Amazon’s Headquarter Decision

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I addressed Amazon’s new $15 minimum wage in my last 2 posts. After attributing the wage hike to the firm’s commitment to social responsibility, CEO Jeff Bezos announced plans to lobby Washington to require his competitors to pay $15 as well.

Last week, Amazon announced its plans to build two new headquarters in Long Island and Crystal City (Virginia) after extracting multi-billion-dollar packages from each in direct payments, tax incentives, and other support. Both cities will be “investing” taxpayer funds in exchange for Amazon’s promise of economic development. Unlike Amazon’s new minimum wage, Bezos is not insisting that his rivals receive the same government handouts. It would be equally difficult to claim that the location decision had anything to do with “social responsibility.” Apparently, Amazon passed on Detroit and El Paso.

To be fair, this type of corporate collusion with state and local governments is not illegal. Amazon is not the first company to secure handouts, which come from both Democrats and Republicans. Taiwanese electronics manufacturer Foxconn recently received $4 billion from Wisconsin to build a new plant there. Outgoing Republican Governor Scott Walker spearheaded the deal.

But make no mistake, this is pure cronyism. When politicians make these deals, they curry favor with some voters at the expense of all taxpayers. In the instance of Amazon, local and state governments transferred tax revenues actually levied on some of Amazon’s competitors to lure the company to the region. Politicians claim that the benefits from economic development spurred by companies like Amazon will justify the “investments.” This could be true in some instances, but governments at all levels have a dismal record in the investment arena and shouldn’t be involved in such activity anyway. Politicians are famous for underestimating costs and overstating benefits of government outlays; just look at the national debt if this isn’t obvious.

Amazon’s toadies cheered when the company raised its wages for competitive reasons, while the company claimed virtue points and insisted that others follow suit. Perhaps they can justify the billions Amazon will get from taxpayers to locate facilities in two of the wealthiest cities in the US.

3 Comments

3 Comments

  1. Jack_99  •  Nov 22, 2018 @8:16 AM

    Welcome to the real world. It’s government’s job to create jobs. I have no problem with my state spending $$$ to lure big names to my area. It’s free competition.

  2. henry  •  Nov 23, 2018 @9:10 AM

    a lot of other cities were bidding to get Amazon also, not just new york and virginia

  3. Nick_B  •  Nov 23, 2018 @6:47 PM

    Jeff Bezos has a lot of chutzpah

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