Amazon canceled its plans for a second headquarters (“dubbed “HQ2”) in Long Island City, New York Feb. 14. following an unanticipated burst of denunciation by government representatives, union members and progressive leaders.
A significant portion of the criticism was New York’s decision to offer $2.8 billion in tax incentives to the company, as well as its perceived “anti-union” policies. Leading the backlash against Amazon’s planned expansion was new Congresswoman Alexandria Ocasio-Cortez (D-N.Y.), who claimed forcing the company to abandon its Long Island arrangement was a victory over “Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”
This myth of “evil billionaires” is a notion that is rapidly becoming more popular in America, especially among young progressives. And it’s not hard to see the reason for its appeal: why do the few people with enormous sums of money and seemingly limitless control get to indulge themselves while the vast majority of people have to work day after day? But an examination of this attitude reveals how it is not as virtuous as one might think.
Ocasio-Cortez calls Amazon a company of “corporate greed”, a common phrase used by those who oppose capitalism. Opponents of capitalism claim that it is inherently immoral because they perceive it as a zero-sum game, or that if one person profits, another has to suffer. In reality, however, the free market is a positive sum game. If Person A gives Person B a loaf of bread, Person B will reward Person A with $2. Person A valued the money more than the bread, and vice versa for Person B. In fact, it is the government that produces the zero-sum games in the economy. Food stamps, agricultural subsidies and government bailouts are examples of times when one can benefit at the expense of others – all of which are provided by the government.
Another argument critics of the free market make is that the “powerful multinational conglomerates” have too big of an influence or grip on the common people in market economies. But capitalism, in actuality, makes sure businesses meet the needs and desires of consumers and run themselves in an efficient, sustainable way. All companies are expected to do so or are punished by the citizens (who make up the market) and their ability to spend.
All of this is needs to be considered before one tries to rejoice in Amazon’s decision. The opposition of “greedy corporations” may seem like the moral and humane worldview to take, but under even thin scrutiny arguments from that position start to fall apart.
Of course, this isn’t even considering the other effects the abandonment will have. The Amazon withdrawal will reportedly cost “at least 25,000-40,000 good paying jobs for [New York] and nearly $30 billion dollars in new revenue to fund transit improvements, new housing, schools and countless other quality-of-life improvements,” according to Gov. Andrew Cuomo. Cuomo and New York City Mayor Bill de Blasio had brokered the deal with Amazon to let the company develop its HQ2 in the city.
The potential tax revenue is only the first of many significant benefits New York will have missed out on. Another would have been a rise in the quality of commodities in the area. Amazon would have tested products in and around New York, just as they did with Amazon Go (a chain of convenience stores operating completely without cashiers or checkout stations) in Seattle, where its main headquarters are currently located. This experimentation and development of new products would inevitably lead to innovation from other companies in the multiple sectors Amazon covers, pressuring other businesses to assist consumers more directly and successfully.
The 25,000-40,000 additional jobs were another huge advantage New York has now lost. Not only would many new jobs be added, but salaries in the labor market also would have increased. Amazon’s rising demand for employees would have caused the price of labor in New York to rise as well, making salaries go up.
Finally, New York also lost out on potential investment into its financial system. Amazon has invested capital and acquired over 120 companies; for example, its Alexa Fund is directing about $100 million into new artificial intelligence businesses. Companies investing capital is one of the main components of inspiration and progress. New York loses a lot of potential capital by rejecting Amazon.
57% of New York City voters had approved of “of Amazon locating one of its new headquarters in Long Island City in Queens,” compared to 26% who disapproved, according to a Quinnipiac University Poll released last December. It is disappointing to see that a few misguided politicians can so abruptly uproot progress and innovation because of unsound reasoning.