Politicians aren't quite as stupid as you (and, apparently, everyone else, believes). The dynamics in such a situation are simply a prisoner's dilemma. Meaning

Politicians aren't quite as stupid as you (and, apparently, everyone else, believes). The dynamics in such a situation are simply a prisoner's dilemma. Meaning: without cooperation, bidding for and getting HQ2 is net positive for the city. Nobody really sees much of a problem here, and your (and the sibling comment's) tiresome invocation of the lazy stupid-corrupt-politician-cliché is, as always, superfluous. The actual issue is that, quite obviously, Amazon would expand and hire more employees anyway. This competition exploits the dynamic mentioned above to move money from the public to Amazon in a zero-sum game. And the total loss of this scheme is even larger than "just" billions in taxes: when Amazon makes this decision based on the subsidies they are promised, they (by definition) must put lesser weight on all the factors that would otherwise dominate the decision. So they will end up at a location with lower quality-of-life, higher prices, or some other trade-offs. Amazon is essentially asking cities to pay them for crippling itself, and for compromising their employees happiness. Which, come to think of it, really does not strike me as the set of priorities one would expect from a stable company with a long-term focus and healthy values. Anyway, that's why somewhat sane jurisdictions such as the EU put limits on subsidies and bespoke tax deals: it's cooperation that, when managed fairly, benefits everyone. There's still competition between locations, but it's about quality-of-life, infrastructure, or education, instead of a voluntary effort to impoverish. The fault, therefore, is the American fetishisation of market-based mechanisms[0], the seemingly endless willingness to starve public administrations of resources without any regard to their actual, absolute levels, and a somewhat pathological fear of showing weakness by treating any situation cooperatively, instead opting to turn everything into some sort of competition that at least guarantees the sweet payoff of others losing even worse. [0]: This is particularly interesting here: The dedication to a free market runs so deep, that voters and politicians are essentially turning down the possibility to form a cartel amongst themselves. I one were to believe they are doing this knowing- and willingly, one would have admire it as a rather rare display of altruism in the service of a larger principle.