The abrupt exit of Amazon from its planned mega project from New York has shocked critics and supporters alike.
Is it a sign of how rabble rousing Left politics can defeat genuine public good?
- After over a year of
stalemate, Amazon abruptly called off plans to set up its second headquarters in New York on February 14.
- The plan would have led to investment of US$ 2.5 billion upfront and created around 25,000 jobs directly.
- Opposing political leaders and citizen groups felt it would raise rents. They were also unhappy as Amazon rejected unionisation of workers.
- The development is a sign of the rising Left in ‘capitalist’ America, wherein large companies like Amazon are being viewed with
dismay and disdain.
One would think, we are long past the days when people of a city are appalled by the entry of a big corporate entity and the possible disruption it would bring. After all, it means new infrastructure, investment and jobs – all the good things that a city and its politicians need.
And if you were told that this happened in the citadel of capitalism – the United States of America – you would certainly find it all the more perplexing. That too, when the company in question is ‘US’ home-grown e-commerce giant Amazon, helmed by Jeff Bezos, the richest person in the world.
Amazon was about to set up its second corporate headquarters in New York with a proposed investment of US$ 2.5 billion. The planned location was Long Island City in the Queens neighbourhood. The project was expected to create 25,000 jobs directly and 15,000 jobs indirectly.
The state and city administration of New York had promised US$ 3 billion in tax breaks to Amazon, and was in the race with 237 cities for this lucrative investment. Queensbridge, with a median income of US$ 15,843 (US$ 10,000 below the poverty line) could have surely used those jobs. Also, Amazon’s entry would have fetched an estimated US$ 27 billionin taxes over 25 years.
But on Thursday, February 14, Amazon abruptly pulled the plug on its plans. The decision was communicated by Amazon’s senior policy executive Jay Carney to New York Governor Andrew Cuomo and Mayor Bill de Blasio.
The decision had been taken by Amazon’s top management in a span of 48 hours, and caught both supporters and detractors by surprise. On closer analysis, it is evident that sections of the citizenry and political class of New York had played a pivotal role in spoiling their own party.
A SELF-DEFEATING SQUABBLE:
A chorus of voices began to grow as soon as the deal with Amazon was signed in November 2017, constituting both criticism and support. There was, for starters, a debate over whether such high tax breaks were necessary to lure large companies.
New York State Senator Michael Gianaris and City Council Member Jimmy Van Bramer criticised the deal when it was signed:
“(It is) unfathomable that we would sign a US$ 3 billion check” to one of the world’s most valuable companies considering the city’s crumbling subways and overcrowded schools.”
Communities around the area were concerned that Amazon’s entry would drive up the rents. Moreover, Amazon was insistent that they would not let workers unionise, as per their policy.
During city council meetings, Amazon executives ran into tough opposition from elected officials and labour organizers. People protested with signs stating “Amazon delivers lies” and “Amazon fuels ICE deportations”. Amazon was fairly convinced that some local and state officials are not keen on taking the deal forward.
But the eventual decision was swift, and seemed a foregone conclusion when Gianaris was nominated to a state panel that would vote in 2020 to approve the financial terms for Amazon earlier this month. Obviously, the top management was concerned that it would have to wait a year for a vote that had little chance of going in its favour. Since there were no binding agreements or hard investments yet, Amazon could exit without much difficulty.
RETURN OF THE ‘BIG BAD CORPORATION’:
The shocking exit of Amazon from New York is a sign of the rising influence of the Left in US politics. Moreover, as covered by the Bloomberg, the friends of Amazon were not as fleet-footed as the opponents. Cuomo and de Blasio did a woefully adequate job in terms of convincing the critics and getting the supporters together. Instead of them, the antagonistic politicians like Representative Alexandria Ocasio-Cortez and Gianaris took over the narrative, and made life
difficult for Amazon.
These politicians allowed the symbolism of Amazon – big, bad capitalism, Jeff Bezos’ personal wealth and Amazon’s policy of non-unionisation to trump the substance of the deal itself, a worrying trend for a country that truly represents the capitalist and free market philosophy to the world.
It is clear that New York would have got much more from Amazon, than it gave up, if it had gone ahead with the deal. Some disruption is to be expected with an investment of this scale. But if the economic rationale is so amply clear, politicians have to manage the consequences rather than indulge in senseless fear mongering.
The damage has been done now. Amazon has packed its bags and left for greener pastures. The consequences are for the people of New York to bear.