It's a solution to a collective action problem. Amazon has offered a prisoner's dilemma to cities, and it's extremely hard to avoid someone defecting. By making it illegal to defect, everyone benefits, except Amazon (in this case).

e.g. imagine no one had offered any incentive to Amazon. They almost certainly would have ended up in NYC and Washington D.C. anyway, but the taxpayers in those locations would be saved footing the bill for their arrival and taxpayers elsewhere would be saved footing the bill for coming up with proposals, which only existed as leverage for Amazon in getting a better deal elsewhere. Likwise competitors with Amazon would not have to contend with a rival who is getting government subsidies. Overall the free market actually benefits from this intervention.

I think the difference is that it isn't a person bidding on the Amazon HQ, it is a city, and IMO, cities in the same country shouldn't be competing with eachother for business. Amazon has to put a headquarters somewhere in the US, what benefit do US citizens get by allowing cities to undercut eachother in an attempt to get the HQ in their city?

> cities in the same country shouldn't be competing with eachother

I feel like the US government is set up to allow just this sort of thing, though. States running themselves like countries and all...

We definitely should want competition in the governance market. But it needs to take the form of neutral rules instead of sweetheart deals for particular firms. It’s the latter that I would like to ban. The U.S. constitution has an analogous clause, the prohibition of "bills of attainder" against individuals.

The citizens of that city enjoy the wealth that Amazon brings to the area. Cities, rightly, salavate over businesses that bring in outside money because that's how an area gets wealthier.

You're not considering the negatives that come with 25k new jobs suddenly appearing in a city. The Denver metro area in particular is already struggling to manage the influx in transplants - this would only make it worse.

Allowing it starts a race to the bottom. Playing city off city to bypass planning, get subsidies, preferential infrastructure. And that's assuming we know where all the money's going. That's the thing with local government; it's a warren of people you've never heard of waiting to be inappropriately influenced.

In the end it's only a multinational and a very local economy getting a boost. The public purse as a whole takes a very serious hit.

Remember that Amazon needs to build this stuff somewhere. They don't need a subsidy to achieve this.

That is not to say that all subsidies all awful, they just need to be managed at the level where the people getting the benefit are the same as those paying the price.

It's baffling to see such comments not giving any indication of grasping the rather basic mechanism behind the idea of restricting such race-to-the-bottom competition.

The number of jobs and investment are fixed. For the nation as a whole, these competitions only forgo tax revenue that instead goes to Amazon's shareholders.

And you can't just make the argument from the winning city's perspective. The right approach is something like the 'Veil of Ignorance': imagine being randomly assign to live in some city/town, and find a policy that maximizes your expected utility.

I also don't quite understand the heroic pose you strike for handing out subsidies. It's not like such self-impoverishment requires any skills on the part of the administration, except a willingness to sell out your citizen. Cooperating with other jurisdictions to form a cartel against such competitions would increase everyone's tax revenue, and still allow you to compete with factors that actually benefit your citizen, like good infrastructure or education.

Monopsony is the same kind of problem as monopoly, but on the buyer side. If you think we should have laws to limit monopoly power, then yes, we also should have laws to limit monopsony power. If not, then not.

We also have laws to make sure government purchases are made by means of suppliers bidding on government contracts. Giving out arbitrary tax breaks should probably go through a similar process for the same reasons.

Right. Everybody's pointing out the race-to-the-bottom for cities, but another bad side effect is that it's unfair to competitors (particularly small and medium businesses that don't have the same sway).

If nobody bids, then some town somewhere gets benefits worth $X.

Once a town bids, then some town somewhere gets a small fraction of the benefit, and Amazon gets the remainder.

Because "you" in this case is "a city government made of individuals who may personally benefit from this while not actually benefiting the area you represent". Also, you're allowed to bid to the point where it's a net negative for those individuals in the long run because you're just bad at math or because Amazon misrepresents the cost.

While we're at it you, the single individual in charge of making this decision, may be in favor of something but your community may be entirely opposed to it, but they can't vote you out until the bid was already placed and you bankrupted the city.

Also, you may be burning the current citizens for the prospect of these future citizens that the company might bring with it. You're hoping to drive out all those gross poor people and replace them with smiling rich tech managers. Never mind that you have no actual plan for where these gross poor people will go, that's their problem. You're building the beautiful city of the future, and you can't make an omelette without breaking some eggs amirite?

> Why use the law to stop me from bidding?

Because the data shows it won't be wild for your town. It won't reverse economic decline, and everyone's lives will not improve. You are being prevented from locking your local governing body into a poor deal (whether because you don't know better as a politician, or because you do know better but don't care, as you'll be out of office by the time it matters [which happens so often it's cliche at this point]). I might be more amiable if you're willing to personally guarantee the financial benefits out of your own wealth, so you have skin in the game (alternatively, the law could require a supermajority of voters support the measure, with a minimum voter turnout requirement).

These measures to protect against tragedy of the commons are not new, nor the arguments such as yours against such protections.

So, if the data shows it'd be bad for the town, why the town is bidding? It may be that town management is incompetent, or corrupt - but then isn't it up to the town population to oust the incompetent management and elect a competent one? Isn't it for the local DA to prosecute corruption?

Otherwise one should argue not to mess with the little decisions like Amazon HQ but solve the actual problem - if local government can be incompetent, and we can't afford that, then all local affairs should be managed by the central government (which, as everybody knows, is always the most competent and incorruptible). Limiting local power just in case of one Amazon HQ makes no sense - if the local government being able to make mistakes is the problem, then this problem should be solved by removing this ability.

If, however, we do think it's good to allow local governments to govern, then if their decision is to bid for Amazon HQ and they think it's good for their town, why should we interfere and tell them it's not?

>>if the data shows it'd be bad for the town, why the town is bidding? It may be that town management is incompetent, or corrupt - but then isn't it up to the town population to oust the incompetent management and elect a competent one?

The thing is, it can be a terrible idea, the government can still do it, and we can then elect new officials to replace them. These things aren't mutually exclusive. The problem is, voting out the idiots that gave away all the town's tax money to Amazon doesn't mean you get the money back. The town is still FUBAR by the debt and infrastructure strain, which now limits the ability of the new government to make proper decisions which leads to calls of incompetency which leads to them being voted out etc etc etc.

>>If, however, we do think it's good to allow local governments to govern, then if their decision is to bid for Amazon HQ and they think it's good for their town, why should we interfere and tell them it's not?

Really? Just defer to authority? There's a wide range of options between "Let the government do whatever it wants if that's what it thinks is right" and "Never let the government do anything because it upsets someone". People protest decisions all the time. Government officials make mistakes and implement bad policy ideas all the time. Government is a living thing. The town can say "let's do this stupid thing that will ruin us" and the people can rise up, make sure that doesn't happen, and elect an official that will put a law on the books making sure that thing never happens. AND THEN, 20 years later when circumstances have completely changes and the whole picture is different, they can then remove those restrictions as for being antiquated and problematic! Democracy in action!

> The problem is, voting out the idiots that gave away all the town's tax money to Amazon doesn't mean you get the money back

Sure, but tax laws can be changed. In fact, if the town inhabitants tell Amazon now "we do not support the deal our management has made, and will kick them out and manage things differently", Amazon probably would not consider this deal a done thing - it's much easier to change taxes than to move headquarters.

> The town is still FUBAR by the debt and infrastructure strain

So, the solution is to make upstream government to prevent downstream government from ever making a mistake, because if downstream government makes a mistake, it can have long-term consequences. But upstream government can't make such mistakes, presumably? The only way it works that I can see is that because you can't prove a hypothetical, you can't win an argument for doing something - because doing something can always lead to a mistake, while if you are doing nothing, you can't conclusively prove doing something would be better, since it's a hypothetical. So, the ideal situation is when any action of the local government that can potentially lead to a mistake is banned.

> Really? Just defer to authority?

Do you have any other choice? Somebody has to make the decision. Either it's the inhabitants of the town, as represented by the government they themselves elected, or it's the central government which of course always knows better and has everybody's best interest in mind and is never corrupt or mistaken. Who else would that be? The decision has to be made somewhere by somebody. Some people here advocate it should be centralized government because local governments can do stupid things. This makes no sense.

Or, we can take poll on HN and mandate by law that everybody should do whatever it says. That would surely work wonders.

> Government is a living thing.

Surely, but what is being advocated here is to take the authority from local government, because it can lead to a bad outcome. As if authority of the central government can't.

If your problem is with short-term thinking that is not in alignment with the people on the ground, force referenda and independent third-party evaluations. I might even trust a federal board that stalls poor action. But to fully ban? No thank you.

Those would be a fair compromise between our positions.

> It won't reverse economic decline, and everyone's lives will not improve.

Then the Seattle city should be in ecstasy now. But I think from the news I read, the locals seem worried, lest happy about it.

Lets forget about the specifics about what it truly does to the state/town in the long term. Given the jobs it's fairly clear Amazon would have built this some place in US regardless of the tax break and would have created the jobs and tax revenue associated with that. By competing like this even if a particular city/state gains more benefit than before the country as a whole looses that tax break from it's total potential revenue right?

The thing is, once somebody starts offering incentives, then everybody has to because anyone who doesn't get's left behind so after the dust settles everything is the same except everybody now collects a lot less taxes, it's a classic prisoner's dilemma.

This is only a bad thing if you assume that tax dollars in the government's pocket benefit society more than those dollars in the bank accounts of private individuals. I think that assumption is far to generous to the efficiency of government, especially in the US.

IMO having Amazon in paying half as many taxes in Buffalo is probably a lot better for NY state than them paying full taxes in NY.

> This is only a bad thing if you assume that tax dollars in the government's pocket benefit society more than those dollars in the bank accounts of private individuals. I think that assumption is far to generous to the efficiency of government, especially in the US.

That makes the assumption that the government won't just raise taxes for everyone else and simply move the money from private citizens bank account to Amazon's bank account.

> IMO having Amazon in paying half as many taxes in Buffalo is probably a lot better for NY state than them paying full taxes in NY[C]. (I'm assuming you dropped a C at the end of that sentence)

In practice NYC just drops it down to 1/4 of the taxes and Amazon moves back to NYC and everything is the same as before accept they got out of paying 75% of their taxes.

This exact thing happened in Kansas City where KS and MI both used tax breaks to lure companies across the state line.

> The socialists want...

Few substantive comments start like this. Would you mind refraining from injecting ideological flamebait?

https://news.ycombinator.com/newsguidelines.html

sounds like a public official gambling with public money. While may be not fully outlawing, some serious limits should be put on on such a risk taking.

At least there should be requirement of a level playing field. How come that granting tax benefits and various other huge privileges to say Foxconn or Amazon is supposedly good for local economy while granting such perks equally to other businesses isn't a good thing? Shouldn't the first thing government to care about be the level playing field and not skewing it in favor of chosen players? I mean a typical Joe can't just come down to your Colorado town and setup business on the same conditions as Amazon or Foxconn. Why such an injustice?

I’m sympathetic to that view. Anyone who can bring as many jobs of that much value should be welcome. Not Amazon alone. If you can bring 25k employees at an average wage of $109k, we’ll be happy to have you. I’m even all right with some sliding scale with a reasonable minimum.

If You’re afraid of public officials gambling with private money, force referenda.

>Anyone who can bring as many jobs of that much value should be welcome.

i'm curious why a 10 employee company with the same $109K wouldn't be eligible for the same tax breaks, etc.?

Foxconn is getting from Wisconsin close to $300K per each of 50K/year job ($4B for 13K jobs). Why such a perk isn't available to a 10 or 100 employee company?

Interesting that be it red or blue state/government when it comes to Big Business both are completely overpowered and taking the position of full submission. And that is why laws limiting such overpowering are needed. It isn't laws limiting the power of local/state government, it is laws limiting the power of Big Business in dealing with local/state government, i.e. limiting the perks/breaks Amazon/Foxconn can extract from a government.

Because the benefits don’t scale down. For a 25k person office I’m looking at revitalization of my city’s downtown, support restaurants, etc. Through scale they’re actually creating a lot of value. If a ten-man team comes to town no new restaurants will result. So you can’t get the same gain.

while the [non]scaling of benefits argument does have a lot of merits in theory, to show that it isn't the primary reason on practice : imagine that the 10-man team comes to town simultaneously with Amazon, then it is kind of obvious that addition of their $109K salaries would provide proportionally the same benefits as those Amazon salaries. Yet that 10-man team would still not get the same tax breaks/etc. Because the benefits are _forced_ from the government by Amazon for Amazon, and not _given_ by the government to the businesses satisfying some criteria of being beneficial for the locality.