A Les­son From HQ2

Dal­las can lure 1,000 firms with fixes, not fa­vors

The Dallas Morning News - - Editorials | Letters -

If re­ports are to be be­lieved and Ama­zon is about to is­sue a de­ci­sion to split its fa­bled HQ2 in half and hand out the di­vided largesse to two East Coast ci­ties, it is easy to of­fer a cyn­i­cal take. Af­ter all, the on­line be­he­moth may have just car­ried out one of the most ef­fec­tive tax and reg­u­la­tory ne­go­ti­a­tion strate­gies in his­tory.

Even New York Gov. An­drew Cuomo — who never seems to have met a tax or reg­u­la­tion he doesn’t love — of­fered a plethora of tax in­cen­tives to woo the af­fec­tions of Jeff Be­zos. If that wasn’t enough, he was will­ing to change his name to “Ama­zon Cuomo,” in case there was any doubt that ab­so­lutely ev­ery­thing was on the ta­ble. So even while the pre­cise de­tails are murky, it would ap­pear that the tech gi­ant has just low­ered its cost of do­ing busi­ness on the high-cost Eastern Se­aboard.

Con­tin­u­ing with the cyn­i­cism, we also might sug­gest that this en­tire ex­er­cise of search­ing for a lo­cale for a sec­ond head­quar­ters was a bril­liantly ex­e­cuted pub­lic re­la­tions cam­paign. Af­ter all, be­fore the search was an­nounced, Ama­zon seemed to reg­u­larly be the sub­ject of neg­a­tive press that fea­tured the sharper edges of its cor­po­rate cul­ture and its abil­ity to crush its com­peti­tors. Pres­i­dent Don­ald Trump reg­u­larly as­sailed the re­tailer. And there was a pub­lic con­sen­sus form­ing that Ama­zon was be­com­ing too big and too pow­er­ful. Even free-mar­keters seemed to la­ment that Ama­zon was tak­ing over the world.

That nar­ra­tive is still out there, of course, but over the past year, a sec­ond and more dom­i­nant nar­ra­tive emerged. As com­mu­nity af­ter com­mu­nity fell over them­selves to put to­gether a pack­age of in­cen­tives to at­tract HQ2, nearly ev­ery­one seemed to find rea­son to com­ment about how good it would be if Ama­zon came to their town in a big way. Ev­ery­one seemed to sing from the same hym­nal prais­ing St. Be­zos. And ev­ery­one should un­der­stand that one sig­nif­i­cant rea­son peo­ple sung from that hym­nal was that it is true that Ama­zon has been a boon to the United States as well as a broad cross-sec­tion of con­sumers.

Well done, Ama­zon. We are hard-pressed to think of an­other ex­am­ple of a cor­po­ra­tion turn­ing a nar­ra­tive so quickly and so de­ci­sively.

Be­yond cyn­i­cism, how­ever, there is an im­por­tant se­ries of lessons to draw from the en­tire HQ2 strat­egy. First, we will point out that if Ama­zon does in­deed cre­ate two new equal sec­ond head­quar­ters in New York and the Vir­ginia sub­urbs of Wash­ing­ton, D.C., it will have done so af­ter win­ning con­ces­sions that es­sen­tially make the reg­u­la­tory and tax land­scape of those lo­cales look more like that of Texas. The fact that Dal­las was in the hunt so late in the process in­di­cates to us that at some level, Texas was set­ting a bar for those East Coast­ers to beat. So we are sin­cere in say­ing, cel­e­brate the cold com­fort of that, Dal­las.

A sec­ond les­son we would draw from this de­rives from the first. Namely, rather than cre­at­ing mas­sive tax in­cen­tives for one or an­other mas­sive cor­po­rate bou­quet of job growth, states would be bet­ter served by re­mov­ing such bar­ri­ers to growth from the out­set to al­low 1,000 flow­ers to bloom. Af­ter all, there is only one Ama­zon out there, but there is an un­lim­ited num­ber of other com­pa­nies that can grow in your re­gion if you cre­ate the con­di­tions for growth rather than hand­ing out fa­vors to those who come call­ing.

And here Dal­las should also be proud. In many ways, the D-FW area has won a con­stant stream of HQ2S as it proves to be one of the most pow­er­ful mag­nets for jobs and new growth in Amer­ica. Toy­ota is among the most vis­i­ble ex­am­ples. But Fidelity and a plethora of other fi­nan­cial ser­vice com­pa­nies are cre­at­ing one of the largest con­cen­tra­tions of fi­nan­cial ex­ec­u­tives in the coun­try right here.

At the same time, thou­sands of well-pay­ing in­sur­ance jobs, med­i­cal in­dus­try jobs and more are be­ing cre­ated here with such con­sis­tency that we who live in North Texas have come to ac­cept it as nor­mal. But as other com­mu­ni­ties know, it is far from the norm.

Fi­nally, we think there is a les­son for Dal­las in all of this be­yond “keep do­ing what you are do­ing to al­low for broad­based growth, the kind of growth that is more sta­ble than be­ing a one-horse town.” Namely, those East Coast ci­ties (along with Austin and other com­mu­ni­ties) had an edge on Dal­las from the be­gin­ning. They are hip­per places where it is eas­ier to re­cruit the kind of ta­lent a com­pany like Ama­zon is look­ing for — youngish, ed­u­cated and hard­work­ing en­trepreneurial-minded peo­ple. In the great ta­lent race that oc­curs for th­ese jobs (and in an econ­omy of record-low un­em­ploy­ment), it’s a good thing to be hip.

The qual­ity of life in Dal­las is good, but most of the other com­mu­ni­ties that made the fi­nal list are well-re­garded as havens for out­door en­thu­si­asts or, in the case of New York, a place you go to brand your­self as a na­tional player who al­ways has ca­reer op­tions. Dal­las has come a long way since it lost its bid for Boe­ing, but to re­main com­pet­i­tive, it needs to con­tinue to bol­ster its case for at­tract­ing jobs. It needs to press for­ward on ev­ery­thing from schools to lo­cal and state eco­nomic poli­cies. And with the rel­a­tively re­cent push to de­velop new parks and re­hab ex­ist­ing ones, it also needs to work on that qual­ity-of-life piece.

In other words, it needs to main­tain that Ama­zon mind­set that ev­ery day is al­ways Day One.

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