The Amazon Lesson
Political failure threatens growth
TWO weeks ago, Amazon chief Jeff Bezos took a firm stance against personal blackmail — refusing to be cowed by an alleged National Enquirer attempt to bully him with compromising photos. Now Bezos is taking a stance against political blackmail — calling New York politicians’ bluff that they could keep Amazon in town while railing against the company.
Amazon’s escape from New York isn’t a critical blow. What is critical is for the state and city to correct their ways for next time.
Yes, Amazon in Queens would have been nice. Even though the city has created 752,500 private-economy jobs in a decade, the 25,000 to 50,000 corporate jobs the e-tailer would have brought to Long Island City was nothing to disdain. Big companies like Citigroup have a legacy of civic engagement and of creating a cushy environment for their employees and their neighborhoods. Amazon would have supported coding classes for nearby children.
Yet Amazon’s price was too high — nearly $3 billion in subsidies.
Particularly egregious was a $505 million “capital grant” Gov. Cuomo offered the company so it could build using union labor. Rather than address the high construction costs that might deter any big company from investing in New York, Cuomo wanted to cushion one favored company against those costs.
In its statement ditching New York Thursday, Amazon lamented that it wanted to have “collaborative relationships” with state and city officials. But a missed opportunity for collaboration was in using its tech and logistics to reduce construction bills.
The city, too, went too far in its proffered goodie of a helipad. This was the wrong message for a progressive mayor to send: that top corporate officials can buy their way out of our transit and traffic crises, creating noise and fumes for people stuck on the ground.
Amazon doesn’t get a pass for badly misjudging the mood here, and seemingly following the cartoon handbook on how to foment a socialist mood. But you can’t blame the company for relying on a governor and mayor to assure them that this idea would, er, fly.
For now, the loser is the governor, who joked last year that he would change his name to “Amazon” Cuomo if that’s what it took.
Cuomo is supposed to be legendary for his ability to deliver politically. Even people who favored the Amazon package should be angry at how incompetently the governor executed it.
He should have had public buy-in from key obstacles, including Queens Sen. Michael Gianaris and City Council Speaker Corey Johnson, before announcing this deal in November.
Why didn’t he? He likely thought a little sparring would be harmless. Gianaris and Johnson could score points attacking Amazon for opposing unionization for its own blue-collar workforce.
Amazon would be happy to serve as the villain in this theater, as veterans of the New York model are, before transforming itself into a hero by offering a quiet payoff to the two pols, in the form of a special fund for worker outreach or somesuch, to be managed by a politically connected non-profit.
Surprise — Amazon didn’t understand or didn’t want to play. Now, as state budget season gets underway, and Cuomo has big asks, including congestion pricing, the governor looks like he’s lost his touch, on a much bigger stage than he’s used to.
Long-term, Amazon doesn’t matter. What does matter are Cuomo’s other failures and Mayor de Blasio’s — all part of why Amazon expected such a payoff. Long Island City has multiple subway lines and the LIRR. But that infrastructure is already overwhelmed with crowds, in part because of the high construction costs the state refuses to address.
On basic managerial competency: In January, Cuomo canceled a perfectly solid plan to close the L train from Brooklyn for a year for long-lasting repairs, for no reason that anyone can figure out.
Now, Williamsburg, with plenty of small businesses that can thrive without corporate subsidies, will likely lose some of its inter-borough business as riders struggle with unpredictable schedules instead of the frequent replacement buses that were part of the planned shutdown. De Blasio, too, has dithered over a streetcar on the Brooklyn-Queens waterfront for three years.
New York is in the biggest jobs and tax boom it has ever seen. But it’s stuck with its same old, creaky transportation — the single biggest reason why Alliance-Bernstein, an investment firm, said it was leaving New York last year.
New York doesn’t need Amazon — but it did need Amazon to demonstrate that companies want to be here.