Janine Jackson interviewed Neil deMause about the Amazon bidding war for the October 20, 2017, episode of CounterSpin. This is a lightly edited transcript.
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USA Today (10/19/17)
Janine Jackson: “Amazon HQ2 Bid Deadline; Austin, Atlanta Among Contenders to Watch.” “Does Sacramento Have a Real Shot at Amazon HQ2?” “Pittsburgh Ships Its Bid, Two Inches Thick, to Amazon.” “As Deadline Approaches, Chicago’s Amazon Pursuit Only Beginning.” “Texas Cities Also Woo Amazon With Diversity, Arts and Sunshine.”
That’s just a taste of the headlines you may have seen. The intercity bidding war for the location of Amazon’s second headquarters is a newsworthy phenomenon in itself—hence USA Today’s “Four Wildest Stunts for Amazon’s Second Headquarters.”
We’re joined now by Village Voice news editor, journalist Neil deMause. He’s author, most recently, of the book The Brooklyn Wars, and also co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit, which seems relevant here. He joins us now by phone from here in town. Welcome back to CounterSpin, Neil deMause.
Neil deMause: Always a pleasure.
JJ: Today, October 19, is the deadline for the request for proposals from cities bidding to be the home of Amazon’s second headquarters. Well, not everybody seems to be playing. The city of San Antonio wrote an open letter to Amazon’s Jeff Bezos, saying that the public courting for the new location is, “intentionally or not, creating a bidding war amongst states and cities.”
Wall Street Journal (10/19/17)
Now, I don’t intend any shade at all to those San Antonio officials, but I do want to set that alongside the lead of a Wall Street Journal article that says:
The in-house economic development team shows how important tax incentive deals have become to Amazon’s business model, and gives a window into why the company took the step of pitting cities against each other to win the biggest subsidy package possible.
In other words, it’s entirely intentional. So San Antonio’s being not naive, but maybe politic, in implying that what Amazon is doing is somehow by the by, and not in fact part of the playbook.
NdM: Yeah. I think that what we’re seeing here is following very much the playbook that Elon Musk used with the Tesla plant, right? Say: “OK, everybody in the country, you’ve got a matter of weeks to pull together a bid. I’m open to anyone, I’ll listen to anyone, and then I’ll look them over and see who offers us the most goodies, and then maybe I’ll go back and say to a city or a state, well, you’re not the No. 1 bidder here, but you could be.”
I think that clearly paid off for Musk and Tesla, to the tune of $1.4 billion. So I’m not really surprised that Jeff Bezos and Amazon are looking at something similar here, and I think, given what we’re seeing from what’s leaking out about some of the bids (which are not public) for Amazon, it looks like they’re going to be looking at some kind of tremendous taxpayer windfall as well.
Village Voice (10/19/17)
JJ: I wanted to ask you to describe some of the offers that we do know about, and then you cite, in this piece in the Village Voice, a not-for-public-release addendum on New York City’s bid. But these are public monies we’re talking about, right? So, first, why don’t we know, and then what are some of the offers we should know about?
NdM: Basically, what we know about is what the cities and states want us to know about. So most of the bids that we’ve seen are playing up—like New York’s, for example; New York last night, finally on the eve of the bid, released their plan, and their plan is all, “New York is so great, New York has universities, New York has an educated workforce, New York has transit.” As someone who lives in New York, I don’t know if bragging about the subways is a thing you want to do right now, but….
So, in any case, it just talks about that. And nowhere anywhere there does it mention anything about what kind of subsidies the city or the state are going to offer, right, what kind of incentives. And that is all going to be communicated to Amazon outside of the public process, and outside of the public eye.
And I think that’s what we’re seeing in many places, and, really, we’re relying a lot on states like New Jersey, where Chris Christie came out and openly sent a letter saying that he was going to double the available subsidies, per job subsidies, that the state could offer to relocating companies, which would in Amazon’s case amount to something like $7 billion, at minimum, of public tax breaks that they would get kicked back. So we don’t know if New Jersey’s going to win, we don’t know what the other bids are, but that gives us some idea of what kind of game is being played here, and what the ground rules are. I imagine that Governor Cuomo of New York, and other cities and states, all at least have that in mind here, and are thinking, OK, to be in the game at all, we have to be talking probably ten digits, not nine.
JJ: What is the prize, exactly, that we’re talking about here? I’ve seen a lot of references to 50,000 jobs. But what do we know about these jobs, and what—again, for a deal to make sense, don’t we have to understand the known relationship between these jobs and the contribution to the tax base that presumably would be being given up?
Neil deMause: “”And the bang for your buck, when you’re talking billions of dollars, is just not there…. If you’re talking something that’s going to cost billions of dollars for only 50,000 jobs, there’s just no possible way it’s going to pay it back.”” (photo: David Dyte)
NdM: Yeah. I mean, look, it’s not as bad a prize as, say, winning the Olympics, right? We’ve seen similar things, where cities will spend billions of dollars to land the Olympics, and you get a whole lot of attention for three weeks, and then it goes away. To its credit, at least an Amazon headquarters does have people who are going to be working there day in and day out, and shopping at local stores and eating at local restaurants and paying local taxes, so it is worth something.
But the 50,000 jobs, I think, are going to roll out over 17 years, so you’re not going to get them right at the start. Some of them won’t come until the year…17 and 17…2034. And the bang for your buck, when you’re talking billions of dollars, is just not there. You really want to keep per job cost at probably below $50,000 per job; $10,000 or $20,000 would be better. But if you’re under $50,000, you’re at least maybe breaking even on your costs. If you’re talking something that’s going to cost billions of dollars for only 50,000 jobs, there’s just no possible way it’s going to pay it back.
JJ: The New York Times had an expose a couple of years ago about the work culture of Amazon. It sounds like a real burn-and-churn atmosphere: lots of folks crying at their desks, emails at midnight followed up by texts about “why didn’t you answer the email.” There hasn’t been a tremendous amount of critical reporting on their work culture, but what there is sounds like, maybe, if as a mayor you’re trying to decide what kind of jobs, what kind of industry you want to bring to your town, maybe this isn’t the first one, one where infamously, in Allentown, Pennsylvania, an Amazon outlet warehouse had temperatures over 100 degrees, and just had ambulances lined up outside to carry away workers when they fell, and after there was reporting on them, they decided to install air conditioners. It sounds a little bit like a cult, and not a very fun cult.
But Amazon’s a private company. You know, Amazon can do what Amazon wants. My question is, where does the public responsibility come in, when we have elected officials talking about being eager to bring a certain kind of industry to their town? I guess I’m just asking, again, doesn’t the public have some right to know here, when there are public monies being used as bait?
NdM: Yeah, and that’s the disturbing thing, right, is that all of this bidding is happening behind closed doors, aside from, again, whatever the press releases are that the cities and states are willing to put out. So you don’t have the opportunity to vet what states or cities are offering with public dollars, right, or what the promises are from Amazon that they would provide in exchange. You know, how good are the jobs going to be, how long are they going to last?
What will be the impact on other jobs, right? I mean, if you’re helping out Amazon by boosting their profits, and giving them a leg up in the retail world, is that going to hurt other businesses that exist in a city? This is why I think that that litany of horse race coverage—you know, who’s going to win Amazon—that you read at the top of the segment is so worrisome.
Because the hope is that when something like this gets announced, you’re actually going to see the press go out there and investigate and try and figure out, OK, what is being offered, what is the city going to get in exchange? And it really is not what’s happening, because both Amazon and the bidders, the public bidders here, are keeping everything close to the vest, and I think it’s been very easy to just instead say, oh, hey look, here’s a town that’s promising to change its name to Amazon; isn’t that funny?
JJ: Right. And then, finally, it’s not like there’s no record here. Amazon has opened up outlets outside of their HQ in Seattle; they have a record in other cities and in other places. You note in your Village Voice piece that maybe if New York doesn’t win, despite coloring the Empire State Building orange in the hopes of winning the account, if New York City doesn’t win, it might not be the worst thing.
Tesla’s Elon Musk (cc photo: OnInnovation)
NdM: Yeah. I think my concern here, and what’s the message that I kind of took away from researching the article, is that the winner of the Amazon headquarters might end up being the biggest loser, because you are going to be on the hook for so much it costs just to be able to be in the bidding, right? That won’t necessarily get you the prize, but when you look at Tesla and how Nevada originally came in and said, well, we’ll give you a little bit of incentives, and Musk came back and said, well, you’re like $900 million off, you’ve got to come up with a lot more money, and they wound up coming up with a lot more money.
It’s just a bad way to do business if you’re a local government. It’s much better to try to build a strong traffic and transit system, to try and build a strong school system, and all the things that build a diverse business base, rather than throwing a whole lot of money at one company in the hopes that, hey, maybe we’ll get some big glitzy thing that will—at least we can put our name on the front page. But I think there’s an element where, there are so few big companies right now that there’s a real idea, especially in a lot of cities that are not New York, of, wow, we could be the home of one of the four companies that people have still heard of.
And, this is what really is driving the bidding war so crazy, what Greg LeRoy talks about, is that you’re seeing these crazy numbers being thrown around, because it’s not like there’s another company down the road that you can say, well, if we don’t get Amazon, we’ll just get the second-best thing to Amazon, because there is no second-best thing to Amazon. It’s Amazon or the highway.
JJ: Right.
NdM: And I certainly think that the highway is a much better economic model, because you don’t have to pay for it. But it’s not like there’s an Amazon Junior out there that you can go bid for instead.
JJ: It’s so funny that we have this idea that this private/public, it’s a real division. Private, they do it on their own, they just go out there and do it. But, you know, you have to give them taxpayer money, or else they won’t go out there and do it, independently, privately.
NdM: You know, it’s the same thing with stadiums and Olympics or whatever; it just suddenly becomes, well, they’re going to build it somewhere and if you want it to be us, then we have to be willing to play the game. They’re private and self-reliant until the minute that they don’t have to be.
JJ: We’ve been speaking with Neil deMause, news editor at the Village Voice, author, most recently, of The Brooklyn Wars and co-author of Field of Schemes. His article, “What’s It Really Worth to have Amazon Come to Town,” appears on VillageVoice.com. Neil deMause, thank you very much for joining us this week on CounterSpin.
NdM: Sure thing.
This piece was reprinted by RINF Alternative News with permission from FAIR.