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.
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.
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.
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?
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.
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.
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.
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.
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...)
Building more housing, and giving incentives to build as much housing as possible is indeed a complete solution.
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.
Housing isn't just about the number of houses in a given country. It's about having available housing where the demand is growing.
Well it does have 10x the population so you'd expect around 10x the number of high paying jobs.
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.
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.
I don't see the argument in what you are saying.
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.
People see and fear gentrification. Granted, it can't be stopped, but it shouldn't be ignored.
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.
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.
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.
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.
Still have a massive shortage of housing to buy. :/
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.
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.
> 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.
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?
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.
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.
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.
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.
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.
Clearly they can, if they this quickly pulled out of NY after the reception they received.
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.
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.
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 McDonalds gives me $1, I don't need to buy a big mac and can go spend it at some other store.
Put another way--why should Amazon go to NYC? Do New Yorkers have a god-given right to the benefits of large tech companies?
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.
There will always be some megacorp looking to open up in NYC. Why diminish the return for the city?
So Amazon is at lower risk of bankruptcy and a higher credibility of eventual return of those investments?
Don't hate the player, hate the game.
Why not both?
Can we get rid of those?
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.
If Amazon moved in the public coffers would be 3B smaller and those benefits might not exist.
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.
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?
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.
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.
By preventing the massive rent increases and forcing out of the locals that Amazon will bring?
Damn, that must suck.
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.
$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.
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.
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.
Also you could restrict the programs a whole lot more, even if you think they should keep existing.
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."
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.
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?
I'd imagine though, only US revenue gets claimed in CA.
EDIT: Congressperson for an adjacent area, not for that area.
She also had very little to nothing to do with the decision, but again, you wouldn't know that from watching the conservative commentary.
I'm smart and don't understand districting.
> "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."
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.
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?
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.
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.
How to deal with the existence of Amazon? I don't know. My guess is tax policy.
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.
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.
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.
And some weren't. Which proponents seem to conveniently ignore...
Now the city receives $0.
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.
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).
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.
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.
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.
>"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.
There’s not an extra $3 billion lying around to invest in New York City for other purposes because Amazon canceled the deal.
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.
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.
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.
Who the fuck is “they” I didn’t agree to shit.
That was done by some guy who lives in Albany.
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.
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.
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.
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.
|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.
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.
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.
The people clearly don’t want to give NY that power carte blanche. They want oversight to that power—oversight which they just exercised.
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.
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.
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...
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.
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.
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.
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.
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.
> 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.
> 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).
> 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.
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.
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.
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).
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.
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.
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.
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.
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?
NYC didn't fall for a Foxconn style bait and switch.
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.
Analyses of the Amazon-NYC story should factor in the probability that the 25,000 promised jobs would never have fully materialized.
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.
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
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.
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.
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.
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.
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" and American cities need to present a united front against it.
Edit: also as New Yorkers seems to be aware DeBlasio is fairly powerless in relation to the governor.
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.
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.
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.
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.
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.
If New York was willing to give $3 billion to Amazon, maybe New York can now use that money to hire 25,000 workers.
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 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.
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”.
There is no shortage of business and people in the sectors Amazon is a part of in NYC, and coming to NYC.
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 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.
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.
No it's not. If Amazon doesn't come the city/state collects zero tax.
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.
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.
> 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.
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.
'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.