Amazon, as we all know, has opted to place its second headquarters in two places: Long Island City in New York City and Crystal City adjacent to Washington, DC. Nobody (except presumably Amazon people) yet knows what’ll go here and what there. Apparently DC is richer in computer programmers, while NYC is the center of book publishing and media, retailing, advertising, and finance.

Shelf Awareness carries a report on reactions in the book community, which reads in part “In strongly worded letters to Virginia Governor Ralph Northam and New York Governor Andrew Cuomo, ABA CEO Oren Teicher wrote that ‘it is unconscionable that state tax dollars paid by [New Yorkers & Virginians] would be redirected to subsidize one of the world’s largest — and most profitable — companies, which, among other things, has a history of doing whatever it can to drive competitors out of business and to avoid paying its fair share of taxes.’

Teicher added: ‘It is simply bad public policy to direct public money away from infrastructure, first responders, and public schools — which benefit all [New Yorkers & Virginians] — and, instead, to direct that money to a single international mega-corporation with a market capitalization that dwarfs virtually every other company. . . Local businesses are the backbone of our state’s fiscal health. The news of such massive public subsidies to one of the world’s largest and most profitable corporations is contrary to the long-term interests of all [New Yorkers & Virginians].'”

Fair enough I guess: that’s Oren Teicher’s job. However I can’t really see why Amazon’s having HQ 2.1 in the city really carries any more of a threat to local booksellers that their being based in Seattle did. If they want to build a bricks-and-mortar bookstore, Amazon will build a bricks-and-mortar bookstore. Does anyone really think that by putting staff into the Citicorp Jackson Avenue building, Amazon will suddenly realize that this is just where they should have had a bookstore all along. Of course as they move more and more high-paying jobs into the area they will inevitably improve the outlook for local retail businesses, but I assume they have pretty sophisticated analysis of where they might place new stores, and don’t just watch their employees flooding out of the building to buy their lunch.

There’s lots of knee jerking going on over this issue. NYC has managed to prevent Walmart’s setting up stores in the city, so some ask, what’s the difference between Walmart and Amazon. Well, rather obviously, the difference is that Amazon is bringing headquarters staff jobs, not retail stores which would directly negatively impact local shops. (Of course, one can argue that Amazon does indeed represent a threat to local retailers anyway; but that on-line retail threat would exist whether their headquarters were in Walla Walla or Long Island City.)

I have heard it claimed that the tax subsidy in New York City amounts to about 7¢ on every $1 of salary paid. The mayor says that the city will be getting $13.5 billion in tax revenue over the 25 year life span of the deal. Obviously such estimates are based on assumptions about staffing and salary levels. There will apparently be 25,000 new jobs over 10 years, with “most being paid $150,000”. The job total may rise to 40,000 over 15 years. I can’t really see how this is a bad deal for the city. Sure, it could have been 6¢ or less — but surely the city’s tax take from income taxes earned from good paying jobs which didn’t exist yesterday is worth a lot more than that. And there will be tax benefits from the extra consumption of new employees. Even before this deal $2 billion had already been committed in infrastructure in the already growing area of LIC. Amazon is donating part of their site for a school. Of course Jeff Bezos doesn’t really need any subsidy, but all of the subsidies offered to Amazon are subsidies available to any company. In other words, according to the mayor, NYC refused to fashion any tailor-made incentives for Amazon. One can deplore the common practice of states and cities providing subsidies to bring jobs to their communities, but, if everyone’s doing it, refusing to take part obviously guarantees failure. City boosters who claim that even if NYC had refused to talk to them Amazon would have come here anyway are just whistling Dixie. If the purists had prevailed in their insistence that no subsidies should have been offered to a company run by the world’s richest man, the end result would no doubt have been that 100% of HQ2 ended up going to Crystal City or somewhere else. Seems like a reasonable sprat to catch a rather large mackerel.