In Chicago, the apparent competition to lure Amazon’s new HQ has been news for some time. (I imagine it has been in just about every town with a population of at least 5 figures!)
Wondering if folk had any thoughts about what is happening in their parts. I’m pretty sold on the benefits of Chicago, and there are several really interesting potential sites - the old post office, Michael Reese, and along the river in the S loop and on the N side. But I’m leery of the local government offering too much in incentives to land them. As I heard on the radio some time recently, if the expected economic benefit to an area is $x, then Amazon is going to bargain to get incentives of $x - $1.00. As with sports teams and events like the Olympics, there is always the possibility that the hoped for benefits do not result.
I’m also not thrilled with the history of states working against neighboring states. Here in Chicago, it makes so much sense for Illinois to work WITH Wisconsin and Indiana, to promote the region running from Milwaukee down through at least Gary if not into South Bend/Valparaiso/Michigan City.
In Seattle, mostly resignation. The tech job market here is pretty hot, so the sky is not falling… though there’s a bit of concern about how much will be moved away for the second HQ versus the first.
We lived through Boeing moving their entire HQ to Chicago in 2001, so I guess you have some precedent on your side in the steal a Seattle corporate HQ game. The news at the time reported that Chicago offered a multi-million dollar deal.
There are some local suggestions that they should just open a second office complex in a suburb, which would make total logical sense if they didn’t have the option to accept large bribes from another city instead.
There has been some talk of Washington, D.C. trying to lure Amazon into the area. Jeff Bezos already owns a mansion in DC, and Amazon does have a small office here already. Considering the city council bent over backwards to get a baseball team in DC, I can only imagine what they will do to get Amazon.
I’m not a huge fan of cities/states offering large incentives to companies to lure them, whether it be Amazon or the Rams. Seems like it’s mostly a race to the bottom. Who can undercut each other by the most to get some scraps. If everyone just agreed not to throw money at Amazon, then Amazon would go to wherever is best for them anyway.
If they move to DC, I suspect it’ll actually be in Northern Virginia. Which is too bad for my commute.
It would be nice for a city to land the new Amazon headquarters but it is a distraction. If Chicago landed the headquarters the estimated 50,000 new jobs would be 1% of the labor force. If it went to DC it would be 1.5% of the labor force. Most cities could probably get a 1% bump in jobs per year just by making it easier to do business in the city or making it more attractive to live in that city. If they did that they would not need to have tax giveaways to big businesses.
When you buy a new car, you don’t try to negotiate a good deal in order to avoid “a race to the bottom”? How about if you’re doing a remodel on your house? Should the contractors agree not to “throw money” at you to give you a better deal?
As long as there isn’t graft involved, a city can ask itself: Are we better off with or without this deal? They shouldn’t accept if they are better off without it. But if they are better off with it, why should they not take it?
I tend to think of it from the cost side. Getting a new corporate headquarters of the sort Amazon is discussing will impose costs on the city; traffic and transit improvements, manpower spent reviewing permit applications, that sort of thing. A city could give Amazon a reduction in taxes that that they will pay, but as long as they collect enough to cover their costs it could still be a good deal for that city.
I’ve certainly heard that Boston is trying to lure Amazon, and may be among the front-runners. I’d like us to get it, but I admit that there’s some self-interest involved in that. I’m not hugely curious about the tax incentives and such, but I would be interested to see what locations they’re considering and what the project might actually look like (if the proposals are even that specific).
Sacramento is giving it a go. It will be a very long shot for sure, but city boosters think it is worth while to try - I guess that is what they are paid to do. There are some advantages: proximity to SF Bay Area talent, without the SF Bay Area real estate costs. I am not sure how much incentives can be offered to make Sacramento bubble to the top of the list, compared to other, larger regional cities with more to offer. IMHO, I suspect the finalists will all not be west coast cities.
Detroit MI, yes Detroit, is making a big pitch. We’ve got available land, three and a half major universities nearby and are coordinating with Windsor to give the pitch an international flavor.
The major ‘city’ that gets talked about in Georgia in regards to this is of course Atlanta. But since it is a metro area with lots of surrounding towns, and there are areas outside of ‘Atlanta’, apparently Georgia has submitted a bid.
They are not talking about the bid and what the pitch/incentives would be, but you know they have likely put together lots of incentives to offer them to build here.
As long as it isn’t in LA, I’m happy. It would be a minor bump in our employment rate, but at what cost? Besides, Amazon is siting dozens of distribution centers around here already. We don’t need the headquarters too.
I read an article about the campaign by Newark, New Jersey to land the prize (not as laughable as you might think) and they mentioned what some analysts thought the most likely winner would be, “Moody’s Analytics ranked New York sixth, behind Austin, Tex.; Atlanta; Philadelphia; Rochester; and Pittsburgh. But the Anderson Economic Group, a consulting firm that represents companies seeking locations and cities trying to attract them, ranked the New York metropolitan area No. 1, ahead of Chicago, Los Angeles and Boston, out of 35 candidates.”
And I hope the eventual winner doesn’t regret how generous they are with the incentives.
Your analogy is backwards. I’d be Amazon in that case, and the dealerships are cities. Of course they wouldn’t want to continually undercut each other until they basically have no profit.
Throwing tax incentives at everyone is throwing tax-payers under the bus for the sake of corporate profits. Sure, spend $100M to get $100M +$1 in benefit, but it’d be better for all cities if they refused.
Think of it like a prisoners dilemma. It’d be better if everyone refused to bow to corporations, but given that other cities do, it’s better to also give incentives and not be completely left in the dust.
Not backwards at all. Who is doing the shopping here? Amazon is doing the shopping.
Are you seriously saying that a municipality should turn down development that is a net benefit to them? Makes no sense. Your argument is based not on whether something is good for the people, but whether it offends your sensibility or not.
The trouble is that the cost/benefits can be very hard to accurately assess, and governments at all levels have a history of giving away more than they get. Some of the giveaways, whether to sports teams or companies building manufacturing plants, have been outright disasters for the taxpayer.
Yes, making business decisions is hard. That doesn’t exempt you from the duty of making them if you are a mayor or governor or legislative body. You can either play or pass, but you miss every ball you don’t swing at.
It’s not that municipalities or other levels of government shouldn’t play and make reasonable efforts to attract businesses. It’s that often they fall all over themselves competing with each other to offer huge tax incentives and other costly concessions – hence the other poster’s “race to the bottom” comment. If there’s one class of company that does NOT need taxpayer subsidies, it’s the dot-com megacorp like Amazon.
A lot of taxpayers are sick to death of (for example) high property taxes while megacorporations pay little or nothing, or some giant multinational getting hundreds of millions in tax breaks to build a manufacturing plant, and then after pocketing the money moving everything offshore after a few years. Likewise highly profitable sports teams expecting billion-dollar stadiums to be given to them free of charge. I wish someone had given me my house for free. The trouble is that scoring political points by bringing in some spectacular venture is easy and highly visible, but the long-term costs may take time and insight to discern, and voters typically have neither.
Actual economists have done studies of the stadium deals made by municipalities with the sports teams and the results are that these deals do not, generally, make economic sense.
The other trouble is that mayors have an incentive to make decisions that give a short term boost in employment but a long-term negative impact on the city’s economy. It’s hard for voters to disentangle long term effects.