Amazon is a company worth $678 billion whose CEO is the richest man in the history of the world. Oddly, it is also the perpetrator of one of the biggest welfare scams America has ever seen. It’s even worse than you think!
Amazon’s grotesque national spectacle of goading our nation’s cities into trying to outbid one another for the company’s second headquarters is going exactly as planned. Nearly 250 cities submitted their pathetically grasping bids; that list has already been cut to 20 finalists, and, of course, only one city will “win” the right to make jaw-dropping handouts to Amazon out of the public till. (The city chosen will be a major city with an already healthy economy, rendering the begging debasements of all the second-tier cities all the more embarrassing.)
An interesting side benefit for Amazon—in addition to the huge sums of money it will receive in tax breaks—is that, as the New York Times notes today, the company now has an encyclopedic analysis of every city where it might ever want to locate any type of facility in the future, including the most valuable information of all: what sort of ransom the city is willing to pay to a company like Amazon. All of these “losing” cities can take as a consolation prize the knowledge that if Amazon wants to build, say, a warehouse there down the road, they will expect to receive at least a scaled-down version of the perks that the city already offered. In this rigged game, the cities of America have already laid all their cards on the table for Amazon to peruse at its leisure.
This is all fucked. Companies like Amazon build new headquarters and other facilities because they have a business need to do so. If a business has a business need to build a business facility, you do not need to pay the business money to do so. The fact that it has a business need means that ultimately it will make money by doing so. There is no charity involved here. The only thing that every damn city in America is bidding on here is the right to have a business facility located in a certain place. You do not have to be a genius to see that, in aggregate, from a national perspective, this is a losing game for the public. If we did not give private corporations any free public money, they would still build their business facilities, because doing so is a necessary part of doing business, which is what businesses do. Furthermore, taxes are what we charge for public services. By giving Amazon tax breaks, you excuse them from paying (a lot) for public services. As a result, either public services will suffer, or the rest of us will pay more to make up the difference. This is charity money being spent to enrich the richest man in the world. It is the worst possible use of public funds.
There’s an easy way to ensure that this charade doesn’t happen: a federal law banning these kinds of state and local subsidies to private businesses. Cities and states feel that they have to involve themselves in these harmful competitions lest they lose out on all business development because some other place is offering a sweeter incentive package. As soon as we allow anywhere to hand public money to Amazon, everywhere is forced to do so. It has to be stopped at the federal level. This process is always, always a net loss for the public. End this game completely. The only way to win is not to play.
If the government is really interested in making sure that Amazon is a good civic partner, they should help the company’s workers unionize.