
Behind Amazon’s HQ2 fiasco - pdog
https://www.bloomberg.com/news/articles/2020-02-03/amazon-s-hq2-fiasco-was-driven-by-bezos-envy-of-elon-musk
======
karl11
Bloomberg still has not retracted their spy chip story
([https://www.bloomberg.com/news/features/2018-10-04/the-
big-h...](https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-
china-used-a-tiny-chip-to-infiltrate-america-s-top-companies)).

Until then, I would take anything you read in Bloomberg w/ a grain of salt.

~~~
krzyk
Was it confirmed that it was made up?

~~~
Tagbert
It was denied. No one else was able to confirm the existence. Bloomberg never
mentioned it again. Does not sound like a solid story.

~~~
wyldfire
> Bloomberg never mentioned it again.

If they're unable to determine the veracity of the story, they should retract
it. If they're convinced of some elements of the story but not others, they
should say so.

The failure to follow up with either affirmation or retraction seems
dishonest.

~~~
Traster
The thing is, if they were unable to determine the veracity they _would_ have
retracted it.

~~~
SahAssar
If they had been able to determine the veracity of it they would be able to
tell us the ways that they did. Not just silence.

~~~
ChefboyOG
Discussing sources is tricky business for journalists, but given the pushback,
it seems like at the very least Bloomberg should have conducted some follow-up
investigations.

------
JackFr
It's easy to look at Jeff Bezos and say ego-driven billionaire jealous of Elon
Musk. That's a fun narrative.

On the other hand, why should Amazon leave money on the table to be happily
scooped up by other companies. Forget Tesla, Washington state was giving
billions of dollars in subsidies to Boeing, while Boeing was cutting jobs in
Washington. The city council of Seattle was feuding with Amazon for "for
making the city too expensive". The city is _complaining_ that Amazon is
making some of their citizens too rich.

I think his frustration would be understandable as businessman, and not as
envy.

Of course the whole system is perverse and corrupt, but hate the game, not the
player.

~~~
Angostura
> The city is complaining that Amazon is making some of their citizens too
> rich.

The city would prefer that Amazon's presence has benefits for citizens as a
whole - or at least didn't make their live worse - rather than enriching a
few. Seems reasonable to me.

~~~
lotsofpulp
Then the reasonable solution is for the city to tax the enriched citizens and
distribute the taxes to the rest of the citizens so that they benefit as a
whole.

But, what really happens, is the "city" or "city council" wants is to score
political points, because a tax would also impact themselves and their friends
and family. Everyone wants someone else to pay to benefit citizens as a whole,
when obviously the fairest way is to pass a tax applicable to all "enriched"
citizens.

~~~
colmmacc
Seattle council has voted for an income tax on highly paid residents (2.25% on
everything above $250k), but income taxes are nominally unconstitutional in
Washington State. It's been working its way through the state courts for
years. So far the lower courts have ruled that an income tax may be
constitutional (this would be a first, in Washington) ... but only if the rate
is equal for all earners (So the Seattle tax still fails).

~~~
lotsofpulp
Interesting! Then their ire should be directed towards Washington state laws,
not Amazon.

------
natmaka
"Employees with experience negotiating deals around the country anticipated
problems, but their red flags were ignored by those eager to please Bezos"

... this is eerily similar to one of the major drawbacks of an authoritarian
regime, where everyone tries to please the Great Leader while no-one dares to
express any unpleasant truth.

~~~
asdfasgasdgasdg
One person's "ignored" is another person's "accounted for." It could easily be
that the folks who made the decision recognized this risk, but decided it was
worth it. That looks about the same as ignoring the risk to someone who is not
privy to the machinery that makes the decision.

I see this happen all the time in the organization I work for. Some folks say
that X won't work, product team tries X, and if it ends up not working, they
say, "You ignored our feedback on X!" But you just can't really know whether
they ignored your feedback, or whether they considered it and decided not to
act on it for any of a number of reasons. IMO, the "ignored" narrative is
pretty uncharitable, even if it is the natural and easy one to assume. It
feels good to be vindicated. It feels less good to think about how teams are
dealing with vast numbers of competing constraints, and sometimes have to take
gambles (a central feature of which is the possibility of loss).

It seems like this type of thing happens all the time. Almost every time
something bad happens, there was some naysayer who predicted it. But you never
hear about the cases where the critics were wrong. The classic Slashdot
comment r.e. the iPod is the counterexample that proves the rule. It's such a
notable comment because naysayers are almost never so blatantly and visibly
cited for their incorrect calls.

Anyway, it's not even clear that the team was wrong to discard this feedback.
They got their tax break, didn't they? Along with a bunch of bad PR at the
time. But I had totally forgotten that this thing even happened until this
article brought it up. I'll probably forget again by next week, and so will
most everyone else.

~~~
Eliezer
There’s a standard solution for this problem, namely numeric probabilities and
prediction markets. If an internal prediction market had given an 80% chance
of this happening, that’s meaningful in a way that individual ambiguous
naysayings are not.

~~~
dmurray
Are there any examples of corporations running internal prediction markets?
That sounds fascinating and I'd love to read about exactly how they made it
work, because I can see about 100 problems with this being the "standard"
solution.

~~~
splonk
Google ran one internally for some time maybe 10 years ago. (Maybe still does,
for all I know.) IIRC it was for points, maybe transferable for massage
credits or something, so no huge economic incentive. I have no idea if it was
in any way effective, actionable, or even seen by executives with decision
making power. Based on the quantity of discussion on the mailing list I
suspect it was mostly used by a pretty small set of people, so I'd have some
doubts about its predictive power.

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leto_ii
Billionaires trying to out-compete each other in the size of the public
handouts they're receiving :))

I never understood why in the US (and in more and more other places as well)
it's considered legitimate to give billions to private profit-seeking
corporations so they can do the kind of stuff that private profit-seeking
corporations do anyway: hire people, build stuff etc.

~~~
nscalf
Because there are positive externalities to a company choosing to do that in
your city. If a big corporation chooses to place a HQ in your city, you get an
influx of people into the housing market, of consumers into your service
industry, of tax payers into your district, etc. While I agree, a lot of these
payoffs end up being small compared to the giant sums offered, the theory
behind incentivizing companies to come to your district absolutely makes
sense, and is exactly what politicians and government workers should be doing.
Their job is to plan for the next 30+ years, not the next 6 months where the
price point for the incentives is all negative.

If you're going to make $5B in the next 10 years because of a corporation, and
giving them $1B now to incentivize them to come to New York instead of Chicago
makes a ton of sense. I'm making those numbers up, but that's the thinking.

~~~
ProAm
Where does the 5B come from? They dont pay federal tax, they are getting state
and local tax breaks, and providing jobs that have suffered wage stagnation
since the bailouts. Politicians do this because they get their pockets
stuffed, and then in turn Amazon and Bezos make bucket fulls of cash too. It
is crazy to allow tax breaks for company's that largely don't pay taxes to
start with, especially extremely profitable companies.

~~~
pathseeker
>Where does the 5B come from?

These were thousands of SWE jobs. Amazon would have paid significant payroll
taxes (which are federal but that doesn't fit the narrative so people ignore
it) and their employees would have paid millions a year in city and state
income taxes, property taxes, etc. Getting a high-paying company like Amazon
in your city is a huge economic boon and is totally worth up front tax breaks.
Remember, it's a tax break, you're just agreeing not to take money you already
don't have.

>It is crazy to allow tax breaks for company's that largely don't pay taxes to
start with, especially extremely profitable companies.

Again, Amazon pays tens (maybe hundreds) of millions in taxes every year.
You're just repeating a political talking point based solely on what they pay
at federal income taxes (due to loss carry-overs).

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satya71
How was this a fiasco? They got $762 million to do what they were going to do
anyway.

~~~
dx87
It may have been a fiasco for the local governments bidding on it.

~~~
jburwell
I live 1.5 miles from the Crystal City HQ2 site in Alexandria, VA. Are there
affordable housing, transportation, and public safety issues we have to
address? Of course. Will we benefit from addressing these problems to add
25,000-35,000 jobs? Far more than the cost/difficulty of solving these
problems.

We are thrilled to have them. We would much rather contend with growth
problems than a loss of tax revenues, reduced property values, list
employment, or low quality jobs. We have subsidize part of their expansion,
but the growth will pay back that investment in 5-7 years. We can live that
ROI.

EDIT: cleanup/clarification

~~~
abraae
> We are thrilled to have them.

The royal We?

Your comment would read better if you didn't claim to speak for some group -
presumably anyone living within a few miles of the HQ2 site. I'm sure that
many people could be found there that strongly disagree with your confident
predictions:

> We have subsidize part of their expansion, but the growth will pay back that
> investment in 5-7 years.

~~~
victor9000
A similar story played out here in Seattle. Amazon transformed SLU into a
business hub, bringing tens of thousands of high paying jobs to a previously
underdeveloped neighborhood.

~~~
aweiland
Crystal City is hardly underdeveloped.

------
danhak
What a beautiful illustration of how ego-driven decision making can be at the
highest levels—both Bezos’ decision to solicit incentives to compete with
rivals, and local NYC officials’ plan to torpedo the deal out of spite for
being left out of the process.

------
neonate
[https://archive.md/pGGNV](https://archive.md/pGGNV)

------
thorwasdfasdf
I think it's interesting how other states have to fight so hard to get
companies to move there and yet, CA one of the least business friendly places,
can take it's growth completely for granted.

------
jorblumesea
Amazon is so heavy handed in how they interact with the public. They don't
seem to understand or care that much for PR and give off this hyper
capitalistic vibe that turns off many people. Even for American society, they
feel extreme. As the article states, "Fuck you, we're Amazon".

~~~
Infinitesimus
> They don't seem to understand or care that much for PR and give off this
> hyper capitalistic vibe that turns off many people

Markets keep rewarding a behavior/product so nothing is going to change.

Amazon.com is convenient and fast for most people. Kindles are great for most
people. AWS is default for most people. 2-day shipping is great for most
people.

As long as most people find their products and services preferable, I'm afraid
bad PR won't change a thing (see: stock performance )

~~~
jorblumesea
I don't see a super strong connection between Amazon's business power and how
they present themselves. You can make boatloads of money and also still come
off as somewhat presentable and not some uncaring monster.

There are plenty of companies that operate like that. Amazon just chooses not
to. As the article pointed out, it's how Bezos rolls, for better or for worse.

~~~
true_religion
That’s true, but do you want PR or truth?

For better or worse, Bezos has always been true to himself and his vision for
the company. Without any market pressures to dissuade him, he has never lied
and pretended to care about anything more than money, status, and further
company success.

There is nothing wrong with this. The purpose of government is to set up rules
to harness the market so even uncaring monster companies still must do “good”
in order to succeed and walk away with money.

------
ryzvonusef
> When Elon Musk secured $1.3 billion from Nevada in 2014 to open a gigantic
> battery plant, Jeff Bezos noticed. In meetings, the Amazon.com Inc. chief
> expressed envy for how Musk had pitted five Western states against one
> another in a bidding war for thousands of manufacturing jobs; he wondered
> why Amazon was okay with accepting comparatively trifling incentives. It was
> a theme Bezos returned to often, according to four people privy to his
> thinking. Then in 2017, an Amazon executive sent around a congratulatory
> email lauding his team for landing $40 million in government incentives to
> build a $1.5 billion air hub near Cincinnati. The paltry sum irked Bezos,
> the people say, and made him even more determined to try something new.

~~~
luckydata
This is so 100% pure CEO thinking it hurts.

~~~
me_me_me
It really feels to me comically childish behaviour.

You are at the top of the world and yet you still need more marbles then
anyone around you. But why would you care?

~~~
konschubert
Matt Levine in “Money Stuff” yesterday: One thing to say here is that the
people who are Econ-101-rational tend to be the ones who make the most money.
Every time you read about a workaholic billionaire and think “boy, not me, if
I had a billion dollars I’d be on the beach,” the answer is always “well
that’s why you don’t have a billion dollars.” If you have the characteristics
that enable you to make a billion dollars, you don’t usually turn them off
once you get there.

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aguyfromnb
So this is what we've devolved to: ultra-rich tech overlords competing with
each other for government handouts.

Things are fixing to get interesting if Bernie gets the nomination...

~~~
chrisco255
Tax incentives are different than handouts. At any rate, it's certainly
nothing new and you could attribute this sort of thing as playing a part in
the United States's economic success.

~~~
TheOperator
Tax incentives are where entrenched power get to take from the collective
social good while not pitching in. How are they not handouts? It's like taking
food from the lunch lady and paying half the price because your dad is rich.

States fighting amongst themselves to give the most generous handouts doesn't
ensure national success. Perhaps that makes sense in regards to national tax
incentives but not state ones.

Spinning getting divided and conquered and screwed into offering an unfair tax
deal just to get Amazon in your state as the key to economic success is some
trickle down shit. Why not have solidarity amongst states and tax Amazon
fairly? Instead of having to shoot yourself in the foot economically years
down the line when you have to adopt costly self-destructive measures to
reverse the economic inequality you entrenched for no good actual reason?

~~~
chrisco255
I grew up in Florida. Disney transformed central Florida from a rural
agricultural economy to a thriving tourist destination in the 60s thanks to
economic incentives which included exemptions for state building codes. Yes,
Walt Disney World has its own building codes. Almost 60 years later and
Orlando is thriving.

I think the fact that tax and regulatory incentives work so well should
underscore the importance of keeping taxation and regulation to the minimum
necessary. When taxes are high and regulations are too stringent, it can choke
an economy.

