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I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprise
by zaroth 9y ago
I completely disagree with the “race to the bottom” framing of the idea that cities shouldn’t compete to provide the best services for the commercial enterprises which reside there.
At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.
My personal opinion is cities should be talking about the Billions they will be committing to supporting infrastructure improvements rather than the billions in tax cuts. HQ2 needs a fuck ton of support systems, akin to building an Olympic City which never shuts down.
Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents. Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.
Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks - and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.
In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment. We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got. I certainly hope my city would do everything possible to roll out the red carpet. It’s the most effective dollars they could possibly spend, because it’s effectively corporate matching of public funds.
- joeax 9y ago> At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated. Back in 2004 when I was working at Microsoft, I remember sitting in a bar in downtown Redmond and tossing back some local brew IPAs. This guy sitting next to me was an older dude and longtime fisherman. He was going on and on about how in the 80's, the eastside (the collective suburbs i.e. Redmond, Bellevue, etc) was just farmland, and that Seattle's main industries were fishing and logging. He was both lamenting and boasting how Microsoft came in and transformed Seattle and surrounding area into the tech mecca it is today. So you are right. All it takes is one anchor company to totally transform an entire city. Too bad they chose cities with established infrastructures and talent pools, and not a city like Milwaukee or San Antonio that would have had the same dramatic transformation as 80's Seattle.
- Kalium 9y agoAmazon doesn't want to spend ten years trying to remake a city into something that might serve its needs. I can see why. It's a huge investment with a very uncertain return. But, let's turn it around. Why would Amazon want to go to San Antonio, instead of a city like Atlanta?
- busterarm 9y agoThey also don't want to do what the auto manufacturers did and make the host city completely dependent on them for the local economy. Shreveport suffered quite a bit after the GM plant closure and drop in oil prices -- being so aligned to one sector was not in Shreveport's best interests.
- Kalium 9y agoFunny story. By coincidence, San Antonio is really proud of its Toyota plant.
- joeax 9y agoTake a city like San Antonio. Austin is 80 miles north. Amazon puts HQ2 in the northern suburbs and suddenly you have a major tech corridor along I-35 that will bring growth and investment along with it, bridging the two cities ala San Francisco-San Jose-Berkeley. You would have a similar effect with Milwaukee and Chicago. Sometimes a city becomes so outgrown and gentrified (like Seattle, hence the new HQ) it makes sense to set up shop nearby. The next best thing is they set up HQ in southern Austin or northern Chicago (both shortlisted cities), and those cities benefit from residual investment.