Some of the top minds in North America are expressing deep concern about Amazon’s solicitation of incentives from cities vying for its second headquarters.
Amazon listed government incentives as one of its preferences in a request for proposals for HQ2, a $5 billion second corporate headquarters for the Seattle-based tech giant that will employ up to 50,000.
A petition signed by 93 academics, urbanists, and policy experts — from Stanford to the Brookings Institution — calls on elected officials to band together and reject the request.
The petition was championed by Richard Florida, a professor and Director of Cities at the University of Toronto and CityLab’s editor at large. The petition says its signatories are ideologically diverse. Some are more conservative and amenable to incentives. Others are more liberal.
“But, we share a concern about the level of incentives and the looming competition between cities over incentives for Amazon’s new headquarters,” the petition says.
Amazon’s appetite for incentives has been controversial since the company released its RFP in September with critics labeling it “disgusting” and a “race to the bottom.” But some cities jumped at the opportunity to gain an edge in what has become perhaps the biggest economic development contest in modern U.S. history.
The signatories of today’s petition believe that is a mistake:
Tax giveaways and business location incentives offered by local governments are often wasteful and counterproductive, according to a broad body of research. Such incentives do not alter business location decisions as much as is often claimed, and are less important than more fundamental location factors. Worse, they divert funds that could be put to better use underwriting public services such as schools, housing programs, job training, and transportation, which are more effective ways to spur economic development.
Earlier this month, Amazon narrowed the field of 238 applicants down to 20 cities. Amazon will spend the next few months digging into each of the 20 proposals, requesting additional information from each city. The company will make its final decision sometime this year.
“This use of Amazon’s market power to extract incentives from local and state governments is rent-seeking and anticompetitive,” the petition says. “It is in the public interest to resist such behavior and not play into or enable it. We urge you the mayors, governors, and other elected officials, as well as economic developers and community leaders, of Amazon HQ2 finalist cities, to put an end to such an imprudent policy.”
Read the full letter accompanying the petition here.
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