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'Amazon's HQ2 Was a Con, Not a Contest' (recode.net)
An anonymous reader quotes a report from Recode: To dozens of cities across the United States, Amazon's widely publicized search for a "second headquarters" looked like thousands of new jobs, up for grabs. To Pivot co-host Scott Galloway, it now looks like a "ruse." "I lease office space all the time for my businesses and I always tell my real estate agent, 'We can lease any office in the world as long as I can walk there from where I live,'" Galloway said on the latest episode. "Amazon is now talking about having three headquarters, Seattle, Crystal City and Long Island City. The Bezos's also own three homes, and the average distance from those three homes to a headquarters is 6.4 miles.
"This was never a contest," he added. "It was a con meant to induce ridiculous terms that they then took to the cites all along that they knew they were going to be in." In other words: By soliciting bids from lots of place where it was never going to move, Galloway alleges, Amazon was probably able to get more tax breaks from the pre-determined "winners." "I would bet, Kara, that when they pick two cities and they went to 2 and 3, they didn't say, 'Well, only half our headquarters is going there, so we're going to let you cut the tax subsidies and incentives in half,'" he explained. "This just has ill will written all over it, and I think people started to figure out what was going on ... It's the Olympics on steroids. A lot of high fives and ribbon cutting, and then 10 years later, we realize it was a bad idea."
"This was never a contest," he added. "It was a con meant to induce ridiculous terms that they then took to the cites all along that they knew they were going to be in." In other words: By soliciting bids from lots of place where it was never going to move, Galloway alleges, Amazon was probably able to get more tax breaks from the pre-determined "winners." "I would bet, Kara, that when they pick two cities and they went to 2 and 3, they didn't say, 'Well, only half our headquarters is going there, so we're going to let you cut the tax subsidies and incentives in half,'" he explained. "This just has ill will written all over it, and I think people started to figure out what was going on ... It's the Olympics on steroids. A lot of high fives and ribbon cutting, and then 10 years later, we realize it was a bad idea."
and you don't.
Where are we going and why are we in a handbasket?
I'm not the biggest fan of Amazon, but why should they leave money lying on the table? If they can negotiate concessions, they are perfectly within their rights and duties to do so. The cities obviously thought there was a net benefit somewhere or they would never have negotiated.
12:50 - press return.
Scott walker sold us works out and stuck them with the tax bill.
Normally, like so many slashdotters, I skip the article and read the comments.
This time I made the mistake of reading the article (as Chicago was one of the cities used in the ruse, I was interested in reading a detailed bit of journalism on Amazon's malfeasance. Instead I get an inane interview with someone who knows (or whose comments certainly indicate) he knows nothing about politics, has a superficial knowledge of other matters, and while I agree with his suspicions about Amazon, doesn't really offer up much insight.
I expect the comments in slashdot, when they eventually arrive, will be far more information dense than the tripe in TFA. What a waste of time.
And you woke up to that now?
Is being retarded a requirement for holding a public office or does it just help a lot? Half of the times a large company is "searching for a cooperation partner" or some such, they already have a winner in mind. They just need to go through the motions for regulatory or political purposes. And it is quite common to make invitations to tender as a means to press the price of your favorites down somewhat. Even if they understand they are your preferred choice, the competition will force them into making a better offer.
Been there, done that.
The Amazon search was never an open-ended search and anyone with three working brain cells understood that. At best they had only favorites and it maybe might have been possible to sway them. More likely, two spots were already certain and one was a "maybe". Wouldn't be surprised if all of them were certain at the start.
Seriously, to expect any kind of "fair play" behaviour from an international corporation only shows that whatever you are smoking needs to be made illegal. Profit is the only ethics of a corporation, because the entire system is set up like that.
Simple way to stop it - don't allow externalities anymore. Put a price on pollution, on negative social impact, on any behaviour you want to discourage and companies will follow the money. They're like drug addicts. You could start by stopping to compete for company favors and make them compete for your grace again. I've always thought it absurd that counties or cities compete against each other to attract a company.
Assorted stuff I do sometimes: Lemuria.org
No shit? news at 11,
My offer included a sofa bed in my living room for him and I still apparently lost. Though I'm still holding out for these reports to be false.
with the fact that he graduated from Princeton. Not that he isn't bright, but It's naive to think the contacts he got from going to an Ivy league school didn't help matters.
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One of the problems in Seattle's South Lake Union is that 2/3 of all the buildings are paying no taxes, so there are no funds to support infrastructure costs, so it ends up getting subsidized by the rest of the city.
Every time I hear someone new say how great it is, I ask them where they live. Chances are they don't even live in Seattle, so they don't realize what the real impact is.
By the way, we have no state or county or city income tax, or capital gains tax on stocks, so it's not like we get any real money to pay for all this.
-- Tigger warning: This post may contain tiggers! --
stop doing this to us? There's plenty of ways to stop them, and we can debate which are the best, but we're not even trying. In fact I'll wager a good number of people on this forum consider this kind of behavior praiseworthy as opposed to the anti-social and outright destructive policy it is.
True fact: Scott Adam's of Dilbert fame cracked jokes about a CEO moving the headquarters to be near his parents home for free babysitting. It's even more ironic when you realize Adam's would now (given his political views) probably side with Bezos.
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There was a promised $3 billion cash subsidy that's now at $4.1 billion, the cost to the community of additional infrastructure such as roads, utilities, etc., 13,000 jobs that are now many fewer, a change in what's produced, and a governor who's soon to be out of office as a result of the recent election. I wonder if that project will be decommissioned.
In a time of universal deceit, telling the truth is a revolutionary act. George Orwell
I wish they'd leave Oregon as well. Of course there's eastern OR/WA (or west Idaho, depending on your outlook) -- But then again, apparently Boise is getting infested with them now too.
Isn't it interesting that after this story many Slashdotters are eager to tell us that they knew it all along? Where were they yesterday with all their insight?
But there's another, similar, scam more relevant to Slashdot: When governments (and certain corporations) advertise a job opening- beware. There is often a policy that requires HR to give at least three interviews before hiring. This is ostensibly a way to assure that they don't just hire the first applicant. But in reality, it is almost always misused.
HR *will* do 3 interviews, but someone in the company or agency has already decided who they will hire. It will be a friend or relative of a current employee. Or it could be that they need to make their quota of women, minorities or robotic workers. As a result HR is wasting time and money, and the applicants are wasting time and money, and the two who get an interview with no chance of being hired are an especially sad case.
I've been there many times. I usually rated at the top of qualifications testing, and so they were required to interview me. Sometimes I could see it in the interviewer's eyes and body language that they were just going through the motions in our interview. Sometimes I could see the guilt in their expressions, knowing that they were leading me on when I had no chance. But usually I got my hopes up only to be disappointed when rejected a week or two later.
I'm beyond all that now, but maybe a discussion here could find a solution to this frustrating system that can dash hopes and crush self-esteem.
...omphaloskepsis often...
If you graduate from high school, you're statistically likely to be a better earner than someone who doesn't, a college graduate is probably going to earn more than a high school graduate, and an Ivy league graduate is going to do better, financially, than a graduate of community college. It's no secret; there is an incremental improvement in potential outcome for each helping step up. Each step up implies one's network of friends, colleagues, and acquaintances also have improved potential outcomes. So, it matters.
State and Municipal subsidies to attract corporations are a tool of elected officials to get reelected... whether or not they make good fiscal sense, they create voting capital. Thus, they are here to stay.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
How cities and states can get away with handing piles of tax money to only particular businesses is beyond me. Why are smaller businesses not given the same handouts, on a per-tax-dollar generated, or a per-employee basis? How is this even legal?
I don't respond to AC's.
Capitalism at its finest. People want to be left alone and stay in their quiet rural/suburban place, but tell me, would you, in a 1000 years, turn down someone offering you an awesome bonus because you have something they want? Would you turn down a job that was a 200% raise because someone felt your skills were perfect for what they need?
Capitalism demands you improve or die. Steady state is another word for stagnation and sooner or later someone passes you by. Nothing wrong with this, just it leads to those "idiots" moving in their best interest.
well that's a total surprise for me.
Bezos chose a couple cities where he wanted to buy a house for himself.
Later, Bezos chose a couple cities where he'd like to put his business. I'm SHOCKED that Bezos chose the same place that Bezos chose.
Hopefully the people negotiating with him in those cities realized that Bezos already had a house there, so clearly he likes that city. Therefore they wouldn't need to negotiate quite as much as another city might.
My suspicion: it was all for the drama and press. The "competition" was just another form of reality entertainment to generate headlines and click counts.
They chose the government center of the country, and the financial center of the country, and divided the headquarters between the two. Yes, it's now obvious that it was the plan all along. They wanted a presence in the corridors of power, and now they have it.
But I seriously doubt they got any sweet financial deals. NYC and DC don't give out painful tax breaks to attract business. Companies come to them. Not vice versa. Not even for outfits the size of Amazon.
Put yourself in a politician's shoes. You love the power. How do you keep it? You make your constituents lives better and make sure they know about it. But cut to the chase even further - really, you only need to make your constituents think you're making their lives better. If you are, it's secondary. The most important thing is making them think that. That's how you get the precious votes.
Cue a sports stadium or a megacorp like Amazon. Big headline jobs numbers, construction spending, infrastructure spending. But how do you pay for it? Taxes, redeploying money from other priorities, and bond sales. Maryland for example, created a nearly 9 billion dollar subsidy/incentive package for Amazon. Baltimore, in Maryland, has two spectacular stadiums at the gateway to the city. But the rest of the city is a mess, with the highest murder rate of any large city in the country, on a par with Ciudad Juarez, a cartel war zone in a semi-failed state.
Who really knows for sure what the net economic benefit will be? I suspect it's a lot like sports stadiums. Realize that the economy is a competition for resources and Amazon is a very successful competitor. And that politicians are not spending their own money, only trying to make their constituents think they are making those constituents' lives better.
Ultimately I think it's like a blood transfusion to yourself - diverting resources away from other priorities and taking on debt to pay for the shiny now. Ultimately, the source of wealth is creating things that people value. Does Amazon create value? I guess so. But they are also very good at retaining that value for themselves. Think of the WalMart effect. Or Facebook lights-out datacenters. These competitors are much better at retaining value they generate than any politician, whose primary skills like in raising money and getting votes. And they're also quite good at sloughing off costs on others, like the environmental polluters of yore. But this is "financial pollution" - company keeps the profits and socializes the losses, like WalMart and foodstamps. Or most famously, Wall Street after the financial crisis and bailouts.
Don't get me wrong, technology increases the productivity of people, which leads to the "Consolidation of the production of value." It's been going on since before the Industrial Revolution, but it leaps forward with the various technological revolutions. But just because a company is big doesn't mean that landing in your area is going to bring a prosperity windfall, and should get vast subsidies in anticipation of such.
What was once HP (after the founders died) played the same game with their manufacturing.
The end game was they pulled all manufacturing out of California.
The deal was made in Houston and it all went there.
California (however) is a very business-unfriendly state.
Ah well. I've lived in silicon valley most of my adult life and I'm really hoping to move up to Oregon or Washington someday. Sorry to cramp your style.
I remember back in 1994 at my first job an older woman lamenting the prices and traffic in the bay area and actually quitting and moving to Oregon with her husband. At the time I just didn't understand. But wow, 25 years later, a) it seems quaint to think that conditions in the bay area in 1994 were something even remotely worth getting away from given how much worse they have gotten since then, and b) I envy her for having the prescience to do it so long ago when it was probably a much better deal.
to corporate welfare, but I want us workers to get some of it too. Start with Single Payer healthcare. Then a $15/hr min wage with yearly inflation adjustment. Then a Jobs Guarantee and infrastructure spending. End the 8 bloody wars we're fighting too while we're at it.
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It's a damn shame citizens of the modern day Rome cannot gain the political capital to force universal healthcare... many of us actually spend more annually our god damn pets' medical welfare.
$15 per hour and a job guarantee assures the replacement of our entry-level employees with entry-stage robotic replacements, and infrastructure investment only stands a chance if the voters/political donors deem it an important plank of one of two political parties... thus, little chance at all.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
seriously. We don't solve problems by immediately giving up. What the hell happened to this country? To this world? Mother loving Gen-Xers. There's a point when healthy skepticism gives way to cynicism, defeatism and borderline cowardice.
The price of freedom is eternal vigilance, but it's a price we can pay pretty easily. We can close the loop holes but raising the top marginal rates back to 90%. We can elect politicians who won't be bought by demanding ones that refuse corporate PAC money and passing Liz Warren's anti-corruption law. We can combat ignorance with education. We can win. But you have to at least try. You don't even have to try very hard. But right now you're not even trying.
Stand up and be counted.
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I've turned down that kind of raise to do work I considered dangerous or immoral. But I had the resources to make that choice. Some of us have family or other obligations that force us to make such choices, choices like supporting family with enormous needs.
they can just withdraw their bids.
Was a monorail part of the deal?
Cuomo is a tool and a crook. He never met a suitcase full of cash he didn't like.
Communities who elect leadership that sells them out for corporate tax breaks deserve what they get. People are ignorant. Everyone with half a brain knows using tax breaks to attract business is a sucker's game.
Happy they didn't chose Dallas or the DFW suburbs. Too much traffic already with all the new HQs located here. No thanks, Amazon..
Organization? You must be joking..
showed that a large percentage of corporate moves resulted in a location that was closer to the CEO's house. I recall this at the time (approx year 2002) because the small company I worked for had moved twice in 4 years, and each move was closer to the CEO's house. Could not find a reference, unfortunately.
I too grew up in eastern OR (umatilla county) and yeah, for someone from SV, there isn't much there that they'd enjoy.
Well, I can see them moving a few miles north to Walla Walla and getting into the snobby wine scene, so there's that.
Amdahl used to help its prospects pull the same maneuver on IBM, way back. They made IBM-compatible mainframes, back when mainframes were really expensive and IBM owned the market. Cheaper and faster drop-in replacements, but most IT execs didn't take them seriously.
An Amdahl sales team would worm their way into getting a meeting when they got wind that someone was eyeing a new mainframe, knowing they didn't stand a chance. They'd leave the IT manager an Amdahl-logo coffee mug worth a million dollars. "How can this be worth more than $10!?" he prospects would ask. "It's magic. Make sure it's on your desk the next time IBM comes around. Just watch what happens!" Sure enough, the IBM rep would come calling and notice the mug. He'd get nervous, excuse himself to make a phone call to HQ, and within minutes offer a $million discount on an IBM mainframe!
Seeing that, the customers would conclude that IBM clearly took Amdahl very seriously... and maybe they should too. Maybe Amdahl got that sale, maybe they didn't, but they definitely got invited to bid on the next one.
The job of the people that run Amazon is to deliver value to their stockholders. If they hadn't done this, there would be complaints.If the people that run cities fell for it that's their problem!