Amazon Deal Sets a New Low

Posted on behalf of occasional contributor Les Schreiber:

It’s interesting to see the responses to the Amazon deal. Most of what you read in Virginia-based media is positive, but in New York not so much. Many who scream about the “nanny state” and too much welfare and government interference in the economy seem happy with a massive gift to one of the country’s most profitable companies. If Amazon wants to locate in Virginia, great, but handouts are not appropriate. I thought the Redskin training camp deal was bad enough, but this sets a new low.

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5 responses to “Amazon Deal Sets a New Low

  1. Les, I would like to see some citations of “nanny state” critics who favor this deal. The conservative reaction has been pretty negative.

    Daily Caller: https://dailycaller.com/2018/11/13/amazon-headquarters-taxpayer-money/

    The American Conservative: https://www.theamericanconservative.com/articles/amazons-great-hq2-swindle/

    Red State: https://www.redstate.com/setonmotley/2018/11/14/bezos-amazon-continue-royally-rip-off-taxpayers/

    I could add the Wall Street Journal editorial page to the list.

    Also, I would urge you to read some of the details offered by Steve Haner and myself on this blog and then explain specifically what makes this deal so bad. Please remember, Mr. Former New York Bond Trader, the New York Times is not the only word on the subject! And the deal that New York struck with Amazon was very different from the one that Virginia struck.

    Personally, I am agnostic at the moment. I’m in information-gathering mode. I would like to hear more perspectives. As much as I sympathize with the antipathy to crony capitalism, the knee-jerk criticisms of both Left and Right strike me as superficial and misplaced.

    • I think given the environment we live in, what other states were willing to do, this deal has much to recommend it. If I were a legislator and had to vote today, I’d vote to accept it. (Nobody need vote today.) But I would love to change the environment, to find a way to tell states or localities they cannot make special deals for favored companies but must set uniform rules for everybody in their jurisdictions. Of course, at the moment I have no rent-seeking clients to keep happy…..

    • “I could add the Wall Street Journal editorial page to the list.”

      The WSJ editorial should be no surprise. If I lived in New York, I’d be livid too. New York got rolled. Virginia did not. And there is nothing crony about this Virginia deal. Nothing, unless one wants to refine the word. WSJ got emotional.

      In addition, sure proof of the quality of the Virginia’s deal is the New York deal. I am still reading up on the Va. deal terms and have much to read, but so far this Virginia deal outline still looks very solid and well put together to me. By that I mean the deal’s general terms as outlined work, and work together. They are coherent. They make financial sense. They are well proportioned, get the job done, and done well. They put together a transaction that works for all concerned, and then go far beyond in some respects. Plus they won the the most heavily contested bid in history. And they did so at far less cost than did their winning competitor up in New York.

      Reading what I have to date, I have yet to find a snake in the woodpile, either. One can see many obvious or potential hurdles, some of which have been mentioned here by Don and TMT, potential business or political issues, or even just getting out of the starting blocks, much less the 30 yard line. But that comes with the territory of this deal. This is a solid deal outline.

  2. Last evening I ran into a state delegate (D) who was quite happy about the Amazon decision, as I suspect most would be. After acknowledging the benefits of the decision to put part of HQ2 in Crystal City, I opined that I hoped this did not mean the end an antitrust scrutiny for Amazon, Google and other big tech companies that have too much economic power. I received a quizzical smile in return.

    BTW, glad to see something from Les.

  3. Les:

    Glad to have you back on the Rebellion. Our state government has historically wasted green dollar redevelopment funds at scale. Look at the Tobacco Indemnification Fund fiasco (or should I say fiascos?). Look at the industry and company-specific tax breaks of the past. How many jobs has Orion Air really created? Does Orion Air still exist as a company? Look at how money stuffed into our state legislators pockets has empowered Omega Protein to rape the Chesapeake Bay.

    Graft in Virginia is both legal and pervasive.

    While the Amazon deal certainly pushes the envelope of corporate welfare it lacks the clear legalized graft that typifies other Virginia deals. Unsavory? Perhaps. Better than the past? I think so.

    The real key is to understand Silicon Valley, Austin, Cambridge MA, Raleigh, etc. Can Virginia turn 25,000 Amazon jobs into 250,000 technology jobs? I doubt it but at least there’s a hope.

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