Amazon is bailing out of New York City (thus, thousands of potential fat-target defendants have now escaped New York’s winner-take-all family law system!). From a Facebook friend:
Bezos is like every Manhattanite, says he’s going to a great house party but then finds out it’s in Queens and doesn’t show up….
What will the wise central planners in the NYC government do now? From their site:
Every New Yorker deserves a safe and affordable place to live, in a neighborhood that provides opportunities to get ahead. The market alone is not always able to meet that need, and, accordingly, governments at all levels must work together to help. Mayor Bill de Blasio has made affordable housing a top priority of his administration and has committed the City to “build or preserve nearly 200,000 affordable units, and help both tenants and small landlords preserve the quality and affordability of their homes.”
New York City’s shortage of affordable housing has reached a crisis point. The crisis has many causes, starting with the erosion of New Yorkers’ purchasing power in the housing marketplace. Wages for the City’s renters have stagnated over the last 20 years, increasing by less than 15 percent, after adjusting for inflation. During the same period, the average monthly rent for an apartment in New York City increased by almost 40 percent.
A massive increase in the population results in stagnant wages as humans are no longer scarce? While simultaneously generating increased demand for housing that drives up prices? Textbook Econ 101 in action? Not exactly, according to the government technocrats:
Another cause of the affordable housing crisis is the mismatch between demand for, and the supply of, housing.
Econ 101 wouldn’t call this situation a “mismatch.” It would just turn out that the market-clearing price is higher than people want to pay and folks would have to start sharing 2BR apartments with 7 roommates, moving to eastern Pennsylvania and riding buses, etc. Maybe the technocrats are illustrating the general principle of “When the market gives you an answer that you don’t like, declare market failure”.
Regardless of whether this shows the failure or success of Econ 101, the politicians have promised more apartments and the city has plenty of money, since the finance industry has been booming for years. With Amazon out, there is a big empty space. The neighborhood already contains a big government-run apartment complex (see “Amazon’s New Neighbor: The Nation’s Largest Housing Project” (nytimes)).
If the politicians in New York are true to their word and housing those who are unable or unwilling to work is truly a “top priority,” should we expect to see government-run housing built on the proposed Amazon site? If not, what else could happen with this part of the city?
[My own Facebook comment on the collapse of the Amazon deal with New York’s Office of Crony Capitalism: “It is a dark day when small retailers in NYC are denied the opportunity to pay the expenses of their largest competitor.”]
Related:
- Amazon’s actual deal with three New York City and State entities (thanks, Luke!)
- https://philip.greenspun.com/blog/2018/11/14/the-amazon-hq2-deals-show-how-to-implement-a-planned-economy/
- https://philip.greenspun.com/blog/2018/11/26/new-york-governor-admits-that-a-rational-business-would-locate-in-texas/
- https://philip.greenspun.com/blog/2018/11/13/amazon-settles-into-low-tax-new-york-city/
Don’t know where the money is gong to come from for this public housing since both the Gov and Mayor have noted that tax collections are down thanks to the mean spirited Trumpenfuhrer’s elimination of the state and local deduction — thus the good citizens of say Mississippi no longer have to share the pain of NY’s second highest taxes in the nation. Most likely there will then be fewer future TV dramas about yuppies in Manhattan (say some ding dong with a degree in ethnic studies trying to master the AI in an Amazon warehouse, which would be good for a lot of yucks), which will be a further loss to the good people of Mississippi. The point about the small businesses seems illogical since it is not as if Amazon qua competitor will disappear or that anyone was going to pay anything out of pocket to attract them- just means that NY will lose tax revenue from the nonexistent project.
“It is a dark day when small retailers in NYC are denied the opportunity to pay the expenses of their largest competitor.”
I’m going to steal that one. The people here in Dallas that are in charge of giving money away are all excited again. They think they have a shot once more.
The only people I feel a sympathetic pang of regret for are the small businesses in the surrounding area who really were anticipating the new arrivals and getting their businesses ready for some growth and turnaround. You know, a little optimism that the future would be looking up in 2019. The Chamber of Commerce people, the restaurants, etc., are the people who really took the blow. Those jobs would have meant a lot to local commerce and I think a renaissance for the area. Hopefully next time Cuomo and de Blasio get a crony capitalist agreement from a company they’ll at least keep a lid on the radical Marxists so the deal can go through.
NYC and NY state politicians have been all over the news today saying their top priority is fighting emperor Trump’s declaration to build a wall 2000 miles away from New York.
Alex – I wouldn’t get too disappointed for the small area retailers. Any windfall would only last until their leases are up, at which time they’d be increased to the new market rate, quickly eating away at any newfound profits.
Senorpablo: You raise a good point. In a world with an infinite supply of humans, nearly all of the benefits of urban economic growth will accrue to owners of the finite supply of urban property. Rents will be adjusted so that the operators of shops earn only a modest income (just as happened with taxi drivers; before Uber, raises to taxi rates would benefit the owners of the medallions, not result in higher incomes for drivers (they would pay a higher rent to the medallion owner for every shift, thus resulting in the same wage as before)).
I’ve seen some economists propose that the fairest way to raise the bulk of government revenue is via property tax. New York City has been going in the opposite direction:
https://nextcity.org/daily/entry/see-the-evolution-of-local-tax-revenues-in-new-york-city
“Property taxes made up 94 percent of New York City’s tax revenues in 1929. In 2017, property taxes were a shade under 45 percent of the City of New York’s tax take, replaced by a mix of sales and income taxes.”
So the burden has been shifted from the people who benefit most from New York’s attractiveness as an urban center to those who live and toil in tiny cubes.
Philg – I think you’re onto something. This is probably exactly what the Irvine company had in mind 40 some years ago as they developed the master plan for their southern CA land. While they’ve sold off much of the single family zoned residential land, they’ve developed and maintained ownership of most of the apartments, office and retail. They built one of the most desirable cities to live in, and now they’re reaping the profits. Though to some extent, they’re boiling the frog, because it’s actually not as nice a place as it was 20-30 years ago in many respects. The density of construction has increased over time, and the roads which seemed grossly over sized for decades now seem only adequate.