Why Amazon Doesn’t Love NY

On Thursday, Amazon abandoned its plan to build a large campus in Queens and allegedly create 25,000 jobs for New Yorkers. The original deal involving $3 billion in government “incentives” was considered an economic victory by Mayor Bill de Blasio and Governor Andrew Cuomo but was derailed by a huge backlash from progressive activists and union leaders. So how did a Democrat-negotiated deal unravel at the hands of other Democrats? The answer is not difficult to understand.

First of all, I’m neither a Democrat nor a New Yorker, but I opposed this deal from the beginning. It’s entirely rational for governments to provide infrastructure when a large company comes to town, but the “extra” payouts to lure Amazon are a slap in the face to taxpayers and other businesses. The government was picking winners and losers. The “incentive package” New York offered would have given Amazon an unfair advantage over its rivals in New York and across the country. I’ll all for Amazon’s success, as long as it is attained through the marketplace.

But my views are at odds with many politicians on both sides of the traditional political spectrum. They overlook the cronyism involved when governments collude with some businesses (but not others) to locate in their cities or states. They refer to the payouts as “incentives” and “investments,” claiming that the jobs created will fuel economic development and that the tax revenues they create will more than compensate. They even use competitive lingo to justify the collusion, arguing that they must “fend off competition” from other locates to “win over” new businesses. But this logic overlooks an important principle: It’s okay and even desirable for governments to promote business activity with competitive tax policies and other inducements available to all firms, but governments should not use taxpayer funds to pick individual winners and losers.

This issue creates complications for those on the left. While defenders of liberty promote free markets and despise government intervention, socialists despise free markets and promote government intervention. Leftists don’t trust business in general and rely on heavy-handed regulation to keep it in line. But most socialists understand that the government is unable to replicate the private sector in terms of production efficiency, so they don’t want to destroy it altogether. They want some type of arrangement with quasi-free markets and big government.

The Amazon deal gave government a “seat at the business table” and some sense of control over the online behemoth, but it required a multi-billion-dollar payout to a giant corporation. Modern leftists want to control business activity in order to extract taxes and other concessions, but they don’t want to support large corporations in any way. In the end, the Democrat Mayor and Governor were willing to hand over taxpayer dollars to Amazon to “create jobs.” In the end, socialists like AOC won the battle because they don’t see why Amazon is needed in the first place.