Announcement of Amazon’s HQ2 Locations Met With Criticism

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Amazon’s announcement earlier this month that it would split its second headquarters, or “HQ2,” between Long Island City, New York, and Crystal City, Virginia, has been met with backlash from politicians; members of the affected communities, including booksellers; and other critics of Amazon.

Amazon’s decision concluded a highly publicized search that began in September 2017 with 238 candidate cities and states bidding against each other. The company plans to split operations evenly between the two chosen sites, with more than 25,000 employees in each city. In its announcement, Amazon revealed that it will receive $1.525 billion in direct incentives from New York and $550 million from the Commonwealth of Virginia.

Before the announcement had officially been made by Amazon, New York State Senator Michael N. Gianaris (D-NY 12) and New York City Council Member Jimmy Van Bramer (D-NYC 26) criticized New York’s decision to offer large subsidies to bring Amazon to Queens in the Yonkers Tribune: “Offering massive corporate welfare from scarce public resources to one of the wealthiest corporations in the world at a time of great need in our state is just wrong. The burden should not be on the 99 percent to prove we are worthy of the one percent’s presence in our communities, but rather on Amazon to prove it would be a responsible corporate neighbor.”

Lexi Beach, owner of the Astoria Bookshop in Queens, discussed in the New York Daily News the impact that Amazon will have on her community, including exacerbating the affordable housing crisis in New York City, overwhelming infrastructure, and threatening bricks-and-mortar retailers through its “insidious” business practices.

Three Lives & Company owner Toby Cox expressed his concerns in an op-ed published in Bookselling This Week. Cox describes the economic benefit that New York’s independent businesses provide the state, calling the subsidies Amazon will receive a “slap to the face of all the small businesses that work so hard to make this city and state as great as it is.”

A New York Times editorial opined that “New York’s Amazon Deal Is a Bad Bargain.” It criticized Governor Cuomo and Mayor de Blasio for offering massive subsidies to Amazon, expressing the view that “no final deal should be pushed through without approval,” and that the governor and mayor should solicit ideas from New Yorkers.

The Wall Street Journal also condemned the subsidies, calling the deal “crony capitalism at its worst” and the subsidies a “ransom.” Its editorial board specifically called out Governor Cuomo and stated that “the worst actors here are the politicians who pose as job creators but are essentially job buyers…” It also points out that the subsidies were likely unnecessary: “Google and other companies have created thousands of jobs in New York without similar subsidies, and Amazon might well have done the same given the city’s intellectual capital.”

In Forbes, Kori Hale examined the impact that HQ2 will have on housing in Queens. Specifically, she discusses the fact that the number of black homeowners in Queens has been shrinking due to various economic factors contributing to gentrification in the area. She explains how the HQ2 decision compounded with new federal rules for “Opportunity Zones,” which offer tax loopholes to companies investing in designated urban communities, including several sections of Long Island City, will attract developers to the area and spur further gentrification Queens. 

Charlie Thaxton for Fortune asserted that Amazon’s tactics in creating the HQ2 media circus “should come as no surprise.” He outlined the company’s “long history of manipulating governments to secure favors that give it an undeserved competitive advantage,” beginning with sales tax evasion.

Greg LeRoy of Good Jobs First, a nonprofit that tracks corporate subsidies, told HowStuffWorks that Amazon had received 146 incentive packages prior to HQ2. These incentives include eight “megadeals,” worth over $50 million each. LeRoy explained that Amazon is “scientific in its approach to getting more and more tax breaks. Amazon even created a dedicated tax break department about six years ago.” He expressed hope that the HQ2 deal will be a breaking point due to the heightened awareness around the issue.

In a New York Daily News op-ed, the Open Markets Institute’s Matt Stoller contended that the “embarrassing beauty contest” in which public officials competed for Amazon’s HQ2 was “premised on a lie” in order to gain concessions from New York and Washington, D.C., which he believes were unnecessary to attract the company. Stoller states, however, that subsidies are only part of a larger problem: “…Amazon has so much power over our political economy that it can acquire government-like functions itself. It controls elected officials, acquired the power to tax, and works with government to avoid sunshine laws.”

Lina Khan, legal fellow at the Federal Trade Commission, and Tim Wu, Columbia Law School professor, further discussed the problem of Amazon’s political and economic power in light of the HQ2 announcement on the NPR show 1A. Khan highlighted Amazon’s monopolistic practices, such as predatory pricing, and Wu discussed the risks associated with monopoly power, including a threat to democracy.

In an interview with The Washingtonian, Open Markets Institute Director Barry Lynn discussed the corruption signified by the HQ2 deals with New York and Virginia. Lynn also raises concerns that the new Washington, D.C., area location will increase Amazon’s ability to target and corrupt federal regulators and actors in Congress.

Open Markets has called for an investigation into the deals made between Amazon and local and state officials in New York and Virginia. According to Lynn, the objectives of investigations by the states’ legislatures and city officials would be to determine whether the deals were “wise” for the cities and states to make, and whether any additional provisions were made that have not yet been released.