The Strategist

American cities are fighting for Amazon

10/31/2017 - 13:40

Concern Amazon is looking for a place for the second headquarters. Many American cities are trying to interest the company with generous financial offers, not caring about taxpayers.

Robert Scoble via flickr
Robert Scoble via flickr
The online trading giant publicly stated that it was looking for a home for its second headquarters. 239 mayors of other American cities that participate in the tender and try to interest the Internet giant, are now promising him financial privileges, competing in ingenuity and lavishing praise on him.

Authorities of the cities also make every effort to interest the Internet company with generous financial offers. New Jersey, a city in such a deplorable situation that it cannot even fulfill its pension obligations to state employees, promises the Amazon concern not to tax the income of $ 7 billion. And the Texas Dallas assures that it is ready to build a high-speed railway to Houston, 390 kilometers in length, which will cost the city at least $ 15 billion.

Amazon is looking for a place for the second headquarters because Seattle crowded. The world's largest online store already occupies twenty percent of the office space in the city - more than any other employer anywhere in the US. At the same time, about 6,000 vacancies remain vacant. That's why Amazon is looking for a place to build a second head office. The main requirement is that the city should attract talented people. In addition, it must have a good infrastructure, a developed network of public transport and be close to the airport.

The winner of the tender can count on investments of $ 5 billion and 50 thousand new well paid jobs, as the Internet company promises. The administration of the cities participating in the contest is tempted not only with a one-time financial infusion from Amazon, but also with money of future employees of the company. After all, they will benefit not only the city budget, but also owners of restaurants and shops, real estate sellers and owners of rented apartments. In addition, according to expectations, Amazon’s headquarters can bring considerable dividends to local companies engaged in the delivery of goods.

in 2010 and in 2016, according to the Amazon concern, the company invested $ 38 billion in the economy of Seattle. At the same time, prices for real estate and rent in the city have reached sky highs. According to the index of housing prices for 20 of the largest cities in the US - Case und Shiller Home Price Index - they increased by 13.3 percent in Seattle only in 2016. At the same time, the average for the country for the same period was 5.6 percent. High rents force out the city residents to the outskirts, make them seek housing outside of Seattle and impose a danger of bubbles in the real estate market.

"It's a farce," says Richard Florida, an economist specializing in city planning. The billionaire company, led by one of the richest people in the world, practically forces poor cities to compete in the generosity of offers, often exceeding their capabilities. This campaign harms Amazon’s reputation, the expert believes. In a number of cities there is growing dissatisfaction with the fact that a private company tries to push them against each other for their own benefit, says Florida.

For this reason, some American cities refused to participate in the tender. Sam Liccardo, the mayor of San Jose, even published a large article about the reasons for his refusal in the Wall Street Journal. "We are not going to offer Amazon any financial bonuses, it would be dishonest in relation to our taxpayers," he wrote. And the mayor of San Antonio, Ron Nirenberg, sent Amazon’s chief Jeff Bezos a letter in which he wrote that he was withdrawing his offer.

A winner of the competition and host of the second Amazon headquarters will become known in the next year.