HQ2: Understanding What Happened →February 28, 2019 • #
This piece from Barry Ritholtz does a good job breaking down the real background behind the Amazon NYC HQ issues, how they were attracted and why they bailed:
The heart of the opposition to Amazon was how much the city and state bent the existing rules to offer a very generous package. The arguments are pretty clear: On the one side, net net the deal works to the city’s benefit, and $3 billion is not all that much.
The other side is less pragmatic and more philosophical. It is the same issue I have with taxpayers subsidizing Football stadiums. GBYOFS and stop asking taxpayers to subsidize your businesses and/or hobbies. The gaming of the safety net by Walmart and McDonalds to push their labor costs onto taxpayers. I railed against in during the financial crisis, and afterwards. Same with the Foxconn debacle — yet another example of corporate overreach combined with an ill equipped governor who got rolled. The taxpayers threw him out of office soon after.
What bothers me about the response to this fiasco is that both sides are complicit in the undesirable behavior: Amazon shouldn’t need to twist municipal authorities for benefits (nor should stadium-builders or anyone else), but those in the government are the ones responsible for caving and writing the beneficial legislation.
When any one company gets special treatment, its own sets of rules, taxes, incentives, kickbacks, etc., when specific rules apply only to some but not to all, well, that is much better described as Crony Capitalism.
The reactionary response that Amazon is an “evil corporation” that’s run by mean billionaires lets a lot of others off the hook for their own bad behavior. Relatedly, the latest EconTalk episode had Duke economist Michael Munger talking about this exact issue.
- Things That Will Change — What will be different after the COVID crisis?
- Invisible Asymptotes — An insightful piece from Eugene Wei on invisible barriers to continued growth in companies.
- Writing Docs at Amazon — On writing memos for meetings at Amazon.