Amazon gorges NYC, VA for $5.5 billion in bribes

There are some competitions you can win by losing. For example, take every city that unsuccessfully sought to become the home of Amazon’s new second headquarters, dubbed HQ2.

Last year, Amazon announced plans for HQ2 — an office co-equal with its main headquarters in Seattle. The company said the location would eventually employ 50,000 people and require $5 billion in capital investment. Amazon, though, didn’t just want help finding suitable locales. It openly sought bribes from cities and states eager to land the coveted project.

After selecting 20 finalists, Amazon announced last week that two locations would split the winning lottery ticket. New York City and a Virginia town located near Washington, D.C., were the lucky winners. After combining state and local incentives, New York gave Amazon a package worth almost $3 billion. Virginia doled out $2.5 billion, according to The Wall Street Journal.

Officials in the winning cities were ecstatic. Their taxpayers, probably less so. The Amazon sweepstakes was perhaps the world’s most high-profile case of crony capitalism.

Including Las Vegas, 238 regions submitted proposals to Amazon. Combined, they offered tens of billions of dollars to one of the most valuable companies in the world, which is led by Jeff Bezos, the richest man in the world. The eagerness to dole out somebody else’s money as part of a massive corporate welfare package was a bipartisan instinct, too. The Republican governor of Georgia, Nathan Deal, offered $1 billion in incentives. Chicago, led by Democrat Rahm Emanuel, offered $2.25 billion. The largest offer came from Montgomery County, Md., which dangled handouts worth a whopping $8.5 billion.

It’s hard to blame Mr. Bezos and Amazon for playing the system. If governments are going to hand out free money, who wouldn’t want a piece of the action? Meanwhile, politicians want credit for creating all those new jobs, which they can use to advance their political ambitions. Even if the Amazon deal or other economic development handouts don’t work out, they’ll take years to unravel. By that time, the politicians who doled out the corporate welfare will probably be in a higher office or retired.

In this instance, U.S. cities, including Las Vegas, should take a lesson from Canada. Toronto, one of the 20 finalists Amazon selected, welcomed the company, but offered no giveaways. “Others may provide large subsidies and tax breaks, but like the province of Ontario, we in the Toronto region don’t want to play that game,” Tony Lennox, CEO of the economic development organization Toronto Global, told CBC last year.

The Canadians have it right. The key to economic development is to create a tax and regulatory climate that is attractive to a wide range of entrepreneurs and visionaries. Using taxpayer resources to bribe favored companies is a recipe for letting special interests run amok and a losing move.

The only way to win that game is not to play.

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