The Case for Amazon in New York

It’s about time that someone knowledgeable made the case for Amazon in New York City. Thus far, leading politicians, like Cuomo and de Blasio have been singularly inarticulate in defending their plan to offer Amazon tax breaks to move one of its regional headquarters to Long Island City, Queens. 

A band of imbeciles, led by Alexandria Ocasio-Cortez have stepped into the void. They do not understand the questions or the issues. As noted in prior posts, AOC has relieved Republicans of being the party of stupid. When it comes to stupidity, she’s in a class of her own.

In yesterday’s New York Times, Columbia University professor Kenneth Jackson laid out the case for Amazon, clearly and persuasively. Jackson is an expert on these matters… as opposed to politicians who know nothing at all.

Jackson began by reminding us that state governments have long offered subsidies to corporations. It’s the way 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.

As for New York City, it has suffered important economic losses during the twentieth century. It used to be a manufacturing base and used to be the world’s busiest seaport. No more:

During the 20th century, the city lost its two main economic underpinnings: its manufacturing base and its role as the busiest seaport on earth. In 1955, for example, about a million people worked in New York City’s factories, and in its crowded harbor, tramp steamers, ocean liners and tugboats struggled to avoid one another. New York was the leading industrial city in the world.

Factories were the first to leave:

In 1900, New York had 90 breweries and was the beer capital of the nation. But by 1976, the last brewery in the city was gone, and Milwaukee and St. Louis were competing for beer supremacy. Similarly, in 1950, New York’s 300,000 textile workers made most of the women’s clothes sold in the United States. The city had no serious rival. But by 2017, only about 20,000 such workers remained.

And then, beginning in the 1970s Fortune 500 countries began to relocate away from the Big Apple:

 During the 1970s, the city experienced an exodus of Fortune 500 corporations. Dozens of them moved their headquarters and took their executives with them. Some went to suburbs in Connecticut and New Jersey, but many more decamped for Atlanta, Dallas or Houston. The impact on the city was dramatic. Not only did workers laid off from those companies lose their jobs, but their spouses and children suffered as well. Many of them, as demographic statistics reveal, had to move to other states to make a living. Their departure was hidden by the fact that they were often replaced by millions of newcomers from other countries, but those immigrants could not immediately compensate for all those lost jobs.

So, the need for a major corporation like Amazon is manifest. What would it cost if Amazon were to pull out of the Long Island City deal? Jackson explains:

The loss of Amazon would cost 25,000 jobs directly, and those workers would support up to 82,000 more indirect jobs. The subsidies New York has offered to Amazon would have been given to any company promising so many jobs. And Amazon is expected to pay more than $27 billion in taxes over the next 25 years. Amazon will also build four million square feet of office space in Queens, providing billions more in construction spending.

And then there is the reputational cost. If the city becomes identified by imbeciles like Alexandria Ocasio-Cortez and one Peter Gianaris, it will cease being a world business hub. Why would any company want to locate to a place run by such people:

If Mr. Gianaris and his supporters have their way, and Amazon retreats to Nashville or Atlanta or some other more welcoming city, the mail order house that Jeff Bezos built will probably suffer little. But New York will lose its reputation as a center of economic opportunity, and the city will sink in status and importance. And its legislators and politicians will solidify their reputation as the most overpaid and incompetent in the nation.

Jackson concludes:

Amazon’s opponents should take a longer-term view. If there is no economic opportunity, there are no jobs. If there are no jobs, there is no tax revenue. And without taxes, jobs and opportunity, New York will no longer be first among cities.