Home > Uncategorized > The Great Amazon Auction is Over… and MAYBE Americans Will Now Wake Up to the Scam of Corporate Welfare

The Great Amazon Auction is Over… and MAYBE Americans Will Now Wake Up to the Scam of Corporate Welfare

November 13, 2018

Atlantic writer Derek Thompson’s recent article on Amazon’s recent “search” for a second headquarters is titled “Amazon’s HQ2 Spectacle Isn’t Just Shameful—It Should Be Illegal” and offers this subheading:

After recounting the procedure Amazon followed to seek out its second headquarters, Mr. Thompson poses a series of questions critics of this process and of Amazon are posing and and poses one very blunt question himself:

The rumored announcement has emboldened Amazon’s army of critics. Did the world’s smartest company really need 13 months, and applications from 238 cities, to reach the striking conclusion that it should invest in New York and D.C.?  The former is America’s heart of capital, and the latter is America’s literal capital, where Jeff Bezos, chief executive of Amazon, already owns a house and a newspaper.

Was this national auction nothing more than a scripted drama to raise the value of the inevitable winning bid? And did the retailer miss an opportunity to revitalize a midwestern city by choosing to enrich the already-rich East Coast?

All good questions. But here’s the big one: Why the hell are U.S. cities spending tens of billions of dollars to steal jobs from one another in the first place?

After offering rationalizations for why corporations should engage in this kind of bidding between local and state governments and why those local and state governments should play the game of lowballing their taxes to entice businesses to locate in their town or state, Mr. Thompson offers three major problems with this “system” of reading corporations by providing them with tax breaks:

First, they’re redundant. This process doesn’t expand the local, state or national economy at large in any way, shape, or form. As Mr. Thompson notes, “Companies often decide where they want to go and then find ways to get their dream city, or hometown, to pay them to do what they were going to do anyway.

Second, companies don’t always hold up their end of the deal. Mr. Thompson cited the recent FoxConn scam in Wisconsin as an example, but the fact is he could have chosen any one of the examples he offered earlier in the article.

Third… it’s… ludicrous for Americans to collectively pay tens of billions of dollars for huge corporations to relocate within the United StatesTo underscore the ridiculousness of the competition between cities and states he describes the ongoing “battle” between Kansas City, KS and Kansas City MO for corporations that undercuts local and state taxes in both states, cuts that diminish the ability of both Kansas City’s to provide public services.

Mr. Thompson concludes his article offering some possible solutions that could be reached at the federal level, but laments that such solutions are unlikely given the bi-partisan support for corporate welfare. He observes:

…in a starkly divided country, corporate pandering is the last bastion of bipartisanship, an activity enjoyed by both Democrats and Republicans at every level of government. New Jersey and Maryland, both blue states, insisted that Amazon take $7 billion in tax savings just months after congressional Republicans passed a corporate income-tax cut that some analysts project will save Amazon nearly $1 billion over the next decade.

Corporate America is getting all the help it doesn’t need. You and I may not like it. But executives such as Jeff Bezos have no reason to care. They are winning by the rules of a broken game.

And who suffers? Mr. Thompson answered that question earlier in the article:

…since cities and states can’t print money or run steep deficits, these deals take scarce resources from everything local governments would otherwise pay for, such as schools, roads, police, and prisons.

So if your city or state plunks down millions or billions in “incentives” to entice a corporation to locate in your region, please connect the dots if your schools are substandard, your police force is spread too thin, and your roads are in terrible shape. If you want to know where the money went to provide those services, drive past the spiffy new office park, vast new warehouse staffed by robots, or the gleaming skyscraper full of pink collar workers.




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