Amazon’s Billion-Dollar Shakedown of America’s Cities

If one needed reminding of the Democratic Party’s complete capitulation to corporate interests, to say nothing of the country’s as a whole, he or she need only have listened to New York City Mayor Bill de Blasio’s address on Tuesday. “One of the biggest companies on earth next to the biggest public housing development in the United States,” he told reporters during a joint press conference with Gov. Andrew Cuomo. “The synergy is going to be extraordinary.”

The company in question is Amazon, which confirmed earlier that morning that Long Island City, Queens, will become the site of its second headquarters (a third headquarters will be located in northern Virginia). The announcement ends a 13-month pageant that saw 238 cities and their elected officials prostrate themselves to CEO Jeff Bezos, only for the multibillionaire to move his company into two of the wealthiest cities in the country (New York and Washington, D.C.) and displace countless working people. And for this privilege, the state of New York will reward Amazon with more than $1.5 billion in incentives, while the city provides property-tax abatements for the next 25 years—this as the city faces public transportation and affordable housing crises.  Amazon, meanwhile, stands to save upward of $1 billion over the next decade.

As Derek Thompson argues in The Atlantic, moves like these are not merely outrageous. They should be outlawed.

“Every year, American cities and states spend up to $90 billion in tax breaks and cash grants to urge companies to move among states,” he writes. “That’s more than the federal government spends on housing, education, or infrastructure. And since cities and states can’t print money or run steep deficits, these deals take scarce resources from everything local governments would otherwise pay for, such as schools, roads, police, and prisons.”

Maddeningly, this corporate welfare seldom results in the kind of economic stimulus promised. Thompson points to the $3 billion in subsidies that Gov. Scott Walker used to attract Foxconn to Wisconsin—an investment that was supposed to generate 13,000 manufacturing jobs in Racine. Instead, the Taiwanese multinational has hired a fraction of that number, automating most of its assembly work. Thompson continues: “Even when the incentives aren’t redundant, and even when companies do hold up their end of the bargain, it’s still ludicrous for Americans to collectively pay tens of billions of dollars for huge corporations to relocate within the United States.”

So what is the solution? If these corporate behemoths are loyal only to their shareholders, what is to prevent this same travesty from repeating itself in cities across the country? For Splinter’s Hamilton Nolan, the answer is simple: federal regulation.

“The only way for public—you and me and every other taxpayer and city and state government who all have much more pressing things to spend money on than bribes to Fortune 500 companies—to win this game is not to play,” he writes. “Nobody can play. The way to accomplish this is simple: We need a federal law banning these sorts of subsidies. Without a federal law, there will always be an incentive for one desperate city or state to start the bidding wars. By banning this insulting robbery of the public till outright, business will continue building, and investing, and locating, and relocating. They do all those things in order to make more money. Companies create jobs because they need work done in order to make money. They are not charitable activities. They do not need a bribe. They are playing on the desperation of desperate places in order to rip us all off. That should not be legal.”

Read Thompson’s piece at The Atlantic here and Nolan’s piece at Splinter here.