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Note to Democrats: Businesses Do Not Want to Have to Beg for the Privilege of Creating Jobs
The Governor of New York is disappointed that Amazon was unwilling to play the game of New York politics like a proper corporate courtesan.
“I do believe Amazon should have stayed and fought the opposition,” Cuomo said in a Tuesday radio interview. “It was a vocal minority opposition. Seventy percent of the people support Amazon.”
1. Why should any business have to put up with the headache of fighting an opposition when they can go somewhere else where they are welcome?
2. The “vocal minority opposition” was basically community activists and politicians agitating to get a payoff; another headache businesses can avoid by going elsewhere.
Published in Economics
They thought they had a deal only to find out Cuomo couldn’t deliver on his promises. That is not Amazon’s fault.
I was at the barber shop yesterday getting a long overdue haircut and catching up with the barber too. He was telling me about all of his plans – plans he’s been telling me about for over a year now. Not big plans to stir men’s souls, just plans like finally getting his swirling barber pole installed, fixing the sidewalk out front, and converting the back office to his apartment (which he’s already been zoned for when he bought the building). Money isn’t the obstacle. Stupid political beak-wetting and red tape is the problem. He’s old now and doesn’t want to move; where would he go at this point of his life anyway?
Me? I’m middle age, and I am willing to move. I don’t want to beg or bow to these corrupt feudal lords either. What’s left in the wake? City workers without enough time to cash out yet, barely keeping the hordes of poor immigrants at bay. We have plenty of money in the neighborhood, but empty storefronts.
If they really cared about the city (my city, Chicago) then they would just get out of the way to start. Then they’d stop spending so much. But they won’t because they aren’t in business to advance the interests of the citizens. They are in the business of living off of the public weal.
To a business, creating jobs isn’t a privilege.
Slightly off-topic (but not really because we’re talking about NYC and its myriad of obstacles and out-stretched palms): Why did the twin towers of the original World Trade Center collapse so quickly following the attacks on 9/11? Conspiracy-theorists scream, “Controlled demolition!” Nah! I am more inclined to blame mobbed-up contractors, second-rate material, and bureaucrats looking-the-other-way than I am the CIA and George W. Bush.
In NYC, projects don’t get built, they get bled! Amazon was right to bail!
Cuomo does not realize that he is part of the opposition. One gang wants you to open your business and pay lenient protection fees to be paid to the gang. A competing gang wants full payments or else. Better to move to a place where the gangs don’t run things.
I don’t know. They’d have to pay their taxes if they did that.
< devil’s advocate mode = on >
My default position is to oppose corporate welfare in general, but somebody pointed out to me that Amazon pays almost no income tax anyways because they reinvest almost all revenue back into the company. Therefore, promising them a three-year tax holiday to open shop in a particular jurisdiction probably doesn’t actually mean much in the long run.
So the hypothesis goes, rather than a promise of free money from taxpayers, the deal was merely a promise to give the company three years before the state would start trying to gouge ’em.
I dunno enough about the nuts and bolts of the deal to gauge the veracity of the hypothesis, but it makes certain intuitive sense.
< devil’s advocate mode = off >
True. But at a certain point, the taxes do become cheaper than the gang’s protection.
Yeah, Cuomo’s statement answers itself. Why fight if you don’t have to?
On the other hand, business has some incentive not to give up immediately. Tax breaks and infrastructure contributions by the government are measurable on financial statements and directly affect the “bottom line,” which is of paramount import to the company executives. Activists are a headache, but their effect on the bottom line is indirect and sometimes contingent. Giving up the direct and tangible benefits of tax breaks and infrastructure contributions because of indirect and uncertain costs of activists may be hard to sell to shareholders.
I think we should oppose all corporate welfare, and prefer freedom and equal justice, in every case except those of necessity.
Interventionist measures against free markets cannot achieve the expected results to begin with, for reasons that we should postpone discussion of. Adding layers of social engineering fixes to “correct” the unforeseen failures of the lower layers of fixes makes things worse.
Concerning taxes: The purpose of a tax law in a republic is to distribute the costs of government. The laws must be as fair (equal individual justice under rule of law) and economically efficient as possible.
But discriminatory tax laws can also be used as a legally sanctioned way of increasing the degree of state ownership of the means of production. A way of bypassing the protections that a constitutional democracy affords its citizens.
The use of marginally discriminatory tax laws (interventionist taxes or tax breaks, it makes no difference at all), including those done in a vain attempt to undo the damage of other discriminatory taxes, is no less damaging than other more direct methods.
Special tax breaks to attract big corporate investments are just one more form of interventionism.
The racket is to set high tax and regulatory costs then offer to waive the excess. Once the mark commits and establishes the enterprise he will need to kiss the ring and grease the machine to keep the breaks in place. Losses revenues to the state become campaign contributions and personal.goodies for those in power.
I am not a fan of corporate welfare. But I really hate the racketeering outlook that makes it possible.
“I can’t believe Amazon wouldn’t get in bed with me – I spent hours negging her!” – New York
Governments woo businesses the way johns woo hookers.
Yeah, I don’t know about any of that. They’re paying about 10% net on their earnings. If they’re lumping big dollars into Sales/Gen/Admin, it’s something, but they’re still paying a billion/year in taxes. Taxes are paid on earnings, which is essentially the difference between costs and revenues. Companies that care about EPS and dividends are interested in maximizing earnings, generally.
https://www.nasdaq.com/symbol/amzn/financials?query=income-statement
So’s building an additional off-ramp to a logistics center. At some point, though, it’s either some kind of partnership to foster growth, or it’s politicians selling favors to get re-elected. The problem of gov’t is its reach, ultimately, and for the feckless dimwits who can’t hack it in the real word, having unearned power is far too attractive a thing to let pass by.
They also stripped all the “deadly asbestos” off the support beams.
Seriously, it was amazing they stood so long, allowing thousands to get out. There was an amazing amount of energy thrust into those buildings. It a wonder the floors above the impact didn’t come down immediately, causing the rest of the building to go with it.
Hookers don’t create jobs. Pimps create jobs.