'Not welcome here': Amazon faces growing resistance to its second home
theguardian.com
theguardian.com
Presumably there are ways to estimate the economic effects of 50,000 jobs + tax breaks. Is there a reason they're not mentioned?
If the HQ is going to employ thousands of workers when its built, and will require a massive construction operation to build, you're looking at a fairly large windfall for the state. Is it $5B worth? The article doesn't delve into the details.
Will tax revenues increase? Surely. Will infrastructure and housing be strained? Undoubtedly (Not everyone wants their local community turned into Seattle). Will there be a windfall? No one has proven that.
Amazon hasn't made the case its presence is a net benefit to the city it selects, and cities are arguably pragmatic for turning them away.
Here is a fun question:, are these grass roots anti-amazon campaigns being boosted/funded by the few remaining cities in the running as a means to sabotage the other cities bids, from the inside?? The campaign leaders may not even know the real answer to that. Thats what I would do if I were Chicago!
Rather than trying to account for the supply chain pull as you noted, I wish cities and states would standardize upon an open source formatting and presentation of the data in their accounting systems. Many competing analyses of costs to various jurisdictions can then arise from private citizens and organizations, and then we can pit them against each other historically to converge upon a small set of models that are consistently predictive. We can even then gather insightful analyses from weaving together accounting and GIS datasets, for example, that weren't possible before without creating entire new bureaucracies.
With more accurate cost management accounting models, we can then more reliably challenge organizations petitioning for specific tax concessions: we can reasonably accurately model the influx of X thousand employees to have $Y impact upon the cost accounting structure over Z years. NPV of that cost is $N. If spread out over F forecasted years of the concession you are proposing, at equivalent long-term bond rate of your corporation of P% at your longest-projected credit quality, then that comes to $T total cost to the jurisdiction over the time period.
Then the per-employee per-$10,000 wage-adjusted cost burden to the jurisdiction on a per-unit basis becomes a calculated, known amount. Tilt the unit measure towards favoring lots of employees at moderate wages instead of a few employees at extremely high wages to incentivize high monetary velocity in the local economy, lest the extremely high wages of a few employees get translated away into capital gains-structured instruments. Compare that to existing employment data, and you know if the jurisdiction is over-paying or not for the concessions. And now the jurisdictions have a metric against which to demand a surety bond: with any future adjustments to wage and/or employee count, if it falls below a certain threshhold, the jurisdiction can collect upon a proportional amount in the surety bond for non-performance. Benefits dollars don't count, because the jurisdiction is only interested in the localized monetary velocity impact upon the localized economy that comes from wages.
I have a background in data engineering and don't really know where I'd get started. But if you could figure out a way to throw differently schema'd data at an algorithm and have it try to create a universal schema, you'd be wealthy.
There would be a ton of challenges, but the problem you described seems like a societally valuable one to solve.
For some kinds of data like account numbers, phone numbers, names, and addresses, it is possible to envision some kind of algo. But that's not where the interesting action happens. After working with lots of application developers over the years, I've learned they cram the damndest bits of information into databases, and it's dangerous to make assumptions about how they use the data (whether temporally, structurally, computationally, *etc.). Sometimes with absolutely no rhyme or reason to what or why, either; the rationale and logic is embedded entirely in front of the database within the application code.
Without access to that code, even process re-engineering teams are flummoxed at just understanding a schema, not to speak of porting it. So I find it challenging to envision a scenario where inspecting only the data can yield better results; by the time we're restricting ourselves to only the data, and only at a snapshot in time, we've lost too many bits of information, and the resolution of the solution is too coarse-grained to be universally useful. As we add more inspection time, more fine-grained snapshots, and more kinds of data however, resolution goes up; the real question becomes just how much is needed to generate a MVP.
For a company that does 177.87B in sales each year?
I think they would pick the structurally best city regardless. They just also want gravy from it first.
I would seriously doubt that any city would be offering this if they didn't believe that it would be net positive for their area. Between increases in property values (thereby increased taxes), number of high-income earners, and new spending from these people, they are likely to benefit from this arrangement in the longer term.
Amazon asking for competition between the various cities isn't hunger games because pillage Atlanta to increase their odds of being picked. It isn't this zero-sum game that these people want to make it out to be.
I would. What's good for a "city" is not necessarily good for the residents of that city. These are two totally different entities with their own wants and needs, that are not guaranteed to act in the others best interest. In fact, occasionally the incentives are so misaligned as to be polar opposites. For example :
> Between increases in property values (thereby increased taxes)
Increased property value is never just a "good" thing. It's an explicit tradeoff. More expensive property is "good" for the municipality government (their incomes rise), but generally bad for most actual humans (their expenses directly increase as a result of this, doubly so if they aren't wealthy enough to already own property).
> number of high-income earners, and new spending from these people,
Again, this is not a good thing, it's an explicit tradeoff. This is good for high-income earners (who can use each other to push their own careers forward), but is explicitly bad for everyone other resident, who can't.
If a bunch of "high earners" enter your market, and you yourself are not a high earner, your income remains mostly flat, but literally every cost you have has gone up significantly. (Housing, Transportation, Education, Medical, Daycare, etc). You are now competing against high-income people for almost everything, but with little-to-none of the money they have. You will loose, every time.
Good job government, working against your citizens' best interest.
The idea of high-income earners driving up costs for everyone may be true as well. I don't have enough background other than anecdotal evidence to say one way or another though. Looking at price increases and any benefit changes to low income earners / low income migration from the area would be an interesting study once Amazon HQ2 gets off the ground.
Look how much the the original community of Silicon Valley have benefited with increased property taxes.
And there is no grantee Amazon will stay in the area once the government subsidies run out.
The assumption that political leaders invariably make decisions that are the best for the general public is not one borne out by evidence.
> It isn't this zero-sum game
Amazon is going to expand, right? Without a doubt, and regardless of what cities do, Amazon will expand. Therefore, cities offering tax breaks is just a transfer from the general public to the shareholders of Amazon. It's not zero-sum, it's negative sum, as far as the public is concerned. It's monopoly rent.
That assumes the promised benefits will actually materialize. I don't have any cites handy, but my understanding is that they usually don't. The company gets money from unsophisticated local leaders based on big promises, and the state or city is left holding the bag if those don't materialize.
Here's an example of another, similar deal that further along:
https://www.realclearmarkets.com/articles/2017/12/26/wiscons...
> The state legislative bureau estimated it would take 25 years – until 2043 – until the Wisconsin government received enough in additional tax revenues to match the initial $3 billion investment. At $4 billion-plus, the break-even point will recede even further into the future.
> The Foxconn giveaway already adds up to a lot of money – close to $1800 per Wisconsin household, even in parts of the state that won’t benefit directly from the plant.
> How many jobs will the deal actually create? The notion of 13,000 jobs is actually a goal, not a guarantee. The legislative bureau acknowledged that some estimates place the probable payroll as low as 3,000. The agency tasked with holding Foxconn accountable has a history of failing to verify job-creation claims and rewarding companies that fall short of quotas, according to state audits. How long will the jobs actually last? Foxconn has launched an extensive commitment to automation and robotics, eliminating tens of thousands of jobs in China with the introduction of specially-designed “Foxbots” – with the stated goal of eliminating almost their entire global workforce.
I'm fine with arguments for or against HQ2; I was commenting more on the sheer amount of hand waving in these articles.
Taxes, Incentives, and Economic Growth: Assessing the Impact of Pro-business Taxes on U.S. State Economies Soledad Artiz Prillaman and Kenneth J. Meier The Journal of Politics 2014 76:2, 364-379
> The empirical effect of business tax policy on economic development clearly diverges from economic theory. In a majority of cases, the impact of business taxation is negligible at best. Controlling for other factors, business-targeted tax cuts either have no effect or result in economic decline.
The full paper is available via Sci-Hub's latest incarnation.
Why couldn't it?
Also it's not like the opposition to it is unreasonable, it probably will benefit the community but it would've been a lot better if Amazon didn't get the tax bonuses and since they were going to build the second HQ somewhere anyway. You have municipalities paying 5b$ for Amazon to do something it was going to do anyway so while the individual location is better off the system as a whole just lost 5b$ in taxes. This really plays into the current trend where Americans feel like these corporations really have outsized power in the US politically and use it to get what they want (e.g. taxes, laws, favorible labor contracts) and as average citizens we have little recourse to do anything about it.
The civic angle is interesting though, will pressure groups succeed in reining back the usual massive concessions that local governments usually grant corporate behemoths? Or will it be business as usual where the giant tosses a few shiny wampum beads to the locals while destroying their livelihoods?
That doesn't make much sense to me.
My father has property here so I'm sure he'll be fine.
"Everyone's costs will increase, and since I don't own property, my costs will increase even higher than most others peoples costs rise"
It's totally rational to not want to take a paycut, and Amazon HQ2 will effectively be a massive pay cut to every non-Amazon person in whatever city Amazon uses for HQ2
(I don't want to own a car again; MARTA, being a good public transit option that is taken by people across the socioeconomic spectrum and so there's political weight on the side of keeping it good, makes Atlanta one of few American cities where that's potentially tenable.)
NCR, a new Tech tower, perhaps something new around BellSouth, Metlife at 17th street... Atlanta has almost twice as many people as Seattle, and unlike a sleepy coffee town has always been dominated by corporate culture. Even if Amazon moved their whole company here, it wouldn't change the city that much.
I mean... this isn’t how price comparisons work? You can rent a studio on Peachtree in Midtown for $1,000 a month if it isn’t “swanky”. It probably has the same square footage as that $2,500 “1 bedroom” in Manhattan. Living in a city isn’t cheap.
I support the campaign but that one sentence prevented me from signing. I've made that mistake before and the deluge of emails I received from "partners" was astonishing.
To he who has much, more will be given.
So no, not all cities or municipalities cow tow to large corporations when it comes to handing out tax breaks or incentives.
I'm even for banning "backdoor" tax breaks that effectively only benefit one or two companies and were clearly targeted at them (I'm thinking of the Delta aviation fuel tax break, as an example), or sweetheart deals to use infrastructure (like stadiums).
I think the most immediate benefit will be that the NFL will have to pay for its own damn stadiums in the future.
The incentive for states to do this is a direct consequence of progressive taxation. If a company paid $1000 in taxes and got back >=$1000 in police protection (or whatever), and the government's relationship with every other taxpayer was of the same nature, companies couldn't do this. The government actually can provide >$1000 in value for $1000 in tax revenue because government services can produce consumer surplus like anything else.
And if every taxpayer had that relationship with government then there would be no room for arbitrage. If someone wanted lower taxes, the cuts would have to come out of some services, but all the services provide as much taxpayer value as they cost. You can't attract high income taxpayers by cutting services that produce a net positive benefit to high income taxpayers.
The problem comes when one state wants to take from the rich and give to the poor and the next state doesn't, because then the richest people all move to the states that don't take more from them than they give back, and getting poorer people to move in instead is not what any state wants. Then the states that were trying to redistribute income realize they've failed, but they don't repeal the programs because they're very popular with the recipients, so instead they give the rich tax breaks to get them to come back. Because $1000 in tax revenue is more than zero, even if they were originally supposed to pay $10,000.
And so the programs that are supposed to redistribute income end up distributing it from the middle to the bottom instead of the top to the bottom and end up destroying the middle class.
The solution to this, at least between US states, is to have a UBI at the federal level and no other redistributive programs at all. Then the UBI serves the goal of redistribution and progressive taxes aren't required on top of that, so there is nothing for companies to arbitrage.
This stuff usually happens at the state or local level, so a federal law (not sure about the constitutionality of that) or constitutional law (or judicial interpretation) seems like the right place for it.
Tax arbitrage is a problem, IMHO, and I do wish there were better ways to mitigate it. It does seem we're moving more towards a system with local taxes occur where the sales are made, and perhaps the same could be done with local income and business taxes. It would make things more complicated, but we have software and tax codes could also use some compensating simplification.
IMHO, tax policy is part of the political system, and in the interests of democracy, the political systems shouldn't be made to compete with each other in exploitable ways.
"Income tax where the sale is made" is VAT. And "business taxes" (meaning incorporation fees and the like) are stupid garbage that disproportionately impact small businesses, don't even generate that much revenue, and should just be eliminated entirely.
But yes, VAT would work really well for this. Especially if there was a standardized way for internet retailers to remit it without having to register with every individual state and locality that each uses their own filing system.
> IMHO, tax policy is part of the political system, and in the interests of democracy, the political systems shouldn't be made to compete with each other in exploitable ways.
It's impossible to prevent this and still maintain any semblance of different states or countries. If states couldn't have different taxes then they would attract businesses by not spending the money on social programs and instead using it for infrastructure projects businesses like. If they weren't allowed to do that then they would still attract businesses with less stringent regulations.
The only way states don't compete with each other is if they're all exactly the same. And they would never actually be on equal footing regardless. If everyone had to abide the same taxes, minimum wage laws and regulations there are in California then no one would ever set up shop in Arizona, much less Mexico or South Africa.
B. There's no current requirement that posts on the front page be apolitical.
The guidelines clearly state "Off-Topic: Most stories about politics, or crime, or sports, unless they're evidence of some interesting new phenomenon. Videos of pratfalls or disasters, or cute animal pictures. If they'd cover it on TV news, it's probably off-topic." They've covered this on TV news, a lot.
You can by moving to any of Alaska, Florida, Nevada, South Dakota, Texas, Washington, or Wyoming.
And there are US states with 0 income tax. And countries with very low income tax. Russia has 13% income tax, the state gets most of its income from its fascinating system of tributary taxation. (1)
It's certainly possible to vote with your feet for the system of government that fits your wishes best.
1. https://www.quora.com/Will-Russia-abandon-the-tributary-taxa...
The state is often heavily intertwined with industry, through massive regulation and, too often, good old-fashioned corruption. If the state thinks it can get away with nationalizing a vital industry concern, it will without a pause. Usually though it can't because it knows that bureaucrats make horrible managers.
All it takes is political regime change.
Every other country in Europe progressed without these innovations and as such they're always only a few steps away from fascism / dictatorship. Except the Dutch. The Dutch were reasonably well protected and they also created a commercial empire. The US Constitution is modeled after the Dutch one.
The difference is that the English weren't able to build their commercial empire until after the legal reforms took place, while the Dutch couldn't make their legal reforms until after they built their commercial empire.
No such legal reforms exist in other nations. These laws are instrumental in allowing a class structure other than ruling class-peasants. Other countries can vary in the amount of wealth they can spread amongst their peasants, but the peasants don't really participate in the governing.
The big caveat here is France. The French mechanism for making demands on the ruling class is social unrest. Nothing like a good French riot. The spectre of a second French Revolution scares the everloving crap out of the rulers and that forces them to the negotiating table. This has the unfortunate effect of making them uniquely vulnerable to fascism. But enterprise in France is just as state-intertwined as it is everywhere else, because there aren't any strong institutions there to counteract it.
Only in Anglo countries can industry and state compete as equals. When industry bands together and cooperates, as we used to call monopoly / cartel, only a coordinated state response can check it. This is enshrined in law and a bedrock feature that our capitalistic society relies on for its competitiveness.
How is France "uniquely vulnerable to fascism?
How do you think that having a response to monopolies enshrined in law makes it a "bedrock feature" of our society when the US has seemingly abandoned any serious enforcement of antitrust law?
How do you respond to the state and industries working together as in the case of regulatory capture or governments adding protections for companies like preventing state level governments preventing municipalities from forming their own ISPs?
Your whole post just reads as "us good, them bad" with no actual evidence on the results
> So by virtue of being English/Dutch descended they have a better system.
Sure. Systems persist through generations. You can still see remnants of the old French colonial government in Louisiana to this day. I don't understand why this should be a controversial statement. The British attitude towards commerce evolved over hundreds of years, and their colonies inherited it.
> How is France "uniquely vulnerable to fascism?
A poor choice of words, sorry. They're 'particularly vulnerable', not 'uniquely vulnerable'.
> How do you think that having a response to monopolies enshrined in law makes it a "bedrock feature" of our society when the US has seemingly abandoned any serious enforcement of antitrust law?
When it comes to very very large institutions with difficult-to-check amounts of power, then ordinary law fails to provide for one side. The antitrust regime in particular was fighting against Standard Oil, a conglomerate that deployed the sharpest legal minds in existence at that time to circumvent federal regulation. It was checked by Teddy Roosevelt, who led the charge to disrupt their operations so they could be brought back under state supervision.
Where law fails, individuals and/or mobs take over. The ability of those corrective agents to actually check power is the operative concept here.
As another example, the Magna Carta was rammed down the throat of the British Crown by the aristocracy, which was tired of seeing their concerns meddled with by the Crown for no good reason they could see. A full-on war had to be fought between the baronies and the Crown before the Carta could be accepted as a legitimate check on authority.
When making a power play, you're changing who gets to write the rules. The mark of a functioning society is when royals, elites and commoners can square off against each other without igniting a war. If they can't do that, then one swallows the other, usually the state consuming private enterprise.
Only robust national institutions can maintain the balance of power between entities. After the Carta was passed, the actual text of the charter quickly became obsolete, but the ideas that it represented, that the Crown cannot just do whatever it wants, became enshrined in the minds of the British. Without this innovation, private enterprise cannot flourish, except in a trickle-down fashion from the state. It's not really private anymore, it's 'at the pleasure of the state.'
My argument is that only the Anglosphere and the Dutch managed to evolve this institutions throughout history, in slightly different ways, and that all other countries try to ape the institutions, and fail to create robust ones. Because it goes farther than merely having a judiciary and constitution. The public themselves has to buy into the system, which is what makes the French public so scary to its lawmakers.
The magna Carta for instance was so far back that their language is extinct, they have the barest of influence on the modern world.
The anglosphere and the Dutch may have evolved institutions that kept a balance between the state and private industry but that balance only existed for a short time. It certainly didn't exist between the civil war and world war 2 in the US as we swiftly changed between robber barons and the new deal. It seemed like they more in between 1945 and the oil crisis of the 1970s, but since then the companies have taken more control every year
I challenge you to learn more about history. Learn about the history of corporations and how they grew out of colonial enterprises. Learn about Standard Oil and what private enterprise looked like before and after them. There are a lot of devils in those details. When you study enough of it, you can sense a smooth, continuous line of social and legal innovations that threads through all of recorded history, thousands of years.
The Civil War that you mentioned settled many pressing issues regarding the ability of states to assert their will against the nation. World War 2 enshrined international agreements and institutions as vitally important for averting war. It also thrust women into economic importance. All of these events created bedrock principles for the new social order to coalesce around. Once they're set, they're set. Other countries want them and so they do the best they can to try to copy them.
But they're never going to work as well as in the countries that they arose in. Nobody does tributary taxation like the Russians. Nobody can build a single-party state quite like the Chinese, with 6.3% of the entire population in the CCP.
Have a look at Europe, there's fully privatised states, and some that might be regarded wrongly, from an American point of view, as socialist, yet still actually capitalist in economic philosophy.
Privatization effectively does two things. It exposes the health of the organization to the market, and it takes the control out of the hands of the ruling class. It is unclear how you could do that to an entire state. If you remove from it the ability to collect taxes, that would do the trick, but also effectively destroy the ability of the state to govern, making it no longer a state.
The closest analogue to this may be Somalia, which is effectively a medieval feudal regime that persisted into the 21st century. Somalia's national government has no real control over the country and can only cajole, never force. Somalia's federal government is playing a 'fake it til you make it game' which apparent when you see that their actual collected taxes is only 30% of what they say should be being collected. Customs were 68% of the entire government revenue in 2016.
Another "private government" is the Vatican, which sustains itself largely on donations from Catholics throughout the world. As there is nothing compelling Christians to donate, the Vatican is much more market-oriented than most states.
I have already gone over Russia's system of tributary taxation, but that's a voluntary system as well that the Russian state could not survive without in it's current form. It's estimated that by midcentury, the system will be replaced with a more conventional one. Putin's successor won't be as capable as he is in keeping the current order humming.
The leap you just made from cities not being able to be extorted by corporations for tax cuts to all private enterprise becoming state enterprise is so massive I have no idea how you even did it.