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Why Losing Amazon’s HQ2 Might Not Be So Bad For New York After All
When Amazon announced it would pull out of its HQ2 project in Long Island City due to local opposition, many were shocked. How could local residents oppose a deal that would generate 25,000 jobs and $27 billion in tax revenues for a relatively meager $3 billion in tax breaks? It just seemed illogical and bizarre.
Yet look closer and the concerns do not appear to be completely unfounded. You only have to look at the recent situation with Foxconn in Wisconsin, where massive tax breaks led not to prosperity, but to a string of broken promises, to see the perils. While the Amazon deal was vastly different, the pitfalls of these kind of transactions are very real.
At the same time, New York doesn’t seem to have trouble attracting businesses without sweetheart deals, despite high taxes. In much the same way, technology and entertainment companies continue to flock to California. So the real question is not the merits or demerits of any particular deal, but how does a region become an industrial center in the first place?
Regional Advantage
In the 1960s and 70s, Route 128 outside of Boston was the center of technology, but by the 1990s Silicon Valley had taken over and never looked back. As AnnaLee Saxenian explained in Regional Advantage, the key…
