Why Don’t the 20 Cities on Amazon's HQ2 Shortlist Collectively Bargain?

https://theintercept.com/2018/01/22/amazon-headquarters-shortlist-hq2/

by rohanshah • 9 years ago

179 278 9 years ago

nordsieck• 9 years ago

Seems like a pretty dumb idea. Amazon is limiting its self to those 20 cities. It can always back out and choose another if it wants.

optimuspaul• 9 years ago

I tend to agree that this is a dumb idea... but think about this. There are a few clusters on the east coast, the clusters could work together to push amazon to one of the other cities in exchange for deals that help the others out.

If I'm being totally honest though I don't think there is much advantage to any of the cities to give Amazon incentives to picking them. I also think that Amazon has already decided.

strebler• 9 years ago

That's definitely possible they've already more or less decided. Either way, they're pulling off an impressive optimization to obtain maximum taxpayer funded subsidies.

ABCLAW• 9 years ago

Nothing better than torpedoing your own RFP to get people chomping at the bit to give you more free stuff.

OrBaruk2• 9 years ago

Because city number 21 will race to the bottom and win the bid.

virmundi2• 9 years ago

Is this a race to the bottom? 19 cities won’t get any tax revenue by definition. The one that gets the building will probably wave taxes so it’s getting the same amount of direct tax revenue as it was before namely 0. So the city does get sales tax revenue from the new jobs due to new spending. It might get income tax that it didn’t get before. Where is the bottom?

sjm-lbm• 9 years ago

If a city waves taxes for Amazon, they'll still have increased costs - say, increased road maintenance around HQ2 as those roads get used much more. Those costs still need to be paid for, and the burden will then move to smaller companies with less clout to negotiate a special deal.

Trying to get an ever-increasing amount of money out of people and organizations with less ability to pay that amount of money seems bottomish for me.

OrBaruk2• 9 years ago

Was paraphrasing the article that mentions the race to the bottom, but I believe that there is a net positive on the city that receives the HQ2 and that's why they are competing with each other.

thesumofall2• 9 years ago

It’s a race to the bottom because it goes beyond tax revenues to include free land (that could be sold to someone else), infrastructure investments (that are likely not needed otherwise), etc.

kodablah• 9 years ago

Because the non-collusive city will come out ahead in this prisoner dilemma.

bryanlarsen2• 9 years ago

This isn't a prisoner's dilemma, the cities are allowed to talk to each other, and to gang up to punish those who break ranks.

dnautics• 9 years ago

Punish how?

guyzero• 9 years ago

What possible penalty could one city impose on another?

coldtea• 9 years ago

The only problem is they have nothing to say to each other.

The idea of a "collective bargain" in a "winner takes all" situation doesn't make sense.

neil_s• 9 years ago

What is being suggested here is a cartel. Yes, if one city didn't agree to signing up for the non-aggression agreement at all, they may stand to win, but if everyone agrees on non-aggression, then whomever the eventual winner is wins the deal for much cheaper. Of course, in practice, defining what constitutes aggression and tax cuts would be quite difficult, but in theory players competing in a winner takes all market could still work.

root_axis• 9 years ago

Because the cities are rivals in a competition for Amazon's HQ, not colleagues who all stand to benefit from a collective bargain. In this case, there will be one winner so the incentive to cooperate is greatly diminished.

thesumofall2• 9 years ago

But the chosen city would win even more if they were to cooperate. Sure, the cooperation would quickly break down but that is why the federal government should decide on such benefits (basically to ensure companies stay within the country, if that is deemed beneficial) rather than local government. It’s for me mindbaffling how anyone believes HQ2 would bring back billions of USD - even if you include secondary and tertiary effects

cortesoft• 9 years ago

Right, but there is always going to be the incentive to defect; if 19 of the cities agree to cooperate, the 20th can just offer slightly more and win the contract.

Brockenstein• 9 years ago

But the chosen city would win even more if they were to cooperate.

Right and the 19 losers are cooperating why again?

Sure, the cooperation would quickly break down

Good job undercutting and highlighting the faults in your own argument. If you can figure it out in two sentences I think there's probably a few people directly involved who this is obvious to. So since cooperation isn't viable in your own estimation, might as well try to win.

but that is why the federal government should decide on such benefits

Unfortunately that proposition doesn't appeal to everyone, so good luck there.

thebiglebrewski• 9 years ago

Just want to add the opinion to the comments section that I think it's completely ridiculous that Amazon gets incentives from cities to go there, as if they need the money. This is monopolistic behavior to the detriment of cities, citizens, and smaller firms.

LostInTheWoods2• 9 years ago

There is nothing wrong with Amazon getting an incentive. The question is are these cities doing their math and offering incentives that are both competitive and reasonable, that won't leave their citizens out to hang.

berbec• 9 years ago

Tell that to major sports teams. Want to see real hostage taking? See what happens when a team wants a new stadium.

perkee• 9 years ago

There is a fantastic pair of episodes of Citations Needed on exactly this topic. They cover the Olympics, HQ2, and sports stadiums. And you're right: city after city gives the whole farm away for these big ticket things that never really pay out, and cities can't deficit spend the way a country can to eat the loss.

CN 19 https://www.stitcher.com/podcast/citations-needed/e/52555894

CN 20 https://www.stitcher.com/podcast/citations-needed/e/52636015

pythonaut_16• 9 years ago

Honestly I think Amazon is as or more interested in the cities' overall plans than just tax incentives being offered. There's a lot of logistics to build a campus as large as they're planning with as many employees as they're planning. I think they're also very interested in zoning and regulatory hurdles. They're probably looking for a city that won't bog the project down in zoning permits, etc. Kinda like how Google Fiber was killed by regulation rather than capital or technical concerns.

The tax incentives play into the overall cost to Amazon for their location, but so does the rest of the plan.

jimmywanger• 9 years ago

That's sort of like saying because you're rich, you shouldn't haggle over the prices of stuff.

How do you think Amazon got all that money? If cities are willing to cut them breaks for them to open up a headquarters there, of course they're going to squeeze the cities.

LonelyStapler• 9 years ago

Each city could select a champion and hold a tournament for victory and glory!

kevin_b_er• 9 years ago

Because it is a race to the bottom. Who can sacrifice the most tax dollars NOW for a hope at more down the line?

This reminds me of how NFL operates at extracting huge concessions and expenses from cities for the privilege of having their team stay in town.

grasshopperpurp• 9 years ago

That's what I thought of, as well. It's always a terrible deal for the city.

alkonaut2• 9 years ago

Here's an idea: don't let states make targeted tax breaks to race to the bottom. That seems to work in the EU. Apple paid 1% in Ireland and simply had to pay up the difference to the normal tax rate.

doggydogs942• 9 years ago

Don’t let ... The only one that can do that is the US Supreme Court.

alkonaut2• 9 years ago

Somehow it always ends up there, like that's a "legal no go". I.e. "that would have to go through the supreme court" or "that's the constitution". I realize it's hard to change some things (like how is Gerrymandering for political views allowed?) but is it that hard that it's meaningless to attempt? Doesn't that mean (in the case of the Gerrymandering example) that US democracy is fundamentally broken AND can't be repaired?

dragonwriter3• 9 years ago

Congress could do it just by imposing a 100% tax on income attributable to an agreement providing an abatement of generally-applicable state or local taxes.

zaroth2• 9 years ago

I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprises which reside there.

At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.

My personal opinion is cities should be talking about the Billions they will be committing to supporting infrastructure improvements rather than the billions in tax cuts. HQ2 needs a fuck ton of support systems, akin to building an Olympic City which never shuts down.

Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents. Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.

Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.

It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks - and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.

If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.

In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment. We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got. I certainly hope my city would do everything possible to roll out the red carpet. It’s the most effective dollars they could possibly spend, because it’s effectively corporate matching of public funds.

nindalf• 9 years ago

You make great points. There is a concern that not all of the incentives will be in terms of infrastructure improvements. Look at Wisconsin's deal with Foxconn - they're literally paying Foxconn money and giving them a license to pollute wetlands and waterways in exchange for 13,000 jobs.

jonknee• 9 years ago

And it will be amazing if there are actually 13,000 jobs. These things have a magical way of never materializing. The jobs turn out to be temp construction or count jobs created in the "economic impact" of having the company there. It's very rare for these deals to come out with the city on top or even equal.

RangerScience• 9 years ago

We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got

I believe you and would like to learn more. Do you have some sources I can look into?

zaroth2• 9 years ago

There’s a technical term for PPP - Public Private Partnership which isn’t exactly what’s happening with HQ2 but the effects are similar. In other words, even though HQ2 isn’t literally a train station, a campus that size functions in many ways like public infrastructure.

Maybe a good place to start;

https://pppknowledgelab.org/guide/sections/83-what-is-the-pp...

joeax3• 9 years ago

At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.

Back in 2004 when I was working at Microsoft, I remember sitting in a bar in downtown Redmond and tossing back some local brew IPAs. This guy sitting next to me was an older dude and longtime fisherman. He was going on and on about how in the 80's, the eastside (the collective suburbs i.e. Redmond, Bellevue, etc) was just farmland, and that Seattle's main industries were fishing and logging. He was both lamenting and boasting how Microsoft came in and transformed Seattle and surrounding area into the tech mecca it is today.

So you are right. All it takes is one anchor company to totally transform an entire city. Too bad they chose cities with established infrastructures and talent pools, and not a city like Milwaukee or San Antonio that would have had the same dramatic transformation as 80's Seattle.

Kalium6• 9 years ago

Amazon doesn't want to spend ten years trying to remake a city into something that might serve its needs. I can see why. It's a huge investment with a very uncertain return.

But, let's turn it around. Why would Amazon want to go to San Antonio, instead of a city like Atlanta?

HaloZero• 9 years ago

I think some of it Amazon doesn't work outside a vacuum of other tech companies. It has to compete against San Francisco and other major tech hubs now so having a developed city is a selling point for Amazon HQ2.

walshemj7• 9 years ago

That's only if you ignore Boeing

frgtpsswrdlame• 9 years ago

At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.

What are you talking about? Put those numbers back where they came from - your ass.

Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.

Agree but that's not the point. Amazon isn't really considering twenty cities, they're considering maybe three but they really want these cities to think they're on even ground so they can extract as much tax breaks as possible from one of the cities they would choose regardless. It's about maximum short-term extraction from their existing long-term choice.

It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks

Let's not use 'irrational' this way, it's perfectly rational to be against this but...

You're right, this is exemplar of capitalism, it's also why I lot of people are turning their noses up at it. HQ2 really illustrates we've moved from seeing markets as a tool which are sometimes useful and sometimes not to being a market society which sees markets as the outsourcing of morality. No ideas have to be considered, the market will decide (and it's always right), it's a strange faith.

and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.

What is that outcome? That Amazon locates where it would have located regardless but with enough tax concessions that it's benefit to the community is substantially reduced? That Amazon's size allows it to pit cities against each other to lower costs, achieving economies of scale that upstarts just won't be able to match and further entrenching it? That Amazon shareholders get a nice dividend next year, funded directly from the concessions that Toronto or Atlanta gives them?

If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!”

If someone came to your town and said, I want to build a $20m sports stadium — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.

Giving a bunch of concessions to Amazon isn't going to benefit the average Atlantan. Lots more people but without the corresponding taxes to keep public services up. Just like stadiums, this isn't a company working to benefit the surrounding community in the best way possible like some PR might tell you, it's Amazon trying to save as much money as possible, nothing else. Benefits to the surrounding community is a side-effect, a leakage and Amazon has every incentive to plug that leak wherever possible, here it happens to be taxes.

In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment.

This is just sick, it's corporate welfare. If I'm paying for Amazon, then I want part of the profit.

We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got.

It's also a significant contributor to our inequality problem. Growth at all costs isn't the answer so neither is making Amazon's costs public but allowing it's profit to remain private.

dang• 9 years ago

What are you talking about? Put those numbers back where they came from - your ass.

Whoa. That kind of thing will get you banned here, as you're surely aware. Please post civilly and substantively, or not at all.

https://news.ycombinator.com/newsguidelines.html

maxsilver• 9 years ago

Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset

It's not though. You purposefully used examples of public or non-profit groups to make it sound like a benefit. But it's not. A more fair comparison would read:

It's like someone came to your town and I said, "I want to build a $20m McDonalds, Mobile Gas Station, WalMart and a Best Buy". I would hope your town says "good luck with that" and not "that's amazing, how should we corrupt the local market to make it easier for you to do that". Amazon is no different in any way except scale.

In a sane world, Amazon HQ2 would terrify cities, who will need to ensure they have extra taxes in place for Amazon, to ensure the city can handle the massive pollutions Amazon HQ2 will generate in the local housing markets, local economy, and local infrastructure.

We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got

Proven? Can you cite some examples? I've only seen "Public/private partnerships" used as a label to mask corruption and theft; as a way to socialize any losses but privatize any gains.

dumbfounder2• 9 years ago

Amazon workers are highly paid, thus bringing the average income up, and contributing to taxes, strengthening the housing market, and much more. That's interesting that you call it pollution. High paying tech jobs are pollution? That doesn't compute to me.

Companies that compete for talent will be pissed, but for lots of others it's a huge win. The only way I see it as a "bad" thing is if you are in a small city that wants to remain small.

It's absolutely nothing like building a McDonalds.

wmeredith• 9 years ago

"Public/private partnerships" used as a label to mask corruption and theft; as a way to take socialize any losses but privatize any gains

I couldn't have said it better.

apercu7• 9 years ago

Devils advocate:

It's possible that Amazon will be a drain on a region.

The cost of housing goes up for everyone.

The best and the brightest of the region get sucked back to HQ1

The startup ecosystem in the region gets drained to work at/for Amazon

Robotbeat• 9 years ago

Cost of housing going up also increases the wealth of homeowners in the area. This is not purely bad.

walshemj7• 9 years ago

Or it creates its own mini environment of tech companies form by alumni of amazon - one large company tends to do that.

Take games workshop in nottingham there is now a large number of spinoff games and mini companies formed by ex GW alumni

Angostura• 9 years ago

If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!”

This sounds very similar to the Garden Bridge project in London. It was eventually canned because it was going to take huge amounts of public funds and provide not a lot of benefit.

peterwwillis2• 9 years ago

Nobody is arguing that.

They're arguing that the states are giving away money. Not that they aren't providing services.

And nobody thinks Amazon moving to their town will create a silicon valley 2. Plenty of cities host huge employers. They don't become magnets for that industry. They just get fat tax breaks.

Many cities actually get worse with these giant companies throwing their weight around. Under Armor is single handedly reshaping southeast Baltimore, which of course is not only upsetting neighborhoods but pushing people out, not to mention small businesses replaced by national chains.

Finally Amazon has hundreds of billions. They do not need a handout from a poor city.

refurb10• 9 years ago

They're arguing that the states are giving away money.

What money are they giving away? If Amazon never comes, then there is no Amazon taxes and thus no tax breaks.

Right now those towns are starting out at zero. If they are smart, they structure the incentives to make sure they are net positive. If they screw that up, well that's on them.

walshemj7• 9 years ago

Actually they do motor plants support a vast number of JIT subcontractors - only Tesla seems to have gone back to vertical integration.

refurb10• 9 years ago

Completely agree. The reason why we have ever-more-powerful and continuously-cheaper electronics is because of the "race to the bottom".

Doing things better and cheaper is the reason why our standard of living keeps increasing.

I for one would love to live in a city that said "we need to do more with the money we currently have."

s73ver_8• 9 years ago

So how does Amazon coming in help a city get more affordable housing?

logfromblammo• 9 years ago

Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.

Nothing. We exist to support our tax-paying residents and local businesses, and so you will have to work with everyone that's already here if you want something in particular. You can probably expect a new bus line, an extension of the road, sewer, and water system, one new police station, one new firehouse, two new elementary schools, half a middle school, and a new wing of classrooms at the nearest high school. The quality of all that will depend on how much your company improves the local tax base, so don't get too stingy, or the local news will have no problem airing all the dirty laundry for Amazontown a couple years down the road. The zoning board will be busy changing colors on their map so that your people can eventually spend money on drive-through coffee and dog-walkers without having to go all the way downtown.

Amazon needs to come to the table with the attitude "We're going to increase your tax base by $X. What's your plan for spending it?" The ideal city just has to blow the dust off the growth plan they already have and write new names and dates in all the blanks.

Any city that says, "we're going to give you a tax discount" is basically saying "we would rather you send your money off to Wall Street than actually spend it to improve the community that you intend to join here."

I suppose a city could also offer a bureaucrat dedicated to expediting issues related to the new HQ, like building permits and inspections and NIMBY lawsuits, if they wanted to pay the cost of that person's salary as a donation to the city. I just never quite understood the concept of offering discounts to rich people.

rflrob• 9 years ago

I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprises which reside there.

I think the idea is that cities definitely should compete to provide the best services for the commercial enterprises, but that those service should not include breaks on taxes or land giveaways. If building a new transit station, boosting spending on public schools that the Amazon engineers would want, and restructuring building and zoning codes to increase the housing supply will make your city more attractive to Amazon, by all means go ahead, since those should redound to everyone, regardless of whether they work for Amazon. But Amazon seems rich enough to me that they would be just fine even without tax breaks on construction materials or payroll taxes.

the_gastropod• 9 years ago

I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprises which reside there.

Part of the problem here is the people negotiating don't really have much skin in the game. It's easy to negotiate with other people's money. There's virtually no recourse for their poor decisions. See: suburbia.

At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions

We're projecting what a theoretical second campus of a 23 year old company will be 50 and 75 years out? Please. Did we learn nothing from the nearly homogeneous business cities like Detroit and "coal country" today? Cities built around one industry or one company will fail.

Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents

Amazon developed out of an existing city. Cities should invest their efforts to nurture their own businesses that one day may grow and provide jobs. Importing an existing business is a rather short-sighted proposition akin to a get rich quick scheme.

Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.

Agreed. Amazon is going to go where they're going to go. Cities should stop clamoring over themselves to give bigger tax breaks to one of the biggest businesses on the planet.

Cyberdog2• 9 years ago

It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks - and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.

When the incentives cross the line from tax breaks to free stuff, it's capitalism, all right - crony capitalism. Not the type I and other libertarians care to see.

Never thought I'd see the day where I'd be nodding along to a Keith Ellison tweet.

unethical_ban3• 9 years ago

It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard.

It's completely capitalist loyalty to business above community to dismiss every concern about selling the farm to Amazon as "whining".

cirgue• 9 years ago

We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got.

No one has proven this. There is plenty of evidence pointing to the opposite conclusion.

It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard.

On the contrary, it is 100% rational for cities to want to get HQ2 and give away absolutely nothing, and possibly even get some concessions from Amazon itself.

They have to have another headquarters, and there are less than twenty cities that make any degree of sense for them to move to. I would bet that there are only two or three serious contenders, and the only way they're not going to go with whatever first choice they have currently would be a truly enormous handout. The whole bidding war going on here is, in my opinion, to try to get a sweeter deal from whoever they've already picked.

40acres2• 9 years ago

I don't understand people who are conflating the search for HQ2 with Olympic bids and sports stadium bids. The Olympics are most likely a one time thing for a month, although in the future I could forsee it revolving around qualified sites, it takes a lot to convert facilities used for the Olympics into regular infrastucture (see Atlanta and LA).

Stadiums I think overall have a better impact, as they can create or revitalize an economic area, provide longer terms jobs, and sports teams provide back to their communities.

Amazon is on a completely different level. They will bring thousands of skilled workers, and generate trillions in economic activity. HQ2 will stand for a long time, it can completely change the trajectory of a city. There are many many issues with bringing Amazon to your city, home prices and infrastructure to name a few -- but isn't this a problem you'd rather have than not?

tbirrell3• 9 years ago

As someone who will probably never work at Amazon, or in any way benefit from their presence, the issues of housing prices and infrastructure are important to me. I'm not willing to pay an effective Amazon-tax in both my rent and commute time for for the dubious honor of saying I live in the same city as HQ2.

TheCowboy• 9 years ago

I'm not a fan of cities dishing out perks, but what you said amounts to NIMBYism. I'm sympathetic to those concerns but housing prices aren't solved by keeping out newcomers or being against development. There can also be an indirect income boost that comes with an increased demand for labor, and it can help make the local economy more robust.

I do think the concern about unforeseen infrastructure costs are warranted, especially if a city doesn't excel in urban planning or has problems with NIMBYism derailing good plans. But I think most of the cities on the shortlist are fair game and could handle a project of this scale.

conanbatt2• 9 years ago

Its reasonable that if you are individually not profiting from it, you should vote against, but most people will benefit (every single landlord, lots of businesses that will sell stuff, and all the people that would move and get a job there). If it were to be put up to a vote, the vote would be positive. If it were to be put up for an economic analysis, the economic analysis would be positive.

skt5• 9 years ago

"in any way benefit from their presence"

how did you reach that conclusion?

zhjansbnas• 9 years ago

The whole point of cities is economic agglomeration. If you don’t want that, why live in a city at all?

misterbowfinger2• 9 years ago

Just a small counterpoint - the United Center in Chicago was supposed to revitalize the surrounding neighborhood, but in practice drove it down to the ground. Same deal with Yankee Stadium and Citi Field in New York.

keepper• 9 years ago

The area around Shea stadium/Citi field was always an industrial area... Re-zoning hasn't happened. ( Shea Stadium was built in the 60s )

The area around Yankee Stadium has always been a vibrant community. Yankee stadium was built in the 1920's

Not sure that you are a new yorker with those two statements... Shea stadium was never re-zoned, so re-vitalization was never its intended goal... Yankee stadium surrounding area has gone thru the usual cycles every other nyc neighborhood has, and the stadium location is almost 100 years old!

d4rti• 9 years ago

Do you have any reputable sources on Stadiums being an economic benefit?

Everything I have seen suggests otherwise, eg. https://news.stanford.edu/2015/07/30/stadium-economics-noll-...

squozzer• 9 years ago

If the benefits would split 20 ways, collective bargaining might work. But it doesn't seem that they would, especially given the geographical dispersion of the finalists.

Regions (such as US Northeast, or Nashville - Atlanta - Raleigh) might be able to assemble a useful coalition to share the bennies and any pains.

Not sure if BOS and NYC wouldn't stab each other in the back.

Bartweiss2• 9 years ago

If the benefits would split 20 ways, collective bargaining might work.

I'm shocked to not see this objection in the article or elsewhere in the comment section. If the shortlist were final and cooperation could be enforced, collective bargaining would still only work if the top 20 cities all had a similar chance without perks.

As is, some of the cities would obviously be out of the running in a no-perks race, so collective bargaining (even over many iterations with many companies) is a clear loser for them. That undermines the entire proposal. It could be repaired if strong contenders like DC agreed to let weaker contenders offer perks up to parity with the strongest players, but that's vastly less plausible or easy to calculate than "no perks".

Animats• 9 years ago

(suggested) competing cities form a non-aggression pact

That's been suggested before at the state level. But it runs into a Constitutional limitation. Interstate compacts have to be approved by Congress. Article I, Section 10: "No State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State." US cities are legally parts of states, not standalone entities.

Trying to get an anti-business deal like that through the current Congress would not work.

Cyberdog2• 9 years ago

Does this apply to municipalities?

Chaebixi4• 9 years ago

> US cities are legally parts of states, not standalone entities.

A city is a municipality.

mynegation4• 9 years ago

I commend the position of Toronto's mayor John Tory who said (I am paraphrasing here): "no tax breaks, if you come - come based on our merits as a city alone".

Toronto is not likely to get Amazon for various reason (political climate being probably more important than tax breaks)

apercu7• 9 years ago

To clarify, you mean the current US political climate?

In all honesty, unless Amazon was going to go to Mississauga or Markham or something like that, I'd rather not have them. We need more jobs in the burbs, not more pressures on the inadequate Toronto infrastructure.

mynegation4• 9 years ago

Sauga and Markham are outside of Toronto municipality and - strictly speaking - are already not on the list. From the shortlist, they do not look like something Amazon is shooting for. They are in Seattle proper, not Kent or Everett.

Yes, I mean US political climate. Ontario Provincial govt created the commission headed by Ed Clark and issued a bunch of statements[1], but I had the impression that above city level they are like whatever.

[1] https://news.ontario.ca/opo/en/2018/01/statement-from-premie...

burfog• 9 years ago

Political climate is something that could go either way.

A city like Seattle would be comfortable for existing employees. It would do nothing to attract talent that dislikes that political climate.

mynegation4• 9 years ago

That's right. I actually have a pet theory that Toronto has already been chosen, but all this shortlisting thing is a theatre and removing almost all Canadian cities in the first round is for plausible deniability of the preference for Canada. I know, I know...

Bartweiss2• 9 years ago

Toronto is not likely to get Amazon for various reason

Which is the reason this competition happens. The top few candidate cities could all call truce and trust that they'll come out ahead over many iterations, but cities that expect they're not in the running without perks will never win the collective bargaining game. So they put up money, and the original strongest players respond to secure their positions, and the race begins.

walshemj7• 9 years ago

cough cough Vancouver aka Hollywood north

mynegation4• 9 years ago

LOL Toronto is vying for this nickname too. I cannot know why Amazon decided against it for the shortlist, but I suspect that cost of living and housing situation that is even worse than Toronto and lack of the geographic diversity played the role.

CodeSheikh• 9 years ago

Odds are in favor of Virginia (look up AWS and other data centers in that area). But it is still interesting to see how these cities are competing with each other and are throwing out tax payers money to lure in Amazon to moving in their backyard. I wonder if they would give similar incentives to small and upcoming businesses and startups.

bpicolo• 9 years ago

I'm not sure the data centers have an effect there. They don't have need for their non-datacenter employees traveling to visit the DCs (those are hyper locked down)

lucas_membrane• 9 years ago

Large corporations often make deals with other large corporations, and they prosper. Workers used to do better when a larger percentage of them collectively bargained. But somehow, the possibility that citizens, who are represented by various local governments, would use those governments to cooperate with each other across the lines on the map sounds like science-fiction and is disparaged as far-fetched and unworkable in many of the comments here. What is it that Americans don't understand?

Do they understand that Seattle, home of HQ1, has home-grown homelessness that is rising?

Do they understand that Amazon will automate away any job outside the executive suite that it can?

Do they understand the power that Amazon will have over the lucky city that makes the investment?

Do they understand that 50 years is now the standard term for the tax breaks that Amazon will be offered?

matchbok2• 9 years ago

Homelessness is not Amazon's problem.

Automation is good. Do you want us to ride horses to work?

Agreed.

s73ver_8• 9 years ago

"Homelessness is not Amazon's problem."

But it is the problem of the city. They absolutely need to keep this in mind while negotiating with Amazon, who has a reputation for driving housing prices sky high, thus exacerbating the homelessness problem.

"Automation is good. Do you want us to ride horses to work?"

Automation is neutral, as it does cost people jobs, not all of whom can be retrained for something else. It also drives down wages. Hell, productivity has been skyrocketing for the past 30-40 years due to automation, yet workers have seen a pittance in rising wages.

untog2• 9 years ago

Homelessness is not Amazon's problem.

Not directly, no. But Amazon is based in a city that has a large homeless population. It is in the interest of their employees to see that population fall, therefore it also ought to be in Amazon's interest.

Automation is good. Do you want us to ride horses to work?

Of course it is. But I see this reaction a lot - that anyone asking questions about our automated future is some sort of regressive idiot who hates technology. Far from it. You can see and be in favour of the obvious benefits automation brings, while also questioning what society looks like when a lot of the jobs people currently have don't exist. That doesn't mean "stop automation", it just means "think about the effects of it while we do it, ideally before".

Brendinooo• 9 years ago

Automation is good. Do you want us to ride horses to work?

No, but it's not an uncommon opinion in these parts that riding to work on anything other than a bike is a flaw in our land use.

Regardless of whether or not you agree, both a bike and a car replaced a horse, but they had drastically different effects on society.

stretchwithme4• 9 years ago

Technology is why we have the prosperity we have.

There are plenty of countries without automation. And many allow anybody to immigrate to them. But don't expect air conditioning You'll have to hire a person to wave you with a fan.

And don't expect those job-killing tubes to bring you your water. Hire a water carrier like everybody else.

And in the truly pure countries, be prepared to drag your stuff with you without labor saving wheeled contraptions like the wheelbarrow.

TaylorAlexander• 9 years ago

Automation is a tool that has both good and bad effects.

It is great that we are improving productivity but automation also furthers concentration of wealth by distributing fewer profits to workers.

It is not simply good. If we don’t understand the negative effects we are more likely to become victims of those effects. If we do understand the negative effects we can make sure to prepare ourselves for the change in the landscape.

jknoepfler2• 9 years ago

I certainly don't want you riding a car into a crowded downtown. I personally walked to work in downtown Seattle (to Amazon, ironically). I'd vote for any local candidate who pushed for an aggressive pedestrian-only zone in the city with a strategy for expanding mass transit access and park and rides. The technology for affordable mass transit is almost a century old; I think incremental, sustainable progress on that technology is better than anything the Tesla has to offer. Wide-spread single-user cars are one of the worst things to happen to this country.

And homelessness can, in fact, be reasonably construed as Amazon's problem (or a problem caused by Amazon if we're a city thinking of letting Amazon in). The exacerbation of homelessness is an externality caused in part by Amazon's concentration of high-wage jobs in a small city and the subsequent skyrocketing of property values combined with mindless gentrification. So it's both a cause for concern when courting Amazon, and it's a form of pollution that they bring to town that it is not a priori unreasonable to hold them accountable for (to the extent that they are responsible for it).

dbingham2• 9 years ago

Automation is only good if the benefits of said automation are shared broadly among the populace. For the time being, that is not the case. Instead the benefits are held closely by only a tiny percentage of the population, who use said automation to collect enormous power and force an increasingly large number of people to live in increasingly precarious circumstances.

80% of corporate stock is owned by a mere 1% of the population. That 1% are the people who, right now, benefit from automation.

If we reach a world where corporations are replaced by worker cooperatives, or a 90% top marginal tax rate (and similar wealth tax) support a generous basic income -- then automation will be good. Right now it's an acute danger to the survival of most people.

adamsea3• 9 years ago

Is Amazon not composed of human beings who are citizens of various cities, states, and nation(s) in which there is homelessness?

zanny2• 9 years ago

Homelessness is only not Amazons problem because corporate charters annul the company of any moral responsibility.

Amazon had 135B revenue and 540k employees in 2016. By comparison (according to the UN) that would have made Amazon the 60th largest economy in 2016, after Hungary (138B / 9.5m people) and before Ukraine (132B / 42m, which has been dropping considerably since).

That is an insane amount of wealth to throw around to influence all manner of people for the sake of a corporate charter. Not only that, but they are only "responsible" for 540k people versus the millions other countries of comparable scale have.

I'm not saying companies should act as governments. I am saying having businesses of that scale is highly distortionary in how governments around them behave, and since the aim of a public corporation is to profit, distortions will be made in the name of profit.

The fact that Amazon is almost certainly more influential on the international stage than Hungary or Ukraine should be horrifying, because nations are at least usually responsible to their people. Amazon is in no way responsible to its employees, nations it operates in, or even its own executives. Its only responsible to the largest stakeholders that own it, and that is terrible for the rest of us.

bsder• 9 years ago

Automation is good. Do you want us to ride horses to work?

I will challenge you on this.

Automation is efficient.

The problem is that maximally efficient is minimally robust.

Cars are wonderful, unless something disastrous happens to your roads. Then horses are better.

Amazon just-in-time delivery is great. Until everybody needs the same thing--at which point local grocery stores with inventory matter.

Efficient doesn't always equate to good.

xg153• 9 years ago

Do you want us to ride horses to work?

As things are currently going, I might. Horses are not polluting the environment (in the extent cars do), they don't track me and they can't be turned off remotely if I declined to renew my subscription.

794CD01• 9 years ago

Other companies might balk at it, but I trust Bezos' Amazon to automate away executive jobs if they can find a way to do so effectively.

na852• 9 years ago

I would never trust a corporation to do anything they're not contractually obligated to do.

tdb7893• 9 years ago

I'm not really sure how they could negotiate together. They could cooperate somewhat but if a city looks like they weren't going to get the HQ it would be in their best interest to leave their collective bargaining pact and try to undercut it to get the HQ.

wmil• 9 years ago

has home-grown homelessness that is rising

I'd be curious to see any stats on this. How many of the current homeless were actually living in the city 10 years ago?

I'd expect that many Seattle's homeless are migrants from parts of the US with harsher winters.

jld• 9 years ago

It's not a perfect metric, but 86% of people accessing publicly-financed homelessness services in 2016 reported that their last residence was located in King County.

https://www.seattletimes.com/seattle-news/politics/king-coun...

seanmcdirmid• 9 years ago

Seattle has always had homeless people, from the time "skid row" meant the place where you skid freshly cut logs to the waterfront to be cut. Likewise, Portland, Vancouver (BC), and (to a lesser extent) Spokane have and have had very similar homeless problems of roughly the same nature. Basically, these three cities have acted as a catchment for almost anyone in BC, Washington, Idaho, Montana, Oregon, that fall through the cracks (and ya, you'll find homeless people from places like Bonners Ferry).

Basically, its the red rural areas around these cities exporting their problems to the cities that actually provide services to deal with them. Couple that with kids from these areas with little education going to Seattle to make it, and not making it.

randomdata3• 9 years ago

Workers used to do better when a larger percentage of them collectively bargained.

What I find interesting is that the unionization rate in Canada today is more or less on-par with the peak unionization in the USA, and is one of the strongest unionized countries in the world. Yet, I constantly hear Canadian workers complain about how they are unfairly compensated compared to Americans, where unionization has practically disappeared, doing the same job.

Most Canadians I talk to seem to think that labour declined in the late 70s-early 80s, which is actually when Canadian unionization was at its peak. However, those are the years we really started to see union decline in the USA. American workers could understandably make that claim. Canadian workers shouldn't. Those should have been the best years for labour ever, based on union strength.

Is this entirely grass is greener syndrome? Canadians do tend to focus on American media more than their own, and the decline of unionization in the USA may have led them to believe that the decline also applied to Canada. Or are their points valid and higher unionization doesn't bring the effects we like to think it does?

ahartmetz• 9 years ago

In Germany, there are very well paid mostly manual labor jobs in unionized industries, especially at the big car manufacturers. In non-unionized industries, wages can be much lower, down to about 30% of what workers in the car industry earn. That is before taxes, though. After taxes, the difference is about 2:1.

There is also data showing that unionized workers get about 1% more of a scheduled raise each year.

acover• 9 years ago

Is it possible to show causation?

afarrell2• 9 years ago

Is this across industries? Or specific to software engineering?

adamsea3• 9 years ago

It would be helpful, to really dig into this, if we could look at a survey or study, as opposed to hearsay.

gerbilly3• 9 years ago

Yet, I constantly hear Canadian workers complain about how they are unfairly compensated compared to

You have to look at total compensation.

We don't go bankrupt in Canada from medical bills.

flukus• 9 years ago

Yet, I constantly hear Canadian workers complain about how they are unfairly compensated compared to Americans, where unionization has practically disappeared, doing the same job.

Sure you're comparing like for like? For people on the high end like software devs you can definitely get paid more in the US, but in most of the developed world no one serving fries is crying out for US wages. It's the latter that are more likely to be unionized.

bcaulfield• 9 years ago

Or maybe think like a corporate raider: buy a substantial piece of a company and demand it move to your city?

chaostheory• 9 years ago

For reasons already pointed out by others, this isn't a pragmatic idea. i.e. Amazon could just restart their search, etc..

imo what's more realistic is that cities on the top 20 list that are geographically close enough, should band together and offer combined benefits e.g. New York & Newark; Montgomery County & N Virginia & DC

nostromo• 9 years ago

Might this violate antitrust law?

disease• 9 years ago

"I've sold monorails to Brockway, Ogdenville, and North Haverbrook, and, by gum, it put them on the map!" -Jeff Bezos

mikeash• 9 years ago

Because they’re all starry-eyed about the possibility and don’t care what it costs.

I live in the DC area. We’re on the list three times: DC itself, plus VA and MD suburbs. The prospect of cooperating on a bid was brought up, but they’re not willing to do it. They want to win and they want it all for themselves.

tc• 9 years ago

Collective bargaining is probably the wrong metaphor. This is the principle-agent problem.

The citizens would be better off if the elected officials worked to make their city the best possible place to do business for all companies on an even playing field. The city would then attract plenty of good companies simply on its merits.

The elected officials instead benefit from granting favors, being able to brag about how they brought in a big name like Amazon, and getting Jeff Bezos on their personal speed dial.

This is also why collective bargaining will not happen here. The interests of the elected officials are not at all aligned. They're competing for a scarce resource, and they themselves largely do not bear the costs of trying to acquire it.

walshemj7• 9 years ago

You would need every state to have the same income and sales tax then.

doggydogs942• 9 years ago

I feel confident that Amazon will not pick a place with cold weather or hurricanes.

debt• 9 years ago

I can see it now: "Amazon HQ2 Candidate Cities Decide to Collectively Bargain."

"Boise, Idaho - previously not even in the running - is officially the home of the new Amazon HQ2!"

mlinksva• 9 years ago

Nevermind collective bargaining; company-specific incentives should be illegal.

stretchwithme4• 9 years ago

Because there are other cities not in these 20.

jroseattle• 9 years ago

This entire thought process assumes that tax incentives and such are the difference maker in this process. That it's an auction that goes to the highest bidder. This is highly inconsistent with Amazon's approach for long-term projects.

Do they want their HQ2 home to have some skin in the game? For sure. But what form does that take?

Suppose a city could offer Amazon $50MM in tax credits over some duration of time. Suppose another city offered to invest into local infrastructure investment -- roads, transit, broadband, etc. While $50MM is a lot of money (even to Amazon), the second alternative is much more appealing.

The HQ2 winner is going to be someone who is forward-thinking, not just whoever rounded up the best gift basket.

notyourday• 9 years ago

I say biggest gift basket wins. Newark, NJ

samlevine• 9 years ago

Because Amazon could build their own city if they had to. The US has a lot of land, power and freeways leading to international airports.

walshemj7• 9 years ago

The main reason is the devolved nature of government in the USA in the UK Amazon would have its arm twisted by the government in a you scratch my back ill scratch yours.

For example BT had development centres in all 4 countries that make up the UK mainly for political reasons - and why the BBC forcibly moved people to Manchester as part of the negations over the BBC charter.

kazinator2• 9 years ago

and instead collectively bargained with the company?

Because they are not a collective; only one of them gets Amazon HQ2.

Let's project this to actual "collective bargaining" in labour. If you and 19 other people were negotiating in such a way that only one of you gets a raise and improved working conditions, and the remaining nineteen others get fired, would you still engage in "collective bargaining"?

intrasight• 9 years ago

I just hope they don't come here to Pittsburgh. For the vast majority of citizens, the arrival of Amazon HQ2 will be a net negative.

nielsole• 9 years ago

The reason is game theory. Every city has an incentive to leave the bargaining group and make its own proposal.

Taxes in general are a similar topic.

In a functioning democracy, the government/legislator should set the taxes as they see fit, yet with increasing globalization, countries become price takers (https://www.investopedia.com/terms/p/pricetaker.asp), because many taxable goods become more mobile.

This is in line with this observation:

Rep. Keith Ellison, D-Minn., has also offered a dissent to the process.
“Something is deeply wrong with our economy & democracy when local government offer up their
tax base to a corporation worth over $500 billion,” he wrote on Twitter.

Game theoretic constructs, where the social optimum solution is not reached can be seen in other topics as well. Take climate change for example, where a lot of governments know what the best outcome for the world(and thereby themselves) is, yet act in their own best interest and emit CO2. A collective "bargaining" solution would make sense, but has yet to happen.

Finding solutions for this is challenging and not as easy as the article puts it.

dragontamer• 9 years ago

The reason is game theory. Every city has an incentive to leave the bargaining group and make its own proposal.

Except 3: Montgomery County, Washington DC, and Northern Virginia.

If Virginia gets Amazon, the other two benefit with increased commercial activity. Even if the taxes aren't directly collected from Amazon HQ2, the increased shopping, increased services, and all that will lead to major benefits for the entire region.

There's one group that can collectively bargain, and benefit even if its rivals win over. That gives that particular group a major edge.

Its unusual that three of the top20 positions are within a 20-mile radius. Amazon must be really considering that area.

https://i0.wp.com/www.thedailychronic.net/wp-content/uploads...

"Northern Virginia" is basically Arlington. As you can see, Arlington / DC / Montgomery County are literally next to each other.

------

Newark NJ and New York City are the other city-grouping that could work together on the Amazon deal.

elbasti• 9 years ago

Because cooperation only happens in the repeated version of the prisoner's dilemma.

znpy• 9 years ago

If you don't want cities and states to beg companies with tax exemptions then you should not have such tax exemption ability in the first place.

arikrak• 9 years ago

Answer: Since there's no way all the cities in the US and Canada would actually agree to such a pact, so Amazon will just pick one of the remaining cities.

I agree that cities should not be offering free land to a company. But it seems OK to offer tax breaks, considering how much taxes a company like Amazon will be paying in the long term. (Not to mention the even more significant taxes the employees will pay.)

throwaway5752• 9 years ago

Because they don't have any leverage in this situation. I read the article, I don't see how this fundamental reality can be worked around. City Y has no disincentive to undercut City X until the NPV of HQ2 is equal to the cost of their incentive package. This is just a reverse auction process.

Bud• 9 years ago

This is so charmingly naive. I'll tell you why they don't collectively bargain. Because what will happen is, one or more of the cities will take advantage, cut a backroom deal, and win. That's why.

mathattack• 9 years ago

Too much incentive for 1 of 20 to break ranks. The cities won’t have a good way to punish the scab

rdlecler1• 9 years ago

Because Amazon will make a point to go to the one or two defectors. Iterated Prisoners Dilema dynamics only work when you have iterated interactions. In large economies where you don’t have repeated interaction with other players there is incentive to cheat.

yumario• 8 years ago

I found this whole competition for Amazon absurd. Lets think about the prisoner dilemma:

    If A and B each betray the other, each of them serves 2 years in prison
    If A betrays B but B remains silent, A will be set free and B will serve 3 years in prison (and vice versa)
    If A and B both remain silent, both of them will only serve 1 year in prison (on the lesser charge)

Now A, B are cities and the can compete(betray) or not compete(stay silent). If they both compete (1th case) is the worst outcome because Amazon does not need a tax break or incentives. It's one of the richest companies in world already!

A competes, B does not (2th case). Good for city A because they can offer an small incentive an still get Amazon, bad for city B.

A and B do not compete. Good for both as the overall economy of the country would improve.

Why Don’t the 20 Cities on Amazon's HQ2 Shortlist Collectively Bargain?

Related Stories