The Corner

Economy & Business

New York’s Corporate-Welfare Boondoggle Flops

(Mike Segar/Reuters)

The city and state of New York were prepared to spend billions of dollars in taxpayer money to attract Amazon’s partial second headquarters. Supporters of the Cuomo-de Blasio plan called attention to the potential for employment from the new headquarters, but when divided properly, the sum came out to $61,000 of state spending per potential job. Meanwhile, New York faces critical infrastructure problems that require attention.

Today, Amazon announced that it will be backing out of the proposed New York HQ plan. This news is welcome. I am not opposed to business investment in the City — indeed, the proposed headquarters would have been in my home county. But the fact that the move was to be at taxpayer cost rendered it unacceptable.

The continuing spectacle of politicians abasing themselves before the corporate world, dangling other people’s money for a photo op and groundbreaking ceremony is pathetic. Corporate welfare is always justified with unbelievably high projections for employment and the resulting income taxes that the unemployment brings — which rarely materialize. And yet it keeps happening, as our nonstop “economic  development” projects and municipally funded stadiums for billionaire team owners make clear.

Worse still is when governments accompany subsidies with the eminent-domain seizure of citizens’ property. Wisconsin recently did exactly this in the hopes of a attracting a new Foxconn factory. Along with Donald Trump and Paul Ryan, the state promised “13,000” jobs. The taxpayer cost-per-job was estimated at $346,000 dollars (over five times the median income of the area) — and that was on the assumption of 13,000 employees. The state even cancelled necessary infrastructure work so that it could focus on building for Foxconn. Today, however, Foxconn says that it will likely not build the factory, and, even if it does, it will be unlikely to employ anywhere near the 13,000 projection. In the meantime, local homeowners have been forced out of their homes. What did they get for it? A photo of their governor standing with the president.

Unlike in Wisconsin, the fiscal damage has not already been done in New York, so Amazon’s withdrawal is not merely a well-deserved rebuke to Governor Cuomo and Mayor de Blasio, but a bullet dodged. Now, Amazon says it is focusing on its planned Virginia and Tennessee headquarters, also fueled by taxpayer money. I hope that they will back out of these as well. If Amazon wants to locate its workers in big and dynamic cities, it should go ahead — at its own cost, as Google has done with its large Manhattan operation, proving that this is by no means impossible.

The city and state’s money should go towards genuine public goods, not to a direct cash transfer from ordinary New Yorkers to one of the richest companies in the world.

Good riddance to a terrible deal.

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Jibran Khan is the Thomas L. Rhodes Journalism Fellow at the National Review Institute.

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