BROOKE GLADSTONE: This is On the Media, I'm Brooke Gladstone.
BOB GARFIELD: And Bob Garfield. This week the envelope was opened.
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MALE CORRESPONDENT:Amazon now making it official. The company setting up shop in Long Island City, Queens for one of its two new headquarters. The headquarters will be split between Long Island City--
MALE CORRESPONDENT: And Northern Virginia. Investing $5 billion creating more than 50,000 jobs. [END CLIP]
BOB GARFIELD: After 14 months of salivating and serenading and surrendering, New York and Virginia. who between them offered more than two billion dollars in givebacks to Jeff Bezos walked away with halvsies of the Amazon HQ2 sweepstakes. After a brief period of elation, buyer's remorse began to settle in. Politicians such as New York City Councilman Jimmy Van Bramer signaled the backlash.
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JIMMY VAN BRAMER: With a mass transit crisis, with a public housing crisis, With a million different things that we could have used this money for, The governor and the mayor conspired secretly to cut a deal. [END CLIP]
BOB GARFIELD: This was not an unpredictable reaction. Yet such voices of skepticism were scarcely heard for the previous year. Because the media were too excited by the drama of it all. Two hundred thirty-eight cities competing for 50,000 jobs and $5 billions investment in a winner take all jackpot. Irresistible. It was an orgy of supplication, reminding different observers of different things.
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FEMALE CORRESPONDENT: It feels a bit like a bid to host the online retail Olympics. [END CLIP]
BOB GARFIELD: Me, I saw breathlessness partly reminiscent of lottery fever.
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FEMALE CORRESPONDENT: Just ahead of tonight's record breaking $1.6 billion--billion!--Mega Millions drawing. [END CLIP]
BOB GARFIELD: And partly something much darker. Those Depression Era dance marathons were the desperate submitted to public degradation for a slim chance at a jackpot.
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MALE CORRESPONDENT: They are finding considerable difficulty keeping their feet in shape but they're still going.
BETTY: You think we can stick it out Frankie?
FRANKIE: Oh you beat ya. We're going to anyway, til the end.
BETTY: I want this dancing to end. [END CLIP]
BOB GARFIELD: That was Frankie and Betty in 1931. Here was New York Governor Andrew Cuomo last week.
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GOV. ANDREW CUOMO: Anything else I can think of that will get us over the top. Anything they want named Amazon. I'll change my name to Amazon Cuomo if that's what it'll takes. [END CLIP]
BOB GARFIELD: Well, be careful what you wish for governor Amazon. For better or worse your name will be tied to HQ one and a half forever. But if it all comes to grief, the media will also have to ask themselves hard questions about why they spent two years failing to ask hard questions. David Dayen for one isn't waiting. He's an investigative fellow with In These Times and contributes to The Intercept and the New Republic and has been writing about the Amazon mega billions jackpot.
DAVID DAYEN: The two winners ended up being two cities that Amazon needs to be in. They have a lot of government contracts so it makes sense for them to be in Washington. They have a burgeoning media and advertising empire and so it makes sense for them to be in New York. Jeff Bezos has a large home in New York, a large home that he just bought in Washington and he also owns the local paper in Washington. This was not really a contest. And the other 236 cities gave up very valuable information for a pipe dream.
BOB GARFIELD: One of the reasons the bids were expensive to prepare is that they contained more than just zoning plans and tax abatement offers, they included all kinds of very granular data about the various cities economic development plans. Now, we know that if, you know, where the highway interchange is going to go in advance and buy land to build a gas station in a restaurant or whatever you are going to make out like a bandit.
DAVID DAYEN: This is, perhaps, more valuable than the two and a half billion dollars or however much they got from New York City and Washington. You have logistics operations, convenience stores that you want to put up all over the country. These physical bookstores that you're putting in. If you know where the people are going to be, obviously that is going to be a real jackpot for you.
BOB GARFIELD: You're just supposing, right? You know, of no plans to exploit the data in those particular ways, right?
DAVID DAYEN: Right. What we know is that over the last year since the bids have come in, Amazon has done 15 or 16 deals for distribution centers and data centers that have netted them $230 million. And some of those cities were cities that put up bids for HQ2. And yes, it is speculative that they're going to use this data. But Amazon runs on data. It's really not a stretch to think that they're going to exploit a giant data set that they just picked up from 230 odd cities all over America.
BOB GARFIELD: Now there's a whole other aspect of this kind of economic subsidy or corporate welfare, whatever you want to label it. The bet is that the value to the overall economy of the region, having thousands of new taxpayers and opportunities for local commerce, that that all outweighs the government investment in the form of tax abatement and maybe infrastructure build out. Over the decades, have these that's paid off?
DAVID DAYEN: Well, I think the way to look at it is to step back a little. Maybe one municipality is benefiting by an individual deal, but is the entire country benefiting from this race to the bottom between cities where they just throw themselves at various companies and give them all these cash awards. I think the answer is clear. The annual cost of these economic development subsidies by one measure is something like $90 billion. And that is not really sustainable. You're talking about something that's more than a lot of municipal budgets and more than the cost of things like housing subsidies. You're just shifting money from government into the hands of companies who have to site their location somewhere. Studies have shown that this just displaces jobs within a particular metro area. That a company comes in and other companies end up moving out. So it does not become this big job creator, it's just a series of corporate giveaways with no real economic benefit.
BOB GARFIELD: We had some evidence in the midterms last week that the public itself may be growing suspicious of the sort of deal. Scott Walker the governor of Wisconsin lost in the election partly due to the sweetheart deal that he put together for Foxconn the electronics manufacturer.
DAVID DAYEN: Certainly the Foxconn deal, which seemed to shift after it was signed. Foxconn said they were building one type of plant that would need a certain type of worker and suddenly they don't need as many manufacturing jobs. That definitely was a factor in the election. It was one of Tony Evers who's the governor elect's first ads was talking about Foxconn. And I do think that you're seeing a lot of opposition to this HQ2 deal within city governments in New York and the state government in Virginia. There are members that are very distressed about the lack of transparency, the sheer size of the deal and about these impositions on democracy in the Amazon deal. They are allowed by the state to run a protective order if information under the Freedom of Information law in Virginia is attempted to be released by the state. In Virginia the state is obligated to have a light touch on regulation on Amazon and that's in the deal. All of these things, I think, are souring people on this idea that economic development is only about throwing subsidies at companies.
BOB GARFIELD: There's one last thing David, look you aren't exactly an adherent of the Chicago School of Economics, you're not a Milton Friedman acolyte. You are an unabashed lefty with deep suspicions about capital and corporate welfare and so on. Weren't you certain to sneer at any ultimate Amazon deal? Is there any evidence that's pertinent to this case that you're withholding to make your case?
DAVID DAYEN: Well, certainly adherents to this style of economic development would say that the tax revenues that come in from a large company locating outweigh the costs, that the deal pays off in a certain number of years. But there are other ways to do economic development. If you want your city to be an attractive option for large companies to locate, you could use all this money that you're spending on subsidies and put it towards educating the workforce, improving the infrastructure, housing affordability. And suddenly companies will think, 'oh that looks like a good place to be. I'm going to move my location there.' Chattanooga, Tenn. decided that priority is going to be municipal broadband. They have this ultrafast, ultra cheap broadband. And companies that need to be in a global economy using the Internet have flocked to that city. So that's another way to do this kind of economic development. And I don't know left or right, it seems like spending that money on people and improvements in the city and quality of life rather than giving the money away to a corporation might unite the left and right against this kind of crony capitalism.
BOB GARFIELD: David, thank you very much.
DAVID DAYEN: All right thank you.
BOB GARFIELD: David Dayen is an investigative fellow with In These Times and contributes to The Intercept and the New Republic. He's author of Chain of Title: How Three Ordinary Americans Uncovered Wall Street Great Foreclosure Fraud.
