After much fanfare, Amazon announced that it would place its second headquarters in suburban Washington, D.C., and in the Long Island City neighborhood of New York City. There is a nomenclature problem here. (An aside: I pronounce “nomenclature” with the accent on the first syllable pronounced GNOME. The spouse pronounces it with the accent on the second syllable pronounced MEN. I had not heard anybody else pronounce it her way, and I was convinced that she was wrong—for the first time ever, I might add. But then I heard a Britisher say it as she does. In spite of what you might think of Americans who adopt British pronunciations, let me assure you that the spouse is normally not pretentious.) Can there be multiple headquarters? An organism has but one head. Doesn’t a corporate entity have but one headquarters? And if it can have a second headquarters, can it be in two places?
Amazon, in announcing that headquarters 2A or 2B would be in Long Island City, did an amazing thing. It brought my governor and my mayor together in relative amity. It might seem that Andrew Cuomo and Bill de Blasio, Democrats from New York City with supposed liberal-to-progressive politics, would be natural allies, but both men have huge egos that they work hard to protect, and both are ethically challenged. Perhaps as a result, they seem to despise each other. However, they were together to announce, and take credit for, Amazon’s coming to Queens. Each beamed; each took a metaphorical victory lap. Neither sniped at the other. Seldom have two men looked more content and prouder of themselves.
The smiles, however, soon became forced. Perhaps the two pols expected universal praise for landing 25,000 new jobs at a reported median salary of $150,000. It turns out, though, to get something from Amazon, you must give something to Amazon. Many said that the city and state had given too much. The criticisms spanned the political and ideological spectrum, from the for-no-good-reason-that-I-can-see media darling and demon Alexandria Ocasio-Cortez (AOC achieved a surprise primary win in a Democratic district that assured her election to the House, but that was obtained with fewer than sixteen thousand votes; since she just taken her seat, she has yet to accomplish anything else) to the often mean and looney and wrong Wall Street Journal editorial board.
News reports indicate that New York, through tax abatements, infrastructure spending, and grants, will spend upwards of $3 billion to get Amazon. The briefly happy Cuomo and de Blasio couple maintain that this sum is a good investment because it will generate $9 of wealth for the region for every dollar spent. Others, however, said, “Pshaw,” and talked about phony math, contending that Amazon would have come to the New York area even without such largesse. The critics pointed out that Google and Facebook have been expanding their New York workforces and footprints without such subsidies.
I have been somewhat surprised at all the criticism. New York regularly gives tax abatements and other goodies to businesses, especially to the real estate industry. No single package of government incentives has been as big as what has been offered to Amazon, but surely the aggregate offered to the real estate moguls of New York City, including to Donald Trump before he was president, has been huge. Even so, while the practice of giving such incentives has drawn sharp criticism, the longstanding real estate incentives game has not drawn the ire that has spewed forth about the Long Island City development.
The criticisms also tend to ignore that New York is not alone in the let’s-entice-a-corporation-to-our-locality business. Moreover, the New York incentives are not necessarily out of line with what other governments have given to corporations. In fact, reports state that US cities and states spend up to $90 billion each year in tax breaks and grants to corporations. Not long ago, for example, Wisconsin was in the spotlight when President Trump and then Wisconsin Governor Scott Walker, with much fanfare, announced that Foxconn, a Taiwanese multinational corporation, was going to build a factory to make flat screen TVs in southern Wisconsin, bringing, perhaps, 13,000 new jobs to the Badger State. The president and governor downplayed that Foxconn really promised to hire only 3,000 workers, at an average salary of $53,000 over the following four years. The corporation merely said that there was a “potential” to create 13,000 jobs in the future. The politicians tried even harder to avoid mentioning that Wisconsin was giving almost $3 billion in incentives to Foxconn through income tax credits and sales tax breaks.
Wisconsin committed to $3 billion in incentives to get Foxconn to agree to bring a new factory into the state, a factory that would employ 3,000 at an average wage of $53,000, with a possibility that 13,000 jobs would someday be created at some vague future date. If Wisconsin made a good deal in luring Foxconn, then New York must have made an even better one since for the same amount of financial incentives Amazon says that it will produce more jobs with much higher pay in New York. But did the Badger State make a good deal?
(continued January 16)