Who’s To Blame for the Amazon Pullout?Posted: February 15, 2019
Full disclosure: I live in Northern VA, relatively close to Arlington, so I am not completely unaffected by HQ2. Not directly impacted, but not unaffected either. It is also worth noting upfront that I am 100% opposed to corporate welfare of any kind, including subsidies to entice corporations to establish any sort of facilities in a given region. With that out of the way…
Amazon decided to give a special Valentine’s Day present to the people of New York City, a sort of “fuck you too” to the protesters and politicians who have been demanding significant changes to the deal that had been negotiated between their company and the city to bring 25,000 jobs to Long Island City in Queens. This has apparently thrilled some Amazon opponents such as Alexandria Ocasio-Cortez, who according to the Washington Post tweeted “Today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.” If you say so Ms. Ocasio-Cortez. Personally I don’t see the benefit. But maybe I’m missing something, which is not surprising since (a) I’m not a progressive and (b) a tweet is hardly conducive to explaining nuanced policy views.
Let’s consider another quote from the Post:
“Amazon showed its true colors today and every American should be outraged,” Marc Perrone, president of the United Food and Commercial Workers International Union, said in a statement. “Jeff Bezos had the opportunity to listen to the voices of working families and support the good-paying jobs New Yorkers deserve.
“But now we can see this is all about blind greed and Jeff Bezos’ belief that everyday taxpayers should foot the bill for their new headquarters even as the company actively works to eliminate millions of American retail jobs. No company that refuses to invest in hard-working men and women should be allowed to stuff their pockets with taxpayer-funded subsidies. Make no mistake, this fight has only begun,” Perrone said.
This is at least more detailed, although hardly more nuanced. I’ll have to take it point by point, as there’s a bit here to unpack:
- “Amazon showed its true colors today and every American should be outraged.” I both agree and disagree. Yes, Amazon did show its true colors. It is a business, and one that is not interested in being held hostage or shaken down. Regardless of how you feel about the original deal, that was the deal that brought them in, the one they agreed to, and unless you have some very disturbing role models you don’t generally become “outraged” when someone pulls out of a deal when the other party decides to change the terms.
- “Jeff Bezos had the opportunity to listen to the voices of working families and support the good-paying jobs New Yorkers deserve.” Not sure exactly what this is supposed to mean. I guess I’m one of those libertarian nuts who doesn’t believe people are “entitled” to a job, good paying or not. But even if I did think people were entitled to a job, my understanding of the plan was that Amazon was going to build a campus with at least 25,000 jobs with an average salary of $150,000 a year. I realize that “average” doesn’t mean “every job will pay at this rate”, but I seriously doubt the intention was “one extremely well paying job and 24,999 crappy ones.” (Sidebar: this same article from the Post says that Ms. Ocasio-Cortez among others “protested that the influx of Amazon employees, to be paid an average salary of at least $150,000 a year, would cause housing costs to skyrocket, drive out low-income residents and worsen congestion on the subway and streets.” So I’m confused – is the pay too low or too high?)
- “But now we can see this is all about blind greed” – I’ll resist the temptation to take a cheap shot here and simply offer a rebuttal. I believe this is about two competing forces: corporate finance and local politics. And when push came to shove it turned out that the local political groups in NYC (including the labor unions, activists, and local and apparently national politicians) had not yet learned a critical lesson of negotiation: the next best option. When trying to push for more, consider what your opponent’s next best option is before you put your offer on the table; if walking away is their next best option, they will take it. And they did.
- “Jeff Bezos’ belief that everyday taxpayers should foot the bill for their new headquarters” – I specifically singled out this statement because this is the only sentiment I can unequivocally agree with. As noted at the outset, I am completely opposed to corporate welfare in all its forms, and this deal is no exception. Whether Mr. Bezos personally negotiated the deal or not is irrelevant; Amazon is his company, and he is ultimately responsible for the direction it takes. Certainly such a major decision as HQ2 would not proceed without his significant input, and he could not have been unaware of the massive “incentive” package involved.
- “Even as the company actively works to eliminate millions of American retail jobs.” And this is the kind of foolish statement that works to undermine practically anything of value Mr. Perrone might have had to say. I understand if he feels the need to defend his membership, but this smacks of defending buggy whip makers in the era of the automobile. Last I checked nobody was coerced into using Amazon, although the same cannot be said for unionized labor.
- “No company that refuses to invest in hard-working men and women” – According to an article at Business Insider, Amazon does invest in “hard working men and women”, with a benefits package for full-time employees that makes me envious, and even “[p]art-time employees who work more than 20 hours per week receive benefits, including life and disability insurance, dental and vision insurance with premiums paid in full by Amazon, and funding towards medical insurance.” But perhaps what Mr. Perrone had in mind was investing in their future: “Both full-time and part-time hourly employees are eligible for Amazon’s innovative Career Choice program that pre-pays 95 percent of tuition for courses related to in-demand fields, regardless of whether the skills are relevant to a future career at Amazon. The company has built dedicated Career Choice classrooms at more than 25 fulfillment centers to make it easier for employees to go back to school by offering classes onsite.” To be fair, this article is from 2017, and Amazon’s culture may have changed for the worse. But I’d be willing to take that bet against the likelihood this is simply more political posturing on Mr. Perrone’s part. Unless he had something else in mind for “investing in hard working men and women”.
- “Should be allowed to stuff their pockets with taxpayer-funded subsidies” – It actually feels misleading to separate this from the previous phrase, as this is a dependent clause, so let’s put them back together: “No company that refuses to invest in hard-working men and women should be allowed to stuff their pockets with taxpayer-funded subsidies.” This is actually a bit more uncomfortable for me than the previous incarnation, as the implicit contrapositive is that “Any company that does invest in hard-working men and women should be allowed to stuff their pockets with taxpayer-funded subsidies.” If we are to be generous and assume that is not his intent, I am right there with Mr. Perrone; however I am rather cynical given the company he keeps.
- “Make no mistake, this fight has only begun.” Which fight exactly? The fight to drive Amazon out of NYC? Fight’s over. You won. Congratulations. The fight to keep Amazon in NYC, on your terms? Sorry, not gonna happen. Short of nationalizing the company (something that I will not accuse anyone of seriously contemplating, no matter how many Atlas Shrugged comments are tossed my way) there’s nothing to be done. Amazon made their choice. Do you perhaps intend to shame them into coming back? Good luck with that. What I expect the rest of the country to see is that NYC won the lottery and then a small group of people decided to tear up the ticket because the jackpot wasn’t big enough. That won’t garner much sympathy outside of a vanishingly small circle, most of whom live in Manhattan.
For myself, I won’t dispute that there are flaws with the HQ2 deals. And I will freely admit that there are reasonable arguments to be made that one or both of them go past flawed and into the realm of bad. But none of the arguments that I have heard coming out of NYC strike me as reasonable, and most of them sound at best partisan and at worst childish and churlish. The fact that many of them are contradictory (either with facts on the ground or with each other) does nothing to enhance the position of those who are making them. Worst of all, the time to fight against a deal is before it is made, not after. And demonizing someone who pulls out of a deal that you have changed the terms of is quite literally blaming the victim, and does even more damage to your business reputation than your already shady tactics have done.
My advice to NYC and the people who created this mess? Shut up, suck it up, and learn from this mess. Before you create another one.