Amazon's HQ2 Secrecy Is Still a Scandal

We may never know what some cities offered.

If you’re a subscriber and have been enjoying this newsletter recently, please take a moment to forward it to someone else who might like it. Just use the green button below. Thanks!

The coronavirus pandemic has caused booming demand for the services of Amazon, the online retailer many people are turning to in order to avoid going to physical stores.

But it’s also brought more attention to Amazon’s darker side: The way it takes advantage of small businesses, abuses workers, lies to Congress, and prevents employees from organizing in order to push for better conditions and wages.

I’d like to add one more under-the-radar scandal to the list: The way in which Amazon and state and local economic development agencies conspire to keep taxpayers in the dark regarding what Amazon attempts to extract from public coffers. A recent court ruling in Indiana highlights the problem.

Back in 2018, hundreds of cities attempted to win Amazon’s second headquarters, known as HQ2, offering the company billions of dollars and ridiculous sweeteners, such as publicly-funded helipads. The winning bids in New York and Virginia weren’t disclosed until Amazon chose them. (Activists in New York were famously able to organize against the deal, after the fact.)

Many cities resisted releasing their HQ2 bids before Amazon made its pick, arguing that doing so would put them at a competitive disadvantage. Now though, nearly a year and a half later, some cities are still refusing to say what they offered. Perhaps these bids were in the billions of dollars, with absurd add-ons. We have no idea.

The upshot is CEO Jeff Bezos knows more about what some places promised his company than do the people in whose name those dollars and goods were being pledged.

The latest turn in this should-be-scandal is a judge ruling that Indiana’s state economic development agency doesn’t have to disclose what it offered Amazon to build HQ2 in Indianapolis. The publication Tax Analysts sued for the details under the state’s public records law, but since Indiana never got to the “final offer” stage, the judge said, that law doesn’t apply.

That may well be the right ruling on the letter of the state’s law. But it’s nevertheless outrageous that an agency ostensibly working on behalf of taxpayers refuses to say what taxpayer resources it’s offering to a giant, monopolistic corporation.

Indianapolis isn’t the only city in which this occurred. Chicago, Nashville, Louisville — all of them fought disclosing the details of their HQ2 bids, dragging journalists and good government advocates into court in order to glean some details. And Amazon, of course, likes it that way: A blind auction increases the likelihood of higher bids.

Knowing these details is important, though, because Amazon’s monopolistic grip on commerce and its labor-abusing warehouse system was built with a lot of help from taxpayers. It’s received nearly $3 billion in state and local subsidies, while paying nothing in federal corporate income tax year after year after year. That’s helped Amazon get a leg up over local, smaller businesses, entrenching its monopoly ever deeper. We all paid into its accumulation of market power.

But, of course, this isn’t just an Amazon thing. Transparency around all sorts of corporate giveaways leaves a lot to be desired. Even states and cities that do disclose what they offer and dole out don’t make that data easy to find. All levels of local government are supposed to disclose how much they lose to corporate tax reductions annually just in the aggregate, but many of them don’t even do that.

This isn’t the formula for Coca-Cola we’re talking about here. Having every city and state publicly disclosing this information levels the playing field and lets taxpayers protect their own interests.

There are so many corporate abuses happening all over, all the time — particularly now when going to work can literally mean catching a killer virus — that it’s easy to become numb to companies pushing the public around and asking for taxpayer money without any taxpayer input. But it’s scandalous and needs to stop.

---

One more thing: In my explainer on the coronavirus small business rescue program, I noted that a big problem is big banks giving their wealthier, more connected clients preference, and refusing to deal with the truly small businesses that need help the most. More evidence has come out backing that thesis: Data from the Institute for Local Self-Reliance, the Booth School of Business at the University of Chicago, and the New York Federal Reserve all show that areas with higher concentrations of big banks received fewer loans from the program.

---

Thanks for reading this edition of Boondoggle. If you don’t subscribe already, just click the green button below.

If you liked this post, take a moment and click the little heart under the headline or below. It helps.

If you’re already a subscriber, please forward this around to friends, family, neighbors, or whoever you think might like it, and tell them to sign up too.

Finally, if you’d like to pick up a copy of my book, The Billionaire Boondoggle, go here. Thanks again!

— Pat Garofalo