Amazon’s HQ2 “sweepstakes” is quite similar to what pro sports teams have been doing for years by pressuring governments to give them incentives. Noah Smith acknowledges some of the drawbacks of catering to large companies, including the fact that the incentives likely have little value to Amazon (or another company) in the big picture yet cost cities far greater. Many urban policy experts feel it could be harmful. On the other hand, it’s easier to see how a company providing jobs can benefit a city/region. Beyond tax incentives, companies like Amazon are looking for great people and those people demand good schools, nice parks. etc. Given an incentive to improve chances of luring a company like Amazon, many cities (including the 20 finalists) may increase resources in those areas.
But there’s a worry that the scramble to lure HQ2 will give rise to wasteful urban policies and set a bad precedent. Already there is speculation that Apple Inc. will build an HQ2 of its own, sparking a similar competition. What if this sort of industrial sweepstakes, used in the past to win everything from auto plants to sports teams, becomes the norm?Many urban policy experts are worried that Amazon-style competitions will hurt cities, by enticing them to spend too much on tax incentives and other giveaways. A recent roundup of opinions by the Penn Institute for Urban Research showed that this concern is widespread.
from Noah Smith’s article Amazon Sweepstakes Can Be Great for the Losers at Bloomberg.com