What if Amazon dropped, to borrow a phrase gaining currency these days, a “prosperity bomb” on Washington, D.C., by selecting the District as the location of its HQ2 project?
Martha Ross with the Brookings Institution worries about the implications of creating 50,000 jobs and pumping $5 billion in investment into a city already marked by huge racial disparities in wealth and income. (D.C. has greater wealth inequality than any of the 50 states.) Amazon, she argues, would create few jobs for lower-income Washingtonians. It would push already-pricey housing costs even higher, displacing lower-income households. And it would strain the fiscal resources of the district government to the tune of $60 million to $80 million a year in direct incentives and pot sweeteners.
A project as big as HQ2 would create enormous growth-related stresses on any local government. Under ideal circumstances, growth would pay for itself through higher tax revenues. But giving tax breaks and subsidies to Amazon would shift the burden of paying for expanded infrastructure and government services to others. Even subsidizing workforce training and higher education poses moral issues for progressives. As Ross points out, such spending benefits the college educated, not the poor.
I have sympathy for some anti-Amazon arguments, little patience with others — such as the specter of thousands of Amazon-employed Yuppies buying and fixing up cheap inner-city properties, pushing up real estate prices, and displacing the poor. Ignored is the fact that 50,000 Amazon workers also would support a whole lot of tradesmen, retail clerks, landscapers, house cleaners, restaurant workers, and other service-sector occupations. By creating job opportunities for unskilled and semiskilled workers, Amazon employees would support higher wages for Washington’s urban poor.
The problem with prosperity in tech hubs like San Francisco, San Jose, and Amazon’s home town of Seattle isn’t the influx of jobs and investment, it’s the inability or unwillingness of local governments to increase the supply of housing. Homeowners fight any development project that they think, rightly or wrongly, might negatively impact their property values, and it’s oh, so easy, especially in cities dominated by progressives, to demonize and defeat the developers who want to add to the housing stock. The reason the working class can’t find housing in these cities is that no one is building enough.
It would be naive to argue that growth is always good — if a mega-project doesn’t pay its own way, it can unfairly shift costs to others. But the growth-is-bad argument is folly. If you want to see what a no-growth economy looks like, go visit Southside or Southwest Virginia. A prosperity bomb is a problem they would love to have.
