Local politicians run off Amazon - Economics

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Campitor
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Re: Local politicians run off Amazon - Economics

Post by Campitor » Wed Feb 27, 2019 5:58 pm

@Rigger
HQ2 on the far side of Queens would have been an entirely different project, with nothing else changed. But that wouldn't fit Amazon's short term purposes.
In regards to the Queens side facing Manahattan versus it's opposite end, I'd like you to reference these two links:
  1. NYC Zone & Land Use Map
  2. NYC Zoning Glossary
The first link allows you to toggle the color coding on the different zones so you can isolate the commercial and manufacturing districts from the residential zones and visa-versa. Amazon can't move to the far edge of Queens away from Manhattan because it's a residential zone. Zones marked C1 through C5 are commercial zones earmarked for businesses that provide services to residential areas (dry cleaners, local grocery store, etc.). The zone Amazon was going to occupy is a "manufacturing" zone. Uncheck all the boxes except Commercial and Manufacturing and you see that Queens is mostly residential with no zones available for Amazon to move into on the non-Manhattan side of Queens. So the site they picked was the best option.
And since this fight is about who gets paid, who benefits, and who sacrifices, there is no room for objective statements. But lots of room to fudge the numbers at every step. When was the last NYC project that was so messed up it came in on time and under budget? Why would you trust the source of those numbers?
If I can't quote the NY state budget director involved in the Amazon negotiations then no source is worthy of quoting. Per his open letter (which has no refutation AFAIK):

...People have been asking me for the past week what killed the Amazon deal. There were several factors.

"First, some labor unions attempted to exploit Amazon's New York entry. The RWDSU Union was interested in organizing the Whole Foods grocery store workers, a subsidiary owned by Amazon, and they deployed several 'community based organizations' (which RWDSU funds) to oppose the Amazon transaction as negotiation leverage. It backfired. Initially, Whole Foods grocery stores had nothing to do with this transaction. It is a separate company. While Amazon is not a unionized workforce, Amazon had agreed to union construction and service worker jobs that would have provided 11,000 thousand union positions.

"New York State also has the most pro-worker legal protections of any state in the country. Organizing Amazon, or Whole Foods workers, or any company for that matter, is better pursued by allowing them to locate here and then making an effort to unionize the workers, rather than making unionization a bar to entrance. If New York only allows unionized companies to enter, our economy is unsustainable, and if one union becomes the enemy of other unions, the entire union movement - already in decline - is undermined and damaged.

"Second, some Queens politicians catered to minor, but vocal local political forces in opposition to the Amazon government incentives as 'corporate welfare.' Ironically, much of the visible 'local' opposition, which was happy to appear at press conferences and protest at City Council hearings during work hours, were actual organizers paid by one union: RWDSU. (If you are wondering if that is even legal, probably not). Even more ironic is these same elected officials all signed a letter of support for Amazon at the Long Island City location and in support of the application. They were all for it before Twitter convinced them to be against it.

"While there is always localized opposition, in this case it was taken to a new level. The State Senate transferred decision-making authority to a local Senator, who, after first supporting the Amazon project, is now vociferously opposed to it, and even recommended appointing him to a State panel charged with approving the project's financing. Amazon assumed that the hostile appointment doomed the project. Of course the Governor would never accept a Senate nomination of an opponent to the project and the Governor told that to Amazon directly. The relevant question for Amazon then became whether the Senate would appoint an alternative who would approve the project.

That they are settling for the "Manhattan on a budget" approach is just sad to watch,
I don't think they had a choice. Queens is ground zero for development. It's the largest of the 5 boroughs with smallest respective density with the exception of Staten Island which is not a good choice for obvious reasons.
Come on, man. This isn't your first rodeo. You have seen how this game is played...This reeks of a committee decision.
Of course it reeks of committee decision but that is how NY and NYC manages its affairs and will continue to do so. The political will doesn't exist to change this committee behavior because there are too many entrenched actors affecting politics. This whole thing was a battle between politicians and unions to determine who will benefit from Queens' development. But regardless who wins, Queens will be developed; big change is in their future. The question isn't who was right or wrong, the question is which side will provide Queens the most benefit. Will it be small organic businesses who move the revenue needle slightly or will it be large businesses who fill tax coffers and election campaign donations? Amazon was of the latter but they were at least committing to developing affordable housing and educational philanthropy while also building a state of the art cloud computing training facility that could have been an educational pipeline for the local schools. The people in Queens are going to be gentrified but at least with Amazon they could have stayed a little longer and their children would have gotten skills they could use in the future.

And precisely because this isn't my first rodeo I know how the game is played. You seem to be of the mind that other choices were available. What I'm saying is that the choices have already been made. Does it make it right or fair to the citizens of Queens? No. But you get the government you vote for.

Campitor
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Re: Local politicians run off Amazon - Economics

Post by Campitor » Thu Feb 28, 2019 2:02 am

@Rigger

I'd like to add that I consider every point in your arguments to be valid. Your recommendations are well suited to any urban expansion planning undergoing a sober, considerate, and deliberate discussion. A discussion that targets benefits for its citizens and businesses without excessive impacts to cost of living or existing social and cultural structures. But NYC planning isn't exactly that - its too big, too old, with too many hands in pockets; the city and state are the monopoly board that unions, politicians, and businesses play on. The only recourse left for the private citizen is to figure out which deal is the less punitive or advantageous. In my opinion the Amazon deal was the most advantageous to its citizens considering the political realities in NYC and NY state. That you believe otherwise isn't irrational if you believe slow and organic is still possible in NYC at this time; I do not for the reasons stated above and previously.

In respect to infrastructure, density, and cost, the economic papers I've read were a mixed bag. Some said that density increases cost of infrastructure, other studies said that the opposite was true. One paper said that costs decrease but rise past a certain density (NYC would fit this category). Another economist said that increased density reduces cost but it averages to a $44 dollar savings per citizen - the cost of an average restaurant dinner. And the last paper I read said that the increased infrastructure cost is related to older cities; the growth that occurs as time passes in regards to unions, politicians, regulations, and special interests causes infrastructure maintenance and construction costs to exceed revenues generated by the increased density.

Riggerjack
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Re: Local politicians run off Amazon - Economics

Post by Riggerjack » Fri Mar 01, 2019 9:33 am

Your recommendations are well suited to any urban expansion planning undergoing a sober, considerate, and deliberate discussion. A discussion that targets benefits for its citizens and businesses without excessive impacts to cost of living or existing social and cultural structures.
If such a unicorn exists, I have never heard of it.
But NYC planning isn't exactly that - its too big, too old, with too many hands in pockets; the city and state are the monopoly board that unions, politicians, and businesses play on.
That is exactly what every planning board is FOR. To make development political. How this works out for the residents, has to do with the power dynamic between residents and civil "servants".
The only recourse left for the private citizen is to figure out which deal is the less punitive or advantageous. In my opinion the Amazon deal was the most advantageous to its citizens considering the political realities in NYC and NY state.
But how did you get there? When city officials no longer pretend to answer to the residents, the interests of those residents become a product for sale. But it's these big development deals, and the expectation that this is business as usual, that juices this dynamic in the favor of the official. "When you find yourself in a hole..."
In respect to infrastructure, density, and cost, the economic papers I've read were a mixed bag.
As I said, Other People's Money, and lots of room and motivation to fudge the numbers. Don't read the summary or conclusion, read the methodology.

https://www.strongtowns.org/journal/201 ... s-no-money

Strong Towns, (the website granola shotgun writes on) is an excellent example of how the numbers can be twisted to make any case. They did a case study in Louisiana, showing tax revenue, vs infrastructure costs. The purpose was to show that urban density makes a more efficient tax farm than suburbia.

But if one digs deep into the comments, where people are going for how those numbers could possibly be accurate, the misdirection gets a little bit clearer.

They load all the expenses to the suburbs, and just pretend that the costs of installation and maintenance are the same, on a per mile of infrastructure basis.

The way this works out in their model, is that suburbia must be more expensive, since it has more linear feet of infrastructure, and they load costs to the outside, which is the opposite of what you would find if one were to look at actual work.

If you look at their map of the world through a tax farmer's veiw point, those huge red towers of massive infrastructure costs, with no tax revenue? Those are parks and green space. That should give you an idea of how hard they twisted their data to get their results.

It's really sad that they feel they need to misdirct like that. They seem to have some really good ideas. But since they are selling them to political forces, they seem comfortable with political tactics.


As an example of how density increases costs:
Yesterday, I worked on a simple extension of our fiber optic network from the street in front of the customers business, to their business. But this is in Redmond. The fiber was in a handhole, ready to go. But because Redmond is relatively (different scale from NYC) dense, this road had been widened. Now this hand hole that used to be along side the road, is in a lane. What would take 2 techs a half day including travel time under normal circumstances, required an engineer a few weeks, coordinating with and permits from 3 separate civil agencies, 6 flaggers, and 3 techs, all day.

And telecom is flexible. We have it easy. Sewer is much much worse. They can't do much of anything without damaging everything around them. Fortunately, sewer lasts a very long time, unless growth rates exceed the plans...



As to your earlier post about the political force blaming the opposing political force for the outcome of a political process...

The strength of democracy, is that it measures how much people care, and how little. This makes it great for stopping the government from doing exceptionally unpopular things. But it doesn't correct for HOW things are done.

And how things are done today, limits the options of what can be done in the future. Over the short term, what gets done is more important. In the long term, how it was done matters more. NYC is a perfect example.

Seppia
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Re: Local politicians run off Amazon - Economics

Post by Seppia » Mon Mar 11, 2019 5:03 pm

Very good twitter thread by Barry Ritholtz

https://twitter.com/ritholtz/status/110 ... 02978?s=21

In short:
The issue with the amazon tax breaks is that they were just for them
Had they requested infrastructure improvement instead (similar to the Hudson yards project) everybody could have benefited and nobody would have felt amazon to be abusive.

Seppia
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Re: Local politicians run off Amazon - Economics

Post by Seppia » Thu Jul 11, 2019 4:17 pm

https://www.wsj.com/articles/new-york-c ... 1562760760

Looks like amazon didn't need those massive tax breaks after all

IlliniDave
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Re: Local politicians run off Amazon - Economics

Post by IlliniDave » Thu Jul 11, 2019 4:29 pm

Seppia wrote:
Thu Jul 11, 2019 4:17 pm
https://www.wsj.com/articles/new-york-c ... 1562760760

Looks like amazon didn't need those massive tax breaks after all
?? The article is about Alphabet. Maybe you meant "Queens doesn't need Amazon"? Amazon never needed the tax incentives I suspect, they just wanted them. They'll probably wind up somewhere else with more business-friendly tax policies. It will be interesting to see if there were any incentives as part of this deal, and if so, how local people react to them. It's a much smaller commitment than Amazon wanted to make in therms of jobs, IIRC.

Seppia
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Location: Italy

Re: Local politicians run off Amazon - Economics

Post by Seppia » Fri Aug 23, 2019 2:06 pm

Uhm...
looks like amazon really didn't need the tax breaks after all....
Quietly coming to NYC, faster than promised, without NY spending a dime.
https://www.profgalloway.com/hq2-midlife-crises?
Six months after "pulling out," the company has 860 job listings in NYC. That’s 4x what Google and Apple have posted. Google — having just purchased 325,000 sq ft in the Meatpacking District for $600 million — has a fraction of the hiring mojo of the firm that supposedly packed up and left six months ago. Since, again, “pulling out” Amazon has 1,577 new hires (1,033 at Amazon and 544 at AWS). In exchange for over $3 billion in tax breaks/subsidies, Amazon had dangled 25,000 jobs over 15 years. At this point, Amazon is on pace to beat that.
I'll call this one a win :)

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