Here’s what we don’t understand. Amazon, the global retail and supply chain monster, wants to set up a new Headquarters, called HQ2. Amazon says it will invest about $5 Billion and create somewhere around 50,000 jobs from HQ2. Municipalities all over North America are drooling over the possibility of that kind of money and prestige being dropped on their postal code.
Which means the municipal folks are doing almost everything to attract Amazon. If you told us that municipalities have been offering sexual favours, we wouldn’t be even mildly surprised. That kind of high dough gets attention, like it or not.
New Jersey has specifically pledged to forgive up to $7 Billion in state and local taxes to get Amazon to relocate to Newark. If this strikes you as mathematically challenged, you are not alone. One municipality in Georgia has offered to rename itself Amazon, while Tucson sent a six foot tall cactus as part of its bid.
Ottawa, of course, sent a polite letter and a video of fans yelling at an Ottawa Senators game to attract attention. We have a slight advantage, in that we have a grotesquely overbuilt fiber optic infrastructure here from Nortel days. As for developers? There’s four lads we know of downtown, sitting on the sidewalk with signs that say “Will code C++ for Food” “Ruby On Rails Coding for Coffee” At least we don’t have a plague of homeless Java code monkeys like Calgary. We digress.
This is where our capitalist hat comes out. The objective of capitalism is to sell things for more than you make them for. Or, in Amazon’s instance, resell them and take a piece of the action. In either case, break-even +1 is where you want to be, with the occasional jaunt into a loss leader to clear inventory, or create some buzz. Any other financial structure means you go bankrupt.
Which makes us think that a lot of municipalities don’t quite understand rudimentary economic concepts. Roads still have to be fixed, the toilet has to flush to somewhere and you need moving electrons over copper wires to keep the lights on. If you pay Amazon $2 Billion over what they’re willing to put out, so you can have the prestige of Amazon HQ2 in your back yard, who is going to come up with the extra $2 Big? That’s right, taxpayers.
The same fiscal shenanigans happened in Atlantic City New Jersey with the casinos: Tax breaks up the wazoo to attract the big casinos, of which Trump was just one of the many that flamed out when there was nobody at the actual gaming tables. Now Atlantic City has several empty monuments to grandiose fiscal stupidity disintegrating along the seashore.
No, if Amazon wants to relocate to Ottawa, they can pay a fair share of the property taxes, water bill, hydro bill and we’ll kick in some price breaks for the first couple of years, but after that, you pay your share, just like the rest of us.
They’re in business, we’re in business and we’ll both do a good deal, but our pants are staying up. Respect us for that.