Amazon, citing local opposition is backing out of having a New York headquarters. New York City had previously offered substantial amounts of money and other incentives to Amazon to bring their HQ2 to their city. However Amazon has now backed out of the deal. This is an extremely interesting idea as we are seeing how the public sector sought to stimulate private enterprise but is now seeing the company back out of a deal where they would have gotten free money.
https://www.reuters.com/article/us-amazon-new-york-idUSKCN1Q32F9
5 comments:
Greg, your article poses an interesting dilemma between public incentives and the private market system. I was initially surprised that Amazon was planning to move to NYC, but after reading that they received nearly $3 Bn in incentives, it made a lot more sense to me. The backlash from lawmakers, activists and union leaders seemed to prove to be too much. I feel like there are two sides to the coin since on one hand, amazon would have provided thousands of job opportunities that could have bettered the standard of living for many NYC residents through more competitive wages. Yet, on the other hand, from the point of the progressive activists, they are concerned about giving such large subsidies to already incredibly wealthy corporations as well as the gentrification and rising cost of living in the city. I wonder if the economic outcome was overshadowed by smaller interest groups in order to push against this deal, as we have discussed in class - showing the negative side of collective action in the face of a deal that could have provided greater prosperity to the area?
Building upon this, investors and home owners were looking to reap the benefits of an increased housing market on Long Island. The influx of jobs would have boosted the housing market of New York and homeowners and investors could of made money on their long term investments. New York City itself already has a complex economic system so squeezing in a brand new Amazon headquarters might have been slightly too ambitious to actually follow through with. Looking forward, Columbus was one of the finalists for the headquarters and may still have a chance to land it. Columbus is still one of the fastest growing cities in the nation and adding a new Amazon headquarters would do wonders for both the local and state economy. Like I mentioned earlier, the inflow of jobs from the headquarters would make real estate more valuable and long term, could be very lucrative.
I'd certainly agree that this is an interesting case study in public entities offering incentives to private firms. I personally agree that the package offered to Amazaon from NYC was substantial and that they benefit substantially from it. I'd also agree that progressive activists certainly pushed back successfully against this deal. However I think it remains less clear on the strict economic benefits of the deal. While it is no doubt the case that higher paying jobs would be available to residents those residents, along with the rest of New York, will be footing the bill for the taxes that Amazon won't be paying. Which is why I'd also suggest that some conservative activists may have joined progressives on this cause as they see it essentially a government handout.
Certainly some other complementary industries will suffer as they will be losing a substantial bit of what would have been a customer base. I'd agree that New York is already quite packed especially compared to Columbus. While I think Amazon won't have a second HQ2 and will stick with just the Virginia location, Columbus would have made a strong choice, especially as it would have allowed Columbus to expand its public transport network.
Greg,
I think that you raise an interesting point in stating that some conservatives might join progressives in opposing the Amazon HQ in New York because they see it as a government handout. The article states that 56% of registered voters were in support of the deal where only 36% opposed it. This suggests that perhaps rather than joining with progressives in opposing the deal, conservatives are still supportive, but not supportive enough to mobilize. It goes to show that a smaller group of people, if better funded and better organized, can have more of a say than the majority. Perhaps it is the case that those who support the deal don't actually care too much about it while those who do not are more passionate about the issue and therefore have a larger say than the majority. It's certainly an interesting little case study in how minority opposition in a democracy can undermine the majority's position.
I did think it was interesting in the first place that Amazon would chose to locate headquarters in New York. Besides the fact that it is a big market city with a high cost of living, I do believe Amazon would find success outside of New York, especially with how much they have been growing over the past quarters. I think that a big market city such as San Francisco, or LA would be a perfect place for Amazon as well.
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