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The Chase For Amazon Will End In Tears

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The Chase For Amazon Will End In Tears

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Reprinted with permission from Creators.

 

The mayors doing their utmost to get Amazon’s second headquarters for their cities are having a grand time informing Jeff Bezos of everything they have to offer. They should enjoy this part of the chase, because what comes next won’t be much fun.

They are about to get some insight into how the search for talent goes in Major League Baseball. St. Louis Cardinals general manager Michael Girsch noted the crucial moment in pursuing a coveted free agent player. “We sometimes call it your ‘puke point,'” he told the St. Louis Post-Dispatch. “Sometimes you make an offer and you’re not sure whether you’ll puke if he says yes or puke if (he says) no.”

Every city wants the Amazon facility, and why not? The company says it will spend at least $5 billion building it and eventually employ up to 50,000 workers. “This is the trophy deal of the decade,” one expert told The New York Times.

Chicago Mayor Rahm Emanuel vowed, “It’s going to be Chicago, county and state with one voice and all resources, all hands on deck and all creativity to that effort.” He’s not the only official in the area with big dreams. Waukegan, Aurora and Gary also plan to enter the contest.

So does just about every other big city, from Los Angeles to Denver to St. Louis to Miami. It would be easier to list the ones that are staying out. Even Fargo-Moorhead, straddling the border of North Dakota and Minnesota, plans a bid — which would have to be rich to offset the average daily January temperature of 9 degrees.

New York City? Submissions have come from 23 neighborhoods. At least a dozen cities just in North Texas have hopes. Stonecrest, Georgia, offered to create a new town and name it Amazon. From the tenor of the responses, the only problem the winner will have is building enough vaults to hold the riches that will pour in.

What the local and state officials hoping to land the deal don’t acknowledge to their constituents is that the company holds all the cards. There is only one Amazon second headquarters on the horizon. With a monopoly on something that is in great demand, it can pit aspirants against one another to boost its profits. The governments that want the facility will have to take part in a merciless bidding war that will extract every nickel they have to spend, if not more.

“Amazon didn’t become Amazon by leaving money on the table or being organized as a 501(c)(3) charity,” University of Chicago economist Allen Sanderson told me. “If it’s really worth $x million to the city of Chicago to land Amazon, why would that firm not charge us, one way or another, $x million minus 50 cents to come here?” If Chicago won’t pay the toll — in tax incentives, direct subsidies, infrastructure outlays and other concessions — another place will.

We have seen this movie before — every time the International Olympic Committee takes bids for the Summer or Winter Games, enticing cities to spend themselves into poverty to play host.

Reports the website FiveThirtyEight, “Host cities almost invariably fail to cover Olympics costs with associated revenues (for instance, in 2012 London took in $3.5 billion in revenues and shelled out something like $18 billion to host the games), leaving them with piles of debt and various useless venues.”

Cities are at even more of a disadvantage with Amazon because the games come along every two years — and the next corporate undertaking of this magnitude may not. Another difference is that many city officials have learned from the ruinous experiences of previous hosts, which are not available here.

It may be helpful for politicians and civic leaders to remember that while Amazon may offer a once-in-a-lifetime chance, the opportunity to spawn growth and attract businesses is perpetual and far less expensive.

A locality that complements its natural advantages (location, climate, culture, safety) with responsible governance, reasonable taxes, modern infrastructure, good schools and cost-effective regulation will prosper over time without paying ransom to corporate giants. A locality that neglects such essentials — looking at you, Chicago — will struggle.

Trying to make up for self-imposed shortcomings by trying to buy Amazon’s favor is a bad strategy. After the decision is made and Amazon arrives, many cities will be sorry they lost and one will be sorry it won. And every city will know its puke point.

Steve Chapman blogs at http://www.chicagotribune.com/news/opinion/chapman. Follow him on Twitter @SteveChapman13 or at https://www.facebook.com/stevechapman13. To find out more about Steve Chapman and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

 

 

5 Comments

  1. Daniel Jones October 9, 2017

    I live in Virginia. Every frigging year I hear how the companies and real estate guys are going to come in due to business-friendly policies. The Commonwealth, such a contradictory title, spends a good portion of the general fund to offer these enticements.

    I remain unsure which is worse, when a company or an entrepreneur speculates with an expensive study (typically paid for by taxpayers) then declines, or when they go through with a project that inevitably costs us a frig-ton more than is generated.

    Every. Frigging. Year.

    Reply
    1. FireBaron October 9, 2017

      Daniel, the problem is the people that the residents of the Commonwealth keep electing. If you don’t want them wasting the state’s money on offering bribes to businesses to come, vote them out. Instead, vote in people who will improve the education system, the infrastructure and the health care system. If you show a company that you can support their operation, provide quality education to their employees’ children, and provide for their medical needs, that shows your state is playing the Long Game.

  2. Aaron_of_Portsmouth October 9, 2017

    Marx & Engels, Lenin, and a few others, must have had some inner vision of the damage that might occur as Free Market concepts became the new and exciting economics model. But Communism proved to be the polar opposite in terms of devastation wreaked, compared to the inordinate greed and crass materialism offered by the early European launch of the laissez-faire approach to business. As well, Adam Smith’s desire to implement a healthy dose of morality into his system was quickly ignored, especially when the model transferred across the Atlantic.

    Early America relished the notion of rugged individualism, little regulation, and the ethos of acquiring as much capital as the individual’s initiative and drive for money would allow, grew with each generation, and the GOP today has been very keen in going overboard on the urge to satisfy the lust for money.
    Amazon and other businesses are just an extension of this mania for money, and will do whatever it takes to fulfill this free market goal—a goal which is self-destructive to the company and injurious to the public in unforeseen ways.

    Not that money is inherently evil; in fact, it is a necessity for any person to help enhance any God-given potential to develop her/his inner potential to innovate and advance society. But without moral restraints and a spiritual basis on which to properly channel such urges and potential, we end up with a sort of monster of an appetite for more material goods and wealth.

    =====================================================================

    “Be united in counsel, be one in thought. Let each morn be better than its eve and each morrow richer than its yesterday. Man’s merit lieth in service and virtue and not in the pageantry of wealth and riches. Take heed that your words be purged from idle fancies and worldly desires and your deeds be cleansed from craftiness and suspicion. Dissipate not the wealth of your precious lives in the pursuit of evil and corrupt affection, nor let your endeavours be spent in promoting your personal interest. Be generous in your days of plenty, and be patient in the hour of loss. Adversity is followed by success and rejoicings follow woe. Guard against idleness and sloth, and cling unto that which profiteth mankind, whether young or old, whether high or low.

    (Baha’u’llah, Tablets of Baha’u’llah, p. 137)

    ” …Wealth is praiseworthy in the highest degree, if it is acquired by an individual’s own efforts and the grace of God, in commerce, agriculture, art and industry, and if it be expended for philanthropic purposes. Above all, if a judicious and resourceful individual should initiate measures which would universally enrich the masses of the people, there could be no undertaking greater than this, and it would rank in the sight of God as the supreme achievement, for such a benefactor would supply the needs and insure the comfort and well-being of a great multitude. Wealth is most commendable, provided the entire population is wealthy. If, however, a few have inordinate riches while the rest are impoverished, and no fruit or benefit accrues from that wealth, then it is only a liability to its possessor. If, on the other hand, it is expended for the promotion of knowledge, the founding of elementary and other schools, the encouragement of art and industry, the training of orphans and the poor – in brief, if it is dedicated to the welfare of society – its possessor will stand out before God and man as the most excellent of stand out before God and man as the most excellent of all who live on earth and will be accounted as one of the people of paradise.

    `Abdu’l-Baha: Secret of Divine Civilization Pages 25-26

    Reply
  3. Dapper Dan October 9, 2017

    As a Seattlite I can tell you firsthand the affect Amazon has had on the Emerald City. Home prices have increased dramatically which is nice if you bought a home when they were affordable. But of course we have much higher taxes now with the increased property wealth we have here. Also more and more people have moved here and traffic is an all day nightmare no matter where you live. The city is a lot different from the blue collar city that I grew up in during the 60’s and 70’s. It’s definitely a double edged sword for whoever lands Amazon as their second city headquarters. Yes there will be more jobs but the cost of living there will price a lot of people out as well. Sound Transit is building light rail now but it’ll be a good 15 to 20 years before it’s completed

    Reply
  4. johninPCFL October 9, 2017

    Walmart does exactly the same things with their “super centers”. Take all the local tax revenues off the table that they can, take county property tax revenues, take state incentives. Then a few yeas into the program, just about when local revenues begin to offset the huge tax benefits they demanded, close that place and open another in the next city (or county) over, with the same generous deducts.

    Oh, and pay their employees starvation wages so that 85% of them are on food stamps.

    Reply

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