The Case Against Amazon HQ2 Is Flimsy. Will Spin or Substance Prevail?

Amazon’s decision to locate HQ2 — its second global headquarters — in New York City was considered a significant win by many New Yorkers.

Part of the euphoria was psychological. New York’s finance and banking industry, despite record profitability, seemed archaic and flat-footed when compared to the new titans of American industry — Apple, Microsoft, Amazon and Google — all of which were valued at multiples of JP Morgan Chase, the largest financial services firm based in New York.

For a progressive state and city with hundreds of billions of planned capital projects — in transportation, affordable housing, infrastructure, education and healthcare — Amazon offered the hope of an economically more diversified New York (aka more tech, less Wall Street-dependent), creation of a second Central Business District in Long Island City that would spur greater economic development in Queens and Brooklyn; and of course 40,000 jobs over a 15-year period just from Amazon, not including direct and indirect construction jobs and high-salary jobs created around the broader Amazon ecosystem.

And did we mention the average job would pay a salary of $150,000?

If Amazon delivers on its jobs promise, the company would emerge as the second largest private employer in New York City — no small feat for the 5th largest economy in the United States (only California, Florida, Texas and of course New York State are larger), serving a greater metropolitan area of over 20 million residents.

For numbers-oriented New Yorkers, Amazon’s proposition was a manifest win for the city. In exchange for $3 billion in state and city incentives over a 15-year period — the bulk of these benefits were jobs/employer assistance-related and would have been granted to any company that met job creation requirements — the state, the city and city residents would reap billions more in incremental value— from wages to incremental sales tax to increased property values in Long Island City and real estate in Queens and Brooklyn.

On paper, it was a win-win of winsome proportions.

And yet, if Friday’s media reports are to be believed, Amazon is reconsidering its relocation to New York due to the immense political opposition by current and aspiring members of New York’s state and city leadership. In an ongoing, high profile election for City Public Advocate, one candidate ended her fundraising tweet with this; “Let’s Kill Amazon”.

What is the opposition’s case made out of?

• Amazon’s request for the city to procure a helipad site seemed to be a particular sore point.
• Jeff Bezos’ status as a billionaire seemed a sticking point as well. One political commentator took pains to calculate the number of years a New Yorker with a $50K annual salary would have to work (assuming 100% savings rate) to accumulate one billion dollars. The answer: 20,000 years.
• Amazon HQ2 could worsen congestion on the MTA.
• The overnight spike in interest in Long Island City condos was upsetting for affordable housing advocates, who felt affordable housing units in Long Island City would dwindle as a result of HQ2
• Amazon “hates” unions
• Amazon’s presence would raise rents, thereby negatively impact “mom-and-pop” retail shops
• And the most offensive of all, the Governor and Mayor did not consult enough local leaders before submitting the city’s bid for HQ2 and agreeing to terms with the company

Before the age of Trump, much of the opposition’s case would have been swept aside on the basis that they were not material enough and can be appropriately remedied. Delaying a transformative deal like Amazon HQ2 — who does that when 238 other cities would love to be in New York’s shoes?

After all, tension between economic development and communities is nothing new, but the politics of old often turned to compromise — and substantial monetary payoff to afflicted parties — to achieve congruence.

There is however, nothing old about today’s politics.

The ascent (and success, one might argue) of Trumpian politics has left an inedible imprint on American politics on both Right and Left. Principled governance is now viewed as a domain for the weak. Slogans are more important than substance.

Be as indignant as one can be, and denigrate one’s opposition as uncaring, out-of-touch, racist, classist, sexist, you name it.

So…

NEVER MIND that the bulk of the state and city’s subsidies to Amazon are in the form of tax credits, more akin to a discount coupon than a cash voucher AND only given provided Amazon achieves promised hiring milestones.

Over a 15-year period, the return to New York is projected to be 9:1 ($9 benefit to New York vs $1 benefit to Amazon). Few of us would pass up an personal investment opportunity where our money multiplies by nine times.

Never mind that incremental tax revenues from Amazon could be used to rebuild MTA’s fragile infrastructure and provide thousands of affordable housing units for all New Yorkers, far exceeding the small number of current Long Island City residents that may be impacted by HQ2.

Oh, the 7-train might well be less congested now since more New Yorkers will reverse-commute to Long Island City for work, and more riders from Queens will get off the Long Island City subway instead of Manhattan. Never thought of that possibility? Chances are — neither has your Queens borough congressional and state/local representative.

Never mind that most private companies in New York are non-unionized and Amazon’s detractors are holding the company to a vastly different standard. And remember, most private companies do not pay anything close to the Amazon targeted average/median salaries of $150,000.

Never mind that liberalizing recreational marijuana — which many opponents of Amazon supports — could exert far greater pressure to commercial rents affecting “mom-and-pop” retail throughout New York State, not just in the immediate areas of the small tract of land that is HQ2/Long Island City.

Some of the angriest political voices in Queens oppose Amazon on the basis they were not consulted, and yet they had no similar grouses on other controversial issues that “bypassed” them, for instance, the proposed elimination of the Specialized High School Admissions Test which would have a detrimental impact on thousands of Queens residents and families.

Spin is easy because they can be condensed into a short tweet (“Let’s Kill Amazon, whoop whoop!”), and does not require fact-based follow-ups and explanation of “complex” cost-benefit-analysis math. Donald Trump is a master. For better or worse, politicians of all political stripes learned from him.

My prediction is Amazon HQ2 will come to pass, and New York City will emerge economically stronger, with a more valuable tax base (remember, taxes are the life blood of any city) and more diverse workforce.

I am not alone. In a HarrisX poll commissioned by Amazon, 85% of New York voters believe that its very or somewhat likely that Amazon’s HQ2 will create good jobs for New Yorkers and Queens residents. 77% of New York voters believe that its very or somewhat likely that Amazon’s HQ2 will improve the economy of New York City. Roughly seven-in-ten NYC registered voters (69%) approve of HQ2, including 80% of Queens residents.

There is the famous saying about the long arc of history and how justice takes time. For a population as perceptive as New York’s, the time needed to make the right decision is often a mere New York minute. We just see through fakeness and bullshit more easily than most.

Helping Amazon help New York and New Yorkers is that right decision.

Disclaimer: The opinions expressed are my own and do not express the views or opinions of my employer, past or present, or any other organization with which I may be affiliated.