by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
University of Georgia economics professor Jeffrey Dorfman tries to warn state and city leaders against enticing Amazon to locate its second headquarter campus in their borders. “The math won’t add up” for the location that puts together the “winning” incentives package.
“The winner of HQ2 will almost surely be a financial loser,” Dorfman writes.
Yet if the cities and states in the running do the math they will find that a deal anywhere near that rich makes no economic sense. From a taxpayer point of view there is no hope of recovering the money in taxes from any economic growth generated by HQ2.
As Dorfman explains in detail:
What Amazon would require from North Carolina is so unprecedented, it would require massive changes in state law (even despite the new mega-incentives for “transformative” projects) and a complete reorganization of transportation systems.
I wrote this immediately after Amazon issued its North America–wide request for proposals, warning North Carolina state and local leaders against it:
Think how enticing a monster Powerball jackpot is to the poor and desperate. This calculated Amazon announcement is just as enticing to policymakers, economic development types, and others who believe economic growth comes from wise central authorities pulling the right levers
Oh, if only we can pull the incentives lever hard enough to win Amazon!
Responsible policymakers should see this for what it is: a race to the bottom. A trap. A sure bet for community buyer’s remorse. Why? Consider the winnings! It would mean so much to the community!
Here’s why: the bidding is sure to get out of hand quickly. Bids from public officials with other people’s money who feel as if they are competing with their peers across the entire continent and will sacrifice time-honored, empirically tested principles of economic growth to chase a gaudy new proxy for economic growth? What would constrain them?
It’s inevitable that whoever “wins” will overpay. It’s also inevitable that Amazon will be the ultimate winner.