A Lesson From HQ2
Dallas can lure 1,000 firms with fixes, not favors
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.