Ugly Truth About Amazon’s $3B Beauty Contest: It Was Never Going to Pay Off

By on April 14, 2019

From Inc.: Amazon to New York City: Drop Dead.” Reacting to a fierce storm of criticism over its $3 billion incentive agreement with New York City and New York State, Amazon said it was taking its HQ2 and the potential of 25,000 new jobs and blowing town.

Well, not quite. “We love New York, its incomparable dynamism, people, and culture,” the company said in a statement. So much so that there are 5,000 Amazon employees here, and the company says it will continue to grow here.

And that’s the point, according to Amazon’s very loud local critics, which include politicians in Long Island City, where Amazon was going to set up shop, and labor unions — Amazon is anti-union and wouldn’t agree to even stay neutral on the subject. How’s this for dynamism: You want a piece of us? Then pay for it. Other tech companies, particularly Google, have been expanding in New York without trying to hold jobs hostage to real estate deals.

The Amazon retreat, and perhaps one by Foxconn in Wisconsin, rekindles the national debate over corporate subsidies to land jobs from such beauty contests as the one that Amazon staged so expertly. Data from Brookings and other organizations that have studied economic development consistently show that the return on the investment nearly always comes up short. But state and local governments get sucked in again and again in the battle to “win” plants and headquarters that are essentially put up for bid.

“Most jobs come from expansion of existing companies and startups,” Amy Liu, vice president and director of Brookings’ Metropolitan Policy Program, told me when I interviewed her a couple of months ago, when the Amazon deal was announced. “It comes from within, not hunting them from the outside.”

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