Amazon vs. New York

Article By: Razel Suansing

Edited By: Woosuk Kim

When Amazon announced its plan to build new corporate headquarters in September 2017, local governments quickly lined up to provide plans to give incentives to entice the company in their locality. More than 200 cities in Canada, Mexico, and the United States provided plans, which mainly included tax breaks (items which avoids taxes, including any tax exemption, tax deduction, or tax credit). After a shortlist of 20 finalists were announced in January 2018, Amazon later announced that the “HQ2” would be divided between two locations: Virginia and New York City. Last Thursday, Amazon shocked international citizens when it announced its cancellation of its “corporate campus” in New York City due to its claimed backlash from local officials. What led to this decision? The conflict between ideology and interest in New York City takes center stage in this issue.

Mayor Bill de Blasio and Governor Andrew Cuomo represented the interests of advancement of New York City technology. Amazon claimed that this project would provide 25,000 full time, high-paying jobs over 10 years as well as a $2.5 billion investment into Long Island City in Queens, New York. On February 5th, Mayor de Blasio stated that any elected official in New York would not want to be the one who cost the city as many as 25,000 well-paid jobs. He stated in a press conference in Brooklyn that “I don’t think anyone would want to take the blame for losing the biggest jobs deal in the history of New York City and that’s why I think it will go through”.

The opposing, ideological side was led by the Representative Alexandria Ocasio-Cortez. She criticized the government for prioritizing the interests of companies over its local citizens. In a recent tweet, she mentioned how “Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here”. Furthermore, Erik Sherman from Forbes Magazine states that the deal wasn’t as greatly beneficial as it claimed to be. He states that “for one, the planned 25,000 jobs were to come over 10 years, meaning an annual 2,500. Nothing to dismiss as unimportant, but the New York City region already is adding more than 28 times that many jobs a year”. An opinion article written by David Leonhardt of the New York Times states that this is the epitome of what social scientists “the tragedy of the commons” in which people are ready to sacrifice long-term interests for short-term ones. Corporate relocation exemplifies this policy. It does not enable economic growth, but rather redistributes income upward. As Leonhardt writes “If every city and state justifies big giveaways based on its own immediate interests, the tragedy of the commons will never end”.

Emily Badger of The Times stated that this deal was “absolutely a godsend to those of us who have been trying to reform economic development”. Economic development is a structure that should be reformed for the benefit of all. This situation is just a short portion of a long fight to reform the structure of economic development for the better.