12 ms·

What Amazon did shouldn't be illegal; what the cities did to try to get Amazon to them should be. Rather than punish Amazon, punish the public servants who tho

by cremp 8y ago

What Amazon did shouldn't be illegal; what the cities did to try to get Amazon to them should be. Rather than punish Amazon, punish the public servants who thought a large tax break for years, or real estate deals, would really be big enough to draw the company in. What Amazon did was playing the field; why not get a bonus for letting others compete; rather than taking nothing because it was already decided?

vkou 8y ago
> Rather than punish Amazon, punish the public servants who thought a large tax break for years, or real estate deals, would really be big enough to draw the company in. They are reacting to incentives, just like Amazon is. They are stuck in a tragedy of the commons, and each is trying to play the field, as best as they can. I'd place the blame on the agent with more power (Amazon), and the one that initiated this spectacle (Amazon).
- lotsofpulp 8y ago
  Blaming someone doesn't fix the underlying issue. Forbidding special tax treatment to individuals and other entities is a realistic solution and easy to execute.
- cremp 8y ago
  > They are reacting to incentives That they are, but only to say 'I created 50k jobs; re-elect me.' To me, that's not much as an incentive but a plea for holding power. At the end of the day the public servants have limited time to make things happen. Companies don't. If you go buy a new car, you haggle with the dealer. That's just something you do. You have total control to walk out (you have more power,) and you wanted the new car (initiated.) Yes the dealer will be upset that you haggled, but they still get paid commission, even at a reduced rate. You go home happy, because you got what you wanted, the dealer is happy to have gotten something over their competitor (and the money doesn't hurt); win-win.
  - vkou 8y ago
    I mean, it's part of a city council's job to develop a vibrant local economy. Getting an Amazon HQ, as a cornerstone employer in their city achieves that. Or at least, that's the general economic consensus. > If you go buy a new car, you haggle with the dealer. That's just something you do. You have total control to walk out (you have more power,) and you wanted the new car (initiated.) If a dealer offers me a shitty deal, I can go across the street, to another car dealer. Likewise, if my offer sucks, there's no shortage of other people buying cars. How many companies are wooing cities with 50k jobs, right now?
    - count 8y ago
      How many vibrant jobs and companies could there be if the cities used all that money to boost local smaller businesses? By the numbers, small businesses dominate larger businesses in job creation, etc. People seem to forget that 'revenue' and 'profit' from these gigantic ass companies don't come back to the 'hometown': they're owned globally, and it gets spread around.
      - vkou 8y ago
        > By the numbers, small businesses dominate larger businesses in job creation, Of course, they do! Small businesses are less efficient, and have to employ more people to get the same amount of work done. But optimizing for this is anathema in an ideological climate where the lowest price for the customer is the most important thing, all consequences be damned. Also, many towns hope to, in theory, attract more employment through satellite industries, that spring up around the big company. These satellites won't be getting any tax breaks.
caiob 8y ago
That’s some twisted Trump logic you have there. If the system allows for tax cheating, why not take advantage of it?
- Vordax 8y ago
  So you are saying it is ok for a city to offer incentives for a business to move there, but it not ok for a business to take advantage of this?
- qudat 8y ago
  No, it's common sense. > If the system allows for tax cheating Do we really need to argue that allowing tax cheating is the root cause? Even the way you phrased it makes it sound like you agree.
- sctb 8y ago
  We've asked you many times to please post civilly and substantively, but it isn't happening so we've banned the account. We're happy to unban accounts if you email hn@ycombinator.com and we believe you'll follow the guidelines going forward. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
cwmma 8y ago
this is, in fact, what the article advocates, making it illegal to offer such subsidies and prevent the race to the bottom between jurisdictions.
- cremp 8y ago
  > First, Congress could pass a national law banning this sort of corporate bribery. That doesn't sound like what they were getting at. Sounded to me like they were attacking Amazon because they were playing the field.
  - BonesJustice 8y ago
    The ‘bribery’ could be referring to the actions of the public servants: offering ‘bribes’ to corporations to entice them to do something (e.g., building a new HQ or factory in that politician’s jurisdiction).
  - jocro 8y ago
    The next paragraph outlined a federal tax of 100 percent on subsidies that don't lead to taxpayer benefit (like infrastructure improvements to accommodate 50k+ new residents). The two also don't have to be mutually exclusive. You can look at what Amazon did and say "That's not a business practice that should be followed," while still saying "State and Local governments shouldn't be allowed to offer funds in this manner."
- scarejunba 8y ago
  Let me see if I understand this correctly. You want to ban me bidding on something because it raises the price for when you eventually win it. No thank you. Say I'm running a town in Colorado. You think Amazon is going to set up in DC. Well, I want a shot at that. Having an Amazon HQ in my town would be wild. It could reverse economic decline and everyone's life would likely improve with the added dollars to the local economy. I want to bid on that and go all the way up to my break even. What if it makes it more valuable to move here? I want the shot at that. Either you give me the chance to do that or you give me megabucks to not do it. But if you're using the law to compete economically we're probably not correctly using comparative advantage. If it gets net negative for you at some point, don't bid! Why use the law to stop me from bidding?
frgtpsswrdlame 8y ago
Everyone in this fiasco was playing the field so why should any of them be blamed? I don't think an ethic where we forgive anyone of anything that is in their interest is appropriate here. Instead it should actually be illegal for both sides. Are you a company attempting to negotiate favorable tax treatment from the government? You're subverting the fairness of our marketplace and should go to jail. Are you a politician attempting to woo a company to your locale with favorable tax treatment? Same deal, go to jail.
thousandautumns 8y ago
> What Amazon did was playing the field; why not get a bonus for letting others compete; rather than taking nothing because it was already decided? You are assuming they were seriously considering the other cities, rather than making a show in order to secure as favorable terms as possible from the cities they were already planning on.
- fhood 8y ago
  You mean you weren't deeply surprised by their decision to be near the actual and financial capitals of the US?!?!
  - dfxm12 8y ago
    That still left a bunch of cities in the running, all just a train ride away from DC and NYC. Shame on Dallas and Denver, I guess, though.
    - walshemj 8y ago
      A slow train ride away its not like you have TGV lines connecting major hubs in the USA
snidane 8y ago
Correct. But you don't want to eliminate municipal competition either. The problem here is of representation. Ie. the city residents could not agree with their tax money being spent on this. This is an example where a direct democracy shines, basically any decision which lasts longer than a current politicians' mandate should be voted directly by citizens to align the incentives. Any decisions with effect roughly contained within a voting period could be delegated to 'managers', ie. politicians voted for administration of public things. The problem today in countries without direct democracy for longer term issues is that they elect these 'managers' to decide on matters vastly exceeding their mandate.
- darawk 8y ago
  I would argue the problem here is of special treatment. We do want municipal competition, we don't want company-specific competition, though.
- JumpCrisscross 8y ago
  > city residents could not agree with their tax money being spent on this New York City taxpayer here. Fine with it. 25,000 high-income jobs, even if after 10 years, makes the new engineering campus on Roosevelt Island instantly more productive. Those jobs will pay taxes, spend money in the local economy, and drive demand for East River infrastructure improvements. I do believe that these sorts of subsidies should be required to be put to a popular vote. Wouldn't be a bad state constitutional amendment, actually...
- Nasrudith 8y ago
  Competition should be party neutral period as a rule of law thing alone in my opinion. As in offer tax incentives for say having 6k office workers who make a median income of 70k and don't impose externalities beyond a large office building's traffic - all legitimate interests to the locale and who they are doesn't really matter. But that it is for specific companies both misses the point of a healthy economy and leads to corruption by definition - not being treated equal under the law.
- PeterisP 8y ago
  From the perspective of the whole country, perhaps we do want to reduce municipal competition and outright prohibit giving expensive handouts to bribe companies to pick their location. From the perspective of a city, giving $x so that the HQ gets built there instead of some other city might make sense. From the perspective of the whole nation, the notion of handing out large amounts of money to gain taxes in location A and lose taxes in location B is clearly ridiculous - let the company pick whatever city is most competitive without the handouts, and if some other city wants that HQ, well, they need to provide better services, not just a discount (which essentially is a loss for the combined coffer of all the governments), unless the gov't "one level up" has considered that it's better for national interests that this area needs to be subsidized above others. For any single city it may make sense to underbid other cities, but for all cities together it makes sense to cooperate/collude so that underbidding doesn't happen.
joezydeco 8y ago
...what the cities did to try to get Amazon to them should be Oh, there's some karmic payback for the cities doing what they did. You see, all that inside information that the 236 other cities gave away to Bezos? He gets to keep that: http://inthesetimes.com/article/21571/the-hq2-scam-how-amazon-used-a-bidding-war-to-scrape-cities-data/ http://inthesetimes.com/article/21571/the-hq2-scam-how-amazo... "Amazon now has a treasure trove of non-public information about America’s future, in addition to knowing how much cash cities are willing to part with to land an Amazon facility. And it got all that, along with a giant PR benefit from the bidding war, for free. If you knew a city was going to build a road in a particular place, you could make a lot of money buying up the real estate there. Imagine that on a national scale and you can see how Amazon will grow far wealthier from the data it collected than even the raw dollars extracted from HQ2’s big winners. In fact, this was the real reason Amazon orchestrated the whole charade."
- dmix 8y ago
  While true I'm not seeing how this fact will influence cities/public servants to not be so dumb in the future? Or stop these corporate welfare parades from happening again... But knowing how regulation typically works they probably wont help either. They'll probably be over-bearing and quickly out of date, or more likely end up hurting local communities trying to get new business from small-medium scale companies while big mega-corps continue with business-as-usual getting free rewards from the state at the expense of citizens and smaller firms.
  - HillaryBriss 8y ago
    > ... I'm not seeing how this fact will influence cities/public servants to not be so dumb in the future this whole episode makes me reflect upon the Tesla Megafactory bidding process where Musk played California off against other states. Ultimately Governor Brown made some comment about how Tesla was just asking for too much and it didn't make sense for California. So it went to Nevada. And, what I wonder is: is there a consulting firm that serves as an intelligent counter force to Tesla and Amazon et al? Musk and Bezos are supposed to be hyper-smart so is there, say, a branch of Goldman Sachs that can hyper-intelligently advise state/city leaders about this particular kind of divide-and-conquer corporate predation (if that's what it is)?
claydavisss 8y ago
It shouldn't be illegal to demonstrate that you are dumber than Jeff Bezos. Really, this is what it comes down to...Bezos outplayed the cities. He'll never get a deal like this again, but since he only wants to make a splash like this once, there's no incentive for him to appear as a fair bargainer.
- megaremote 8y ago
  Why? One small group of people make the decision, the entire city of millions suffer.

by cremp 8y ago

vkou 8y ago

> Rather than punish Amazon, punish the public servants who thought a large tax break for years, or real estate deals, would really be big enough to draw the company in. They are reacting to incentives, just like Amazon is. They are stuck in a tragedy of the commons, and each is trying to play the field, as best as they can. I'd place the blame on the agent with more power (Amazon), and the one that initiated this spectacle (Amazon).

lotsofpulp 8y ago
Blaming someone doesn't fix the underlying issue. Forbidding special tax treatment to individuals and other entities is a realistic solution and easy to execute.
cremp 8y ago
> They are reacting to incentives That they are, but only to say 'I created 50k jobs; re-elect me.' To me, that's not much as an incentive but a plea for holding power. At the end of the day the public servants have limited time to make things happen. Companies don't. If you go buy a new car, you haggle with the dealer. That's just something you do. You have total control to walk out (you have more power,) and you wanted the new car (initiated.) Yes the dealer will be upset that you haggled, but they still get paid commission, even at a reduced rate. You go home happy, because you got what you wanted, the dealer is happy to have gotten something over their competitor (and the money doesn't hurt); win-win.
- vkou 8y ago
  I mean, it's part of a city council's job to develop a vibrant local economy. Getting an Amazon HQ, as a cornerstone employer in their city achieves that. Or at least, that's the general economic consensus. > If you go buy a new car, you haggle with the dealer. That's just something you do. You have total control to walk out (you have more power,) and you wanted the new car (initiated.) If a dealer offers me a shitty deal, I can go across the street, to another car dealer. Likewise, if my offer sucks, there's no shortage of other people buying cars. How many companies are wooing cities with 50k jobs, right now?
  - count 8y ago
    How many vibrant jobs and companies could there be if the cities used all that money to boost local smaller businesses? By the numbers, small businesses dominate larger businesses in job creation, etc. People seem to forget that 'revenue' and 'profit' from these gigantic ass companies don't come back to the 'hometown': they're owned globally, and it gets spread around.
    - vkou 8y ago
      > By the numbers, small businesses dominate larger businesses in job creation, Of course, they do! Small businesses are less efficient, and have to employ more people to get the same amount of work done. But optimizing for this is anathema in an ideological climate where the lowest price for the customer is the most important thing, all consequences be damned. Also, many towns hope to, in theory, attract more employment through satellite industries, that spring up around the big company. These satellites won't be getting any tax breaks.

caiob 8y ago

That’s some twisted Trump logic you have there. If the system allows for tax cheating, why not take advantage of it?

Vordax 8y ago
So you are saying it is ok for a city to offer incentives for a business to move there, but it not ok for a business to take advantage of this?
qudat 8y ago
No, it's common sense. > If the system allows for tax cheating Do we really need to argue that allowing tax cheating is the root cause? Even the way you phrased it makes it sound like you agree.
sctb 8y ago
We've asked you many times to please post civilly and substantively, but it isn't happening so we've banned the account. We're happy to unban accounts if you email hn@ycombinator.com and we believe you'll follow the guidelines going forward. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

cwmma 8y ago

this is, in fact, what the article advocates, making it illegal to offer such subsidies and prevent the race to the bottom between jurisdictions.

cremp 8y ago
> First, Congress could pass a national law banning this sort of corporate bribery. That doesn't sound like what they were getting at. Sounded to me like they were attacking Amazon because they were playing the field.
- BonesJustice 8y ago
  The ‘bribery’ could be referring to the actions of the public servants: offering ‘bribes’ to corporations to entice them to do something (e.g., building a new HQ or factory in that politician’s jurisdiction).
- jocro 8y ago
  The next paragraph outlined a federal tax of 100 percent on subsidies that don't lead to taxpayer benefit (like infrastructure improvements to accommodate 50k+ new residents). The two also don't have to be mutually exclusive. You can look at what Amazon did and say "That's not a business practice that should be followed," while still saying "State and Local governments shouldn't be allowed to offer funds in this manner."
scarejunba 8y ago
Let me see if I understand this correctly. You want to ban me bidding on something because it raises the price for when you eventually win it. No thank you. Say I'm running a town in Colorado. You think Amazon is going to set up in DC. Well, I want a shot at that. Having an Amazon HQ in my town would be wild. It could reverse economic decline and everyone's life would likely improve with the added dollars to the local economy. I want to bid on that and go all the way up to my break even. What if it makes it more valuable to move here? I want the shot at that. Either you give me the chance to do that or you give me megabucks to not do it. But if you're using the law to compete economically we're probably not correctly using comparative advantage. If it gets net negative for you at some point, don't bid! Why use the law to stop me from bidding?

frgtpsswrdlame 8y ago

Everyone in this fiasco was playing the field so why should any of them be blamed? I don't think an ethic where we forgive anyone of anything that is in their interest is appropriate here. Instead it should actually be illegal for both sides. Are you a company attempting to negotiate favorable tax treatment from the government? You're subverting the fairness of our marketplace and should go to jail. Are you a politician attempting to woo a company to your locale with favorable tax treatment? Same deal, go to jail.

thousandautumns 8y ago

> What Amazon did was playing the field; why not get a bonus for letting others compete; rather than taking nothing because it was already decided? You are assuming they were seriously considering the other cities, rather than making a show in order to secure as favorable terms as possible from the cities they were already planning on.

fhood 8y ago
You mean you weren't deeply surprised by their decision to be near the actual and financial capitals of the US?!?!
- dfxm12 8y ago
  That still left a bunch of cities in the running, all just a train ride away from DC and NYC. Shame on Dallas and Denver, I guess, though.
  - walshemj 8y ago
    A slow train ride away its not like you have TGV lines connecting major hubs in the USA

snidane 8y ago

Correct. But you don't want to eliminate municipal competition either. The problem here is of representation. Ie. the city residents could not agree with their tax money being spent on this. This is an example where a direct democracy shines, basically any decision which lasts longer than a current politicians' mandate should be voted directly by citizens to align the incentives. Any decisions with effect roughly contained within a voting period could be delegated to 'managers', ie. politicians voted for administration of public things. The problem today in countries without direct democracy for longer term issues is that they elect these 'managers' to decide on matters vastly exceeding their mandate.

darawk 8y ago
I would argue the problem here is of special treatment. We do want municipal competition, we don't want company-specific competition, though.
JumpCrisscross 8y ago
> city residents could not agree with their tax money being spent on this New York City taxpayer here. Fine with it. 25,000 high-income jobs, even if after 10 years, makes the new engineering campus on Roosevelt Island instantly more productive. Those jobs will pay taxes, spend money in the local economy, and drive demand for East River infrastructure improvements. I do believe that these sorts of subsidies should be required to be put to a popular vote. Wouldn't be a bad state constitutional amendment, actually...
Nasrudith 8y ago
Competition should be party neutral period as a rule of law thing alone in my opinion. As in offer tax incentives for say having 6k office workers who make a median income of 70k and don't impose externalities beyond a large office building's traffic - all legitimate interests to the locale and who they are doesn't really matter. But that it is for specific companies both misses the point of a healthy economy and leads to corruption by definition - not being treated equal under the law.
PeterisP 8y ago
From the perspective of the whole country, perhaps we do want to reduce municipal competition and outright prohibit giving expensive handouts to bribe companies to pick their location. From the perspective of a city, giving $x so that the HQ gets built there instead of some other city might make sense. From the perspective of the whole nation, the notion of handing out large amounts of money to gain taxes in location A and lose taxes in location B is clearly ridiculous - let the company pick whatever city is most competitive without the handouts, and if some other city wants that HQ, well, they need to provide better services, not just a discount (which essentially is a loss for the combined coffer of all the governments), unless the gov't "one level up" has considered that it's better for national interests that this area needs to be subsidized above others. For any single city it may make sense to underbid other cities, but for all cities together it makes sense to cooperate/collude so that underbidding doesn't happen.

joezydeco 8y ago

...what the cities did to try to get Amazon to them should be Oh, there's some karmic payback for the cities doing what they did. You see, all that inside information that the 236 other cities gave away to Bezos? He gets to keep that: http://inthesetimes.com/article/21571/the-hq2-scam-how-amazon-used-a-bidding-war-to-scrape-cities-data/ http://inthesetimes.com/article/21571/the-hq2-scam-how-amazo... "Amazon now has a treasure trove of non-public information about America’s future, in addition to knowing how much cash cities are willing to part with to land an Amazon facility. And it got all that, along with a giant PR benefit from the bidding war, for free. If you knew a city was going to build a road in a particular place, you could make a lot of money buying up the real estate there. Imagine that on a national scale and you can see how Amazon will grow far wealthier from the data it collected than even the raw dollars extracted from HQ2’s big winners. In fact, this was the real reason Amazon orchestrated the whole charade."

dmix 8y ago
While true I'm not seeing how this fact will influence cities/public servants to not be so dumb in the future? Or stop these corporate welfare parades from happening again... But knowing how regulation typically works they probably wont help either. They'll probably be over-bearing and quickly out of date, or more likely end up hurting local communities trying to get new business from small-medium scale companies while big mega-corps continue with business-as-usual getting free rewards from the state at the expense of citizens and smaller firms.
- HillaryBriss 8y ago
  > ... I'm not seeing how this fact will influence cities/public servants to not be so dumb in the future this whole episode makes me reflect upon the Tesla Megafactory bidding process where Musk played California off against other states. Ultimately Governor Brown made some comment about how Tesla was just asking for too much and it didn't make sense for California. So it went to Nevada. And, what I wonder is: is there a consulting firm that serves as an intelligent counter force to Tesla and Amazon et al? Musk and Bezos are supposed to be hyper-smart so is there, say, a branch of Goldman Sachs that can hyper-intelligently advise state/city leaders about this particular kind of divide-and-conquer corporate predation (if that's what it is)?

claydavisss 8y ago

It shouldn't be illegal to demonstrate that you are dumber than Jeff Bezos. Really, this is what it comes down to...Bezos outplayed the cities. He'll never get a deal like this again, but since he only wants to make a splash like this once, there's no incentive for him to appear as a fair bargainer.

megaremote 8y ago
Why? One small group of people make the decision, the entire city of millions suffer.