The Atlantic On The Pull Out Of Amazon
Amazon Got Exactly What It Deserved—And So Did New York
Trillion-dollar companies going shopping for billion-dollar subsidies should be publicly shamed.
“The most obvious losers in Amazon’s reversal are real-estate speculators. In November, The Wall Street Journal reported that brokers embarked on a “condo gold rush” in anticipation of the Queens campus construction. “This is like a gift from the gods for the Long Island City condo market,” one realtor told the Journal. Alas, the gods, like the billionaires, giveth and taketh away.
But it is not clear that either New York City or Amazon will suffer with this announcement. In fact, it is more likely that neither the city’s nor the company’s economic trajectory will be materially altered. New York City doesn’t need an Amazon headquarters to be the global capital of advertising and retail, and Amazon doesn’t need New York subsidies to expand its footprint in the city.
The larger truth is that corporate subsidies, including the $3 billion package offered to Amazon, are often pernicious and usually pointless. Studies show that these sorts of measures “have no discernible impact on firm expansion, measured by job creation.” Yet every year, local governments spend more than $90 billion to move headquarters and factories between states, a wasteful zero-sum exercise whose cost is more than the federal government spends on affordable housing, education, or infrastructure. In the most garish example of corporate-welfare absurdity, Foxconn, the Taiwanese manufacturing company, solicited up to $4 billion in subsidies from Wisconsin in exchange for a factory and tens of thousands of workers. Now it’s an open question whether that facility will ever get built.
But even the less garish examples are galling. New York City doesn’t have an employment problem; it has a housing-affordability problem. Yet the original language of the Amazon deal used tax breaks that might have gone to infrastructure or low-income housing investment in the Long Island City region. While it’s hard to draw a direct line between corporate handouts and foregone public spending, the fact that states and cities cannot run persistent deficits or print their own currency, like the federal government can, implies that tax dollars lavished on corporations limit the amount of money available to other public projects. Meanwhile, the New York City subway is a disaster, and tuition is rising at the City University of New York system.”
https://www.theatlantic.com/ideas/archive/2019/02/amazon-cancels-new-yorks-hq2and-thats-a-good-thing/582844/
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