Janine Jackson interviewed Neil deMause about Amazon’s retreat from New York City for the February 22, 2019, episode of CounterSpin. This is a lightly edited transcript.
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Janine Jackson: By the time Amazon chose New York and Virginia for its second headquarters in November, a funny thing had happened: People had been heard to question, not just the value to a community of hosting an anti-union corporation known for worker exploitation and hawking facial recognition software to ICE, but the whole idea of cities competing with one another to attract companies with huge bundles of tax breaks and subsidies—in New York’s case, a reported $3 billion worth.
When Amazon abruptly pulled the deal off the table on February 14, there were the anticipated grumbles about anti-corporate activists spoiling what would have been a great opportunity for jobs and growth and all things good. But there were also cheers, not only for standing up to Amazon‘s particular demands, but for challenging the idea of tax incentives and subsidies as a way to grow or govern healthy communities.
Our next guest has been reporting these issues for years. Journalist Neil deMause reports for Gothamist. His most recent book is The Brooklyn Wars, but he’s also co-author, with Joanna Cagan, of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit. He joins us now by phone from San Francisco. Welcome back to CounterSpin, Neil deMause.
Neil DeMause: Always a pleasure.
JJ: We spoke about this in October of 2017, in the thick of the “choose us, choose us” unseemliness. It’s been interesting, I think, to see the conversation mature, because for many people, it wasn’t whether the Amazon deal was the worst, as these things go, but whether “as these things go” is some immutable model whose benefits aren’t to be questioned.
Well, New York Gov. Andrew Cuomo gave the boilerplate argument. You know, the thing that’s supposed to make you say, “Duh, of course it’s a good idea for New Yorkers to give billions of dollars in subsidies to a company, because it’s just simple math!” You addressed that line in a Gothamist piece a few months back. What was Cuomo arguing, and what’s wrong with it?
ND: I think when Amazon announced the DC suburbs and New York City as the two winners of its HQ2—although, as a lot of people have pointed out, it’s not really a headquarters if there’s three of them—but the response in New York was not uniformly excited, for a bunch of reasons, partly because of the $3 billion in tax breaks that were involved, and partly because they were talking about going into a neighborhood, Long Island City, that already is beset by overdevelopment and gentrification. And a lot of people were concerned about the impact on housing prices, and things like that.
And Governor Cuomo’s response was, as is kind of his style, to get a little huffy about it, and to say, “No no no, we’re not giving Amazon $3 billion, because they’ll be paying $30 billion in taxes over the years. So really, it’s like we’re earning a 900 percent profit.”
And this was a very, very odd argument, which is what I tried to address in my Gothamist piece, because normally you don’t think of people paying their taxes as a profit for cities, right? You know, people paying their taxes is just what they do in order to help contribute to all the things that keep a city running.
So if Amazon was going to be paying $30 billion in taxes over the years, that’s what you need in order to have trains to get the Amazon employees to work, and schools for the Amazon employees’ kids to go to, and all the other things that city and state governments provide. But suddenly there was this idea of somehow, if you are giving someone a 10 percent tax break, that’s really a 90 percent profit.
JJ: It still is said, in the Daily News editorial, they basically said that that line makes a lot of sense, and people were silly not to understand it, they didn’t get what was going on here. And that also seems to be at work in the very idea that, like it or not, this is the way you get companies to come to your community, you know. Whether or not it really breaks down as a benefit completely in the ledger, still: you want these companies to locate, you have to offer these subsidies. And there’s questions to be asked about that, aren’t there?
ND: Sure. I mean, I think when you look at this whole Amazon sweepstakes, right, they got much bigger offers from a bunch of other states. New Jersey offered, I think, $7 billion. Maryland was, I think, a little bit more than that. And they turned them down, because, clearly, they wanted to be in New York and Washington, DC.
Which, on the one hand, sure, it’s great that New York “only” offered $3 billion instead of $8 billion, but on the other hand, did they even need to offer that? And how much are you leaving on the table by offering huge tax breaks to anybody who is willing to locate here?
A lot of people pointed out that Google is opening a new—not headquarters, but larger facility, adding a whole bunch of jobs, and not asking for these levels of subsidies.
And for another Gothamist article I recently researched that, not long ago; they did an investigation of one of these tax breaks for companies relocating to New York City, and found, I think it was about, they calculated in about three-quarters of the cases, the company would have relocated anyway, because it was already profitable, and the subsidy was just icing on the cake.
JJ: And then, if the idea is, you want jobs or you want economic growth, there are also other ways that you could do that. You know, if the question is just, “How can we increase revenue?”—if that’s the bottom line.
ND: Absolutely, and there’s been a lot of criticism of people who said, like, “Oh, we should take the $3 billion and spend it on transit or schools or something like that,” because it’s not $3 billion we’re going to have, right, because it’s just a tax break. So, therefore, it’s a different kind of money you’re giving away than if you were taking it out of the state or city treasury.
But, really, it’s the same thing. I mean, you can make a great argument that improved schools or improved transit is an economic investment, in the same way that bringing Amazon to New York City is, because if you have better schools, more companies and more individuals are going to want to live in New York, because the schools will be better. And if you have better subways, people are going to want to live and work in New York, because you won’t have to be trapped on a train for two hours in the morning when it breaks down.
JJ: Right.
Neil deMause: “Somehow, when it’s giving money to a large corporation, that’s suddenly, ‘Well, this isn’t really an expense or a giveaway. This is an investment.’” (photo: David Dyte)
ND: But nobody looks at those kind of expenses as investments in your city and investments in your economy. Whereas somehow, when it’s giving money to a large corporation, that’s suddenly, “Well, this isn’t really an expense or a giveaway. This is an investment.”
JJ: And that view that you mention, about investing in other things, that is the perspective that a number of community groups, I think, were trying to put forward. You know, the papers are attributing Amazon‘s pullout to politicians’ pushback, which of course is very real. And the name of State Sen. Michael Gianaris comes up a lot, along with Ocasio-Cortez.
But those politicians are responding to community, to groups like ALIGN and Make the Road, and immigrants and labor and people of color, and students and Queens residents’ coalitions, who had concerns about gentrification, as you pointed out, that the jobs, they suspected, that were offered would not materialize, or would not necessarily be jobs for locals.
But they aren’t saying, “We don’t want any new businesses.” They’re saying, in part, that they want to be at the table. And I just wanted to ask you, the secrecy and the lack of public oversight has been such an element of this process from the beginning, hasn’t it?
ND: Yeah, well, that was Amazon’s plan from the beginning, right, was to conduct this bidding war among cities and states. And in the initial rounds, cities and states weren’t even allowed to reveal what they were bidding, to try to keep everything hidden until the deal was done, sort of under the table, and then present it as a fait accompli to the public. And I think one thing that Amazon—and presumably other companies—have learned is that that doesn’t go over very well, because you had, for example, the New York City Council upset that they were cut out of this deal, because the state was going to take control of it, and not give the City Council any say.
And, obviously, you had the public and all of these community groups that have really been spending the last decade or more gearing up for fights over increased housing costs, which are out of control in New York, over the city and state giving priority and funding to these sort of big megaprojects, as opposed to other more community-friendly projects or small businesses or any of a number of things you could think of.
And I think one of the things that’s interesting about what the strategies were, and what was successful, is the one thing that Amazon really didn’t realize was that people were going to go after it, not just for the subsidies, but for the rest of its business. And from all the reporting that we’ve seen since Amazon pulled out, it really does seem like they were offended that anyone would criticize them on their anti-union policies, or on their partnering with ICE on anti-immigrant policies. So it was remarkably successful as a grassroots campaign to target Amazon‘s credibility and its status as a “good company.” And I think it’s very interesting that Amazon pulled out, saying, “Yeah, we thought we were going to get the money anyway; we just didn’t want to have to face all these questions.”
JJ: That’s an excellent tip for community organizers, and for reporters as well who— questions are meant to be your stock in trade.
There is now actual legislation to do with cities and communities offering tax incentives and competing with one another. There’s a sense that states need to get together on this, or it’s not going to work.
Do you see much hope in terms of this whole idea of beating back the very use of these subsidies as ways to lure corporations?
ND: I think, certainly, New York state and other states could be looking at legislation to scale back some of these subsidy programs, to investigate whether they are actually doing anything positive, whether the public is getting a good bang for their buck. And I think in terms of some of these interstate compacts that people are talking about,
it’s a great idea, but it’s really hard to enforce, right? Because if 10 states get together and say, “We’re not going to offer tax breaks in order for companies to locate in our states,” then the other 40 can just say, “Oh, OK, great for us. We’re going to go and do that instead.” It’s hard to have a nonaggression pact when you don’t have everybody on board.
Which is why I think most people think that the federal government really needs to be involved. And it would be trivially easy for Congress to put an end to all these local-level corporate subsidies wars tomorrow.
There was a bill in Congress, 20 years ago now, that would have just placed a high tax on any local-level corporate subsidies. So if Amazon gets $3 billion in tax breaks from New York City, then they have to pay…I don’t know, a billion or two billion or three billion, you could make it, in federal taxes, which completely eliminates any benefit that they would get from that, and eliminates any benefit they would get from trying to stage one of these bidding wars.
That bill didn’t get anywhere in 1998, and I don’t think it would come close to passing today. But the fact that we’re talking about this, and again, the media is sort of slowly starting to grapple with some of these issues, is at least a promising sign that maybe the heyday of massive tax breaks for any company that can threaten to leave town, or threaten not to come to your town…we’re starting to see a light at the very end of the tunnel.
JJ: We’ve been speaking with journalist Neil deMause. You can find his recent work on Amazon and other issues on Gothamist.com. There’s more work on DeMause.net. Neil deMause, thank you so much for joining us this week on CounterSpin.
ND: My pleasure.
This piece was reprinted by RINF Alternative News with permission from FAIR.
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