Monday, 16 October 2017

Wooing HQ2 ? Yuk !

If you are an American, here's a a nice issue to distract you from your fixation about you know who and direct your attention to a different issue you can get all worked up about.

Witness each city falling over each other and doing the most stupid of things to land HQ2. Tucson Arizona, where one of the readers of this blog lives ,  uprooted a 21ft cactus and tried to deliver it to HQ1. The mayor of Kansas City actually bought one thousand items from the company in HQ1 and wrote a review of each one of them. Mayors of cities are looking silly in videos that they have made asking Alexa where HQ2 is going to come up and Alexa answering of course, the city they are mayors of. Shall I go on ?

If you are wondering what all this hullaballoo is  about, this is all to do with attracting Amazon's second head office. Amazon is based in Seattle (this is HQ1). They want to create a HQ2 somewhere else. And why are cities willing to stand in a line and kiss Bezos' ass (cue the nod to the awful American version of the Queen's English !). Because he is promising to invest $5 bn and create 50,000 jobs. How did they come to this magic figure of investment ? Because he says the average salary of the jobs created would be $100,000. 

The antics of Tucson and Kansas City are harmless on their own. HQ2 won't come there anyway. The real danger is the big cities offering tax breaks to Amazon. Without a doubt this will happen.

This is a terrible idea. Cities and states that do sweetheart deals to tempt businesses into moving are doing an appalling act of profligacy.  This is worse than a bribe.  Think about it - this is a perfect way of taking money from the poor (remember indirect taxes are not progressive and a fair amount of the state revenues in the US come from indirect taxes) and giving it to somebody who does not deserve or need the money. One city does this , and the next city will do the same for another company.  And before you say Bingo, everybody has been given a dole.

The right way to attract companies is to do the boring things - create infrastructure, make a talent pool available by vigorous education and training, attract outsiders by making it a great place to come and live, have a favourable business atmosphere in the form of ease of doing business and reasonable tax rates.  That is when companies will come and stay on. That's why New York in Finance and the West Coast Cities in technology are what they are.  Not because they gave tax breaks.

If you are an American, you should vigorously protest against your city doing a sweetheart deal with Amazon.  

For Indians, who can look at all this with an amused smile; we have of course been long guilty of doing such deals with companies. But I want you to get agitated in a different angle. The capital of the IT industry in the country did all the right things 30 years back - great place to live in, pleasant weather, abundance of talent, a cosmopolitan place for people to come, etc etc. It did not give a tax break. And yet every IT company worth it's salt came.

And then this city let it all go to seed and become the appalling wreck of a city that it is today.  This is the best way to drive every company out. No member of the Homo Sapiens species will ever come to this place again. Instead the entire population has mutated into Pithecanthropus Erectus, which being extinct, is delighted to be able to come back into existence even if condemned to living in a hellhole ! How does this blogger know of such a mutation ? Because he has mutated himself !


Sriram Khé said...

Lost cause, my friend. Lost cause.

I have been railing against taxpayer payments to private enterprise, whatever that enterprise is. Instead, cities fall over each other to freely hand out taxpayer money to sports teams, corporations, real estate developers like the orangutan, ... it is an endless list.

Progressives like me have this old-fashioned idea that my taxes ought to be used for the public good. So, these cities then go about hiring mercenary analysts who will come up with whatever bottom-line that the recipients and the cities would like them to calculate. And they then demonstrate what an awesome deal these subsidies are for taxpayers. Republicans, in particular, are happy to give away taxpayer money to corporations and rich people, but not a penny shall go to the poor!

I have pretty much stopped commenting/worrying about India. If American issues are lost causes, the Indian ones are beyond being lost!

When is that plane to Mars? ;)

Anne in Salem said...

I wholeheartedly agree. I understand the allure of bringing Amazon and all the economic benefits that will follow, but there are downsides as well. What happens to housing when 50,000 people bringing in $100K are willing to plunk down half a million on a house? And traffic? Heaven forbid.

At least we Oregonians have little to worry about. "The right way to attract companies is to do the boring things - create infrastructure, make a talent pool available by vigorous education and training, attract outsiders by making it a great place to come and live, have a favourable business atmosphere in the form of ease of doing business and reasonable tax rates." We offer only one of these. Perhaps we should woo Bezos. He may be able to pressure the legislature to make some smart business decisions.

Ramesh said...

@Sriram - Oh well; we can but protest. And one of these days I am going to dock you on the head for saying all the time that India is a lost cause :):) Remember the title of your post a couple of days back ? Pot calling ...... :)

@Anne - I am not sure of the benefits at all in relation to the tax gifts given. Just a straight cost value equation will be a of very doubtful veracity. Anyway , love the fact that both the commenters - one from the left and one from the right agree !!

Sriram Khé said...

It will be a case of pot calling the kettle black only if I had said India is a lost cause while the US is a shining city on the hill. I did not--I wrote that the US is a lost cause, especially now with the orangutan and his platoon of 63 million monkeys ruining the country. The hill is shining now only because of the tiki torches that white supremacists are lightning up!!! :(

Here in Oregon, we can pretend that we don't engage in such taxpayer subsidies only because we are not a sought after location because of our location and demographics. But, whenever we can, we too play these horrible games of giving away taxpayer dollars to businesses. My favorite story is about Hynix in Eugene. The local government prostrated before the company, gave it everything it wanted. The company came to town, extracted what it could, and shuttered after a few years. For years, Portland has tried to attract a major league baseball team with taxpayer dollars. Our pot is as black as the 49 other kettles in the country!

Anonymous said...

Haha! I'm happy to report that the saguaro is back where it belongs - the Sonoran Desert Museum. Tucson is just not equipped to handle HQ2 but hey it's exciting to be on the shortlist, especially when there is no fear that HQ2 will actually move here. Most people don't even know that there is a second city in Arizona!

Ramesh said...

@Sriram - I was just winding you up ..... :)

@Anon - LOL. Actually I didn't know of the existence of your city till you moved in there !!

Deepa said...

At least they have something to get excited about. The great State of Connecticut couldn't even dare to dream on this one.

Ramesh said...

@Deepa - You must be thankful that your great state is not doing silly stuff. But then, I thought you only wanted the rich Wall Street types - not a Johnny come lately such as Bezos !!!

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