During all the hoopla in the past year about Amazon’s competition to determine a location for its new “HQ2” to complement its existing headquarters in Seattle, Washington, I managed to have a little fun.
First, while the list of competing cities was still being winnowed down, I wrote a column called “How Trenton ‘Won’ Amazon’s HQ2.” The quotation marks around the word “won” were important, of course. As I wrote in U.S. 1’s October 10 issue, the Amazon competition gave Trenton virtually no chance to win, but a very good chance to take stock of its assets: a concentrated downtown area and a commensurate amount of walkability; an inventory of sturdy late 19th and early 20th century factory buildings; and close proximity (20-minute walk or less) to a transit center on the main line of the Northeast Corridor.
Then, in the November 21 issue, I commented on the November 13 announcement of the final (or so we thought) selections. The title of that column: “How New York & Arlington ‘Lost’ Amazon HQ2.” The idea this time was, in effect, be careful what you wish for.
“As we can tell from the history of cities giving out incentives and benefits to businesses, there will inevitably be some unintended consequences,” I wrote. “We are already seeing stirrings of skepticism in Long Island City.”
Since those columns a few things have changed.
First Amazon backed out of the Long Island City deal, which would have resulted in 25,000 new jobs in exchange, of course, for $3 billion in tax subsidies. “While polls show that 70 percent of New Yorkers support our plans and investment,” the company announced, “a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”
Second, shortly after that Valentine’s Day kiss off by Amazon, I finished reading a book by a college classmate of mine, Jonathan Taplin — “Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy.” I knew that Taplin, during college and immediate thereafter, was a tour manager for Bob Dylan and the Band, and that later he was a film producer, working with Martin Scorsese, among others.
I figured Taplin’s book would show how the big guys — Facebook, Google, and Amazon — have homogenized and monopolized the creative arts industry, making it dead easy for anyone to post their life’s work online but making the possibility of a sustainable income from it a dead end. I figured I would skim through Taplin’s book, earn the right to tell him I have read it at our upcoming 50th college reunion, and then pass it along to my two sons. For them it would be a sobering view of the prospects in the industry to which they seem committed: Music.
I was partly right. “Move Fast and Break Things” paints a grim picture of the creative arts in the information age: “Since 2000 U.S. recorded music revenues have fallen from $19.8 billion to $7.2 billion per year. Home-video revenue has fallen from $21.6 billion in 2006 to $18 billion in 2014. U.S. newspaper advertising revenue has fallen from $65.8 billion in 2000 to $23.6 billion in 2014,” Taplin writes. There you go, kids, you musicians and your newspaper editor father are all in the same cruel boat. Taplin continues: “The astonishing and precipitous decline in revenue paid to content creators has nothing to do with the idea that people are listening to less music, reading less, or watching few movies and TV shows. In fact all surveys point to the opposite — the top-searched Google items are all about entertainment categories. It is not a coincidence that the rise of digital monopolies has led to the fall of content revenues. The two are inextricably linked.”
And, kids, if you think that publishing a book will be any more lucrative than putting out a newspaper, think again. “Amazon uses its monopsony (a market structure in which only one buyer interacts with many would-be sellers) to force authors, publishers, and booksellers to lower their prices, putting many of them out of business,” writes Taplin.
Sobering, as I expected, but I was wrong about skimming Taplin’s book and passing it on to the kids. Instead I read it word for word, and bought copies for each kid. Taplin made me rethink my position on the wisdom of Long Island City’s stance toward Amazon.
There has been a lot of second guessing over the Amazon deal. Respected urban planners had different views. Kenneth T. Jackson, a professor of history at Columbia University and the author of the 1985 book, “Crabgrass Frontier: The Suburbanization of the United States,” put the Amazon decision into perspective. “During the 1970s,” he wrote in a New York Times op-ed, “the city experienced an exodus of Fortune 500 corporations. Dozens of them moved their headquarters and took their executives with them. Some went to suburbs in Connecticut and New Jersey, but many more decamped for Atlanta, Dallas, or Houston.
“The region now faces a calamity almost as bad as anything that has happened in the past. The loss of Amazon would cost 25,000 jobs directly, and those workers would support up to 82,000 more indirect jobs. The subsidies New York has offered to Amazon would have been given to any company promising so many jobs. And Amazon is expected to pay more than $27 billion in taxes over the next 25 years. Amazon will also build 4 million square feet of office space in Queens, providing billions more in construction spending. More important, a new Amazon headquarters on the East River would signal that the future of this metropolis is as great as its past.”
Not so quick, countered Richard Florida, a professor in the University of Toronto’s School of Cities and a prominent urban thinker. “Until recently, there was a growing understanding among city-builders and economic developers that handing over taxpayer-funded incentives to large corporations is wasteful and ineffective,” Florida wrote on the online publication, CityLab. “That is, until Amazon’s HQ2 search threw a wrench in that, bringing real pressure from business and political leaders to compete for the big prize.”
“Companies, especially large, data-driven ones like Amazon, know where they want to go to begin with. But they essentially set up fake competitions to game the process and extract incentives. Politicians play the game to the hilt, even when they know it’s bad policy, because they think vying for the trophy makes them look good and wins votes.”
Politicians are divided on Amazon. New York governor Andrew Cuomo expressed hope that the company might reconsider, and dismissed the critics as “a vocal minority opposition.”
In an op-ed in the New York Times Mayor Bill de Blasio had a less friendly view. The mayor had offered Amazon some advice on how to “win over some of their critics. Meet with organized labor. Start hiring public housing residents. Invest in infrastructure and other community needs. Show you care about fairness and creating opportunity for the working people of Long Island City. There was a clear path forward. Put simply: If you don’t like a small but vocal group of New Yorkers questioning your company’s intentions or integrity, prove them wrong. Instead, Amazon proved them right.”
For all the criticism that de Blasio has come under as mayor of New York, a truly thankless job, he might have a point. Surely a corporate colossus such as Amazon could have waged a campaign to win over some critics. At least, the company could have shown that it cared about community concerns. So why didn’t it?
Taplin, writing a year before Amazon announced its HQ2 competition, offers this appraisal of his fellow Princeton alumnus and Amazon CEO, Jeff Bezos, and some of the other driving forces behind the online revolution. “The libertarians who control the major Internet firms to not really believe in democracy. The men who lead these monopolies believe in an oligarchy in which only the brightest and richest get to determine our future.”
As Taplin reports, “perhaps the greatest beneficiary of the no-taxes, no-regulation regime of the Internet” has been Bezos, “schooled in the libertarian ethos by his family. He built Amazon on a clever exploitation of geographical factors in determining who had to pay sales tax, and who didn’t.” Of course, Taplin continues, “for all his libertarian distrust of government, Bezos has never stopped trying to use government to his advantage. Some say he bought the Washington Post so he could have powerful influence in the nation’s capital.”
This week the New York Times reported other hard bargains Amazon has driven over the years, including threatening to pull the company’s operations out of states that have tried to impose taxes on it. In a separate article, the Times also reported on Bezos’s disastrous foray into the Hollywood scene, complete with a marital breakup, or two, naked selfies, politically charged PR men, and other details too numerous to mention here.
The whole sorry affair was triggered when the other woman’s husband suggested she spend time with Bezos to discuss their mutual interest in aviation and space. Surely you wouldn’t trust Bezos with your wife. So why would you trust a neighborhood in your city in the hands of Bezos’s company?