I’m wondering if the Amazon HQ2 deals show how to implement a planned economy without having to acknowledge that one’s country has transitioned away from the market.
Planned Economy v1.0: It is illegal for anyone to operate a business without approval from a government ministry. Government experts decide which companies can operate, from which locations, and engaging in which businesses.
Planned Economy v2.0: Set up tax rates that are, by global standards, punishingly high. It is therefore impractical to do business if a company must pay the headline rates. Government experts decide that certain companies, in certain locations, and engaging in certain activities, can operate with tax rates that are closer to global norms.
We’re not quite to this point, but with a few upward tweaks of the tax rates I think that we could be.
Related:
- “A $2 Billion Question: Did New York and Virginia Overpay for Amazon?” (nytimes): “An additional $7.5 billion in subsidies wasn’t enough to get Amazon to move across the river,” said Michael Farren, an economist at the Mercatus Center, a libertarian think tank, referring to the difference between Maryland’s offer of $8.5 billion and Virginia’s of less than $1 billion. “That just says that subsidies were never what mattered in the first place.” (the Maryland location would have been awesome for family court plaintiffs suing Amazon employees! See Real World Divorce for what is obtainable.)
- “Helipads and everything else Amazon is getting out of its deals with New York and Virginia” (CNN). This has been a good month for Airbus (Eurocopter)!
I think the first article you linked to is right on the money. Amazon mints cash (or could if it wanted to), their gating factor is access to talent. They would have come to NY and DC anyway, but managed to get a sweet giveaway just by bluffing.
I feel bad for B&H Photo, who are effectively subsidizing their main competitor in this travesty.
@Fazal:
But of course talent is their limiting factor. This is probably why an average employee retention period at Amazon is about 1 year, and everything is optimized for a churn.
OTOH, B&H Photo is a NYC institution. The quality of their product selection is well known, the store is masterfully managed, the sales staff is exceptionally knowledgeable, polite, and (can you believe it?) not pushy. I have been a happy customer for well over 20 years.
Is there anybody who has ever been near a CEO who doesn’t believe Bezos knew exactly where the HC2 would be BEFORE announcing this circus? This includes the “economic development” types who roam from circus to circus well paid to present the show at every invitation.