A false shot at prosperity Amazon conducts an unfair competition to become its headquarters
Amazon, the world’s biggest retailer, founded and helmed by the world’s richest man, recently subjected scores of American municipalities to a hu- miliating dog and pony show. The Seattle-based tech behemoth announced it was planning to build a second headquarters somewhere in North America, promising some 50,000 new jobs to wherever it landed. It then, in a slow-motion imitation of a reality television show, invited localities to submit bids.
Submit them they did: More than 300 applications flooded in. Perennial economic laggards like Baltimore; Bridgeport, Connecticut; Camden County, New Jersey; Cleveland; Gary, Indiana; and Toledo, Ohio, threw their hats in the ring, thinking they had a shot at prosperity. Most bids consisted, essentially, of cash strapped cities and states debasing themselves before the world’s richest man. They promised tax abatements, direct subsidies and dedicated transit links. In other words, the idea was that beleaguered taxpayers would foot the bill for a sparkling new headquarters for a company whose market capitalization already tops $750 billion.
In the event, Amazon went with a Solomonic decision: It will split the new headquarters in two. And the company selected two cities that already sit atop the American heap: Long Island City, in Queens, New York; and Crystal City, in Arlington, Virginia, just across the Potomac from Washington. Amazon’s honcho, Jeff Bezos, wants access to New York’s deep talent pool and Washington’s political connections – particularly as he faces growing concerns on Capitol Hill over his company’s monopolistic powers.
In other words, both New York and Northern Virginia have assets that any company would want to exploit. That’s why it was puzzling that both areas ended up shelling out for the new headquarters. New York is subsidizing Mr. Bezos to the tune of $1.5 billion; Virginia, north of $500 million. (Perhaps needless to say, the taxpayers of New York and Virginia themselves were not consulted in this decision.) It seems unnecessary.
It’s also patently unfair — and a violation of the free market system that we at least pretend to aspire to live in — to have taxpayers pump money into one specific corporation. How might New York’s retail industry, already suffering at the hands of Amazon, feel about such a subsidy to the business that constitutes an existential threat? Alexandria Ocasio-Cortez, the leftist sensation recently elected to Congress from New York is not often right. But she had a point when she tweeted “Amazon is a billion-dollar ,company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.”
All in all, the prostration before Amazon was an embarrassing and indefensible spectacle — particularly as two recent announcements from other tech giants makes clear.
First, there’s this: Alphabet, the parent company of Google, the world beating search engine, recently announced a New York investment of its own.
“Alphabet unit Google plans to spend $1 billion to expand operations in New York City, a move expected to at least double its workforce there to around 15,000 over the next 10 years,” Investor’s Business Daily reported last week. “Google’s new 1.7 million square foot Hudson Square campus will include two buildings located at 315 and 345 Hudson Street and an office space situated at nearby 550 Washington Street in Manhattan. The internet search giant in March also bought the Manhattan Chelsea Market for $2.4 billion.”
That came on the heels of announcement earlier in the month from Apple, the hardware giant behind iPhones, iPads, and laptops. “Apple plans to spend $1 billion to expand its Austin, Texas, operations and establish new facilities in Seattle and San Diego, the iPhone maker said Thursday,” IBD reported on Dec. 13. “The iPhone maker also plans to expand operations in Pittsburgh, Boulder, Colo., and Culver City, Calif., the company said. Pittsburgh has emerged as one hub for artificial intelligence research.”
And here’s the thing: Neither Apple nor Google is receiving a state or local subsidy for its expansions. Each company made a business decision — what areas are affordable, have a talent pool and a business-friendly environment — and choose accordingly. That, unlike the Amazon spectacle, is how it’s supposed to work. Let’s hope that if Mr. Bezos announces another humiliating contest for a fourth headquarters, cities recall how the last one turned out. Perhaps they can Google it.