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Konopacki 3/13/19

New Yorkers have been gnashing their teeth these past few weeks over the decision by Amazon to pull its planned "second headquarters" out of Queens.

The city had spent millions and promised billions to lure Amazon to make the nation's largest city its second home. The largest American retailer had held a contest during the past year, inviting cities to compete for the new headquarters, which promised thousands of jobs and, eventually, a bigger tax base for the winner.

Indeed, Amazon couldn't seem to pick a winner from the many cities that applied, so they decided to split HQ2 between New York and the Washington, D.C., burbs. They both had offered the moon to the company that early in 2018 was valued at a trillion dollars.

When the terms of the deal, favored by both Democratic Gov. Andrew Cuomo and NYC Mayor Bill de Blasio, became fully public several weeks ago, many New Yorkers started to make a fuss. The richest man in the world, Amazon CEO Jeff Bezos, who is not used to not getting his way, decided he'd show these ingrates just how powerful the rich can be. He yanked HQ2 from New York and announced he'd take it to where it was wanted.

The politicians and citizen watchdog leaders who had objected to Amazon's plans have been denounced by Cuomo, de Blasio and many others for costing the city thousands of jobs, a chance to become an East Coast tech powerhouse and, of course, many millions in a bigger tax base — at least, someday.

(The whole episode reminded many folks in Wisconsin of ex-governor Scott Walker's $4 billion deal with Foxconn's supposed 13,000-worker factory in the Racine area. Since the Republican-controlled Legislature and Republican Gov. Walker quickly approved the deal, there really wasn't time for any organized effort to raise questions.)

The New York Times was among those that scolded the critics of the Amazon deal, but one of its columnists, David Leonhardt, begged to differ.

"Thank you, New York," he wrote in a column siding with the Amazon naysayers. "The city did the rest of the country a favor: Corporate-relocation handouts are terrible economic policy."

He's absolutely right — they are not only terrible policy, but are unsustainable for either a city or a state.

Leonhardt did admit that in the short run the loss of Amazon to New York raises important questions.

"But they're not the only issues that matter here," he wrote. "They're not even the biggest issues. The handout that cities and states have been strong-armed into giving to corporations over the past few decades ... do nothing to raise the nation's economic growth rate. They mostly distribute income upward, from taxpayers to big shareholders.

"I agree with the critics (including my colleagues on the Times Editorial Board) who say that New York would probably have benefited from Amazon's presence in Queens. But I keep thinking about the larger principle here. If every city agrees to give billion-dollar handouts to companies, in the name of that city's short-term interests, those handouts will never end," he added.

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Wisconsin Gov. Tony Evers hinted at that fact recently when he commented that deals like Foxconn and Kimberly-Clark aren't sustainable in the long run.

Taxpayers can't afford to pump millions and billions into profitable private companies without harming their own economies.

As many contended during the Foxconn debate, Wisconsin would have been much wiser to take those huge subsidies for one foreign-owned megaconglomerate, especially one with the shady reputation that Foxconn has, and spread it around the state to nurture small business that together not only can create more jobs than Foxconn can, but odds are will be around a lot longer than Foxconn will.

As Leonhardt said, providing megadeals to corporate giants doesn't add to the national economy, but simply moves money from one city or one state to another.

We all know how that ends. The big corporation gets bigger, the cities and states are forced to yield to their economic power by giving even more tax breaks and subsidies — and the one holding the bag is that same guy we've known for so long: mom and pop taxpayer.

Dave Zweifel is editor emeritus of The Capital Times. dzweifel@madison.com608-252-6410 and on Twitter @DaveZweifel.  

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