'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."

Comments

And this is why Bezos runs Amazon

[presidenteloco]

and you don't.

They're a business, what do you expect?

[kalpol]

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.

Re:They're a business, what do you expect?

[Tom]

I'm not the biggest fan of Amazon, but why should they leave money lying on the table?

From their perspective: They shouldn't.

From the perspective of society: We should force them to. Because that money can pay for schools, hospitals, police, firefighters, roads, electricity, water and a hundred other useful things.

Re:They're a business, what do you expect?

[rogoshen1]

The notion of 'Leaving money on the table' is the shiny side of the same coin as 'race to the bottom'.

Basically extracting as much from any given situation as possible; which just results in even greater concentrations of wealth; at the expense of people, suppliers, and society at large.

In this case though, it's especially repugnant because those 'gibs' amazon was trying to cajole local governments into granting would have to be paid for by the citizens, who get absolutely no say in the matter.

And for what? a few extra jobs (potentially!) that the bureaucrats can use for re-election fodder? Would the net tax base actually expand after all the concessions? Would Amazon's tricky bastard accountants figure out how to dodge them?

Re:They're a business, what do you expect?

[whoever57]

From the perspective of society: We should force them to. Because that money can pay for schools, hospitals, police, firefighters, roads, electricity, water and a hundred other useful things.

That's where politicians need to step up to the plate. Instead of bending over and competing to give the biggest tax concessions, they need to grow a pair and say no.

Remember how some people predicted that Scott Walker's deal between Wisconsin and Foxconn would be bad for Wisconsin? Now it's come out that those predictions are true.

Re:They're a business, what do you expect?

[liquid_schwartz]

The notion of 'Leaving money on the table' is the shiny side of the same coin as 'race to the bottom'.

Basically extracting as much from any given situation as possible; which just results in even greater concentrations of wealth; at the expense of people, suppliers, and society at large.

In this case though, it's especially repugnant because those 'gibs' amazon was trying to cajole local governments into granting would have to be paid for by the citizens, who get absolutely no say in the matter.

And for what? a few extra jobs (potentially!) that the bureaucrats can use for re-election fodder? Would the net tax base actually expand after all the concessions? Would Amazon's tricky bastard accountants figure out how to dodge them?

It's a democracy, it can be changed. Once the idiots figure out that white privilege is a myth but wealth privilege isn't then we can move on to solving this race to the bottom. Anyone who actually believes white privilege is a useful idiot of the 1%.

Re:They're a business, what do you expect?

[GameboyRMH]

If you believe wealth privilege isn't real, then you're a useful idiot for the 1%. If you believe white privilege isn't real, then you're a useful idiot for white supremacists.

Solve all the problems, don't be a useful idiot for anyone.

Re:They're a business, what do you expect?

[GameboyRMH]

Your incentive should be some sense of fairness or moral obligation to do good - admittedly a rare trait, especially among any privileged class.

In the US, the median white family has nearly 10x the wealth of the median black family, and this gap has not been steadily decreasing. Broadly speaking there are only two possible explanations, one acknowledges racism (that slavery's legacy is still hurting people today and minorities are still discriminated against - IOW, white privilege is real) and the other is racist (that there is some inherent difference between races that produces this huge inequality independently of any possible societal biases). Choose one.

HINT: Racist beliefs are ethically and scientifically wrong bullshit for dimwits.

same thing with foxconn wisconsin

[Joe_Dragon]

Scott walker sold us works out and stuck them with the tax bill.

I regret reading TFA

[Anonymous Coward]

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.

really ?

[Tom]

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.

I think it has more to do

[rsilvergun]

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.

Tax exemptions are almost always a bad thing

[WillAffleckUW]

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.

Re:Tax exemptions are almost always a bad thing

[GregMmm]

Tax exemptions are NOT almost always a bad thing. In fact they are a tool, unfortunately a tool in the hand of government. Lets face it, the people in government are not the sharpest tools in the shed. So they make bad deals. Try this: Before you offer tax exemptions to someone run simulations for the life of the exemptions and see if you can afford it. Did Seattle try this?

And yes I'm a native Washingtonian. I've stumped the Amazon streets. You should know it's illegal according to our state constitution to have an income tax, so the politician knew about this. Also, why would you want capital gains tax on stocks? You want your 401K to be taxed for gains, or your pension? Almost everything would be impacted by a capital gains tax.

Of course you missed the one source of income. Oh, right 40,000, each making over 6 figures running around Seattle spending money on goods which have one of the highest sales tax in the country. (~10.1%)

I'm saying I totally disagree with your points, I just think our leadership has for so long not thought of our tax dollars like a business does. Run the numbers. Does this tax break offset the full cost, and what does the city/county/state get in return? Hope the new "HQs" are running these numbers. Let the dumb ones over bid. It's like in sports with the new free agent. You usually regret it as the contract goes on.

Re:Tax exemptions are almost always a bad thing

[Bryan Ischo]

" Also, why would you want capital gains tax on stocks? You want your 401K to be taxed for gains, or your pension?"

Just to answer this nugget: anyone who proposes fairer or better tax structures is implicitly agreeing that taxing everyone (including themselves) for the common good (including themselves) is the right call.

So yes, if it's fair and beneficial to the state as a whole, I would support a tax on my 401k and/or pension.

I'm not saying one way or another whether these particular taxes are justified; I am speaking more to the sentiment you seem to be raising where it doesn't make sense for anyone to decide that taxes which would affect their own assets are a good idea.

It is the inability of lots of people to understand and accept a common sacrifice that is the heart of alot of social problems we have.

Of course, it's also the spend-whatever-you-can-and-then-ask-for-more attitude of most government that is at the heart of alot of other social problems we have.

A sensibly run government intelligently taxing the right amount to get the best bang-for-buck and do the most with the least possible? A pipe dream for sure ... but what a dream ...

Re:Tax exemptions are almost always a bad thing

[whoever57]

Apparently, your personal biases are more important to you than facts:

Aviva Chomsky, a professor at Salem State College, states that "Early studies in California and in the Southwest and in the Southeast...have come to the same conclusions. Immigrants, legal and illegal, are more likely to pay taxes than they are to use public services. Illegal immigrants are not eligible for most public services and live in fear of revealing themselves to government authorities. Households headed by illegal immigrants use less than half the amount of federal services that households headed by documented immigrants or citizens make use of."[36]

National Public Radio (NPR) wrote in 2006: "Supporters of a crackdown argue that the U.S. economy would benefit if illegal immigrants were to leave, because U.S. employers would be forced to raise wages to attract American workers. Critics of this approach say the loss of illegal immigrants would stall the U.S. economy, saying illegal workers do many jobs few native-born Americans will do."[26]

Professor of Law Francine Lipman writes that the belief that illegal migrants are exploiting the US economy and that they cost more in services than they contribute to the economy is "undeniably false".[37] Lipman asserts that "illegal immigrants actually contribute more to public coffers in taxes than they cost in social services" and "contribute to the U.S. economy through their investments and consumption of goods and services; filling of millions of essential worker positions resulting in subsidiary job creation, increased productivity and lower costs of goods and services; and unrequited contributions to Social Security, Medicare and unemployment insurance programs."

https://en.wikipedia.org/wiki/...

Are we ever going to let companies and the 1%

[rsilvergun]

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.

And there's the Wisconsin Foxconn factory

[Streetlight]

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.

it's like the board game of Life...

[rmdingler]

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.

Bezos and Bezos chose the same cities!

[raymorris]

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.

Re:Bezos and Bezos chose the same cities!

[NaCh0]

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.

HAHAHAHAHA

Right.

Meanwhile in reality, government negotiators are so dumb, they probably threw in perks for Bezo's personal real estate to sweeten the deal of moving his business headquarters there.

Like getting a blood transfusion from yourself

[Beeftopia]

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.

Nothing new

[hambone142]

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.

If Crystal City and Long Island City don't like it

[ayesnymous]

they can just withdraw their bids.

Amdahl made $Million coffee mugs like that

[mileshigh]

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.