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Promising Billions to Amazon: Is It a Good Deal for Cities?
- TokyoKid 9y agoThe sick part is Amazon is asking cities to fight over the privilege to kiss it's ass. So the bidding goes higher and higher as the people get robbed more and more.
- Roritharr 9y agoJust wait until the tax incentives run out and they simply move again. Nokia did this in Germany, it was quite the joyride.
- jrs235 9y agoAnd I bet when/if Wisconsin stops kissing Foxconn's butt, Foxconn will threaten to move. And if threatening fails then they'll move. The Wisconsin/Foxconn deal is a horrible deal for Wisconsin.
- bilbo0s 9y agoThe Foxconn deal is interesting for a number of reasons. First, it's huge, and in a state that arguably does not have the population or state budget to support the subsidies. ie - Whether or not Wisconsin can actually afford this is an open question. Secondly, just as you mentioned, if Foxconn does start up in Wisconsin, and they eat up all of the subsidies... what is to stop them from moving? Lastly, the Foxconn deal is a very 20th century attempt at growth in what a lot of smart people claim is a new 21st century reality. One thought experiment put forth recently noted that there are roughly 3 or 4000 STEAM and business school graduates from Wisconsin universities every year. A 21st century attempt at growth might be to dole out seed level startup grants for those graduates with good enough ideas... something in the ... say ... 20000USD range. With the money they will give to Foxconn... They could do that for EVERY STEAM or business graduate, for EVERY year... for the next 50 or so years. It's hard to imagine that they wouldn't hit a high enough valuation on their portfolio to make their money back. I thought that was kind of a good point. So, I'd be very curious to see some states try the "state run ycombinator" thing, while others try the old give lots of subsidies to big companies thing... and see which model is more successful long term? We'll likely never see that... but it would be interesting from a purely academic perspective.
- mistermann 9y agoAre you considering taxes on Foxconn workers salaries in your calculation?
- bilbo0s 9y agoWe could do that, if we could get an idea of the number of years that Foxconn is likely to continue doing business in Wisconsin. I'd imagine no one really knows that right now. So if we have a 50 year "y combinator" type fund, it might be a little unfair to compare the money generated from the companies started through that fund to the money generated by Foxconn if Foxconn only stays in Wisconsin for... say... 10 years. We just have no good data on that. How long will they stay? My COMPLETELY UNEDUCATED guess would be more than 5 years, but likely much less than 50 years. We could compare the income taxes generated, but my gut tells me that doing so would put the young STEM and business types even further ahead in terms of ROI. That's just a guess though.
- fjsolwmv 9y agoSTEM is relevant to economy development, not STEAM.
- bilbo0s 9y agoI don't have data regarding the number of STEM grads though. The only thing I know is that there are roughly 3 or 4000 STEAM and Business school graduates. So that's what I have to go with. Besides, there are obviously LESS than 3 or 4000 STEM grads, so the program would last LONGER than 50 years in that case. (Although I think cross functional STEAM/Business teams are a better bet anyway... but even if you believe the STEM guys are capable of going it alone... it only makes the guy's argument more strong. Because the funding would last decades longer.)
- hbosch 9y agoEconomy and culture must grow together for healthy society to develop and thrive. The "A" is crucial in that respect. My opinion.
- slededit 9y agoToronto was able to make the short list without any tax incentives.
- hungerstrike 9y agoI think Toronto is the token Canadian city that Amazon is using to enable them to negotiate on a Federal level as well.
- louprado 9y agoOr to hedge against the US immigration policy that could hurt their labor supply in the long term. It was not lost on me that half my engineering grad school classmates wouldn't pass the Bannon/Miller test.
- supergarfield 9y agoWhich test are you referring to? Googling returns nothing.
- hbosch 9y agoIt's a joke -- (Steve) Bannon and (Stephan) Miller are notoriously xenophobic, nationalist aides to President Trump known for their hardline stance on immigration.
- hocuspocus 9y agoI wouldn't bet the farm on this. Toronto has a better infrastructure than most US cities on the list, saner immigration policies, wages low enough (even if you compare the total cost of employment) to possibly make up for any tax discount. Canada's image is good among European and East Asian tech workers willing to relocate. And its tech scene, while not huge, is decently sized.
- refurb 9y agoMade the short list? People say that like it's an accomplishment. Jesus, Amazon is milking this for all it can and nearly every city is bending over backwards for Amazon.
- JoshTko 9y agoI wonder if amazon already decided among 2,3 cities and is simply using a public bidding to gain more from those target cities.
- sincerely 9y agoI think that’s a popular sentiment - IIRC before they announced this whole process they had expressed interest in two cities specifically (Toronto and Boston, if I’m not wrong). Would not be surpised if it ends up being one of those
- cimmanom 9y agoNope, it never is.
- grecy 9y agoIt fascinates me that Americans tolerate this kind of behavior. This is an extremely rich and profitable company negotiating so they can get out of paying taxes they and everyone else are ordinarily obligated to pay. Why anyone thinks that is OK shocks me. Do small businesses get out of paying these taxes? do individuals? Why does a multi-billion dollar company not have to contribute their legally-obligated share to society? It shocks and staggers me because at the end of the day it's regular citizens and American society in general that suffers. There is less money for teachers, schools, police, roads, drinking water and all the things these tax dollars are supposed to pay for while a company that already has hundreds of billions gets to keep all that money. There is no need to wonder why America has crumbling infrastructure, no universal healthcare, sky-rocketing education expenses, etc. etc. etc.
- maxerickson 9y agoLots of jurisdictions have zones where they reduce taxes to encourage development. Small businesses can get the benefit simply by opening a location inside one. This Amazon deal is likely to be neutral or beneficial for whichever government manages to pull them in. It's a race to the bottom but it likely isn't really deeply harmful. (the employees will pay property taxes and spend money in the community...)
- grecy 9y ago> This Amazon deal is likely to be neutral or beneficial for whichever government manages to pull them in. It's a race to the bottom but it likely isn't really deeply harmful. (the employees will pay property taxes and spend money in the community...) There is absolutely no world where this is neutral or beneficial for any government. Of course the employees will pay property taxes and spend money.... but our whole society and tax system is based on the idea that the employees pay taxes AND the employer pays taxes. Just because employees are paying doesn't mean the employer shouldn't. The government should be collecting millions (billions?) in property taxes and spending from the employees AND billions from Amazon - that's how the whole system was designed and is supposed to function. That's how roads are built and teachers are paid. The government will lose billions of tax dollars from Amazon they should be getting, which is absolutely 'deeply harmful' I have no idea why anyone would want to be part of a race to the bottom. The drive to increase corporate profits is gutting America, and the kind of reasoning you use simply justifies it.
- bfuller 9y agoNo. I will be furious if they come to dallas, and I have a feeling they will.
- ausjke 9y agoWhere ever Amazon goes, please do not come to Austin. If that happens, I will be in one of the groups to protest on street. We can no longer afford a huge deep-blue-brush to paint this great little city. Austin has been ranked as the best cities of living for years for a reason, jumbo Amazon could just ruin it permanently. I'm an Amazon customer, a prime member, but I do not want it to have a headquarter in a place I live, as I do not feel it is a good fit, physically or otherwise. Everybody else is welcome.
- farnsworthy 9y agoIt's like the professional sports team dynamic. Who's making the decision: owner/board/executive committee? I'd imagine that whoever it is already has a gut choice or two in mind, as people typically do when making decisions about anything (new job/hire/partner/significant other/car).
- harrumph 9y agoOF COURSE NOT.* * Except to market-fundamentalist quacks who never found a boardroom they wouldn't fellate.
- dang 9y agoWould you please not vent like this in HN threads? If you have a substantive point to make, make it thoughtfully; if you don't, please don't comment until you do. If you'd read https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html, we'd appreciate it. Please don't miss the bits about uppercase and ideological battle.
- pcurve 9y ago"Amazon said it would create as many as 50,000 jobs with an average compensation of $100,000, but that number is contingent upon how many people it transfers from its Seattle office." It's going to be very hard to get people to move from West to East, let alone Seattle to Newark. Sure, employees don't have to live IN Newark. Most of them would end up living in Newport NJ or nicer suburbs to the west, but houses and property tax are extremely high.
- fjsolwmv 9y agoNo one's moving from Seattle to Newark, except people whose parents live there. They'd stop hiring in Seattle and hire more in Newark
- scarface74 9y agoI really hope they don't come to Atlanta. We are already overly congested with traffic, mass transportstion is completely inadequate. We already have the busiest airport in the world.
- echelon 9y agoI hope they do come to Atlanta. It'll cement our city as a new, burgeoning tech hub. Amazon's move here will only bring more tech companies along with them. It's not Atlanta will stop growing if Amazon doesn't come, so I don't see the point of your argument.
- scarface74 9y agoI've been living and working in Atlanta for 20 years. During that time there has never been a shortage of well paying tech jobs. Sure they are mostly corporate jobs and not the cool hipster startup jobs, but right now the salary for developers with at least 5-8 years of experience in the right stack is $100K. On the upper end $140K+. That salary affords you a house in one of the 20 most affluent cities in the US (Johns Creek) or one of the 20 most affluent counties (Forsyth) without being house poor.
- echelon 9y agoI work for a tech company in Atlanta, and my starting salary was your "5-8 years" salary. In under four years, my stock options made me a couple million dollars. Atlanta needs more "hipster" startup jobs. More real tech jobs.
- the_cat_kittles 9y agothis is a big tragedy of the commons. if all cities would agree to not offer incentives, wed basically all be better off
- ronhav3 9y agoTech turned Washington blue. I hope Amazon can do the same for a swing state like NC or GA.