Amazon sweepstakes prompts references to, well, you know

I liked the old state flag
I liked the old state flag

Amazon’s official announcement this week that it would build so-called HQ2’s in the New York City and Washington, D.C. metropolitan areas sparked renewed debate over government giveaways to attract companies.

Not surprisingly, Nevada came up.

One of the more gushing pieces came from CNN, which ran a story claiming that even cities that were named as finalists but didn’t win the Amazon sweepstakes “laid the groundwork to become tech hubs for years to come.”

In addition to quoting economic development officials from Miami, Pittsburgh and other losing cities, each of whom waxed fondly about how much the sweepstakes allowed them to publicize themselves (what else are spurned economic officials going to say?), the CNN story also pointed to the blessing bestowed on Phoenix when it was passed over for Nevada by Tesla.

“The groundwork and due diligence we did for Tesla led to successes elsewhere,” the president of the Greater Phoenix Economic Council told CNN.

Other reports took a harsher approach.

“Every year, American cities and states spend up to $90 billion in tax breaks and cash grants to urge companies to move among states. That’s more than the federal government spends on housing, education, or infrastructure,” wrote the Atlantic’s Derek Thompson.

Thompson’s critique is reminiscent of arguments — unheeded by Nevada and every other state — during the Tesla sweepstakes: By providing incentives and subsidies to corporations that don’t need them, state and local governments are depriving their own citizenry of public benefits, only to deprive some other location of economic activity, in what for the national economy is a zero sum game.

“It is just one more example of a government giveaway for a factory that would have been built anyway,” wrote prominent urban studies researcher Richard Florida shortly after Nevada approved the $1.25 billion dollar public package for Tesla in 2014. “There is virtually no association between economic development incentives and any measure of economic performance. And it’s not just me. I spoke with several experts in economic development incentives and advanced manufacturing and the consensus was the same: this deal was overblown and unnecessary.”

As the Seattle Times — a paper in a state that gave Boeing nearly $9 billion five years ago — put it Tuesday, the Amazon sweepstakes “added fuel to the ongoing debate over whether such incentives are good policy — or even whether they work.”

And how necessary were the incentives as governments — including state and local governments in Nevada, originally — were lining up to promise the moon and the stars to woo Amazon?

The answer, somewhat refreshingly, came from Amazon itself.

Amazon spokesperson Jay Carney told the Times that “incentives didn’t drive this process,” and access to skilled labor, not public incentives, was “the driving factor for us.”

Meantime back in Nevada, four years after Gov. Brian Sandoval called the Legislature into session for the sole purpose of giving Tesla $1.25 billion worth of incentives and subsidies — a giveaway package that the Legislature approved unanimously — there remains no hard proof that the incentives were, to borrow Carney’s phrase, “a driving factor” for Tesla.

Hugh Jackson
Editor | Hugh Jackson was editor of the Las Vegas Business Press, senior editor at the Las Vegas CityLife weekly newspaper, daily political commentator on the Las Vegas NBC affiliate, and author of the Las Vegas Gleaner political blog. Prior to moving to Las Vegas, he was a reporter and editor at the Casper (Wyoming) Star-Tribune.


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