However, whether or not Amazon already knows where it would like its second headquarters to be, its competition will create a net loss nonetheless. The competition will create more costs for the communities that make bids for its headquarters than Amazon can ever hope to recoup through the tax incentives it ultimately receives. It will lure many places into spinning their wheels to propose a deal they never had any real chance of closing. These places will waste valuable staff time, including that of elected officials, organizing themselves and their pitch for naught. This is an opportunity cost—time and effort that could have gone into solving other problems. What is worse, this game will create hope that is destined to be dashed. Smaller big cities do have a lot to offer and they tend to be rather proud of that. But many of them have seen company after company pull out of their place over the last thirty years, creating a nagging sense of loss. Because of the number of these places, they are destined to lose in these competitions more often than they win. Though they may not have wagered anything all that tangible, those losses can be devastating all the same. They lead to a lot of consternation, antipathy, and finger pointing after the fact.Read the whole thing.
This game reveals a lot about the power of large companies and their distorting influence on places today, especially in local economic development. It is not Amazon’s game. Like many companies before it, Amazon is playing a game that states and local governments have designed themselves and that only they can lose. State and local governments happily accept this. They have proven over and over that they are all too willing to give up their tax base for growth that would have occurred somewhere anyway. And while that growth, if it arrives, may benefit some of that state or metro area’s residents, the competition itself isn’t going to fix any one of the many, many economic and social challenges American communities face today.