Good Riddance to Amazon

In looking through my Facebook feed one morning last weekend I found:

  • A post from a young conservative about how @Jack permanently banned his organization’s Twitter account with 7,000 followers for tweeting “Learn to code” regarding laid-off journalists.
  • A post from a conservative writer about how her posting of a pro-wall fundraising text saying “If you like your country, you can keep your country” was removed by Mark Zuckerberg’s crew because it “violated community standards.”
  • Dozens of posts from knee-jerk pro-business “conservatives” bemoaning that New York City and state won’t have the chance to give another leftist tech billionaire $3 billion in government handouts.

It will serve them right, I thought, when Jeff Bezos announces that he won’t be stocking any books with “hate speech” as defined by Silicon Valley, or won’t deliver any packages at all to those reported to have “violated community standards.”

Bezos, as you’ve probably heard, announced on Valentine’s Day that he was pulling out of the sweetheart deal given to him by New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio in November so as to win half the Amazon “HQ2” jackpot for Long Island City in Queens. The move came in the wake of opposition to the deal by openly socialist Rep. Alexandria Ocasio-Cortez and other left-leaning Queens pols, and the appointment of one of these pols (by the new leader of the State Senate, now in Democrat hands after the election in last fall) to a panel that could block the project.

It wasn’t just the loony Left that opposed the deal, though, and reasons for opposing it varied. As I noted at the time, there was widespread outrage on the Right about a $3 billion corporate welfare giveaway to a trillion-dollar company headed by the world’s richest man. In a pattern that emerged in the 2016 and looks likely to shape the shifting of our politics for decades to come, the ideological battle lines were blurred, but they roughly pitted the Left and Right against the corporate establishment.

Some of that conservative opposition has been re-asserted since the Bezos pullout. But, faced with an epic tantrum by the corporate elite (one developer obscenely compared the collapse of the deal to 9/11), and the lure of joining them in bashing the often woefully uninformed AOC, it’s been a bit muted. Compare this full-throated condemnation of the deal, titled “Alexandria Ocasio-Cortez is Right about Amazon’s Corporate Welfare,” published in National Review last fall by a senior fellow at the free market Mercatus Center, with this more restrained criticism in an internal Mercatus publication last week. And the New York Post, which editorialized in November that “The Amazon deal is no win for New Yorkers” last week opined that its demise is also “a loss for the city.” Damned if you do …

Conservatives are right to join with progressive populists in opposing the Amazon deal. And they shouldn’t be either cowed by the hysterics from the business community, or seduced by the chance to score a few political shots against Ocasio-Cortez, into going wobbly now. The rightist opposition to the deal, even if it meant allying with the likes of AOC, was a sign, like the Tucker Carlson monologue and the Trump election, of the growing and important rebellion of rank-and-file Republicans and conservatives against the wealthy “fiscally conservative, socially liberal” corporate and party establishment. This is no time to revert.

The Amazon giveaway was a bad economic deal for New York’s taxpayers, and a bad political deal for the conservatives who did support it. As I wrote in November, it represented a “New Age form of crony capitalism for the socially progressive titans of politically fashionable industries.” In return for $2.8 to $3 billion in grants and tax subsidies:

Bezos, a big donor to liberal causes whose empire includes the left-leaning Washington Post and the trendy Whole Foods Market chain, …will provide all of 2,500 jobs per year over 10 years, “a drop in the bucket” of the 700,000 jobs already added by the city’s expanding economy over the last decade, which … will cost taxpayers between $112,000 to $120,000 per job. At an average salary of $150,000, these will not be jobs for struggling family breadwinners but for affluent young tech professionals, in a “hot” area that was once a decaying industrial zone but where the median income is now $138,000 and the average rent $3,458 a month.

In other words, the upper-status social liberals who run the city and state will take $3 billion from working-class and middle-income taxpayers and small businesspeople and give it to the wealthiest man in the world to fund . . . six-figure salaries for other upscale social liberals. The galling result will be to drive up housing costs and commercial rents to unaffordable levels for many of the average taxpayers and businesspeople who are footing the bill—in effect, using their own money to displace them.

Amazon supporters have mocked AOC for suggesting that the collapse of the deal will give the city and state an additional $3 billion to spend on other needs—as if they’d scrapped plans for direct cash outlays of that amount—laughing that she doesn’t understand how tax abatements work. But while she’s wrong she’s actually closer to the mark than they are. That’s because not only was $300 million to $500 million of the subsidy to have been paid in direct grants, meaning the city and state will indeed now have at least that much to budget in other ways (including reducing taxes), but, even more significantly, all but $386 million of the $2.5 billion in tax credits wererefundable.” That’s jargon meaning that if, as is often the case, the deal is so sweet that it reduces your tax liability to less than zero and the government pays you. So a large portion of the “credits” also actually would have been direct cash payments that will now be available for other uses.

And don’t think that wouldn’t have happened. It’s the norm with New York’s $420 million per year film tax “credit” boondoggle (another corporate welfare giveaway from liberal pols to wealthy liberal donors that some “free market” conservatives support because their love for the rich exceeds their love for the market). We New Yorkers pay Hollywood moguls to make movies here! Does anyone doubt that Amazon, which, as just reported, paid nothing in federal taxes last year, would have similarly manipulated the New York system—getting its base liability down to zero before applying the “credits”?

Governor Cuomo and his economic development officials claim that the deal more than would have paid for itself by bringing in $27 billion or some such in increased tax revenue through both direct receipts from Amazon and the multiplier effect. Some conservative Amazon boosters who ordinarily would be skeptical both of government economic forecasts and Keynesian pump-priming have touted this claim without asking questions. In fact, however, academic studies repeatedly “fail to find any evidence that subsidies benefit the broader communities that offer them.” Rather, they are essentially windfalls: an insignificant factor in corporate location decisions outweighed by the general tax and regulatory climate, the talent pool, infrastructure, and, for fashionable industries like tech, the perceived cachet of being in a trendy locale. The same month as the Amazon deal, Google announced plans to add up to 12,000 jobs in New York without receiving any special subsidies. And Amazon rejected localities offering even more lavish handouts in making the HQ2 selection, and acknowledged that subsidies weren’t a key factor in its decision.

The rosy government and industry forecasts of $27 billion (or $100 billion, or $1 trillion) in new revenue from these giveaways never pan out, in part because they turn on absurd assumptions that there would be essentially no economic activity in the favored industry or locale without the subsidies. New York State has pulled this trick for years in trying to justify the film tax boondoggle, even though Cuomo’s own tax reform commission called him out on it.

Deal proponents argue that it would have given a boost to the small businesses remaining in rapidly gentrifying Long Island City. Yes, it would until their leases were up and they couldn’t afford the exorbitant renewal rates. And, given that the announcement of the deal had spiked the rental market above its already-stratospheric level before a shovel hit the ground, for a lot of them those eviction notices would have come before they saw any boost. Supporters also express concern about the loss of low-skill and construction jobs, which I share. But, as seen, these would have been dwarfed by the jobs for upscale millennials and, as one booster concedes, “the company’s pullout…won’t matter a dime to the city’s thriving economy”—which will continue to produce other working class jobs courtesy of the non-subsidized market boom.

But let’s say I’m wrong about this, and abandonment of the deal will hurt small businesses and other working people. If that’s true then we have a wrenching dilemma to which I’m not sure there is an answer: how much tribute do we offer up to these extortionate vipers in order to achieve a public good: $3 billion, $10 billion, $50 billion?

And what is especially troubling, and should particularly alarm conservatives given the increasingly leftist cultural ideology gripping corporate America, is that the extortion is no longer just economic. Bezos and crew made the repeal of “anti-LGBT” laws, such as “bathroom bills” barring men in women’s locker rooms, a factor in the HQ2 selection. Maybe LGBT issues aren’t that big a deal to you. But remember that, ironically, in the age of “Woke Capitalism” the capitalists support AOC’s entire social if not her economic agenda. So what if rather than bathroom bills it had been late-term abortions, or racial quotas in school suspensions, or restrictions on free speech or due process on campus? Such conditions rob the people of their sovereignty on political questions. Why should Jeff Bezos set policy anywhere other than within his own companies? At what point do conservatives get over their inveterate groveling to big business and the wealthy? At what point do we stand up to them and say, “To hell with you! We’re free men and women in a democratic society and you can take your jobs and shove them.”

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Photo Credit: Leonard Ortiz/Digital First Media/Orange County Register via Getty Images

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About Dennis Saffran

Dennis Saffran is a Queens, N.Y.-based appellate attorney and political and policy writer whose work has appeared in City Journal, The Federalist, the Wall Street Journal, and elsewhere. Follow him on twitter @dennisjsaffran.