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Did New York Lose Anything with Amazon’s Rejection? It’s Complicated (techcrunch.com)
105 points by pseudolus 33 days ago | hide | past | web | favorite | 268 comments



> The livability crisis that’s currently afflicting Seattle and San Francisco is evidence of how cities need to be careful what they wish for when it comes to the explosive growth of technology companies (and the attendant wealth that comes with it) in their metropolises.

Let me get this straight, New Yorkers should view Seattle and SF as cautionary tales for what happens when high-paying jobs arrive in a metropolitan area? Has the author ever visited New York City?

SF's issues aren't caused by swanky new jobs, they're caused by NIMBY politics. NYC has easily 10x the number of high-earning jobs as SF, no matter how you define high-earning. Fortunately, the people running our local zoning are only like a 5 or 6 on a 10-scale of batshit crazy.


I've seen quite a few takes suggesting NYC will be transformed by the sudden arrival of high earners, like the Seattle city councilors who went to NYC to warn the city about their mistakes.[1] Whatever Amazon's merits, the specific arguments seem ludicrous.

Seattle lawmakers talked about how Amazon took up 20% of the city's office space. That was 45,000 workers in a city of 730,000 (6%), and a metro area of 3,800,000. NYC was looking at 25,000 Amazon employees against a city population of 8,600,000 (0.02%), and a metro population of 20,300,000. This claim looks similarly awful. NYC and Seattle have surprisingly similar average salaries ($69K), but the relative impact of 25k workers earning double that is 1%-5% as large in NYC. Manhattan is already the highest-earning county in the entire nation, so much so that adding Amazon employees there would bring down the average salary!

If anything, what I find wildest is that NYC has kept its housing prices halfway sane. It's wrapped around a river and a bay, half on an island, in the middle of an area so urbanized it inspired the word 'megalopolis'. A huge fraction of its development is pre-automotive, so transport in and out ranges from 'tricky' to 'crisis'. It has the highest-earning county in the country, which is also one of the highest wealth-throughput areas in the world.

And so the median house price there is... perhaps 20% higher than Seattle's, despite 4x the population density? Manhattan prices are at the same income multiple as Seattle and the rest of NYC? What the heck? It's not that people don't know Seattle housing prices are excessive, and the boom is pretty recent, but I don't understand why it's viewed as a narrow issue of wages and population growth. Whatever raised those prices, they still point to something seriously wrong with the way things are functioning now.

[1] https://www.theguardian.com/technology/2019/jan/07/seattle-l...


What a lot of people don't realize is Manhattan in 2018 still has less people living in it then it did in 1950. The massive immigration of young working people in the 1920s led to large scale development high density housing.

Living costs were out of control and people lived 8 to a room in extremely unsafe tenements but the upside is the city's housing and transportation infrastructure was built for a capacity it still has not yet claimed back today.

https://en.wikipedia.org/wiki/Demographic_history_of_New_Yor...


This is a really interesting point, thank you.

I hadn't realized NYC's population as a whole was only up 300,000 since 1950, either. Maybe most interesting, the 2 boroughs that gained population are larger (combined) than the 3 that lost it, and even today Queens and Staten Island have the lowest population density. The metro area has grown massively, but for the city proper it looks like not only has growth been slow, it's been steadily evening out density.

I wonder how this has played out elsewhere; are there patterns of outcome (and relative unhappiness cause) for population spikes/declines and for lower, prolonged levels of excess demand?


I've found that people the Bay Area at least often don't have an intuitive grasp of the scale of NYC. Something like they think that a borough is more like on the scale of a neighborhood, like the financial district is like Manhattan or Brooklyn is roughly like the Mission.


That has more due to the local zoning law, I don't think Seattle housing would be this expensive had there be more high rises like NYC.


> SF's issues aren't caused by swanky new jobs, they're caused by NIMBY politics.

A fun stat I just learned: Seattle's population density is 13 people per acre, but its parking density is 29 spaces per acre. Complaining about too many high earners and too much migration into a city seems like a pretty hostile place to start when there's still room to have two parking spaces for every human.


New York definitely has an affordable housing issue but a vast over supply of luxury housing (a lot still going up to) that I'd imagine a good portion of these hires would be taking up.


In what sense is there an oversupply of luxury housing? Are there lots of vacant luxury units?


The number of vacant apartments and the number of apartments listed for sale/rent are both at an all time high. Despite this, most new construction is priced at the high end of the market. In addition, there's been a big boom in ultra-high-end multimillion dollar apartments.

https://www.6sqft.com/nearly-250000-nyc-rental-apartments-si...

https://www.nytimes.com/2018/03/16/realestate/brooklyn-devel...


New construction of expensive high end apartments help lower the prices on other units. Wealthy people will move there rather than driving up prices on dilapidated brown-stones. Its kind of how the average new car price is 30k, which is off limits for many Americans. But the new car inventory drives down the price of older models.


The problem is likely more rooted in wealth inequality. As a smaller group of wealthy individuals control a larger portion of the nation's wealth, they will inevitably acquire all sorts of investments (stocks, real estate, etc) driving prices up.

If there weren't luxury multi-million dollar apartments to buy, they'd be buying the brownstones anyways. And given that the multimillion dollar units sit on the market far longer than the more affordable housing stock, is there even really high demand among the wealthy to own premium housing?

Luxury housing gets built because it's the only thing that's profitable to the builder once you take into account zoning and permits and regulations that need to be satisfied in order to build. What we really need is relaxed policy that allows for the profitable building of run-of-the-mill, average housing.


Wealthy people are less likely to stay put in one place I think. Thus, there's a demand to rent multimillion dollar units for 1-3 years at a time, but not necessarily own one.

Poor or average people buy a house in order to save money on rent. Rich people don't care about that amount and can easily get their stuff moved with company money. They recover the rent vs mortgage cost via increased flexibility.


With a few exceptions new construction is high end.

There are a few areas that were designed as slums from the beginning: Lower East Side in Manhattan, parts of the West Side in Chicago.

Taking Silicon Valley, if 25,000 high end apartments were built, that would take a lot of pressure off low end, because well paid people wouldn't be taking them out of desperation.


> In what sense is there an oversupply of luxury housing? Are there lots of vacant luxury units?

Short answer, yes. If you're interested in detailed information about NYC housing, I definitely recommend checking out the Housing and Vacancy survey data (https://www1.nyc.gov/assets/hpd/downloads/pdf/about/2017-hvs...)


There are a lot of vacancies and nearly unheard of concessions being thrown out there. A ridiculous amount of construction as well. If there's prolonged weakness, concessions eventually turn into rent decreases.

https://ny.curbed.com/2018/4/12/17227574/new-york-rent-marke...


All of that seems good and necessary - given that the median net effective rent is still over $3k/month in Manhattan, and that there's apparently room to profitably continue building, it sounds like things are headed in the right direction.


Its a great example of how just building more housing isn't a complete solution, because all builders are going to target the top of the market if they at all can.


No. The price of housing is not determined by the builder. Like any good its price is driven by what people are willing to pay. Here in SF, even 230 square foot studios are considered "luxury housing" because the shortage of housing is that extreme. Any new construction commands a premium over old housing. In effect, restrictions on building more "luxury housing" restricts the construction of most new housing even if it is high density.

Building more housing, and giving incentives to build as much housing as possible is indeed a complete solution.


Tell that to china https://news.ycombinator.com/item?id=19171099

They have something like 65 MILLION excess, unused apartments, almost exclusively targeting the luxury market (because they are created and valued as investment first, housing second), and they still have extreme affordability issues.

Building more housing is absolutely not a complete solution.


Much of those houses in China are not built in desirable cities but in ghost town that have little to no people living in them. There aren't million of chronically vacant units in Shenzhen. One could just as easily point to vacant houses outside Detroit.

Housing isn't just about the number of houses in a given country. It's about having available housing where the demand is growing.


I really don't think it's fair to compare China's housing policies to the United States' policies as they couldn't be more different.


Of course there are differences, merely pointing out if building more housing, even building more housing to an almost comically absurd extent solved affordability issues by themselves, China wouldn't have them.


I still don't see your point. No one acts as if housing supply is a magical fix-all to affordability. Almost all housing issues in America are caused by multiple factors and New York is no different.


They target the top because the regulatory environment is such that it’s too costly to target middle and lower range properties. In places like Houston, there are tons of “normal” places being built. With land prices in places like New York and requirements to subsidize “affordable” units within the building, that necessarily means the market rate apartments have to be much more expensive to compensate. In Houston, there is no such thing as “affordable” set-asides because their isn’t a need for it. Houston also doesn’t set aside thousands of acres of prime land as “open space preserves” like they do in the Bay Area, further constricting available land. We can debate the quality of life value of “open space;” it would be a fair debate, but you can’t have lots of available but politically unbuildable land while simultaneously lamenting the lack of affordable housing.


A high paying job doesn't mean alot when a pack of cigarettes are $15 and rent is $4K a month. The issue with NY is the HIGH cost of living. You can only eat $1 slice pizza for so long.


>NYC has easily 10x the number of high-earning jobs as SF, no matter how you define high-earning.

Well it does have 10x the population so you'd expect around 10x the number of high paying jobs.


True enough, and the two cities actually have similar average salaries. But Amazon wasn't proposing to bring in 10x as many workers to NYC as Seattle; they were proposing a bit over half as many. In both wealth and space, one Amazon office is just a far smaller deal in NYC than Seattle.

The more controversial part is whether that just means "less effect", or can actually change the role played. I'm very much in the second camp. The conflict here is not so much over "good or bad" but timeframe; rising demand helps cities and raises the standard of living for residents, but demand shocks can destabilize people and produce housing shortages even under good policy. Seattle saw 18% population growth by migration in a decade, with Amazon staff becoming 6% of the population, and housing prices rose about 80% in seven years. That sort of disruptive change just isn't on the table in NYC.


Simply the rate of change/growth, and the pressure it places on cities and long-time residents, are valid reasons for caution.

You imply that these issues are easily solved, if people like NIMBYs "simply" change their mindset. But history shows that mindset-change is a slow and stressful process.

Cautionary tales are a chance to study such issues, and find solutions, or at least strategies -- something that govt is usually bad at. Not blame the victims.


How is it putting a pressure on long-time residents exactly? New York is always changing it's a very expensive city to live in and it's getting more end more expensive. That's how it is for us living here. Everyone.

I don't see the argument in what you are saying.


In Chicago I saw first hand how it turned the Mayor into everyone's favorite punching bag:

Housing prices go up. Developers move in and scoop up desirable properties, remodel the kitchen, paint it grey, and sell to a young tech worker for 3-4x what they bought the property for or demo a 100 year old beautiful greystone and put up a modern shipping container on stilts with 8 apartments and no parking.

Property values go up, long time residents are getting older. The ones who CAN move sell first and you get a runaway housing bubble. The ones who CAN'T move? They're on a fixed income. They need public services but they can't afford more taxes. Property taxes go up. Sometimes older people on fixed income can get a freeze, but taxes go up anyway. More people, more services.

People don't like taxes going up so either you put it off as long as you can while services atrophy and you make it the next guy's problem, or eventually schools start going bankrupt. Teachers go on strike, not enough police, not enough money to keep up transit and infrastructure, and you've got a lot of upper middle class people living in a very expensive post-apocalyptic hell hole.

That's Chicago.


Many long-time residents are renters, who get pushed out. Isn't New York over 50% renters?

People see and fear gentrification. Granted, it can't be stopped, but it shouldn't be ignored.


This is exactly the kind of thinking that makes no sense.

First of all the prices have gone up long before Amazon came in that's just how New York work them moving in will affect housing prices NOT renting prices.

There is no way you can spin this in favor of the local politicians. They just cost many of their fellow neighbours 25K jobs many of them high paying which is important in New York.


I'm trying to explain the mindset and circumstances of people who relate to a "cautionary tale". I like to understand what makes people think the way they do, vs simply calling them batshit crazy.

If such people truly have enough power to quash the NYC deal (I'm not convinced they do), then isn't it worthwhile to figure out how to allay their fears? Do they have a shot at the new jobs? Do they have the necessary skills? Is training being offered? Will their schools become overcrowded? Is rent control adequate? Will their unit be upscaled or bulldozed?

Most humans are adverse to change, so the rate of change is also a factor.


I understand their mindset and circumstances, I live here. It's the same mindset that you see everywhere in the world and I have lived a lot of different places. People don't' like things to change and sometimes they have the political power to ensure that doesn't happen and it turns into this or NIBYISM or neighborhood battles.

It's really that simple. You don't need to turn them into victims or anything like that to explain it.

There is nothing new about the rate of change with regards to Amazon. Had it been another company you wouldn't even have heard about it and it would have been installed. It's purely political opportunism.

All that is left is that these politicians cost new york 25K jobs. That's it.


> SF's issues aren't caused by swanky new jobs, they're caused by NIMBY politics.

What are Seattle's issues, caused by, then? Because if you look at the Seattle city skyline, you'll find it absolutely covered in cranes. This town of 700,000 people, in a state of 7 million people, has more active cranes then any other city in North America.

It's a construction free-for-all here. And I consider that a good thing - but clearly, its not enough to keep me from having to step over human shit on my way to work.

We also have no rent control, no proposition 13, we aren't surrounded by water on three sides, and our suburbs are actually developing - so you can't blame those boogiemen, either.

But we do have an explosion of incredibly well-paid tech professionals... With the only thing trickling down to normal people being rent increases.


Rents have been doing better over the while haven't they?

Still have a massive shortage of housing to buy. :/


Growth of the average has slowed, but rent for lower-end units is growing.

Growth in housing prices has slowed, but at this point, the only homes normal people can afford are an hour out of town - North Bend/Everett/etc.

And, even if things magically get better tomorrow, the lower class has gone through a decade of pain to get there.


Agree with the article. The economists can argue all day about how the equation will work out to be a net profit to NYC regardless of subsidies, but that seems short-sighted. Every decision can not be reduced to a profit/loss question.

One company should not have bargaining power over an entire city, and they certainly should not get special economic treatment over others. It points to and perpetuates an unhealthy power imbalance.

At the end of the day, every US company (and Amazon in particular) got where they are in no small part thanks to all the infrastructure & standing in the world that the government provides. Using that when its convenient and forgetting about it later is just not ethical. And I suspect the 25K jobs are going to stay somewhere in the US anyways, creating about the same tax income even if its spread out.


I keep hearing about Amazon getting "special treatment", but is that really true?

https://www.marketwatch.com/story/what-amazons-hq2-means-for...

> For the Long Island City location, Amazon was going to receive $1.2 billion in refundable tax credits through New York State’s Excelsior Jobs Program if the company created 25,000 net new jobs in New York State by the end of June 2028.

> New York State had also promised a $505 million capital grant to reimburse Amazon for the costs associated with building its office space.

> Amazon also planned to take advantage of incentives through New York City’s Industrial and Commercial Abatement Program and New York City’s Relocation and Employment Assistance Program (REAP). Unlike the incentive offered by state officials, these city programs are available to any businesses that meet their specific requirements. Tax breaks through REAP, for instance, could have added up to $900 million.

Most of the subsidies are coming from existing programs which every company can take advantage of. The only special treatment Amazon is getting is the $500M mentioned above. Which works out to $2000 per job, over 10 years. An amount which is recouped in a few months of NYC city taxes alone - a tax which most other cities do not have at all.

I can see why people outside of NYC would be cheering for this. But it's insanity for locals to be celebrating shooting themselves in the foot. HQ2 would have cemented New York's place as the country's #2 tech hub after silicon valley. Over the next 20 years, New York could have even challenged and supplanted silicon valley. For tech workers in the city, it would have given them greater bargaining power when negotiating compensation with their existing or new employers. And for startups, it would have offered another source of employees to poach from, and a company that could easily acquire them.

New York has always succeeded because it was a pragmatic city. But this entire debacle is the kind of political dysfunction that I would have expected from San Francisco, not NYC.


It doesn't matter how much money Amazon got as it's the perception of the fact they are getting a tax break which is why it's shocking. Amazon isn't some two-bit startup which has no VC funding. It's the richest company in the world so why the heck do New Yorkers need to hand over their cash to bring them the Queens?


For the same reason you hand over your cash in order to buy stuff on amazon.com or run things on AWS. Not because Amazon deserves your money, but because it's in your own best interests to do so.

Since you seem so opposed to tax breaks for big corporations, have you also lobbied for repealing the Excelsior and REAP programs? Or do you get upset only when these programs are applied to Amazon?


The idea of those incentives is to lessen the difficulties of expanding into your city and in return they are moving to your city. For a small company these might be large difficulties, for a company the size of amazon they are very small in comparison.

Thus, the only reason it is "in your best interest" is a prisoner's dilemma. https://en.wikipedia.org/wiki/Prisoner's_dilemma

Any city has two options: A) hurt yourself by making big concessions, B) don't do that. (Obviously also various degrees of A, but that does not matter in the following).

Ideally for your city and all cities, every city goes with B) and you get the deal by virtue of what should matter (existing infrastructure, location,...). However, if another city "caves" and offers A) they improve their chances, so what happens is that all cities offer A). That decision is "in your own best interest", but everybody is worse off than if nobody did that (same for bribery and paying "protection money" to the mafia).

Thus, yes I am opposed to Amazon receiving the benefits of these programs. However, instead of repealing them outright, they should include a ceiling.


Let's take this argument to its logical conclusion. NYC charges all residents an income tax to live in the city. Most other cities don't have such a tax, and this leads to the same prisoner's dilemma. Hence, every city should now be morally obligated to charge the same income tax that NYC does. Similarly for state income taxes as well.

If that sounds absurd, I certainly think it is. Local governments shouldn't be trying to "profit" by taxing its residents and companies. The whole purpose of local taxes is to best serve local residents and companies. If a city/state can better serve its people by lowering its taxes or by offering tax credits for specific programs, it should certainly do so, even if there's no competition involved. There is no prisoner's dilemma here.


To carry out your analogy, you order from Amazon because they’ll deliver for you. In this case, New Yorkers suspected that the jobs would go to outsiders, the property values would skyrocket and push locals out, and Amazon’s nasty history of vertical integration would be a threat to existing business owners. This deal was scuttled by the people who represent regular, working class Queens residents—not the people who saw dollar signs and dreamed of overflowing NYC tax coffers. Cuomo and DiBlasio had probably already promised those tax revenues to their buddies for all kinds of sure-to-fail projects.


I voluntarily hand over my money to AWS for them to provide a product. The government is not forcing me to hand money to them.


>For the same reason you hand over your cash in order to buy stuff on amazon.com or run things on AWS. Not because Amazon deserves your money, but because it's in your own best interests to do so.

I wouldn't have thought that I need to pay companies to exploit my local labor pool. I'm not buying something from them. They're buying something (work) from me.


It's the richest company in the world so why the heck do New Yorkers need to hand over their cash to bring them the Queens?

Because Amazon can easily go elsewhere, and most places have lower taxes than NYC. Giving them a ~10% off coupon on an extremely high tax rate is not the same as handing them money.

You can object to the deal on principle, sure, but you're ignoring the fundamental reality of the situation; if NY refuses to give them any incentives, they can just as easily go to some other location that will give them incentives. And if all the states banded together and agreed that nobody would give them incentives, NY still loses, because then they'll just pick a place with lower tax rates.

I can understand the appeal of trying to stand up to big corporations, but in the end, NY isn't screwing Amazon by refusing to negotiate with them on this, they're just screwing themselves. If you want to have high tax rates and not lose business to other states, it's a winning strategy to be open to compromise sometimes.


They can't easily go anywhere else, that's why they picked an established area with tons of talent already in the immediate area. Why didn't they choose some small city in the middle of America where salaries would be less, real estate would be cheaper, and taxes would be lower? Because there is very little technical talent already in those places.

Amazon did this to themselves with their tone deaf "national search" and if anything they proved to everyone that Amazon needs NY more than NY needs Amazon. Otherwise, they would have picked any of the other numerous smaller cities that were on the radar of the search, but were not chosen.


> They can't easily go anywhere else

Clearly they can, if they this quickly pulled out of NY after the reception they received.


Why not just go with plan B all along and save political capital?

Instead they did the dog and pony show of shopping their Decision around, commited to NY and had to backtrack. You can't spin this as a plus for Bezos.


> Giving them a ~10% off coupon on an extremely high tax rate is not the same as handing them money.

Yes it is. How the hell is it not?

and Amazon wants NYC for the size of it's talent pool and ease of recruiting. NYC has no reason to give them anything.

> If you want to have high tax rates and not lose business to other states, it's a winning strategy to be open to compromise sometimes

NYC is having so much trouble getting businesses to come.


Yes it is. How the hell is it not?

If I give you $27 and you give me $3 back, then yes, technically you've handed me $3. Taking that out of context ignores the end result, which is that I've given you a net $24. You wouldn't be $3 richer if the transaction had never taken place, so acting all indignant that you paid me $3 when you came out way ahead seems pretty disingenuous to me.


If I have a $1 off a big mac coupon, I need to pay McDonalds $5 for what would normally be a $6 big mac.

If McDonalds gives me $1, I don't need to buy a big mac and can go spend it at some other store.


You need to pay taxes anyway, it's not a choice you can make.


Because the United States is a very, very large country, and Amazon has lots of options as to where it takes its headquarters?

Put another way--why should Amazon go to NYC? Do New Yorkers have a god-given right to the benefits of large tech companies?


The massive talent pool and ease of recruiting people to come live there from across the world. The access to massive markets. Proximity to a lot of the hot new startups. The desire to have an HQ on both coasts. New Yorkers don't have a right to large tech companies, but the companies would be foolish not to come along.

Amazon always wanted NYC. They overplayed their hand trying to get a break and it blew up in their face.

They probably could have gotten away with most of it if they did this with less fanfare.


No, but the idea that the only options are "amazon with a bunch of tax gifts" or nothing is a false dichotomy. The point is that NYC probably doesn't need Amazon's side (High End Jobs) as much as Amazon needed NYC (Access to high end talent, proximity to the center of the global economy).

There will always be some megacorp looking to open up in NYC. Why diminish the return for the city?


NYC tax revenue ebbs and flows on the strength of the finance industry (e.g. recent news that market slowdowns are showing up as a billion dollar shortfall in tax revenue). Google and Facebook are both ad-tech. Amazon would have brought a third major industry to town, something that could have worked to smooth out those tax revenue swings.


> Amazon isn't some two-bit startup which has no VC funding

So Amazon is at lower risk of bankruptcy and a higher credibility of eventual return of those investments?


Because the system is broken and Amazon knows that their dog and pony show about a competition will put politicians in a position where it's give away the money or face an opponent who attacks you on jobs.


Not to mention they paid nothing in federal taxes


“It is a dark day when small retailers in NYC are denied the opportunity to pay the expenses of their largest competitor.”

https://philip.greenspun.com/blog/


Arguments about the merits of something should probably be more in depth than just witty quotes.


It's really sad that this point has been lost in all of this. Somehow existing programs got spun into the city/state hand delivering a $3bn check to Bezos. Really sad.


I'm glad, maybe this will lead to a movement cracking down on that sort of corporate welfare in general.


Because if not for Bezos, those funds would have gone to other companies—some of which might have actually needed them, and weren’t just using their clout to try and get free cash while floating on billions in profit.


So now we're going to blame Bezos for using a incentive-program the way it was expressly meant to be used? Perhaps we should also start shaming white collar professionals who take advantage of 401k plans and Mortgage Interest deductions. If they didn't try to reduce their tax bill, that money could have gone to others who actually needed them.

Don't hate the player, hate the game.


> Don't hate the player, hate the game.

Why not both?


> Mortgage Interest deductions

Can we get rid of those?


> Don't hate the player, hate the game

Without the players, the game ends.

Amazon can afford to pay its own costs many times over. Many SMEs cannot. I'd have had a lot of respect for Amazon had they just chosen a site on logistical criteria and built it out of pocket. Instead, I despise them even more than before.


These tax breaks existed long before Amazon planned on moving to New York. SMEs could and still can utilize them if they choose to do so. There's nothing that prevents them from doing so and they also have more incentives available to them than larger businesses.


> There's nothing that prevents them from doing so

If Amazon moved in the public coffers would be 3B smaller and those benefits might not exist.


> I'd have had a lot of respect for Amazon had they just chosen a site on logistical criteria and built it out of pocket.

Amazon is a publicly traded company. Like every company, the point of the business is to generate profit. This means reducing overhead costs in order to do so.

Sure, they could do it out of pocket, but why do that when NY was offering standard business incentives to bring them there? Why cost your investors money when you don't need to?

Look at any large company, they're going to do the same thing and try and leverage any avenue to reduce overhead costs. It's just smart business, period. Show me a company who paid their own way without any state or local tax breaks and I'll show you 100 fold more who did.


Amazon doesn't pay dividends, so the magnitude of profit has no direct relevance to shareholders.

So if it won't harm the shareholders ( most of whom are secondary-market holders and thus not investors ) why not what is morally right versus technically right?

Isn't that what we ask engineers to consider before working for ad networks, for example? Why does that not scale to companies?


Whether a company pays a dividend or not has no relevance to whether profit should matter to an investor. I'm not sure what you're trying to make a point about here. Additionally, I'm not sure what your point about "secondary market holders" vs "investors" is about either. Would you mind clarifying these?


> Whether a company pays a dividend or not has no relevance to whether profit should matter to an investor.

What? The point if owning stocks is receiving dividends, otherwise it's just speculation. Without dividends, you can only realize gains by selling to someone else, turning the whole thing into a Ponzi scheme.


Instead they wasted how much time and money on a fake search, only to have the whole thing blow up in their face.

The idea that they had to do this out of "obligation to shareholders" is ridiculous. Amazon has avoided profit in search of growth for decades. For a supposedly long term thinking company this was a misstep.


The funds don’t exist. They aren’t going anywhere because NYC now has less money than before not more.


> But it's insanity for locals to be celebrating shooting themselves in the foot

By preventing the massive rent increases and forcing out of the locals that Amazon will bring?

Damn, that must suck.


The thing is the subsidy was only 10% of the expected tax revenue and only $500mm was exclusive to Amazon (mostly in the form of property rights). The rest is available to anyone who sets up shop outside of Manhattan. As far as tax breaks go it’s fairly minuscule.

But because of poor numeracy and a poor understanding of the conditions of the break or the nature of tax deductions, a lot of people had sticker shock at the $3b number.


Some people misunderstood that the $3B was a credit, not real cash being gifted to Amazon. But even among people who understand the nature of a tax credit, we felt that NYC should not forego revenue that another company would have to pay. In other words, the city has enough bargaining power to collect all the taxes that it would be owed. Amazon can flounce and run off to Virginia or Nashville or wherever, but NYC will remain the heartbeat of the US economy without this deal. New York metro is consistently the top contributor to GDP by a factor of two over LA. The Bay Area is not even top three on that list, at about 1/8 the contribution of New York. Let the cities that are struggling cut sweetheart tax breaks to speculate on future break even. If you want to bring your business to NYC, you pay business class prices for the privilege. As a property owner and taxpayer in Manhattan, believe me—that’s the deal we’re all taking for access to this vibrant and exceptional globally-connected and hard-charging economy.


Should New York get rid of all business tax incentives? A majority of that $3bn was from existing programs available to any qualifying business.


The $500M exceptional credit was the issue. That’s a lot of money.


No one opposing Amazon actually pieced out that portion of it as their reason for opposing it. Be honest. If the $500mm is the real beef with the whole thing then break it down vs jobs:

$50mm/yr vs 25,000 jobs paying an average of $150k/yr for a total of $3.75bn of taxable income.

At New York State's lowest tax bracket of 4%, that's $150mm. At New York State's highest tax bracket of 8.84%, that's over $330mm.


> then break it down vs jobs

No.

No giveaways like this. None. Zero. If Amazon wants welfare for jobs, then tell them to screw off and let another company come in that will employ people without handouts.


2.5 billion of the "welfare for jobs" is open to any company coming that meets the requirements of the Excelsior program.

So if you want companies to come in without tax incentives, you probably need to go to your congresspeople and get that program turned off.


People keep saying this like it's an absurd proposition that no one would be fine with.

Also you could restrict the programs a whole lot more, even if you think they should keep existing.


I have no real position on whether or not it should exist. I don't know if the positive impact outweighs the cost.

But no one in here is making a strong argument for it either way, and neither are you.

People can say that Amazon has to go somewhere regardless, so everyone should band together and say no subsidies are ignoring the fact that the subsidies might be what makes it economically possible for Amazon to create these jobs in the first place. Maybe the government gives Amazon $5, they turn it into $30, and Amazon pays the government back $7.50. Or the sum of the economic development in the area results in the government getting back $7.50 for the $5 they spent. And by give, I mean 'Doesn't charge Amazon for come tax season'.

Or maybe the government doesn't give Amazon anything, and Amazon or the sum of economic activity still means the government gets $7.50, and they net the whole amount instead of $2.50.

I don't know, I'm not an economist or versed enough in the specifics here to have any real idea. But either option is possible, as well as a broad variety of others, but the a significant portion of arguments in here seem to be 'Businesses should never get subsidies because I don't think they should/Bezos is the richest man in the world he can pay for stuff" or "lol the stupid liberals shot themselves in the foot."


Take the $0.5B out of the offer and see what happens. I’m pretty sure you’d close the deal.


Please. No one was talking about the 500m. Everyone was talking about a 3bn giveaway.

While some people understood what was happening, most opposition intentionally confused onlookers.

And even with the misinformation, the deal was still popular, particularly among Queens residents & PoC.


The 500M was for fixing up the eroding waterfront where they were building the campus. The alternative was allowing the damage to continue or fix it at a higher price themselves.


I don’t want to pay for that either way. Let other developers do it. LIC is gentrifying anyway.


> Some people misunderstood that the $3B was a credit, not real cash being gifted to Amazon.

If the government gives me a 25k deduction on my taxes, does that not end up as money in my pocket?

I don't understand why this is different for Amazon? How is being able to do business without paying the associated taxes not a giveaway?


How can the Bay Area have less than 1/8th the GDP of NYC when Apple’s revenue alone (~300B) is over 1/3rd of NYC’s GDP (~800B per Wikipedia)?


Is that 300B Apple's global revenue? If so, I'd imagine there's your answer. Prior Apple fancy accounting tricks had all revenue funneled through the friendliest tax haven until they got called on it.

I'd imagine though, only US revenue gets claimed in CA.


Even without considering Tha accounting tricks, a lot of that revenue gets generated where production happens, by the distribution network, etc etc.


Unfortunately people who misunderstood Amazon wasn't being gifted $3B includes the recently elected congressperson for the area: https://mobile.twitter.com/qtrresearch/status/10961811573167...

EDIT: Congressperson for an adjacent area, not for that area.


You see this a lot because conservatives have a hate-on for AOC, but she's not the congressperson for the area Amazon were building in. Queens has a lot of congressional districts.

She also had very little to nothing to do with the decision, but again, you wouldn't know that from watching the conservative commentary.


My mistake, I was under the impression she was the congressperson for the area. She was a prominent critic of the project, and factored into the failure to some extent. I also don't consider myself to be conservative, just disappointed in the grandstanding against the project.


She's dumb and doesn't understand that giving away 3 billion to a company is good and also tax credits aren't giveaways because reasons.

I'm smart and don't understand districting.


Her district is like a mile away from the proposed Amazon office, she has the bully pulpit of the nation 1000x more than any other congressperson in the area does, she talked a lot about the Amazon plan, and celebrated helping destroy it. I don't think it's unreasonable to bring up her incorrect understanding of how tax credits work.

> "We were subsidizing those jobs. The city was paying for those jobs. So frankly, if we're willing to give away away $3 billion for this deal, we could invest $3 billion in our district ourselves if we want to. We could hire out more teachers, we can fix our subways, we can put a lot of people to work for that money if we wanted to."

https://www.nbcnews.com/video/alexandria-ocasio-cortez-react...


She's dumb because she thinks NYC now has 3 billions stacked somewhere that can now be used for other things like, the subway system, schools, teacher salaries, firefighters, farting cows, the unwilling to work, etc.


Everything you said about NYC really applies to Manhattan. The point of the incentive is to encourage development outside of Manhattan.


So if the subsidy were 95% of expected revenue, would you still support it because hey, 5% is 5%?


If the 5% were a true accounting of all the costs involved, yes. When it's 90% you can get away without an accurate accounting since the margins are so huge.


An accounting with that accuracy just isn't possible. The OP was touching on the vast and varied social costs that are leveraged to build value for the shareholders.


> was only 10% of the expected tax revenue

That's 10% too much.

> But because of poor numeracy and a poor understanding of the conditions of the break or the nature of tax deductions, a lot of people had sticker shock at the $3b number.

Or people understand and are still outraged at the giveaway to a trillion dollar company.


> One company should not have bargaining power over an entire city

But they do and I don't think there's any escaping that. It's natural.

The problem comes with the various state and local governments wanting to subsidise things like this. They can offer things that perhaps objectively disadvantage the nation but help locally. Of course NY is go bend over backwards to get Amazon HQ2. All those people. All that income tax. And they're allowed to. That's the problem.

I think this is one of the things that the EU does fairly well. "State aid" is furiously complex and often outright illegal because allowing a single country to offer beneficial rate will usually mean the collective EU loses out on tax.

The famous example is Apple getting their corporation tax down to 0.005% in Ireland for putting all their EU business through their Irish books. Apple are allowed to do that. Ireland is not. Ireland were forced by the EU to collect a sensible rate retroactively.

Would it be a bad thing if local or state subsidies over (eg) $500k had to undergo federal scrutiny? If taxes were a little more balanced? It might mean that national planning could be more effective and encourage growth in states that cannot afford to subsidize (eg Louisiana, Mississippi).

I guess it's all for naught if you continue to allow lobbying, but every little helps, right?


I'm going to disagree with "It's natural".

We have created a business and government environment where it is likely to happen, but we can change that environment at any time, just as Reagan created the current business environment 30 some odd years ago.


I thought it was fairly clear in a context so devoid of nature, natural might suggest logical consequence but you're the second person to quote the word.... So for the record: No, Amazon are not doing it like they do on the Discovery Channel.

And yes, this it a logical side-effect our how our society has developed. Capitalism and globalisation concentrating money into megacorps like Amazon. This is certainly something we can change but the how is kind of important.

I was tackling how states kowtow to big companies to attract and retain them. It sounds like you're in favour of stopping companies ever attaining the critical mass they have, stopping them being a target for that in the first place.

It's an interesting idea, but I suggest it probably breaches a few Constitutional rights. Breaking up massive companies. Limiting companies to sales within their own state, not allowing the transfer of wealth outside the state. All extreme conclusions of stopping an entity like Amazon gaining undue influence.

I'm sure the are some on the far-right who would just suggest a mandated 0% tax. I'm sure states would just find other incentives.


Well, "It's natural" can also mean that it's a state of things that we should accept. Or it could be a reference to a moral framework where virtues are applied to state. It could be arguing that what is happening in the consequence that we expect in all systems at some point. There are lots of uses of the word, and I don't think that any of them really apply well to the current topic.

How to deal with the existence of Amazon? I don't know. My guess is tax policy.


I think it's very healthy if states and cities compete on general tax rates.

If Texas has lower tax rates than California, and Texas does well and California badly, that's competitive governance at work and a great thing.

But if Texas gives Tesla $5B and Tesla does well while other companies go under, that's crony capitalism and should ideally be illegal.


>But they do and I don't think there's any escaping that. It's natural.

Lots of things are natural but part of the point of civilization and organized society is to control what is natural for the benefit of the population at large.


The parent's poster was all about how to control it.


The post you're referring to has it backwards, in my opinion. I don't think this deal wasn't bad for the nation at large, it was bad for New York. The solutions presented don't reflect that.


> it was bad for New York

And I think that's where our disconnect here is. Most were advertising this deal at a net +$30bn revenue for the state over 10y, even after this $3bn deal. 25,000 highly-paid people brings serious money. Income tax revenue. Sales tax revenue. 25,000 property tax payments. That's before you consider auxiliary businesses you get serving a campus of 25k.

What I'm not saying is that New York should have made this deal. They would have lost some potential revenue, but that's not the issue. What I'm saying is that no city, no state should be able to barter tax rates. Allowing that means that Amazon is paying less tax on its operations and making them even harder to compete with for SMEs. That hurts the nation at large.


States already compete on the basis of tax rates. That’s a very good thing. If you don’t like paying taxes out your butthole in California or New York, you can move to Texas or Nevada. It would be awful if the federal govenement told every state they had to have the same taxes as California. California can get away with abusing its residents because it has beaches and nice weather, but not every state can do that.


Competing on tax rates that apply equally to everyone is not the same as selling exceptional treatment to the rich alone. That undermines the rule of law in favor of the rule of wealth. It is institutional bribery.


Most of the tax breaks Amazon was going to get are, in fact, offered to all businesses. The reporting on this has been absolutely awful (as most journalism is).


> Most of the tax breaks Amazon was going to get are, in fact, offered to all businesses.

And some weren't. Which proponents seem to conveniently ignore...


Too many debates I read online today assume that the city was going to hand Amazon a $3b check. Some sort of misunderstanding of how taxes/tax subsidies work.


So, what you’re saying is that there’s not currently $3 billion saved that can now be invested in the schools, subways, etc.


Over some years, Amazon was to pay some $X in taxes. But they were given a break to pay $3b less assuming some goals are met. The city receives $X - $3b.

Now the city receives $0.


Well, not $0. NYC is a desirable place for many companies, and others will move in to the place Amazon intended to occupy. It might take longer and the companies may be smaller, but it's not like there is now a giant black hole in Queens that can never be filled.


I think many businesses will think twice about attempting a move to this particular part of NYC, who knows if your company falls into the 'acceptable' category of the government and it's representatives new ideology?


I don't think they will. Unless you are a company the size of Amazon (and literally only a couple are) you are not going to have the same problems.


But don't forget that they also need to invest $0 into additional infrastructure necessary to accomodate Amazon and deal with various other problems their presence would have created.


You're assuming $X was larger than $3 billion, which isn't a given. Look at sports stadium deals, hosting the Olympics, or Wisconsin's giveaway to Foxconn. The city/state budget is usually the loser in these deals.


Sports stadiums and the Olympics generate temporary jobs and generally do not have the same economic impact of 25k jobs paying 150k over ten years. Amazon's tax breaks were tied to headcount so it's hard to see how the city would be a loser in this case.


> 25k jobs paying 150k

I've seen a few people make this remark, on the assumption that every single job was going to be a high paying job. I believe this is an assumption as I don't recall seeing anything from Amazon stating that they were intending to do this either.

A citation would be helpful for this position.


You've seen a few people reference this because it was in a widely circulated press release by the company itself.

https://press.aboutamazon.com/news-releases/news-release-det...

Third bullet under Amazon in Long Island City in New York City:

Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City. This includes a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years. Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year and as it reaches building occupancy targets. The company will separately apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).


Thank you!


Do you believe Amazon's extortion would have stopped at the first $3 billion and they would have happily paid taxes in full after that?

http://fortune.com/2019/02/14/amazon-doesnt-pay-federal-taxe...


Who is Amazon extorting in either of these cases? If you have a problem with Amazon following the federal tax code that's existed longer than they have, perhaps you should take it up with your congressional reps.


The point isn’t whether Amazon should or shouldn’t be paying a Federal taxes, it’s whether—given this prior behavior—we would expect them to pay state or city taxes, instead of finding or creating a loophole to get out of them.


There are a lot of large businesses headquartered in New York. They all seem to be pretty smart. If there are widespread tax loopholes out there, others surely have taken advantage of them by now. If they had, you would see outrage articles on that as well.


> If there are widespread tax loopholes out there, others surely have taken advantage of them by now. If they had, you would see outrage articles on that as well.

Given the response to Amazon doing so is "how dare you complain about Amazon using these loopholes, it's their fiduciary duty to bilk the government out of all the money it can", I don't think there would be widespread publicity to other companies using loopholes.

Instead we'd have people like you trying to shut up anyone talking about them.


I'm not trying to shut anyone up. Please don't be rude. I'm wondering why all the blame is directed at Amazon when they sought to take advantage of (mostly) pre-existing programs. If the problem people have is with tax subsidies in general then isn't the government the real issue here?


> I'm wondering why all the blame is directed at Amazon

The first step is recognizing that there's a problem.

> If the problem people have is with tax subsidies in general then isn't the government the real issue here?

Maybe the problem people have isn't with tax subsidies. Maybe their problem is who the subsidies are being given to? People are realizing that Amazon isn't a good corporate citizen, and I don't think anybody thinks Amazon needs these subsidies.


It's inevitable that tax subsidies, if available, will go to companies that can negotiate the best for them. Large enterprises have more lobbying power, and more ability to play cities against each other. So I think there's little hope of city officials finding the best corporate citizens to subsidize.


How do you design a subsidy program that actually benefits everyone if one of the criteria is likability? The more grey areas you introduce into a program like this, the more cronyism and corruption kicks in which more than likely results in an inefficient use of taxpayer money.


Cap the subsidies by revenue. A trillion dollar company doesn't need handouts, if they can't make profits on that scale of revenues they are inefficient and that capital should be re-routed elsewhere.


Most of those large businesses didn't preface the building of their headquarters with a very public dog and pony show of shopping for tax subsidies.

Lots of shady tax related shenanigans happen in NYC, particularly in real estate development. Sometimes they get called out, and sometimes they go unnoticed for years/decades until new information draws the public eye to them.


And NY can allocate that 505 million dollars they were going to give to Amazon in the form of a capital grant for something that will benefit the public like infrastructure.

>"Now the city receives $0."

No, now the city receives zero from Amazon. Or another way to look at it is Now Amazon will get zero access to NYC's talent pool. Meanwhile Google is quietly adding 12K new jobs at a new building in Manhattan and doing so without asking for subsidies or incentives. These will be tax revenues that NYC and NY state didn't have to pay to get. NYC will be just fine.

[1] https://www.wsj.com/articles/google-plans-large-new-york-cit...


Not sure why you are being downvoted. That is exactly correct.


I didn't downvote OP but assumed that OP's comment was meant to be a sarcastic response to something that AOC wrote about the matter. Sarcasm is rarely a constructive contribution.


I wasn’t trying to be sarcastic, I was trying to be explicit by restating.

There’s not an extra $3 billion lying around to invest in New York City for other purposes because Amazon canceled the deal.


As it turns out, there really was an AOC-ism of that nature.

https://twitter.com/akarl_smith/status/1096123735935987712?s...


The fallout will be interesting to see: NY State govt is your regular Blue Democrat government, some of NYC, parts which were against this HQ2 deal, are very progressive. The progressives undermined the traditional Democrats. I bet we get to see echoes of this skirmish during the next cycle.


I think it's the opposite, this is an echo of the latest election cycle. Since Hillary was humilliated by Trump the centrist Democrats are losing most political battles, gradually.


Hillary didn’t lose because she was a centrist (Would Biden have lost?). She lost because she’s a bad candidate. She lost to Obama. She is a war hawk. Also lacked Bill's charisma.

People in the middle want the government to give them a fair shake, they don’t want handouts. They’re tired of being sold out by government and industry to overseas cheap labor.


Yes, but the whole thing has a Karmic feel to it. Amazon used a very public HQ process which turned the process into a public game show. Since they used public pressure on local politicians as a bargaining chip to get a deal done, it feels fitting that it backfired this way.


A little ironic in the other direction too, I think. New Yorkers saw the deal as corrupt favouritism and wanted to stop it from happening. Now New York has even more of a reputation for corruption by making it clear they won't uphold the terms of deals they make. Really, Amazon are lucky the subsidies disappeared before they made significant capital investments, otherwise it would practically have been extortion.


>"Now New York has even more of a reputation for corruption by making it clear they won't uphold the terms of deals they make."

First of all New York didn't rescind the terms of any agreement. Amazon made the decision not to go forward.

Second Governor Cuomo pursued the deal as a "General Project Plan", this is a state process that circumvents a local approval process that would involve the city council and any community input. If there's any "corruption" here it was in the way this thing was pursued from the outset.

So no, not "ironic" at all.


> New York didn't rescind the terms of any agreement. Amazon made the decision not to go forward.

The State Senate put Michael Gianiaris in a position to veto it. Gianiaris called the deal "unacceptable." He said "If their view is we want your $3 billion or we're leaving, maybe they should leave." He said he wanted to renegotiate the deal from scratch.

Maybe that was just his opening position, and maybe he would have softened up once in a meeting room, but if I were in Amazon's shoes I wouldn't expect to get what I'd been offered, and I'd be pretty worried about getting mugged after setting up shop too.


None of which is at all the same as what you stated - that New York "was making it clear they won't uphold the terms of deals they make."


> they won't uphold the terms of deals they make

Who the fuck is “they” I didn’t agree to shit.

That was done by some guy who lives in Albany.


It's not 'high stakes' if it doesn't have a real chance of blowing up!


I dunno. The city if thought of as a business is right to offer incentives to get big employers as such employers as big and profitable as Amazon are likely to bring in even more skilled labor and high wage paying jobs. Yes this would lead to gentrification. But that is the job of the elected officials to set aside some of the projected windfalls in tax revenues for specialized housing for displaced people and for infrastructure and the like to accommodate Amazon. The problem is officials would rather line their own pockets with union money or campaign against or for whatever topic is all the rage than actually work.


> The city if thought of as a business

Well the point is that the city should not be thought of as a business. Neoliberalism is a dead-end ideology that got us into today's mess.


It's not a business. It shouldn't operate like one.

Your views seem quite old-fashioned, neoliberal, maximising shareholder value. Both concepts that are increasingly under a lot of scrutiny as they seem to have failed to deliver on any of their promises for anyone apart from the super rich.


And if those shareholders were the very citizens of the city would you still find fault with my argument? This is a representative democracy is it not? Who do the elected officials of the city represent but the people that live and work within its boundaries?

Therefore it should be thought of as a business. The city’s share holders are its inhabitants. It should run in such a way that it invests in the interests of the majority of its shareholders — its people. Courting potential companies that would bring in high wage earners will have knock on effects to the locals in the form of new commerce. It’s proven that one of the things that moves the whole demand curve to the right is an increase in population. But some of the “shareholders” are not as enfranchised as some others and this is where the city helps them cope with the new influx of capital and people. A city, run like a business, puts its people first and as such its people win. Excess revenues either get saved or distributed as a dividend aka a tax refund. Revenues aka taxes from both people and businesses pay for services that help the people. Etc etc.

I think it’s egocentric to make such a bold statement as my analogy is patently false because populism is increasing and the wealth creators are being attacked.


I think President Obama said it best:

The final thing I’ll say is that government will never run the way Silicon Valley runs because, by definition, democracy is messy. This is a big, diverse country with a lot of interests and a lot of disparate points of view. And part of government’s job, by the way, is dealing with problems that nobody else wants to deal with.

So sometimes I talk to CEOs, they come in and they start telling me about leadership, and here’s how we do things. And I say, well, if all I was doing was making a widget or producing an app, and I didn’t have to worry about whether poor people could afford the widget, or I didn’t have to worry about whether the app had some unintended consequences -- setting aside my Syria and Yemen portfolio -- then I think those suggestions are terrific. (Laughter and applause.) That's not, by the way, to say that there aren't huge efficiencies and improvements that have to be made.

But the reason I say this is sometimes we get, I think, in the scientific community, the tech community, the entrepreneurial community, the sense of we just have to blow up the system, or create this parallel society and culture because government is inherently wrecked. No, it's not inherently wrecked; it's just government has to care for, for example, veterans who come home. That's not on your balance sheet, that's on our collective balance sheet, because we have a sacred duty to take care of those veterans. And that's hard and it's messy, and we're building up legacy systems that we can't just blow up.


Great President but I think he's wrong.


I agree with some of what you're saying, but it's a mistake to just lump all of the government in as one huge entity. NYC != 'the government'.

|Using that when its convenient and forgetting about it later is just not ethical.

The government is all too happy to remind them, and tell them what is owed. Let's not forget who actually has the monopoly on power / violence in this arrangement. If you think the government shouldn't be offering special treatment, and shouldn't be picking who gets a competitive advantage, I agree, but let's not pretend like the government at any level is somehow at the mercy of any business. The worst the business can do is pack up and go somewhere else. Any government entity can do much much worse to the business.


NY made the offer to Amazon. If citizens of NY don't want their government to be able to bargain with a business or organization on an individual level then they should take that power away from government.


Something I haven't been able to find: did NYC actually withdraw anything promised for Amazon to back out, or did Amazon just get buyer's remorse after seeing the mixed reaction the city had?


The government was starting to stack against Amazon’s permitting needs. Permitting is already notoriously complex in NYC.

From https://www.businessinsider.com/nyc-council-speaker-amazon-h...

the anti-Amazon movement's best shot at stopping the deal was through the Public Authorities Control Board, which the deal needed approval from. New York State Sen. Michael Gianaris, who has been highly critical of the Amazon deal, was just nominated to the board, and his "no" vote could have scuttled the entire project.


I read that the unions, especialy SEIU, wanted a promise from Amazon against interfering with future potential unionization efforts. Amazon probably doesn't want a domino effect happening where their operations in NYC get unionized and then it spreads elsewhere. But these jobs were tech jobs, so I'm guessing there was also going to be a distribution center or something else that would unionize? Because the tech workers certainly wouldn't.


Amazon already has a pretty big distro center presence just across the river in NJ. I'm sure they would not be too happy if those guys unionized and started demanding humane working conditions.


Excellent question. It is hard to believe that only now did Amazon start caring so much about its already tarnished public image with worker rights and whatnot that they'd roll over so quickly on such a huge deal. I surmise that it was the mayor's office that called off their part of the deal, based on the public statements. The governor had been lacing into the recalcitrant lawmakers who joined the protestors. Both are rumored to want a 2020 Whitehouse run, but the mayor also has a much more public reputation as a "progressive" to defend. This is just my speculating.


> I surmise that it was the mayor's office that called off their part of the deal

Surmise away, but the mayor has been strongly and publicly in favour of the deal, and critical of the people trying to kill the deal. (The guy who really killed it was state senator Michael Gianiaris.)

The problem was that the people who made the deal (de Blasio and Cuomo) didn't have the power, either de facto or de jure, to get it in place.


> If citizens of NY don't want their government to be able to bargain with a business or organization on an individual level

The people clearly don’t want to give NY that power carte blanche. They want oversight to that power—oversight which they just exercised.


Are you implying that citizens should vote and otherwise shut up? Isn't is essential to the functioning of a democracy that citizens voice their opinion and participate in a public discourse?


> One company should not have bargaining power over an entire city, and they certainly should not get special economic treatment over others.

Depends on which city. NYC is an established city, with unique value proposition over the globe. I actually don't think losing Amazon would be a big problem for it overall, for certain region maybe, despite the drama. But that can't be said for any other city in US.

And you and I all know people get discounts when they buy in the same stuff for a larger amount. I see no difference in this case.


Bigger companies get power and the ability to lobby because the outcomes are a much bigger deal and 'everything affects everyone'

Bombardier, here in Montreal, is maybe the biggest private employer. They are one of the few companies that provides high end jobs like 'designing products'.

Bombardier makes big planes - they might need special status at the airport, special access to certain things etc..

In a negative case, Bombardier was about to go bankrupt on the tail of a recent bad project. They needed a bailout which the market was not interested in really. If the government did not step in, the company could have folded and would have been devastating. The devastation would have been one thing for Bombardier investors, but probably much worse for so many regular people involved. That fact should express the degree to which these investments are 'important' to parties aside from investors.

Consider for a moment why 'they market' wasn't interested in the first place: because they couldn't make huge bank. Too much risk.

Why does Softbank plow zillions into WeWork and not Bombardier? Because they, Softbank - wants to make 'all the surplus' - not the community. With WeWork, investors 'make bank'. With Bombardier, most of the surplus goes to other parties.

Bigger picture, consider that 'a company' is a balance of power between 1) shareholders/debtors, 2) executives, 3) workers, 4) buyers and 5) suppliers.

In the case of Bombardier - shareholders stand little to gain. The 'winners' of the perpetual equilibrium are the suppliers, buyers, employees.

In many cases, it can be demonstrated that the overwhelming amount of money and surplus generated when a company comes to town is generated for parties 'other than' the investors. (I'm not saying this is always the case of course)

Since to this day, Amazon doesn't even make a lot of profit, and almost 100% of their proceed are invested in jobs, or surpluses for customers ... it's those participating in the system i.e.

For the most part, Amazon is an 'efficiency machine' that provides structure for smart people to work in, to collaborate effectively to do cool new things.

The are 'mostly' a positive force who's investors hardly claim a dime in profit (at least for now).

It's reasonable that some accommodation was made for them, though the $3B seems high, it's actually a small deal especially if it's tax incentives commensurate upon future returns.


It turns out that in many cases there is no " net profit (...) regardless of subsidies"

In fact, in some cases the jobs that the subsidized company 'creates' are move expensive to taxpayers (due to subsidies) than it would be to just pay the same people to not work, or work on something else that is actually productive for society at large.

Here's a good analysis of the issue: https://www.theguardian.com/cities/ng-interactive/2018/jul/0...


I hate the Guardian so much. Such a useless rag. The article assumes that these "costs" are giving a company a huge check, not tax deductions and the like.


Taxes are mandatory, so thst's a distinction without difference.


Not mandatory if they put those jobs elsewhere.


This really isn’t about New York.

The problem is the race-to-the-bottom communities engage in when heaping tax subsidies on companies that would create jobs no matter what.

For public finance, it is one of the purest examples of a prisoner’s dilemma one could think of. And just as in that thought experiment, it is entirely obvious how to get to an outcome that is better for everyone: cooperation.

Other economies have done so successfully: The EU limits direct subsidies to individual companies, shifting competition to areas that benefit all companies and citizens as well, such as education, safety, public transit, reasearch, or even low taxes, as long as they apply not just to those that are large and mobile.

The results speak for themselves: Ireland has become a knowledge economy powerhouse, not primarily with their illegal subsidies to Apple, but with lower taxes across the board, plus some rather good universities and the English language.

Eastern Europe has managed to attract manufacturing, especially automotive. Over the last 20 years, they have experienced a massive economic rally. Meanwhile, old economies like Germany aren’t exactly hurting, either.

There used to be an argument against that seemingly made sense, namely that subsidies may be the only tool poorer communities have to attract investment and catch up.

But if anything, this debacle has exposed that argument as hollow: it wasn’t Detroit or Kentucky winning HQ2, it was New York. Financial competition seems to favor the already rich, to everyone’s surprise.

The trouble seems to be a sort of fetishisation of market mechanisms: citizens favoring tax competition makes about as much sense as a union disbanding because “this really isn’t fair to McDonalds”.

Focusing on New York shifts the debate onto a side issue, namely that economic indicators do not always perfectly correlate with quality of life. Because NY would have seen a benefit in the former, without a doubt. But the impact would have been distributed somewhat unequally amongst the population. That’s a debate to be had, and one where a clear answer eludes me. But it’s tangential to the unique features of this incident, namely the reality-show competition and massive subsidies.


MMM yes not sure I believe you Ireland succeeded because it had an educated English language work force who would prefer to go to England to work. Plus massive tax subsidies' that screwed over their eu partners whist still collecting eu investment as a depressed area.


I'm Irish and I hate to say it but it's hard not to agree that we wouldn't be in a much worse state if we hadn't become a de facto tax haven for companies entering the EU. Yes we do have a well educated, English speaking, flexible and fun workforce but let's be real, most of the companies wouldn't be here (at least initially) if it wasn't for tax.

While it's mostly positive, the presence of big multinationals also causes problems. For one, most of them are doing marketing, services etc rather than development. This means they are more flexible to move elsewhere.

Also, they are a brain drain from local enterprises. Irish people seem to have this ingrained thing whereby they prefer to stay at a big company rather than move. It means we haven't seen the positive spin-outs that we should have when so many big companies are in the country for so long. I can't think of a billion dollar sized company that has been built here in Ireland in the tech sector. Even Stripe had to go abroad.


And just as in that thought experiment, it is entirely obvious how to get to an outcome that is better for everyone: cooperation.

Ya its called being a cartel. 1000+ members cartel (city/state/national govts) is just extremely unstable and short lived. Think Amazon HQ2, Brexit and others as trust busting done by free market. The Cooperation is not going to work.


I know in the technical sense, calling it Amazons rejection is accurate, but in reality this was a power play of a different kind from the people of the city.

While I've not found a consistent stance among people I talked to almost everyone found it at least troubling how Amazon could wield this kind of power. The people who opposed it were vocal and diligent. I'd argue NYC rejected Amazon.

More importantly, while cities compete for companies or industries all the time, it seems this really highlighted the kind of leverage a big company can hold over even a huge metropolis.


> I'd argue NYC rejected Amazon.

Over 60% of NYC residents who had an opinion supported Amazon. Over 70% of Long Island residents supported them. This is a victory for some well organised political activists but to cast it as a victory for NYC is a bit much.

At the very least it makes NYC a less likely competitor to the Bay Area.

https://marginalrevolution.com/marginalrevolution/2019/02/am...

> The Bay Area: NYC is no longer such a fierce competitor at the macro level, with the potential to become the new center of gravity for the tech world. The Bay Area can breathe a bit more easily now, at least as long as clustering remains the name of the game. Yet this one is double-edged, because it also means the Bay Area has less incentive to solve its rather pressing problems and dysfunctions.

https://twitter.com/jbarro/status/1096137477188976646?s=21

> The most prominent voices of opposition to the Amazon deal have been local pols in Queens, but that doesn't align with public opinion. The Quinnipiac poll showed strongest support for the subsidy package in Queens (55-39) and the Bronx (54-37).

https://poll.qu.edu/new-york-city/release-detail?ReleaseID=2...

> Support for the Amazon relocation in general ranges from 51 - 29 percent in Manhattan to 64 - 21 percent in The Bronx.

> Queens voters support 55 - 39 percent the $3 billion incentive package to attract Amazon.


>At the very least it makes NYC a less likely competitor to the Bay Area.

Nonsense. If the bay area were a competitor, that's where Amazon would have wanted put their new HQ, not New York. Amazon doesn't have an HQ in San Francisco.

Nevermind the fact that New York has been experiencing a tech boom for the last decade or more, with Apple, Facebook, and Google all buying campuses similar in scale to Amazon's proposed one, and without demanding bribes from the state before doing so.


Apple, Facebook, and Google all meet the requirements for the Excelsior Jobs Program ( https://esd.ny.gov/excelsior-jobs-program ) which is where 2.5 billion of the 3 came from for the Amazon deal.

I have no personal knowledge of whether or not the three are utilizing it, but it would seem unlikely to me that three smart businesses would not be taking advantage of some easy to quality for tax credits, which means it's likely they are taking 5/6ths of the same amount of tax breaks that Amazon was planning to.


The point was that NYC was potentially a competitor to Amazon if they could get a major “tech” company as a kind of anchor tenant bringing tens of thousands of (rich from salary and stock) people to NYC. It has already surpassed Boston as the second city in the US and world if you want to raise VC or hire people who have experience in startups, companies that aim for super high growth for multiple years. The fact that NYC doesn’t have it together enough to keep Amazon after it won it means that while it may be better run than the Bay Area there’s room for somewhere else to come from behind and overtake NYC, maybe even the Bay though that would be the work of decades probably. Boston pissing away it’s advantage to Silicon Valley took decades.


> with Apple, Facebook, and Google all buying campuses similar in scale to Amazon's proposed one, and without demanding bribes from the state before doing so.

All of those companies are orders of magnitude smaller than Amazon.

Also for the record Amazon has a pretty big presence in SFBA (Sunnyvale, Palo Alto, SF proper).


> Over 60% of NYC residents who had an opinion supported Amazon. Over 70% of Long Island residents supported them. This is a victory for some well organised political activists but to cast it as a victory for NYC is a bit much.

Its a bad idea to be dismissive of the rejection levels.

While support for Amazon was 57% overall in NYC, rejection of the financing ranged from 52-37%, support for NYC being more involved was at 79%.

Those are sizeable numbers, even more so if a percentage of those people felt like they had much to lose.

NYC doesn't need to compete with the Bay Area. That is a Bay Area obsession. NYC needs to compete with London, Paris, Hong Kong, Shanghai, Singapore, and other Alpha++/Alpha+ cities. Those cities are much more than tech hubs. NYC is doing just fine.


    > Over 60% of NYC residents who had an opinion supported Amazon.
Well, now might be the time to remember that we don't have democracy by referendum. We elect representatives who listen and make decisions.

If enough of that 60% got up off their asses and did the legwork, the result might have been different. Instead all they had was just an "opinion". Sorry, but that's not enough.


Yes I thought it was "machine" politics at work looking at it from the outside.

That's machine in the American political sense BTW


    > this really highlighted the kind of leverage a big company can hold over even a huge metropolis.
Agree, it was a gross display of cynical power. Amazon played a dozen large cities off each other, forcing each to bend over backward to offer up as much freebies as possible. In exchange for what? A tentative fungible "promise" to deliver 50000 high-pay jobs to the lucky city? In response, even poor cities like Philadelphia strived (in secret) to come up with "proposals" to one of the richest and most ascendant companies on the globe.

And what ultimately happened? Oh, turns out, it wasn't an HQ2 after all, it is now an HQ2 AND HQ3 in TWO cities with half the number of jobs each.

I sort of expect such behavior from a greedy American corporation, but what makes me sad is the pathetic appeasement from the cities courting this.

Good for the people of NYC, who finally opened their eyes to the bullshit.


Well, no, actually it turns out there’s only going to be one HQ2 after all. NYC got complacent.


Yeah but it was clear when they announced "two winners" that this was all an exercise for Amazon's benefit at the expense of the cities.

And what is an HQ2 anyway? How many "headquarters" does one need? And what's up with the curious round number of 50k? Was that just pulled out of thin air by some PR dude? Is there any accountability at all for throwing around numbers like that and then reneging on the deal?


By the original definition of the size, magnitude, there will be 0 "HQ2s" until Amazon announces that it's Crystal City location is going to be twice as large.

NYC didn't fall for a Foxconn style bait and switch.


This whole thing seems fishy to me.

The Governor of NY and Mayor of NYC were in alignment (highly unusual) and are profoundly powerful people.

Amazon doesn’t typically give a hoot about activist opinion. And honestly, the professional activists in NY give zero shits about Queens and would have been bought off with something else. This was a thing that was going to happen.


Who are these “professional activists who don’t give a shit about Queens”? The two most vocal opponents of the deal were a state senator and a congresswoman who represent Queens.


I was looking forward to those jobs tbh. Like the majority of nyers...


Sure. Amazon being here would have been good for a lot of reasons. It's a mutually beneficial situation. Amazon should want to be here either way.


The Wisconsin Foxconn saga should teach us all to be highly skeptical of the claims that companies make when seeking these types of subsidies: https://www.bloomberg.com/news/features/2019-02-06/inside-wi...

Analyses of the Amazon-NYC story should factor in the probability that the 25,000 promised jobs would never have fully materialized.


Amazon should not be compared to Foxconn just because they both happen to be topical. Amazon would need to hit targets to get the tax breaks. There is no way that committing fraud or completely misleading NYC would be worth the reputation hit Amazon would get all for just $3bn over ten years.


I’m not suggesting fraud, just that we should take forecasts for what they are - forecasts, not guarantees.

However it seems to me that Amazon did not seem to mind taking a reputation hit with the idea of a year-long “search” and bake-off for HQ2 where the results were obviously pre-determined in advance.


Sure, forecasts are forecasts but their tax incentives are not tied to their forecasts so what's the big deal?


Antitrust in America is broken. It may be time to breakup companies like Amazon and Facebook - or at least take a very hard look at whether breaking them up would stimulate more competition and innovation in our marketplace.

If Amazon is upset that it didn't get subsidies and open arms to come to NYC - then it should probably move elsewhere. There are many other communities and cities that could benefit from any benefits way more than NYC.

NYC is right to stand up to the creeping influence of mono-culture.

The other day I was walking through the West Village in NYC. I'd say a good 30% of stores are shuttered. I stopped in front of a interior design store and looked through the window - and just spent 5 minutes browsing the amazing collection of whatever they were offering. You can't do that online. Instead, you are funneled towards the item that has the best reviews (maybe fake) or has been optimized for cheapness - and everyone buys it.

/ end rant


Yes they lost 25000 taxpayers who will pay income tax in a city which has close to 50% taxation all in all for the upper echelon.

I have heard some crazy claims that New York doesn't need the jobs as it has 4.5% unemployment rate.

Every job that could have been created in New York but didn't is a lost job.

It's not complicated at all.


The question for me isn't the profit/loss equation, it's whether we should be giving subsidies to already highly-profitable companies.

You can argue all you want about whether Amazon would bring in more money for NYC, but the fact is that they would bring in MORE net money if they didn't receive the subsidies. Yes, you can argue that Amazon wouldn't come to NYC then, but that's only because American cities have allowed Amazon to set the rules by creating this competition for their HQ2 location. American cities need to present a united front that we won't be giving money to already extremely wealthy people. Otherwise any time a major company wants to start a new location they can play cities against each other and the people living in those cities will pay the price.

Jeff Bezos is the richest man in the world. If he wants a new HQ he can buy the real estate at full price. Americans need to stand up to the frankly disgusting idea that we should be giving him money.


>Jeff Bezos is the richest man in the world. If he wants a new HQ he can buy the real estate at full price. Americans need to stand up to the frankly disgusting idea that we should be giving him money.

I feel like all of the people saying that Amazon should pay full price because Bezos is rich are missing the point. His wealth is almost entirely in stock, which the valuation of is heavily dependent on how Amazon does quarter to quarter. He's seen a 25% decrease in most of his wealth vs. where it was last year.

He's not the richest person because Amazon is generated boatloads of cash and handing it to him, so it's not like he can redirect that into buying real estate. Nor can he sell a ton of his shares without potentially losing a controlling interest in the company.

He's obviously exceedingly wealthy, but in practicality, the majority of his net worth is unavailable to him as long as he wants to continue running Amazon without any chance of interference or veto, and basically none of it is available to make an impact on this sort of decision.

The merits of any incentives should be based on the economic realities of the situation, plain and simple. Do the tax breaks result in a net positive for the city, based on generated tax revenue, new jobs, both from Amazon and those providing service to Amazon employees, from the new housing that must be built to support the population increase, etc.

I don't know if they do. Maybe this would be an amazing deal for NYC. Maybe it would be a terrible deal. I'm not qualified to make a real judgment there. But the 'Bezos and Amazon are rich, why should we give them anything' is just more populist rhetoric, which we need to get out of our politics. It's toxic as hell.


> His wealth is almost entirely in stock, which the valuation of is heavily dependent on how Amazon does quarter to quarter.

Maybe, but it's "real" enough to borrow money at low interest. Or fund vanity projects like Blue Origin. There are physical rockets being built with fake wealth, so in practice that wealth is as good as cash.


> so it's not like he can redirect that into buying real estate.

Yes he can. All he has to do is get Amazon to start buying real estate, and bam, he's a partial owner of real estate.

> The merits of any incentives should be based on the economic realities of the situation, plain and simple. Do the tax breaks result in a net positive for the city, based on generated tax revenue, new jobs, both from Amazon and those providing service to Amazon employees, from the new housing that must be built to support the population increase, etc.

Okay, let's ask this as a question then: does allowing companies to play cities against each other benefit NYC, or does it incentivize more companies to do the same thing, allowing companies to pay less taxes?

Why do you refuse to consider the possibility that if cities in the US all refused to pay incentives to Amazon, Amazon would choose a city to go to anyway, and not get tax cuts, and average citizens would benefit from the taxes Amazon pays?

I'll say what I've said over and over again here: lots of people on HN would rather incentivize nails than use a hammer. Incentives are one tool in a government's toolbox, and they aren't the solution to every problem.

> I don't know if they do. Maybe this would be an amazing deal for NYC. Maybe it would be a terrible deal. I'm not qualified to make a real judgment there. But the 'Bezos and Amazon are rich, why should we give them anything' is just more populist rhetoric, which we need to get out of our politics. It's toxic as hell.

I don't think it's populist rhetoric to demand that the richest companies in the world pay their fair share of taxes. I think blindly ignoring any possibilities that don't involve incentivizing the already-rich is a much more toxic problem, and the main reason we continue to have growing income inequality in the US.

If NYC pays Amazon a subsidy to attract them to NYC, that sets a dangerous precedent and means that every city will have to pay subsidies to big companies to attract them, and the end result is that companies pay less taxes and everyone else suffers the consequences. That's the effect Scott Anderson calls "Moloch"[1] and American cities need to present a united front against it.

[1] https://slatestarcodex.com/2014/07/30/meditations-on-moloch/


This is 100% Cuomo’s fault for keeping everything secret, as he always does, and trying to bully all the stakeholders out of having any say. Local NYC politics is brutal, and nobody is gonna roll over their needs just cause someone else says it’s the right thing to do.


Deblasio was also involved in the negotiations but yes, this is the real reason why this didn't go through. I can't imagine how much additional red tape would be tacked on if state and city legislators got involved in the process so I can understand the want for secrecy.


Yes but those additions would’ve secured support for the deal to go through. That’s how it works: not a marshaling of principles but an exchange of met needs.

Edit: also as New Yorkers seems to be aware DeBlasio is fairly powerless in relation to the governor.


It obviously could have gone either way but given how adamant politicians were on guaranteed union jobs and Amazon's refusal to entertain the idea, I don't know what they would have been able to meet in the middle on.


I think Amazon would’ve been able to find a compromise, the unions in nyc are some of the most professionalized in the country. They’re not starry eyed leftists, just businessmen looking out for members of their labor conglomerate.


After all the pageantry Amazon picks the #1 and #2 most obvious cities for HQ2. Which leads me (and many others) to believe that they would have expanded their NYC presence anyway. Amazon already has THOUSANDS of employees in the NYC area. It was inevitable.

What rubs people the wrong way was that Amazon got a tax break it didn’t need.

And even after this deal has “died”, Amazon will STILL continue to expand in NYC! Certainly won’t be Jersey.


And yet the elected officials of NY didn't think Amazon would choose NY without offering Amazon incentives to expand in NY. Why did they do that?


A good portion of the tax incentives Amazon would have taken advantage of were through existing programs that any business could use. One of the real incentives offered was probably in the form of cutting down on red tape for construction of the new campus.


I think they were being stupid. Their terrible rhetoric around the issue certainly doesn't imply that they grasped the situation.

If they publicly bemoaned the shakedown from the get-go, but claimed they hsd to participate abyways, they would have improved their negotiating position, and maybe diffused blowback too.


Have they answered where do the 25,000 jobs go now?


They said that the search for a HQ2 will not continue and instead they are focusing on increasing presence in NY, VA, and I think TN. Not sure if the increased presence is 25,000 jobs worth.


Which makes this whole episode so bizarre - they suddenly changed their mind on the value of having a HQ2 (and 25k jobs in a HQ) completely, after such a long and public buildup? Something is fishy here.


Yes, something strikes me as strange about the withdrawl announcment.

As mentioned elsewhere in this thread, the incentives and subsidies were coming from the state, not the city. Cuomo and many majority Democrats in the state Senate were on board. The mayor, DeBlasio was on board.

The opposition was driven locally by councilpeople and community activists. Some in state government opposed but I doubt it would have been enough to derail it, especially considering upstate cities have had similar blockbuster subsidy deals given to them (Albany with IBM/nanotech, Buffalo with Tesla/Solar City).

It seems like Amazon would be driven to withstand some (likely temporary) public criticism in order to get billions of dollars of incentives. After all, they already faced the same criticism during the HQ2 spectacle and have a lot of same type of backlash in their hometown to begin with.

Makes me wonder if there's another story playing out that the public has not heard yet.


It's my understanding that Amazon had a lot of difficulty working with the city's unions, owing to the latter's opposition to Amazon's anti-union stance. The unions had a lot of support from the local councilpersons and community activists you spoke of.

Right before the Amazon pull out, there were several meetings between Amazon, labour/union reps, and government officials (according to NPR). It's all a black box, but my guess is that either the unions or Amazon wanted some sort of contractual guarantee the other was unwilling to budge on, and the local governance sided with the unions.


Why wouldn’t you think that seeing all the negative public reaction they just decided to go the other way?


Because it's not as if they didn't already have a public backlash against the HQ2 search, against their labor practices globally, and even in their hometown Seattle where they dominate.

Seeing as the state controls the incentives and the governor and mayor were on board, there was a decent chance they would have gotten the incentives no matter what local opposition was, and eventually the issue would have been dropped. For incentives totaling billions, it's difficult to imagine them dropping the whole thing over some heated meetings with councilpeople and union leaders.


TN as in Tennessee? I thought altanta was the tech hub for that general geographical area.


Amazon has already announced 5,000 jobs going in Downtown Nashville - it came out the same time the split up HQ2 did.


Virginia, Nashville and to a lesser extent everywhere they’re hiring.


https://twitter.com/akarl_smith/status/1096123735935987712

If New York was willing to give $3 billion to Amazon, maybe New York can now use that money to hire 25,000 workers.


Your comment, along with the tweet you linked to and all other tweets like it, reflects a fundamental misunderstanding of the deal, resulting from a gross oversimplification of it. New York was never “giving” Amazon even $1. They were simply going to give Amazon a tax discount for a limited period of time, and the estimate was that the tax savings would have been about $3 billion over 10 years. This money is not sitting in a bank account somewhere, ready to be deployed for newly invented government jobs now that it has been saved from the greedy claws of Jeff Bezos.

New York was effectively giving Amazon coupons for X% off its New York tax bill. When your local grocery store sends you its weekly ad, and it says “over $500 in savings inside,” do you believe you can walk into the store with the coupons and demand $500 in cash? You may do that, but you should expect a heavy police response. Coupons simply help drive business that the entity issuing them would otherwise not have.


It's interesting that you use retail coupons as an analogy. Are you familiar with the idea of a loss leader? What happens if that revenue isn't earned elsewhere?

It's not at all clear that New York would come out ahead on this deal, given the infrastructure costs and Amazon's well known tendency to avoid paying taxes.


I am familiar with the concept of a loss leader, but that has nothing to do with what was happening here. Giving someone a discount on taxes doesn’t mean they don’t pay taxes, or, as your original comment and the tweet you linked to implied, that they were simply handing Amazon $3 billion in cash that was sitting in the bank and can now be diverted to random government projects designed to invent jobs. The $3 billion never existed; it was a long-term estimate of Amazon’s potential tax savings under the deal.

Anyway, it’s a moot point. They aren’t going there, and either are the jobs and (discounted) tax revenue that they would have brought with them. If you consider that a win, then you have indeed “won”.


It effectively reduces to the same thing if amazon's presence means that other businesses in the same sector/local area aren't don't exist.

There is no shortage of business and people in the sectors Amazon is a part of in NYC, and coming to NYC.


It effectively reduces to the same thing

In no way is it the same thing. This comment and the tweet he linked to indicate that they believed the money was being paid to Amazon soon, and that because Amazon has backed out, that money can now be spent on government projects. That is just factually incorrect. The money does not and will not exist - it was an estimate of tax savings had the deal gone through.


I think a lot of us forget that there is an economic multiplier occurring when a company of Amazon's magnitude comes and sets-up shop. There are also clear benefits from having educated individuals setting-up shop in your city. Not accounting for all the other ways that taxes and commerce exist for companies of that size (E.g. Payroll tax, etc)

I agree that there are some negative factors that have to be accounted for that are not associated with the subsidies. I also find it unnecessary for a place like NY to be provide that degree of subsidies since it already has a quite robust environment full of successful businesses.

I think the US would be better off having Amazon's HQ2 in another area of the country (a combo of North Carolina/Virginia maybe?) to diversify the country's technological output from California & NY.


New Yorkers are sick and tired of mega corps getting tax breaks to fiddle the tax system while their infrastructure suffers even more. Perhaps if Amazon contributed the $5b they would 'save' on NYGC subway improvements then the people would be more favorable to them being in LIC. But, nadda.


I thought the majority opinion of the New Yorkers were in favor of Amazon's headquarter coming to the city.


I don't understand how amazon itself would create such a wealth imbalance among people. There are already so many big corporations that pay handsomely for those who work in Newyork city and the cost of living is same as SF or Seattle.


1. Straight off the bat, you're giving a gigantic subsidy to the largest retailer of the world, whose CTO is the richest man in the world. That's coming out of taxes paid by normal people. If that's not obviously increasing wealth imbalance I don't know how to make it any clearer. The other companies who pay for those who work in NYC do so without creating a gigantic competition to see what city will give them the most money.

2. There are many reasons to be skeptical of Amazon's promises to create jobs.

3. Many of the jobs created are for technical, mental labor that requires education. There is no shortage of these jobs already, and many of the jobs are filled by people moving into New York, rather than by the people who are already there.

4. The cost of living is NOT the same as SF, yet. Rents in SF are much higher still.


That's coming out of taxes paid by normal people.

No it's not. If Amazon doesn't come the city/state collects zero tax.


If you read my comment in context, you'd see that I'm stating problems with the (now hypothetical) situation where Amazon does come to NYC.


And doesn't have to provide more services for the extra people.


In addition to all the metrics and crunching of numbers, pride also comes into play. New Yorkers who opposed Amazon did so on another level of basis such as how it is their turf and their city, and not simply for the highest paying to walk in unwelcomed. Amazon attitude of not being willing to discuss with the locals demonstrates a sheer arrogance that derives from corporate capital Godzilla. Both sides had their ego held up high, except that Amazon had it for the wrong reason.


it’s funny people keep saying “ny rejected amazon”. amazon already had the deal and turned it down. they are the ones who took the action.


New York didn't lose anything by not having Amazon here. New York is a city built on diversity, and ensuring resources are available to maintain that diversity is important to the citizens. It's a matter of giving one huge handout to the most valuable company in the world that will destroy a community and drive up wages (bad for small businesses) and housing costs (bad for Queens), versus giving $5M to 100 small businesses who can create jobs and maintain diversity while keeping wages / housing in check. That not to mention, there are other infrastructural things in NYC that need attention / money. People here want money going back into the soul of the city, not to an outsider traipsing around to various cities looking for who will give the biggest handout. Amazon's big misstep here is that they acted like they were a gift to NYC, and didn't sell the dream of what value they'd bring to the city. New Yorkers will immediately tell people to fuck off with that approach.

Amazon's other missed opportunity is not intentionally choosing a smaller city like Austin or Denver, which would not only have amazing talent, schools, transportation, and culture, but would be far less costly. They would save more money in the long run and achieve the same results. But that's beside the point.

New York doesn't need Amazon, and I'm glad Amazon caved when the people pushed back. It shows that Amazon never cared about the people here and would bring nothing to the community.

edit: If you're going to downvote please comment why you disagree.


> It shows that Amazon never cared about the people here and would bring nothing to the community.

Jesus christ, no. The state put an outspoken opponent of the deal in a position where he has veto power to stop said deal. Then when Amazon execs tried to call this guy multiple times he refused to even take their call. That's why they pulled out.


They want to get a multibillion dollar deal done in a global economic center, and a few phone calls to one guy was enough for them to stop pursuing it? Pretty weak if that's the case. Nobody I've spoken with here has anything positive to say about Amazon being here, and there's no way it hinged on one person.


"The company tried to reach out to Gianaris — but he rejected three invitations to meet, according to a source."

source: https://nypost.com/2019/02/14/this-is-the-man-who-delivered-...

> there's no way it hinged on one person.

Well that's kinda what 'veto power' means ...

> Nobody I've spoken with here has anything positive to say about Amazon being here

That's funny, I live in NYC myself, and almost everyone I know was excited about it. We must have different friends I suppose.


Wait so all those people in the street with the protest signs were cheering FOR Amazon? Nope. Maybe the guy with veto power was put in place because he protects the city from BS like this? Possible. Our whole office is laughing at how Amazon approached this and couldn't get it done, so yeah maybe our bubbles don't overlap.


Amazon and/or Austin would literally have to build in another part of the city and construct their own rail system to compete with how awful the traffic is.

Also, I disagree that diversity is a priority over long term tax revenue and infrastructure improvements and economic success.

Also, I didn't downvote you.


Austin's traffic is bad for sure. Dallas then perhaps, which at least has a rail going north (also bad traffic). That said, Queens absolutely values diversity. They mom and pop shops getting pushed out all over the city is creating a negative feedback loop. Some city officials and politicians may like the tax, but there are some that are also protective of the culture. It's a complex issue, but ultimately, New York is not an easy place to walk into. Lots of people to make happy on a deal this size.


Long Island City is practically indistinguishable from Manhattan these days. Those mom and pop shops are going to be pushed out regardless of whether or not HQ2 is in LIC. At best, current residents have a reprieve that can be measured in months or two years at the outside.


> I disagree that diversity is a priority over long term tax revenue and infrastructure improvements and economic success

'Tech bros' are also diversity, and so are Trump supporters. You can't just pick and choose and create your own special brand of diversity that needs protection from groups and cultures you don't like.


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