On Wednesday night, New York City turned orange. The Empire State Building, 1 World Trade Center, and a handful of other skyscrapers were lit up with orange lights. Across the city, digital sidewalk billboards glowed orange. Why? It was too early for Halloween, too late for the Mets, and altogether too much for the Knicks.
No, Thursday marks the deadline for cities to submit bids to land Amazon’s second headquarters. In Ottawa, Canucks fans were told to make some noise—and faites du bruit—for Amazon during a TV time-out. The Boston Globe published a long “Dear Jeff” interactive, begging not just for jobs but for the company’s help solving urban problems. (Today, streaming video. Tomorrow, school integration.) The mayor of Kansas City, Missouri reviewed 1,000 products on Amazon. (Every single one: five stars.) Tucson, Arizona, tried to mail Jeff Bezos a cactus. At Wharton, pitching Philadelphia to Amazon has become a classroom assignment.
The spectacle was entirely expected—a reprise of Google’s 2010 high-speed internet sweepstakes, for which Topeka, Kansas changed its name to Google for a day—but nevertheless still impressive, in the way it crystallized the absurd power that corporate boards now wield over local governments. Now comes the transition from a nationwide spasm of public groveling to the quieter, more private seduction of dozens of bids promising land and money to America’s 12th-largest company. Each public stunt is just the wrapping on a package of tax breaks, promises, and other giveaways enclosed in the bids, many of which cities, counties and states have decided to keep private.
Most cities will lose, of course, though local leaders argue these games make a place fitter even in defeat. Amazon’s RFP describes an ideal that no American city quite lives up to, prompting responses of self-reflection and collaboration. At a forum in Washington this week, for example, Nashville Mayor Megan Barry noted that Amazon’s request is a reminder that the city’s undeveloped transit network leaves it at a disadvantage. The seven Bay Area cities bidding for the headquarters agreed not to offer subsidies, Oakland Mayor Libby Schaaf said. In New York, which pitched four neighborhoods, the editor of Crain’s argued that past bids for the Olympics, among other moonshots, had generated good ideas. (That his go-to “good idea” was a developer-designed streetcar project, however, undermines his case.) Why not, goes the positive spin, resolve to be the city you want Amazon to think you are?
Still, this is a contest and some sniping is in order, especially over taxes. New Hampshire offered 620 low-tax acres in Londonderry. Half of the state’s proposal, the Boston Globe real estate columnist wrote, was spent ragging on Massachusetts’ high housing costs. The other half: boasting about the excellent universities paid for by the Bay State’s high taxes. This is typical of how Amazon (and every sports team, and most large companies), use state and local boundaries to create a prisoner’s dilemma. The size of the bounty is unique—Amazon boasts $5 billion in investment and 50,000 jobs—but the hunt, as I wrote last month, is depressingly familiar. Cities and states race to carve out tax exemptions for giant companies, forcing smaller, more rooted enterprises to bear the cost. In a letter explaining the city’s decision not to participate, San Antonio mayor Ron Nirenberg decried the “bidding war” and said the city would not “give away the farm.”
Even before the search for HQ2, Amazon has benefited from this system: Good Jobs First, which tracks corporate welfare, shows that Amazon has received $1.2 billion in subsidies since its founding, including $177 million this year alone. Economists are very skeptical about tax breaks for corporate relocation generally—including for Amazon’s strenuous warehouse jobs—but the scale of the HQ has brought subsidy offers to new heights. New Jersey Gov. Chris Christie, backing Newark’s bid, announced $5 billion in tax breaks.
It didn’t have to be this way. In 1975, the year that President Gerald Ford’s infamous rebuke to an indebted New York City symbolized federal disinterest in urban problems, Milwaukee congressman Henry Reuss made a scathing assessment of federal priorities. “In stark contrast to the hopes expressed by some for a Marshall plan for the cities,” he announced at the opening of a Congressional hearing on cities, “we have found ourselves in recent years engaged in a frustrating scavenger hunt for urban money.” New York’s brush with bankruptcy helped establish the paradigm we see today, “redefin[ing] the political dialogue,” in the words of the investment banker Felix Rohatyn, who led the nation’s largest city through a bankruptcy-style restructuring that included deep cuts to the municipal welfare state. Going forward, Rohatyn said at the time, cities would understand that “business has to be supported and not just tolerated.” That arc reaches its apotheosis with Amazon.
Still, the offer is transformative. Even in New York, Amazon would be the largest office tenant by far. If the company were to build out HQ2 in, say, Pittsburgh, it would wind up employing one in every twenty workers in the metropolitan area. In this respect, the fervency of local leaders is a rational, if likely hopeless, response.
More striking is the lack of critical voices—among U.S. mayors, who are almost all Democrats—about Amazon’s business. Amazon accounts for 43 percent of everything that’s sold online in the United States, and 5 percent of all retail sales (excluding food, and before the Whole Foods acquisition). Bezos’ company decided years ago that would pay sales taxes, but that’s small compensation for its brutal effect on local, independent retail. The Institute for Local Self-Reliance, a think tank that advocates for small businesses, estimates that Amazon’s market share has vacated more than 135 million square feet of retail, or about 700 empty big-box stores and 22,000 Main Street businesses. You may think that is a good trade for ever-cheaper consumer products at your doorstep in days or even hours—or that the American romance with small-business owners is overdone. But its consequences—starting with the elimination of customer-facing retail jobs and rise of their warehouse counterparts—will be cataclysmic. Even withdrawal letters from San Antonio and Little Rock were full of general admiration for the company.
The irony is not only that Amazon’s employees will want to live in the kind of place their company is destroying—a city or suburb anchored by a distinctive collection of small shops, a hardware store where the owner remembers what kind of wood you used to build your deck, a guitar store that sponsors Little League teams—but that their presence will help that place thrive. The second headquarters will protect local retail like a seawall in a storm, holding back the water in one place but pushing it higher everywhere else.