Amazon announced it will move half its headquarters to Queens. This will eventually bring 25,000 good-paying jobs to the Big Apple.
The Mayor and the Governor proclaimed this as a huge victory. But many a critic reckons the state and city got hosed. This because their taxpayers will pay Amazon at least $1.5 billion to move to Queens.
Union guys love the move. The deal requires union workers for all the construction projects.
Meanwhile, some residents may hate it. The city’s subways, bridges, roads and tunnels are already in sad shape and overwhelmed. The Amazon development will only make things worse, they argue.
Other critics reckon the city paid way too much for the jobs. They argue that Amazon wanted to come to New York anyway. The city is home to more high-tech workers than any other city. Washington ranks second. It is near D.C. that Amazon will locate the other half of its headquarters.
In other words, Amazon will locate to where the most tech workers already live. What better locations for recruiting employees? The question is whether these locales had to bribe Amazon as much as they did.
Politicians love projects like this. Because they can boast they brought thousands of jobs to a region. In this case you can remove the “r” from the verb. They bought the jobs for one region. With money they took from other regions.
This is true in both a direct and indirect sense. In the direct sense, you pay taxes to the state. Your governor and legislators decide how to use the money. Sometimes they send tax money your way. Sometimes they send it elsewhere.
In the indirect sense they have taken money from upstate for decades. Their tax and spend policies certainly helped sap upstate’s economy. (As did federal policies.)
The declines did not come by accident. One huge factor was that the state became one of the worst in the nation in which to operate a business. In surveys too numerous to count, New York has ranked at or near the bottom in business-friendliness.
The plain fact is that operating a business in this state is more difficult and less rewarding than in most of the other states. As their factories aged, too many companies decided this was not the best state to invest in new plant. Many moved jobs abroad. Many moved jobs to other states. Many simply tossed in the towel.
The states that were more attractive have lower taxes than New York. Lower income tax. Lower property tax. Lower and fewer taxes on business. They have fewer smothering regulations. They foist less red tape on businesses.
In the economies of those states, government has a smaller footprint. Government bleeds their economies less than government does ours.
Our state politicians work overtime to come up with special treatment for companies like Amazon. They offer tax breaks and regulation relief to try to lure ventures. By doing so, they admit that taxes and regulations make a difference.
Well, if they make such a difference, why not reduce them in every corner of the state? Why limit them to only a few areas? The pols won’t think of doing such because the costs of their huge government won’t allow it. They would have to shrink government to pay for the tax breaks for all.
That ain’t gonna happen, of course. Which does not erase a few simple realities of economics: When you tax and regulate more you smother economic development. You drive business and people away. When you tax and regulate less, you encourage the opposite.
From Tom…as in Morgan.
PS: Christmas gift idea. You can buy my new novel THE LAST COLUMNIST on Amazon.
Find Tom on Facebook. You can write to Tom at tomasinmorgan@yahoo.com.