Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic. He is a university professor in the University of Toronto’s School of Cities and Rotman School of Management, and a distinguished fellow at New York University’s Schack Institute of Real Estate and visiting fellow at Florida International University.
In the wake of the incentives bidding war over Amazon’s HQ2 comes a new round of calls to action. Should the federal government limit or ban the reverse-Robin Hood practice of state and local governments offering taxpayer money as big corporate subsidies? The logic is simple: These bidding wars place cities and states in an unenviable prisoners’ dilemma, where they compete with incentives and have little reason to cooperate. Some say a higher level of government needs to intervene and stop the madness, as the European Union has done, but I believe there is no way the federal government would do that for us.
I am all for ending incentive insanity, but the federal level of government under Trump is even more dysfunctional than ever: American’s faith in the presidency and Congress is near record lows; Congress remains divided and dysfunctional. Since it’s not likely that the U.S. government will end this incentives race, mayors need to step up and agree to end these corporate subsidies on their own.
I understand full well the pressures which have made mayors reluctant to take the lead on limiting or banning business incentives. I personally know and respect a good deal of the progressive mayors who lead the HQ2 finalist cities. I reached out to them and other state leaders in January when I organized my HQ2 petition, or mutual non-aggression pact, calling on local leaders to stop the incentive madness and compete on merits. Most said they could not do it, because of the backlash they would receive from both local business leaders and voters. As Nathan Jensen pointed out, political leaders believe they are better off giving it their best shot and losing, rather than not entering the game at all.
Amazon played this process, and these mayors, like a proverbial fiddle. By setting an aggressive deadline for the its first-round submissions, it pressured cities to respond very quickly, setting in motion a competitive dynamic that was hard to arrest from the get-go. But now the “competition” is over, and it is plain to see that Amazon gamed them and their cities.
It’s time to hold mayors accountable and make them forge an agreement to end or limit extreme incentives, especially when more HQ2-like competitions and even bigger handouts may well be in the future. We urbanists like to point to the pragmatic, non-ideological outlook of mayors. We’d all be better off, we like to say, if only “mayors ruled the world.” They are addressing inequality, imposing new and higher minimum wages, and working hard to upgrade jobs. They are developing new strategies, like inclusionary zoning, to generate more affordable housing. They are holding the line on sanctuary cities. So why give them a pass when it comes to business incentives?
I’m not talking about just any mayors. The mayors who willingly participated in the HQ2 debacle are a veritable who’s-who of the nation’s liberal and progressive elite—the likes of Bill de Blasio (New York City), Eric Garcetti (Los Angeles), Rahm Emmanuel (Chicago), Muriel Bowser (Washington D.C.), Marty Walsh (Boston), Bill Peduto (Pittsburgh), and others—who are on record about fighting inequality and building more inclusive economies. Yet, at the same time, they are willing participants in a competition that ultimately handed over billions of taxpayer dollars to one of the world’s most successful companies and its richest man.
Participating in this game is not without political risk. Backlash is mounting, especially in progressive circles. Representative-elect Alexandria Ocasio-Cortez has publicly denounced the deal. State Assemblyman Ron Kim plans to introduce a bill to use the billions New York would spend on Amazon’s subsidies, to repay student debt. In today’s charged political climate, handing out huge sums of corporate welfare to large companies and billionaires can be, and should be, a career ender.
Let’s hope the experience of serving as such easy marks in the HQ2 game will be a much-needed wake-up call to mayors and public officials. The odds of players—even prisoners—cooperating increase when a game is played over and over again. Seeing how the HQ2 process ended up, and realizing that the game was rigged from the start, should spur mayors to cooperate. It’s not as if these mayors are strangers, after all: they know each other and work together in groups like the U.S. Conference of Mayors. They have the personal relationships and the institutional venues needed to build such cooperation.
There is plenty of precedent for collective action. When America’s national government failed, a group of progressive American mayors stepped up to continue the fight against climate change. Across the world, nations have worked together to manage and regulate trade; even enemies come together to regulate nuclear arms. It’s time for the leading progressive mayors of the bluest cities to put an end to the insanity of economic incentives, which are wholly unnecessary and transfer a huge amount of wealth from the taxpayers to large corporations and the super-rich.
CityLab editorial fellow Claire Tran contributed research and editorial assistance to this article.