Local politicians run off Amazon - Economics

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CS
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Re: Local politicians run off Amazon - Economics

Post by CS » Mon Feb 18, 2019 8:12 am

It took Sears 80 years to die.

7Wannabe5
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Re: Local politicians run off Amazon - Economics

Post by 7Wannabe5 » Mon Feb 18, 2019 8:45 am

True, and Amazon does seem to be somewhat better geared towards self-aware reinventing itself, but the overall pace of innovation necessary in order to maintain same rate of exponential growth has also greatly increased in the last 80 years.

Also, according to Geoffrey West in “Scale”, the structure of cities makes them inherently longer lasting than companies.

Jason
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Re: Local politicians run off Amazon - Economics

Post by Jason » Mon Feb 18, 2019 9:57 am

I would bet the mortgage, that years from now, when the dust has cleared and historians have the benefit of hindsight, there will be a documentary that contextualizes what happened with Amazon in Queens with what was happening on a national level with the wall and how deal making at this time was impacted by a reductionist and bi-furcated political narrative, the conclusion being that this was the greatest blunder in Manhattan borough history, moreso than the loss of the Dodgers when Robert Moses left them no choice but to leave Brooklyn for LA.

m741
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Re: Local politicians run off Amazon - Economics

Post by m741 » Mon Feb 18, 2019 10:36 am

I feel like I'm taking crazy pills reading the national discussion of this.

Based on everything I've read this is a rejection of corporatism in favor of pure capitalism. Can someone here explain how Amazon competing on a level playing field is socialist? I realize that some of the participants in this discussion are socialists, but in this case the capitalist case happens to align with other political positions they hold (anti-gentrification), against corporatism. It's not like Amazon cannot build in NYC, they just have to do it like everyone else. Google did so without subsidies, and is planning on expanding to 20k jobs IIRC (as did Uber, Facebook, etc, all of which have offices in NYC).

Also, I'd have to argue that this is better for both NYC and the US in general. If there's one place that doesn't need to incentivize and subsidize new business, it's NYC, where rents are insane and people are already concerned about gentrification. I think Jacob has pretty much nailed this case on behalf of local residents. And there's plenty of places in flyover states that could use a stronger tech culture, such as rust belt cities where established businesses are flagging and there's less job opportunity. And if Amazon doesn't want to build there... isn't that a pretty good indication of the value of NYC? Furthermore, NYC is already the tech center on the east coast, and I think everyone working in tech wants more choices where to live and work (rather than the 6-7 cities in the US that dominate the industry).

So in the current balance, it feels like winners are (1) the US, and hopefully some city that would better benefit from the office, (2) non-Amazon tech industry & its workers, (3) NYC as a whole, (4) poorer residents/renters in LIC. And the losers are (1) property owners in LIC, (2) Amazon.

prognastat
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Re: Local politicians run off Amazon - Economics

Post by prognastat » Mon Feb 18, 2019 10:45 am

Campitor wrote:
Fri Feb 15, 2019 10:02 pm
This reminds me of a research paper I read but I can't remember the source. They had 3 individuals do a very easy task but one got paid 10 dollars, the 2nd one was paid 5 dollars, and the last person was paid 3 dollars. I recall they had to sort a stack of papers - each stack sorted netted them money. When the other 2 found out they were getting paid less, they refused to sort any more papers despite the ease and speed in which it could be accomplished. The sum of money at the end of the day, even at the lowest pay rate, was modestly substantial. The scientists were perplexed that people would turn down easy money because of a pay imbalance. Desiring zero money over some money is a logical fallacy. Somewhere someone is making more money for doing the same job - but somehow finding out about it turns people angry despite their previous satisfaction with the job and its pay.
Well that's probably because we view our possessions and worth relationally. We judge them based on what those around us have. If it's less then it's bad. It makes a lot of sense since worth is constantly changing. Nothing inherently makes $10 or $3 a significant amount or low amount. It's only in how much better or worse of it makes you in relation to those around you. If you both start at an even amount and one person is getting $10 and you are getting $3 than though in absolutely amount you are still making progress in relationship to the competition you are falling behind.

Campitor
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Re: Local politicians run off Amazon - Economics

Post by Campitor » Mon Feb 18, 2019 11:15 am

CS wrote:
Mon Feb 18, 2019 7:57 am
I think the Amazon thing was too sudden, and not pitched right, etc. It is not incentives so much as how things are framed, i.e. 'this is different'. Amazon has little to no people skills in some ways.

CS. I believe you're correct about the framing and this makes me disappointed with NY. The arguments against the deal were emotional ones and filled with logical fallacies imho. Sadly it's hard to change someone's mind, and logic, when the arguments are based off emotions instead of dispassionate deliberation. What perked my interest were the logical arguments; I wanted to see if I was missing a crucial bit of information or if my own logic was flawed. It's okay for the Amazon deal to fail if the arguments are based off logical reasoning.

Here are some of the logical flaws per my point of view:
  1. Tax incentives given to Amazon would incentivize existing businesses to demand the same. Other businesses have already made the same demand (JP Morgan) in the past so the Amazon deal can't be the catalyst of that behavior. This was a red herring.
  2. Amazon has a lot of money therefore they don't need tax breaks. This assumes that Amazon doesn't have any existing or future commitments on that money. It also assumes that giving tax breaks to big companies is bad despite the wealth of pre-existing data that shows otherwise.
  3. Amazon moving in would cause gentrification. This assumes the cause of gentrification is wealth producing companies, that have a higher than normal pay scale, driving up living costs as the result of capital improvements in the surrounding area and the increased demand on housing units. This is also assumes that gentrification is a bad thing - humanity has been gentrifying its cities since the days of Hammurabi. Maybe it's the expense of building new housing, the maligning of landlords, and the ever present threat of throttling rents without any recourse for housing providers that stagnates housing stock?
  4. Amazon will take the NY money but leave later. This can be said of any existing business in NY that is currently getting tax credits or subsidies - how many actually do that? If you look at Amazon's history, they haven't closed that many offices compared to the centers they have open (https://en.wikipedia.org/wiki/List_of_Amazon_locations). And the tax credits and subsidies were contingent on Amazon hitting specific benchmarks in construction and employment.
If humanity is to improve, it has to see beyond the "framing" and base decisions on sound logic and data. We should never be swayed by the good framing of bad data and logic nor should we be dissuaded by bad framing of sound arguments and logic. A botched Amazon deal isn't going to affect NY much, but what other more impactful events will occur because we can't see past the framing? How many bad decisions are made by politicians and citizens who only see the framing and not the data/logic?
Last edited by Campitor on Mon Feb 18, 2019 11:43 am, edited 1 time in total.

Campitor
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Re: Local politicians run off Amazon - Economics

Post by Campitor » Mon Feb 18, 2019 11:22 am

@Prognastat

It doesn't matter what the other person is getting as long as your own life is being improved. And what is gained by netting zero income versus a lesser income? How is earning $0 dollars better than earning $3 competitively? The "I'm falling behind comparatively" should incentivize the continuation of effort until a better opportunity arises; especially when the inferior pay is still netting you a beneficial income. This is just bad thinking that hurts people instead of helping them.

IlliniDave
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Re: Local politicians run off Amazon - Economics

Post by IlliniDave » Mon Feb 18, 2019 12:36 pm

What about two parties negotiating a deal that benefits them both runs contrary to capitalism?
Last edited by IlliniDave on Mon Feb 18, 2019 12:39 pm, edited 1 time in total.

prognastat
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Re: Local politicians run off Amazon - Economics

Post by prognastat » Mon Feb 18, 2019 12:38 pm

@Campitor

Not saying it's right, just that it's how humans tend to think.

m741
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Re: Local politicians run off Amazon - Economics

Post by m741 » Mon Feb 18, 2019 1:18 pm

@IlliniDave - I'm assuming you're responding to me.

When one of those parties is the government, I don't think that's capitalist. In the extreme case, you get regulatory capture, which is pretty much the definition of corporatism. I'd argue that any government action that disrupts a competitive market (so basically everything but monopoly-busting) is anti-capitalist. That's not to pass judgment, in many cases I'm for those government actions, but I don't go pretending that they're capitalist.

If deal-making between two parties is the hallmark of capitalism you can call anything capitalism: the government and its poorest citizens making a deal to redistribute money? Capitalism! The government explicitly subsidizing corn farmers? Capitalism!

Both parties called off the deal anyway, so the dissolution doesn't exactly feel like socialism either.
Last edited by m741 on Mon Feb 18, 2019 1:20 pm, edited 1 time in total.

Jason
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Re: Local politicians run off Amazon - Economics

Post by Jason » Mon Feb 18, 2019 1:20 pm

Queens is not tantamount to NYC. It's a different government, its a different geography, its a different real estate market, its a different economy. It's a different fucking world.

How anyone can say Amazon "lost" is beyond me. How does Jeff Bezos lose? It was a zero sum game and he said I'll zero sum somewhere else. Remember this whole thing was a beauty contest to begin with. It's like saying Tom Brady lost because Giselle broke a nail while giving him his annual Super Bowl winning hand job in the back of the limo after the post-game party on the way to their free trip to Disney World.

m741
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Re: Local politicians run off Amazon - Economics

Post by m741 » Mon Feb 18, 2019 1:24 pm

Amazon's first choice was NYC (and/or DC). They lost their first choice. If they preferred building somewhere else they would have chosen it as their headquarters. It's not like they came out poor, but they didn't get to impose their will like they have elsewhere.

If you want a metaphor, you could equally say it's like Amazon "lost" because they came in second place to the desires of local residents.

Jason
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Re: Local politicians run off Amazon - Economics

Post by Jason » Mon Feb 18, 2019 1:28 pm

Queens is not NYC. Amazon was looking at Newark, NJ as well, which is just as close to Manhattas as Queens.

The person who runs the beauty pageant by definition cannot lose. The metaphor is Steve Harvey accidentally crowning the wrong contestant and then just giving it to someone else.

IlliniDave
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Re: Local politicians run off Amazon - Economics

Post by IlliniDave » Mon Feb 18, 2019 1:46 pm

m741 wrote:
Mon Feb 18, 2019 1:18 pm
When one of those parties is the government, I don't think that's capitalist. In the extreme case, you get regulatory capture, which is pretty much the definition of corporatism. I'd argue that any government action that disrupts a competitive market (so basically everything but monopoly-busting) is anti-capitalist. That's not to pass judgment, in many cases I'm for those government actions, but I don't go pretending that they're capitalist.

If deal-making between two parties is the hallmark of capitalism you can call anything capitalism: the government and its poorest citizens making a deal to redistribute money? Capitalism! The government explicitly subsidizing corn farmers? Capitalism!

Both parties called off the deal anyway, so the dissolution doesn't exactly feel like socialism either.
Didn't say deal making was the prime characteristic of capitalism, just asking what about it was contrary to capitalism. Governments negotiate and enter into contracts/deals with private business all the time (e.g., hiring a contractor to build a road). In socialism the government would dictate to Amazon what they must do (or simply take them over).

As soon a a local or state government starts taxing or otherwise regulating business differently than any of the other state or local governments in the country it has disrupted the competitive market for any larger-sized (non local-only) business. As someone pointed out above NY already has a myriad of these incentive programs and probably as many one-off special deals prior to Amazon coming along. It's just part of the playing field on which capitalism has to operate in this country.

m741
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Re: Local politicians run off Amazon - Economics

Post by m741 » Mon Feb 18, 2019 2:04 pm

@IlliniDave - Fair enough, it's not a flat field, but I don't think digging another furrow is somehow defending capitalist ideals. Actually, I'm a little curious, are you in favor of some of the proposed anti-corporate welfare deals between states, which seem like they would actually level the field? Or were you just arguing hypothetically?

Maybe we don't even disagree? It's mostly frustrating to me seeing "socialism" blamed, when in this case Amazon tried to extract terms from the government (this was the whole point of their contest). As far as I can see, the government didn't do any dictating here, quite the opposite, so it seems like the initial deal was a textbook definition of crony capitalism, and the rejection of the deal was pro-capitalist. Is there some perspective that makes the initial deal socialist?

IMO this is actually a pretty interesting political question because it cuts across the Democrat/Republican landscape.

Jason
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Re: Local politicians run off Amazon - Economics

Post by Jason » Mon Feb 18, 2019 2:10 pm

Governmental incentive package to both small and large scale real estate developmental projects incentivizing users and developers in the United States of America is common business practice.

I once heard this story about a guy who grew up in Queens who's father was a pretty successful local real estate developer. He decided that he wanted to expand the family business into Manhattan. So through the leveraging, some might say to "unethical" extent, of government incentives, tax breaks etc. his name ultimately became synonymous with Manhattan real estate. I think he actually once went on national television and declared himself "smart" because he didn't pay taxes. For the life of me, I can't remember his name.

m741
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Re: Local politicians run off Amazon - Economics

Post by m741 » Mon Feb 18, 2019 2:23 pm

Just because incentives have been offered in the past doesn't mean that it's a good thing. To me that's the whole point: it has to stop at some point, and if not here, where? I like Amazon overall, I shop with them regularly, but all these incentives add up. It's not a question of Amazon, this is just the most notable case. After all, the best incentives are offered to the biggest, most powerful companies (Amazon, not Tony's Pizza), and help them consolidate their advantage, reduce the number of companies able to compete with them, and allow the same companies to further capture the government and distort the market. At some point it becomes a snowball.

Actually, some of these smaller psychology-test examples, and IlliniDave's original question at the start of this thread are interesting, because they seem to focus on one time scale. Yes, this particular deal may have been good for NYC in particular in the short term, but lots of things are good in the short term that have bad long-term systemic effects. This same deal feels exactly like the bank bailouts, or negotiating with a hostage-taker. Yes, if you weigh the possible outcomes in the short-term it was a good thing to do, but in the long-term is it something we want to keep doing? I'd guess we each have reasonable, but different answers.

Another example would be the prisoner's dilemma. The optimal one-time strategy is defecting, but the optimal iterated strategy is more complicated. From my own perspective, asking why it's a good thing for NYC to reject this offer is like asking why you shouldn't defect when you're only playing the prisoner's dilemma once, since all the incentives point to defection. I'm sure other people are thinking about their iterated strategy, but have a different opinion of players than I do...

Jason
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Re: Local politicians run off Amazon - Economics

Post by Jason » Mon Feb 18, 2019 2:43 pm

m741 wrote:
Mon Feb 18, 2019 2:23 pm
After all, the best incentives are offered to the biggest, most powerful companies (Amazon, not Tony's Pizza), and help them consolidate their advantage, reduce the number of companies able to compete with them, and allow the same companies to further capture the government and distort the market. At some point it becomes a snowball.
Patently false.

Pennsylvania and Maryland routinely poach solid, family owned, entrepreneurial companies in the tri-state area (NJ/NY/CT) through the incentives of cheaper land and construction costs, decades (yes decades) long tax abatements and overall reduced cost of living. I am talking of business starting in the 5 Million per annum sales area. Ironically, this is what has put Queens in the condition it finds itself in now.

Historically speaking, from an industrial perspective, the area was built on the back of entrepreneurial companies, namely garment manufactures (Manhattan) and entertainment companies (Brooklyn). However, Hollywood offered better weather and tax breaks so entertainment studios moved out in the early 20th century. Garment manufacturers lasted until the 80's until they moved to China.

Due to the demand of the residential market in the NYC region, manufacturing and warehouse operations have been moving to due to the value of their real estate. Or the owners have become savvy, and have developed it themselves. Queens will now be left behind as the surrounding area has been overbuilt and I don't get the feeling that those protesting Amazon have a hearty entrepreneurial spirit to revitalize the area themselves.

Campitor
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Re: Local politicians run off Amazon - Economics

Post by Campitor » Mon Feb 18, 2019 3:29 pm

@prognastat

I didn't think you were promoting that fallacy. I just wanted to point out how this behavior is personally detrimental. And if anyone is concerned about gini coefficients and how money aggregates into fewer hands, the fallacy we were talking about is probably a great contributor. The guy making the $10 per stack certainly isn't being hurt when the $3 dollar guy quits. And some other guys ($3) may decide to work faster and longer in order to gain more money than the $10 guy. This is how money flows to the few.

A minority of people behave rationally and optimally which is why Pareto's principle will always win in regards to wealth regardless the system (socialist, communist, capitalist) - logical and hard working people find a way to rise - the petty and the irrational find ways to sink - this has always been the way. This may sound like I'm saying "let them eat cake". I'm not. I'm just saying that people get opportunities and self-sabotage because of irrational sentiments or prejudices. Society needs to grow past these irrationalities.

@m741

1st off - cool avatar. The definition of capitalism is an economic system in which the means of production and distribution are privately or corporately owned and the operations are funded by profits. Socialism is defined as an economic theory, system or movement where the production and distribution of goods is done, owned and shared by the citizens of a society. The definition of communism is a system where all property is public and people work and are given things by the government according to their needs.

Government and individuals colluding to take someone else's money (forced redistribution of wealth) is communism. The government explicitly subsidizing corn farmers is socialism. NY negotiating taxes with Amazon is a socialist action but also a state and city defined regulatory action; they have rules governing tax credits and subsidies. NY determined that Amazon qualified for subsidies but only if it met certain commitments. This benefit is also extended to all other companies doing business in NY or seeking to relocate to NY. Can we do anything about it? Sure - stop voting for politicians who give companies tax breaks and pray that the next state over does the same. The 10th amendment allows states to govern themselves as they see fit as long as it doesn't impinge on any other rights outlined in the constitution or the powers granted to the federal government. And companies are free to do business in whatever state they want and seek tax easements within the established regulatory frameworks therein.

No one did anything wrong in regards to granting or desiring pre-existing tax breaks. But in my opinion it was NY that lost out. Amazon can go anywhere. All NY can do is offer enough incentives to make it economically viable for companies to relocate to their state. Otherwise why would anyone want to do business there in the age of computers, planes, trains, and automobiles?

Campitor
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Re: Local politicians run off Amazon - Economics

Post by Campitor » Mon Feb 18, 2019 3:37 pm

Jason wrote:
Mon Feb 18, 2019 2:43 pm
Due to the demand of the residential market in the NYC region, manufacturing and warehouse operations have been moving to due to the value of their real estate. Or the owners have become savvy, and have developed it themselves. Queens will now be left behind as the surrounding area has been overbuilt and I don't get the feeling that those protesting Amazon have a hearty entrepreneurial spirit to revitalize the area themselves.
I wholeheartedly agree. I feel bad for the 70% of New Yorkers who wanted the deal finalized and the local residents who would have benefited from Amazon's philanthropy towards affordable housing and education.

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