New York Needs Amazon

On Nov. 13, 2018, Amazon announced that New York would become one of two locations for the company’s second North American headquarters, ending a competition that had involved more than 200 places, including cities as diverse as Chicago, Atlanta, Denver, Newark and Austin, Tex. But there was hardly any cheering in New York. State Senator Michael Gianaris and other leaders protested that the agreement was bad for New York and bad for its people. They argued that it is absurd for city and state taxpayers to subsidize one of the world’s most valuable companies, owned by the world’s richest man, with as much as $3 billion in taxpayer money.

They are right about one thing. It is absurd that any city would agree to such a deal. But this is how the game is played. Paying companies to relocate has been the American way since 1936, when Mississippi established the nation’s first state-sponsored economic development plan. Under that plan, since followed by many other jurisdictions, cities and states agreed to pay companies to relocate by promising them new factories and low or nonexistent taxes. With those inducements, numerous businesses relocated in the decades after World War II, usually from the union-dominated Northeast and Midwest to the business-friendly South. 

In this historical context, New York’s deal for Amazon is not a bad deal at all. But its opponents have condemned it, partly because the negotiations were held in secret and because the constituents most involved in the decision were not consulted. Absent serious renegotiations, they want Amazon to take its promise of 25,000 new jobs somewhere else. The greatest city in the world, they say, need not kneel before capitalist royalty.