believe, 20,000 housing units with 5,000 set aside as so-called "affordable housing." So from a public opinion perspective, people were mollified that building Hudson Yards would not drive up rents.


The issue that should be discussed is:

How to decide when government subsidies to big business actually benefit local residents and when the subsidies only benefit the big business.

Right now there are no protocols to address this issue.

Tyler and Alex as economists should be discussing solutions to this problem rather than just rattling the bones.

Tyler, It's time for you to step up to the plate and answer this question.

Comments for this post are closed