See http://www.statesman.com/news/breaking-news/austin-shortlist....
Quote: > Austin officials said in October that no local financial incentives were included in the city's proposal for the Amazon project.
As an Austinite, I was really proud to see the city offered no financial incentives. Seems they've learned from the Domain issues (locals will understand this reference.)
I would be happy to have Austin selected as the city for HQ2. On local FB groups I have said I didn't think it would happen due to other cities offering better incentives, and I think that's why Amazon ran this contest. Instead of just saying "Austin", they said "Well, Austin...unless somewhere else gives us an unbeatable deal." :-/
Sorry, but the idea that the WF acquisition was to actually end up with a bunch of spread out land that isn't usable for their purposes at a premium far above what they would pay for the land itself is just silly. If it goes to Austin and WF has spare land it might get used, but they would never have made the purchase just for that.
Whole Foods started in Austin and has been buying real estate for decades. They famously purchased land based on the percentage of college graduates in an area. They purchased land in urban areas. I don’t why you would assume otherwise. They purchased land and held onto unused real estate to keep their competition from building new stores.
They own a lot of land in prime locations. Often they’re the landlord of all the other business near them. Ever wonder why you see natural pet food stores and eco-friendly dentists next to a Whole Foods? It’s because they own the block.
Let me know if I need to explain this further.
> Let me know if I need to explain this further.
No need to be condescending. However, I think he did have a good point. I can't see Amazon buying Whole Foods to acquire their Real Estate holdings. I also don't see those holdings being valuable in terms of a HQ2 location. I would imagine the HQ building would be similar to the one in Seattle, in the fact that it is downtown and not near an area with college graduates. Also, that building would most likely be a large office building which would be out of place in a area like that.
Here's photo of land Whole Foods owns or leases (mostly owns) in downtown Austin that I pieced together from information in news articles. They likely have much more.
I get the race-to-the-bottom argument, but then what mechanisms can an underdog city use to ever compete?
Short of serious corruption, most cities are about as nice as their current tax base allows. Giving a company a tax break to incentivize that company to move into their city allows them to grow their tax base and improve their city for everybody. But it's not like cities are just sitting on potential attractors for employers to move in.
Policy is a highly subjective thing, but it also takes decades for it to make an impact.
Consumers and producers don't always get to decide. If you live in a small town that has a Wal-Mart then it's extremely difficult to compete directly with that store if you're just some independent. People might like your business, but you can't buy at the same volumes, you can't force the hand of city council for tax breaks, you have almost no power in comparison.
Absent good governance then corporations decide everything and we get to "decide" between the options they deign to give us.
That's not necessarily true. A city may not want everyone, or they may particularly want Amazon. Competition is competing, one part of which is incentives to localize in an area. Since so many places want an HQ2, it is Amazon's market not that of the cities.
Cities can rail against having to compete in a competition, but those cities likely will not win the competition.
Remember, if someone wants to move to a larger city they can. However, being smaller is actually appealing because you get less traffic etc. Further, city's are only important due to it's residents, if everyone moved somewhere else it's not like the land is going to get upset.
That's the problem, how do you spark the network effect? People don't setup in SF for ironic atari t-shirts, they're there for the talent pool and infrastructure (i.e. the stuff amazon will bring)
In short, you bring them in for other reasons. The most common being Universities, but it can also be Government or Private Sector research labs. One oft overlooked factor in Silicon Valley's success has been the great Universities nearby attracting some of the brightest people from all over the world.
Pittsburgh (CMU), Raleigh-Durham (UNC) and Austin (UT, TAMU) are succeeding in tech for similar reasons.
The Raleigh-Durham area is always talked about as kind of an unappreciated, affordable place for tech people to work. Both downtowns have improved over the past decade or two (like in many small cities), the three big universities have plenty of students, RTP is around, the only thing really against it is the suburban sprawl. I hear they are getting light rail but I've heard people talking about rail in NC since I was a child (30 some years ago).
as much as HN (me included) likes to complain about sprawl, don't forget that there's plenty of people who love the suburbs. Sprawl is not a downside for everybody - the people who like it just call it "affordable single-family homes" and "quiet neighbourhoods" instead of sprawl
I think on this I was thinking more the requirements of the HQ2 which specifically mentioned mass transit routes.
Also, more generally, the parent was talking about the 'network effect' of SF and the culture there. When you're isolated in your affordable single-family home and commute to your office park that vastly differs from the serendipity and collision of people, thoughts, opportunities that you have living in a denser place where you come across more people daily, one would think. I assume that's why cities are more liberal - that we have to put up with, tolerate, and can empathize with a wider variety of people than the isolation of house->car->work->car->house.
Just speculating there.
As another engineer in Atlanta, I’ve got mixed feelings on whether the criteria Amazon put forth is really met. There’s probably more people from Atlanta that leave for tech than stay by a long shot given I’ve probably met more Georgia Tech graduates over my career outside Atlanta than actually in the metro area. Anecdotal evidence aside, there’s been several articles published about Atlanta’s brain drain problem specific to tech (medicine does not seem to apply given CDC and Emory attract world-class doctors just fine). I’m not sure if anyone on HN outside the region can name a single tech company HQed in Atlanta off the top of their head - I certainly couldn’t before I moved here.
Amazon never said this, so unsure why you think this.
The five primary criteria driving Amazon’s decision, per GBH, include:
1. “East Coast presence.”
2. “Thriving engineering/surrounding university infrastructure and student pipeline.”
3. “Transportation hub with major growth potential.” ...
I don't think Amazon has made it public as to which criteria it's using to make this decision.
[1] https://www.cnbc.com/2018/01/22/gbh-insights-atlanta-and-oth...
The sites in Somerville are actually a much better choice than the Suffolk Downs site offered by Boston. They're a lot closer to the Boston itself and are better situated for housing and transportation. It would also knit together those grim parts of Somerville that are cut off from the rest of the town by Routes 93 and 28.
https://www.wsj.com/articles/to-get-anything-done-georgia-po...
It's the market that is influencing social policies, politicians are just responding to that.
On a deeper level, I think it means that they've already decided on putting HQ2 in the Washington—Arlington—Alexandria MSA, but they haven't yet decided what part of the MSA they're going to put it in, and they're going to have the three real finalists duke it out amongst themselves.
It makes sense: Amazon has some pretty deep ties to the area. Their original AWS datacenters are in NoVa. Jeff Bezos owns the Washington Post. Bezos also just bought a house in DC. The area is just as much home to Amazon as Seattle is.
Edit: Also, as a Texan myself, there's no way anything in Texas is going to get HQ2 with our LGBT-hostile state legislature. It's the same reason people are saying that Indianapolis might as well be disqualified due to the Indiana state legislature refusing to pass a hate crimes bill. Given what our legislature tried to pull this year, Amazon isn't going to touch us. And you can bet they'll try again in 2019, and Joe Straus won't be there to stop them.
They are up for election this year and even though it seems likely that the Governor won't change, other seats seem much more competitive.
As to your edit, I wonder if this is a Bezos way of not-so-subtly trying to push those type of legislatures to change their tune on that and other issues. Maybe beyond wanting to get a sweet tax break deal, there's a bit of soft power and influence Bezos is trying to bring to bear to tell state legislatures that being adverse to things like people's sexuality, women's health, etc. isn't good for business. Might be reading too much into all that but it's interesting to think about.
That's where it will be. The Wall Street Journal once noted that about 70% of corporate HQ moves move it closer to the CEO's place of residence.
I agree that the DC area is the most likely possibility for HQ2, but bezos buying a house there is a relatively unimportant indicator.
They are in Medina (WA), Beverly Hills (CA), Van Horn (TX), Manhattan (NY), and D.C.
Of these 5 known places, his Beverly Hills, Manhattan, and D.C. houses are close enough to the HQ2 finalists.
If we assume the rumors of Amazon wanting an East Cost presence, then we can narrow it down to NY and D.C.
1. http://www.businessinsider.com/jeff-bezos-owns-five-massive-...
https://slate.com/business/2018/01/amazon-is-totally-putting...
Honestly, I thought it was going to be Washington—Arlington—Alexandria before they even announced the finalists, and the choice of finalists just confirmed it.
There's land near the domain that's effectively reserved for it.
It's not - the Constitution was specifically designed to forbid this kind of inter-state warfare (eg things like taxing out-of-state goods differently) and SCOTUS has consistently upheld this (eg Granholm v. Heald).
The Constitution gets some things right, but it also gets a lot of things wrong. That's why the whole "living document" part is so important.
No, it's not; it's a fundamental inescapable truth of all documents, because meaning is dialogue between the author and the audience, change the audience and the meaning changes.
Sure you can; race-to-the-bottom among states only occurs because of the substantial nexus with real interstate and foreign commerce (not a distant potential impact), so even narrow views of the interstate commerce power would give Congress the authority to regulate to control it.
Isn't this what already happens with businesses that have the potential to employ a lot of people?
In the UK, at present, there are plenty of firms playing this game of 'we're thinking of shifting operations to mainland Europe' just to see what concessions they can get from the Govt.
More like "we need to know what the legal regime will be for import/export of goods and services will be in a year's time, so please get your act together before we have to assume the worst".
Does it really matter to "St. Louisans" on which side of this silly, arbitrary border they build their HQ? This system is ridiculous.
For those that pay taxes and use things paid for by taxes, it matters. The services on the other side of that silly, arbitrary border is paid for with different funds and gets to make its own decisions about how money is spent or saved.
> This system is ridiculous.
Yes, but an alternative would be...what? Federally-mandated local-tax rates and policies or something? I like that my city (not on the HQ2 list) can control what it spends its money on and can decide if giving tax breaks to X would lead to suitable growth in Y and make the trade-offs with its tax-base in mind.
Yes, as you say, it obviously matters who wins and who loses, but this is a system that's generating an enormous number of unnecessary losers.
A federally mandated blanket prohibition on city tax incentives that companies can use to play cities off against one another.
>I like that my city
Can participate in this race to the bottom?
I don't see the value in making cities compete with one another for jobs with tax breaks. It's simply a mechanism to create subsidies to big business because they are big that drains city budgets.
Your point (I think): It's competing with other cities and taking less tax in doing so. So it may end up _less_ ahead than if there were no competition. Since every city is doing this, it makes sense to keep under-cutting other cities until the net-gain is effectively just larger than zero.
Nobody forces the city to participate or offer incentives. This article advocates that they shouldn't.
A city should be clever about its incentives and make them align with what the company wants so the outcome isn't so zero-sum.
Many cities do this with zoning - only allowing waterfront building permits if the developer also builds parks or whatever. These increase the property-values for the developers while paying for a public-good that everyone can use.
Something similar here may be to offer tax credits toward infrastructure near the campus. E.g. don't demand the taxes directly but instead force the company to build new roads.
This is more or less an accounting-trick of course, but imho it's a lot less zero-sum and actually forces the company to consider how their incentives (or requirements) will actually benefit them.
If you prohibit all tax-incentives, cities are effectively forced to pre-build or promise services to make themselves attractive to companies. This can lead to huge amounts of waste (4-lane roads that could have been 2 for example) and cities defaulting on bonds to build such things when the company ends up choosing another city etc. I don't know if this is much better than requiring clever accounting.
To be honest, the problem may be the dividing of the cities as such. The solution may instead tax and run all of them as a single block (e.g. minimize city government in favor of county) or even combine into a single city.
This is moving the goalpost of the conversation above a bit, but my point is that the problem may not necessarily be "cities compete," the problem may be with the local bureaucracy. This can manifest in lots of ways like you describe.
The fact that cities need jobs and an inflow of money in order to function means that they're forced.
It's like saying that nobody forces you to take a job coz the park bench is always an option.
A city also has property taxes which make up a large portion of my city's budget. I pay ungodly sums in property taxes for a not-that-expensive condo. The city gets away with this because the location is desirable and we have great public-transit.
Because of the property tax revenue, the city does give some companies a tax-break. But also because of the property tax, citizens keep a close eye on things, so most tax-breaks around here end up looking like forced-improvements or other public-goods.
Each city is different and will find the best way to fund itself. Saying they can't pay less for something they want forces the funding problem elsewhere.
The reason your condo was relatively cheap is because your city has high property taxes.
Your city may decide it wants to drive out rent-seekers by hugely taxing rental income or raising property taxes on rentals. This would effectively be a business tax. And the town next-door could decide it wants condo real-estate development to attract young urbanites, so it might notice your town's changes and offer tax-free rental income for N years. This allows each city to benefit their tax-base/residents the best.
PROHIBITION ON STATE-FUNDED AND STATE-SPONSORED TRAVEL TO STATES WITH DISCRIMINATORY LAWS (https://oag.ca.gov/ab1887)
In effect, this law means that if any member of California government picks a contractor / supplier / conference in North Carolina, then that person has to pay for any related travel out of their own pocket. The idea is that this will hugely disincentize any one in the California government from doing business with companies located in North Carolina.
I guess we'll have to see if there's ever a legal challenge to it.
You also seem to be describing a case where California is a direct market participant (they're paying the contractors). States are allowed to discriminate in favor of their own citizens (or, I guess, anyone else) when they themselves participate in the market.
It's not just that they don't require employees to travel there, they also don't pay for trips "This bill would prohibit a state agency from ... approving a request for state-funded or state-sponsored travel to ..."
The bill doesn't explicitly forbid government employees (and by extension, the government of California) from doing business with North Carolina - it just adds personal, out-of-pocket cost for doing so. (which probably amounts to the same effect.)
Travel from a prohibited state, including the return flight back, shall be construed as travel “to” the original destination.
(I don't follow college sports enough to know whether CA and NC even have any universities in the same conference, though, so it might be moot)
(+) China has limited internal free movement and some countries have "special economic zones", enclaves/exclaves and status anomalies like Guantanamo etc.
That forces myriad issues to bubble up to the federal level, which was the exact opposite of the federal design. For example, say we didn’t have the Fair Labor Standards Act, which includes a federal ban on child labor. States could ban child labor within their borders, but that policy would be undermined by neighboring states who could flood the market with cheaper goods produced using child labor. In fact, Congress proposed a Constitutional amendment in the 1920s to ban child labor. In the 1930s, FDR’s threats to pack the Supreme Court resulted in a dramatic expansion in the view of the federal government’s commerce clause power, which obviated the need for an amendment and child labor protections were included in the FLSA in 1938.
Complete economic integration is not necessary to provision a common defense (e.g. NATO). Inclusion of the Commerce Clause was instead a bit of a submarine trap. While the Constitution was sold to States on the theory that they would continue to be mostly sovereign, having ceded only narrow powers to the federal government, taking away states’ power to control cross-border trade left them castrated. Today, they’re mostly irrelevant except for the layer of inefficiency they add to the whole system.
Economic success isn’t the only concern (and there is no evidence that less economic integration wouldn’t have led to just as much success, and European countries are plenty prosperous with historically far less economic integration). At bottom, people were promised that they wouldn’t become one completely integrated country, but the Constitutional design made that promise a dead letter from the beginning.
It was meant to give the federal government all the powers necessary for the federal government to have to make the country successful. Hence the "necessary and proper" clause. You're of course correct that many functions have been successfully left to the states.
NATO would not work without the United States. It has the same issues the US had under the Articles of Confederation where members try to weasel out of their commitments: http://money.cnn.com/2016/07/08/news/nato-summit-spending-co...
The EU is not stable, has a terrible problem with border security, and the lack of economic integration is certainly a problem (e.g. look at Greece), so I don't think that's an example to aspire to.
The Necessary and Proper clause says: "The Congress shall have Power ... To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."
The "foregoing Powers" refers to the preceding text in Article I, Section 8, which gives Congress power to do things like "provide and maintain a Navy." So Congress has the power to "make all Laws which shall be necessary and proper [to provide and maintain a Navy], ..." It does not have the power to make laws "necessary and proper" generally.
The basic design of the government is flawed. It's supposed to be a federal system, with a limited federal government that provides for a common defense, regulates the currency, etc., but where the states build the roads, provide police services, etc. That was how the Constitution was sold to the public before it was ratified.
But depriving states to control their borders makes that idea unworkable in practice, because it creates a prisoner's dilemma situation. E.g., everyone might want universal healthcare, but each state has an incentive to let the other states do it, and simply let people cross the border for treatment when they get sick. Or, it might be the case that investing in education helps businesses to have a competent work force, but each state has an incentive to let the other states foot the bill, and lure businesses and educated workers after the fact through low taxes.
To provide the services people expect from a modern first-world country, then, the federal government is then forced to give up federalism. It has to dramatically overstep the limited role it was originally envisioned as having.
Here, in the same real life Amazon responds: "Oh, we decided you are no longer the finalists. That place in Idaho gets it."
But if the finalist cities think that it has not made up its mind yet, and that tax incentives are the primary criterion it is using to make up its mind, then Amazon benefits from them thinking that. It still gets the HQ2 in the city it wants, but on top of that it gets highly competitive tax incentives.
It's not going to chose that place in Idaho (or in my tiny state of Delaware, which also made a proposal) just to spite them.
Oh that's 100% incorrect. Absolutely everything has a price. The only question is how much would Amazon need to get in tax breaks to offset tiny state issue
Wrong! Amazon paying or not paying taxes would have a small impact on the rest of the city. They are better off saving these billions.
Of course, I consider Amazon's approach borderline illegal. It should be banned, period. For Amazon, and for any other company in the US.
Employees best interest is in a better Amazon with a runway growth and stock price. Many employees might not even live in the same city, and the parents and children will be better off with more a stronger 401k, raise, better firm.
It looks like Amazon is flirting with a few other cities to make her beau a bit jealous. And its about as seemly.
This is quite how the Constitution of the United States was created by the 13 independent former-colonies of America. The #1 show on Broadway right now covers this.
* Amazon has already chosen its HQ2 city, for a variety of business-related factors that have nothing to do with tax incentives.
* But it would like tax incentives if it can get them.
* So it acts like it hasn't made up its mind and gets a bunch of potential suitors to woo it with tax incentives.
If this were a teen movie, the cities would eventually find out that Amazon has been playing them. They would then team up to teach Amazon a lesson, and hilarious hijinks would ensue.
Here in real life, it would be great if all of the finalist cities were to band together and say, "We're withdrawing all tax incentives we previously offered. Choose us for us, not for what tax money we're willing to sacrifice."
But a HUGE part of such a pact is that the cities need to find a way to punish any city that doesn't join the agreement, such as with economic sanctions. I'm not totally sure whether it would be possible to craft sanctions that might deter defecting from the pact, especially with so much potential upside on the line, but that's sort of what has to happen for the pact to work.
One other thing to consider, which is part of the economists' argument, is that having the HQ2 city forgo millions or billions in taxes is ultimately bad for Amazon. HQ2 is going to have employees who will have to live in that city, and it is in their best interests to have well-funded public services.