If you are an American, here’s a a nice issue to distract you from your fixation about you know who and direct your attention to a different issue you can get all worked up about.
Witness each city falling over each other and doing the most stupid of things to land HQ2. Tucson Arizona, where one of the readers of this blog lives , uprooted a 21ft cactus and tried to deliver it to HQ1. The mayor of Kansas City actually bought one thousand items from the company in HQ1 and wrote a review of each one of them. Mayors of cities are looking silly in videos that they have made asking Alexa where HQ2 is going to come up and Alexa answering of course, the city they are mayors of. Shall I go on ?
If you are wondering what all this hullaballoo is about, this is all to do with attracting Amazon’s second head office. Amazon is based in Seattle (this is HQ1). They want to create a HQ2 somewhere else. And why are cities willing to stand in a line and kiss Bezos’ ass (cue the nod to the awful American version of the Queen’s English !). Because he is promising to invest $5 bn and create 50,000 jobs. How did they come to this magic figure of investment ? Because he says the average salary of the jobs created would be $100,000.
The antics of Tucson and Kansas City are harmless on their own. HQ2 won’t come there anyway. The real danger is the big cities offering tax breaks to Amazon. Without a doubt this will happen.
This is a terrible idea. Cities and states that do sweetheart deals to tempt businesses into moving are doing an appalling act of profligacy. This is worse than a bribe. Think about it – this is a perfect way of taking money from the poor (remember indirect taxes are not progressive and a fair amount of the state revenues in the US come from indirect taxes) and giving it to somebody who does not deserve or need the money. One city does this , and the next city will do the same for another company. And before you say Bingo, everybody has been given a dole.
The right way to attract companies is to do the boring things – create infrastructure, make a talent pool available by vigorous education and training, attract outsiders by making it a great place to come and live, have a favourable business atmosphere in the form of ease of doing business and reasonable tax rates. That is when companies will come and stay on. That’s why New York in Finance and the West Coast Cities in technology are what they are. Not because they gave tax breaks.
If you are an American, you should vigorously protest against your city doing a sweetheart deal with Amazon.
For Indians, who can look at all this with an amused smile; we have of course been long guilty of doing such deals with companies. But I want you to get agitated in a different angle. The capital of the IT industry in the country did all the right things 30 years back – great place to live in, pleasant weather, abundance of talent, a cosmopolitan place for people to come, etc etc. It did not give a tax break. And yet every IT company worth it’s salt came.
And then this city let it all go to seed and become the appalling wreck of a city that it is today. This is the best way to drive every company out. No member of the Homo Sapiens species will ever come to this place again. Instead the entire population has mutated into Pithecanthropus Erectus, which being extinct, is delighted to be able to come back into existence even if condemned to living in a hellhole ! How does this blogger know of such a mutation ? Because he has mutated himself !