'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.

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.

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.