More than 750 economists, policymakers, and urbanists have signed a Change.org petition posted two days ago that urges cities to stop offering Amazon massive incentives to choose one of them as its second North American headquarters.
The incentives, offered in many cases by local and state economic development councils, will be paid for with taxpayer dollars. That’s a problem for Richard Florida.
Florida is the author of a petition entitled “Support a Non-Aggression Pact for Amazon’s HQ2”. He’s an urban theorist and professor at the University of Toronto, and is best known for his concept of the “creative class”.
His theory asserts that metropolitan areas with high concentrations of tech workers, artists, musicians, gay and lesbians and what he describes as “high bohemians” exhibit a high level of economic development.
Florida wrote about the creative class in best-selling books including “The Rise of the Creative Class” (2002), “Cities and the Creative Class”, and “The Flight of the Creative Class.”
Some critics have said Florida is elitist and his influence on urban planners throughout the U.S. is a cause for concern. But other critics, including Harvard economist Edward Glaeser, signed the petition.
Now Florida has economists and others ranging from liberal to conservative signing the petition by the hundreds. All, he said, share his concern “about the level of incentives and the looming competition between cities over incentives for Amazon’s new headquarters.”
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Tax giveaways and business location incentives divert funds that could be better used underwriting public services such as schools, housing programs, job training, and transportation, the petition says:
While we are supportive of Amazon’s quest to build a new headquarters, we fear that the contest among jurisdictions—cities, metro regions, states, and provinces—for this facility threatens to spiral out of control. Already, at least four jurisdictions have proposed multi-billion-dollar incentive packages. This use of Amazon’s market power to extract incentives from local and state governments is rent-seeking and anticompetitive. It is in the public interest to resist such behavior and not play into or enable it.”
Florida claims to be a huge fan of Amazon, according to Philadelphia Magazine. Philadelphia is one of the 20 cities that made the latest cut in the race to Amazon HQ2. So is Toronto, Atlanta and Miami.
“I’m one of their Prime customers,” Florida told PhillyMag in a phone interview. He even served on the panel that put together the bid that helped get Toronto in the 20 finalists for Amazon HQ2.
Now he’s having second thoughts about the bids:
“When I saw (former New Jersey) Gov. Chris Christie offer $7 billion, when I saw some of the country’s most progressive mayors — Bill De Blasio in New York, Eric Garcetti in Los Angeles, Ras Baraka in Newark — line up to offer big incentives, I said, ‘Something is wrong here,’” Florida said. According to a post on CityLab, Pennsylvania will offer Amazon $1 billion in incentives to locate in the state, and legislation is pending in Philadelphia that would add $2 billion to the total.
Amazon has now started asking for secrecy in the highly-publicized pitching process that involves giving away taxpayer dollars. The Seattle-based online retailer has insisted that cities shift to a confidential pitch mode as the second round progresses, CNBC reported.
The lack of transparency bothers Florida. “I believe this is public taxpayer money that’s being spent, and that information should be publicly available,” he told PhillyMag.
The bidding war also opens a Pandora’s box for the cities making the bids, said Kevin Gillen, senior research fellow at the Lindy Center:
“Most economists, myself included, think these place-based incentives are fine to use on the margins, but they shouldn’t be the base of an economic development strategy,” he said. Instead, places should compete on the fundamentals: quality of the workforce, available facilities, transportation and infrastructure.
“Once you start down that path, you not only have to offer incentives to every company that wants to move to your area, you have to offer them to your existing businesses.”