THE COLLEGE HILL INDEPENDENT


Priming the Capital

Amazon’s bidding war and the allure of corporate takeover

by Isabel DeBre & Chris Packs

Illustration by Katya Labowe-Stoll

published February 2, 2018


 

It is a truth universally acknowledged, that a single corporation in possession of a good fortune, must be in want of an HQ2. Amazon is rich and attractive––and seeking a new home. Last fall, the tech giant called on cities across North America to compete for the ultimate prize: its second headquarters (HQ2). Lured by the promise of 50,000 high-paying jobs and $5 billion in direct investment, 238 cities, including Providence, R.I., scrambled to assemble pitches highlighting their most attractive qualities. 

Since America loves bidding wars, and The Bachelor, the media has successfully spun the story of this corporate headquarter search in such anthropomorphic terms—full of intrigue and romantic love. Cities are “throwing themselves” at Amazon, which is “counting its suitors,” the New York Times reports. “Dear Amazon: It’s not you, it’s us” says Little Rock, AR, in an October Washington Post advertisement, withdrawing its proposal after realizing its scale didn’t fit the bill. The love letter continued: “We’re happy knowing that many great companies find our natural good looks, coupled with our brains for business, irresistible.” 

The media’s strangely special treatment of Amazon contributes to the larger social sense that Amazon is radically different than other companies. And in many ways, it is. No corporation Amazon’s size has ever grown so fast for so long. The more it fulfills our every need, the more its packages appear on our doorsteps every morning, the more we’re convinced that the curved golden arrow could be a smile. Its brand feeds, breathes, and evolves around us. If it’s human-like, the logic seems to go, it must be more humane. 

But the sensationalist, anthropomorphic language surrounding Amazon and its soulmate search obscures the deeper and more disturbing reality of what lies beneath its unchecked power. Left-leaning news outlets, from the Guardian to n+1, have bemoaned Amazon’s “techno-capitalist takeover,” but this argument, while generating productive outrage, still neglects a central point: Amazon is not so different. Its scope may be larger, its growth may be faster, but the HQ2 competition is not a rupture. Rather, it represents another beat in the violent rhythm of corporate exploitation of American cities and suburbs––valuing tax incentives over social services, and displacing the country’s most vulnerable residents. 

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Amazon’s veneration of cities as hubs of “strong local and regional talent” signals a dramatic reversal in decades-long corporate practice. In the early 20th century, it was typical for American corporations to base their operations in robust metropolises. But, in 1942, the Bell Labs division of AT&T broke from this trend by abandoning their Lower Manhattan headquarters. The AT&T unit envisioned a corporate campus that would be comfortable for its employees, as well as abundant free space to pursue research without the city’s electrical interference. Purchasing 213 acres of land in rural New Jersey, it instigated a corporate flight that would persist for generations. General Motors, General Electric, General Foods, Deere & Co., and others all abandoned cities for the suburbs––bringing a massive white working class with them. Suburban real estate boomed. CEOs built mansions near their sprawling corporate headquarters. Pastoral land became not only livable, but desirable. 

Meanwhile, the cities, so dependent on industry, decayed in their wake. Detroit, the ‘car capital,’ was eviscerated. What New York Times columnist William Laas labeled “suburbitis” left urban tax bases decimated, resources sapped, and infrastructure tenuous. It is no coincidence that the Civil Rights Movement peaked at this point in urban life, as Black residents, finally considered equal to whites under the law, faced continued economic exclusion in underfunded, underdeveloped cities. The postwar ideology of the white middle class, coupled with very real discrimination, barred people of color from imagining futures beyond the bounds of a deteriorating urbanism. 

But in the last 20 years, with the disaggregation of corporate services, the rise of telecommuting, and the savvy potential of ‘urban millennial workers,’ companies are returning to once-depleted cities with promises to revitalize real estate and infrastructure. In June, McDonald’s moved its headquarters from Oak Brook to Chicago. In May, General Electric relocated from the Connecticut suburbs to Boston. Over the summer of 2015, Johnson & Johnson moved from New Brunswick to Tampa. With them, these corporations brought high-paid (largely white) employees into poorer (largely POC and immigrant) communities, fracturing cities even more sharply along racial lines. In addition to generating massive displacement, these corporations, like Amazon, called on cities across the country to advance competitive offers that would attract the companies––that is, tax incentives. 

Local tax breaks, which first gained traction in the 1990s, save corporations more than $80 billion a year, the New York Times estimates. Despite pushback against corporate exploitation of struggling localities in the past two decades, the local tax incentives have resurged dramatically. The DC-based policy firm, Good Jobs First, reported that the largest ever local tax break was offered in 2013, when Washington State offered Boeing $8.7 billion to base its corporate activities in the state. 

Rhode Island Governor Gina Raimondo, a former venture capitalist, has prioritized tax incentives during her term to lure companies like GE, Johnson & Johnson, and Virgin Pulse. According to AP, the state Commerce Corporation has approved $30.7 million in incentives since early 2016.  As recently as fall 2017, Providence awarded $10 million to the IT firm Infosys. During the course of her term, Raimondo has successfully courted 22 companies, including Massachusetts-Based Vistaprint Corporate Solutions and the technology offices of Johnson & Johnson. Combined, the companies project they will generate $46 million in revenues for the state. “Growing businesses, especially ones with such deep and storied history in our state, is essential to Rhode Island's comeback," said Governor Raimondo last year when A.T. Cross relocated to the Ocean State. "Our tools are working — we're ending the year on a roll, and we're not going to take our foot off the gas.”

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The governor’s focus on corporate growth played directly into its decision to pursue Amazon’s HQ2, Rhode Island Commerce Corporation spokesman Matt Sheaff told the Indy. “Amazon was looking to make a big investment, and that’s the hallmark of this administration.” When Amazon announced to North American cities it would invest $5 billion in HQ2 construction, in addition to generating 50,000 jobs paying an average of $100,000, Rhode Island jumped at the chance to recover from its recent economic slide, dramatically expand its development, and compete with nearby financial hubs. One look at Amazon’s city wishlist (favoring scale, employment base, and public transportation system) theoretically disqualifies any Rhode Island city from the bidding battle, but that didn’t stop the state’s major stakeholders from scrambling in seven weeks to produce a proposal.

Partnership for R.I., a non-profit coalition of business and academic institutions based in Rhode Island, raised $150,000 to fund architectural mock-ups for HQ2 in a number of different sites, including the Jewelry District and Providence Station. In a video pitch to Amazon, Governor Raimondo describes Rhode Island as a “hidden gem,” recently discovered by other multinational corporations, and now primed for the “lively experiment” of Amazon’s investment. Another video in the state’s submission package, reminiscent of a peppy prescription drug commercial, depicts a man in a sport coat and khakis strolling through a picturesque meadow, touting Rhode Island’s James Beard Award-nominated restaurants, offshore wind farm, and job-hungry college graduates. 

Only one city, San Antonio, has explicitly rejected the premise of the Amazon competition. In an open letter to Jeff Bezos, San Antonio Mayor Ron Nirenberg and Bexar County Judge Nelson Wolff refused to participate in the HQ2 games on ethical grounds, writing that, since no metropolitan area meets Amazon’s lofty and vague requirements, cities have been coerced into offering increasingly high incentive packages. The letter goes on to promise public investment into the San Antonio community in place of corporate subsidies––and, perhaps naively, appeals to Amazon to reject financial incentives and instead pledge to support the HQ2 city’s public spaces and social services.

Meanwhile, in stark contrast, dozens of cities have offered Amazon incentives that far exceed typical corporate handouts, setting a precedent for new and startling ways state governments may find themselves beholden to corporate interests. New Jersey has offered $7 billion in incentives to Amazon if it chooses to base its new HQ in Newark, exceeding the $5 billion Amazon promised in revenue. Chicago promised in its proposal to compel HQ2 employees to pay back part of their salary to Amazon as an income tax, which would amount to a loss of $1.32 billion that might have otherwise been spent on city services. According to the Atlantic, Fresno went even further, proposing a joint county tax fund, which would give Amazon the power to designate and choose city projects––for example, a public park accompanied by the sign “This project is brought to you by Amazon.” 

“The important question isn’t how cities are trying to get Amazon, but if Amazon is able to get away with this, what’s next?” wonders John Beacham, coordinator of the Act Now to Stop War and End Racism (ANSWER) coalition in Chicago. He told the Indy that  while Chicago offered Boeing millions of dollars in incentives, the city never saw any tax revenue from the company over ten years. “Brown and Black communities are losing their schools and health clinics while our mayor offers $2.25 billion to the richest person in the world who just bought Whole Foods in cash. The money will not trickle down into schools or hospitals for poor communities of color that need them most. Endemic, explosive problems like poverty and racism will only get worse.” In the past weeks, ANSWER has organized protests and publicity campaigns to fight Chicago’s bid for the proposal. 

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As history has shown, Amazon’s promised $5 billion influx into the chosen city’s economy would not be evenly distributed across race and class lines. In Seattle, Amazon’s original HQ, the corporation has brought tech-centric wealth at the expense of rampant inequality, skyrocketing rent prices, and large-scale gentrification and eviction of communities of color, as the Seattle Times reports. Seattle is also grappling with a homeless crisis and declared a “state of emergency” last year. In other words, as the international corporate class dominates the city center, working class locals find themselves marginalized both economically and geographically. "Amazon offers really high-earning jobs and really low-paying jobs and there's not much in between," wrote Spencer Cox, a researcher on Amazon’s urban impact at the University of Minnesota. “If you look at Seattle ... the middle class has basically disappeared.” After all, the 50,000 jobs that Amazon promises are for the highest income bracket. The only jobs Amazon would provide working class residents are “low-wage, part-time, dangerous jobs,” Beacham said. 

Amazon’s proposal thus represents the most stark example of a violent trend in major American cities: instead of suburban white flight, wealth is pouring back into financial centers and historically abandoned communities of color are coerced into moving aside once again. “Corporations are transforming metropolitan centers into oases for most wealthy elites,” Beacham told the Indy. “This is nothing new, but it’s an escalation of what has been underway––Black and Latinx people driven out of our cities while government and business collude and highly-paid employees drive up rent.” It may sound dramatic, but, Beacham argues, the future of American urbanism is at stake.

The homelessness, overcrowding, gentrification, and marginalization now found in Seattle would likely be reproduced in any HQ2 host city, Reuters reports. Unless the contest winner finds a way to smoothly absorb 50,000 new workers, HQ2 will “balloon housing prices and flip entire neighborhoods in the blink of an eye.” This trend of displacement and marginalization of low-income communities, especially communities of color, would have almost certainly have occurred in Providence if its bid was selected. Providence has undergone significant change in the past 50 years, as waves of economic revitalization have fueled wide-scale gentrification throughout the city. For example, since the “urban renewal” programs of the 1950s, Providence’s East Side—especially Fox Point and University Heights—has become almost entirely white (displacing former Cape Verdean and Black communities, among others), and is now the most affluent part of the city. Currently, the front-lines of gentrification in Providence are on the West End, Olneyville, and the South Side.. A number of local organizations, such as Direct Action for Rights and Equality (DARE), have worked for decades to resist the incremental marginalization of low-income residents and communities of color in Providence—most recently opposing Mayor Elorza’s EveryHome program, which seeks to fill every vacant lot in Providence. Considering this violent history, no transparent public debate of the local consequences of a potential RI Amazon headquarters occurred prior to the state’s bid submission. 

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On January 18, Amazon announced that it had not selected Rhode Island for its shortlist of 20 finalists. Commerce Corporation spokesman Matt Sheaff admitted “it was a long shot,” but said “we’re glad we gave it a shot.” He told the Indy that the economic development organization is now enaged in talks with Amazon about future collaborative projects, although he would not specify what this would look like. “All I can say is that we are very interested in future opportunities and so we remain engaged.” He mentioned that Rhode Island’s university talent pipeline and high quality of life make it attractive to businesses, in addition to the state’s “competitive tax incentives,” which Commerce Secretary Stefan Pryor declined to disclose. 

When asked about the the likely displacement of low-income communities and prioritization of tax incentives over social services (for which former RI Governor Lincoln Chafee has criticized Raimondo’s administration), Sheaff responded: “Any time a company relocates to the state, there’s not only the jobs initially created, but all the dry cleaners, restaurants, small shops that grow around the company, new jobs at various income levels. It’s a rising tide.” 

Community organizations staging anti-Amazon protests outside their city halls, however, see things differently. “People hear about the 50,000 jobs, that cities will be rebuilt, that other investors will come, and buy into the logic that everyone will benefit,” Beacham said. “But as we’ve seen time and time again, this couldn’t be further from the truth.” 

 

ISABEL DEBRE B'18 & Chris Packs B'20 are Amazon truthers.