Amazon expanding elsewhere: Sawant ready to storm the barricades

It certainly was a Thursday morning jolt – no espresso needed. Amazon announced it is seeking to build a second headquarters that will be “a full equal” to its Seattle HQ and “a second home.” The Seattle Times reports:

“The company, still growing quickly in the city where it has been based for 22 years, said Thursday it would seek to place another headquarters somewhere in North America starting in 2019. Amazon says it expects to spend upward of $5 billion on a new corporate campus, and house as many as 50,000 employees there.”

It has been fascinating to see the different reactions to the announcement. Depending on the source’s ideology, and their inclination or antipathy to business, the gut-check reactions varied widely.

And in this corner…
For outright hatred of private enterprise, it’s tough to top Seattle City Councilmember Kshama Sawant, a proud Socialist. Her statement yesterday compared Amazon to Boeing (negatively) and decried the reality that cities and states compete for good-paying employers (“a race to the bottom for the living standards of workers”). Sawant then basically called Amazon rapacious and her colleagues feckless collaborators with a hostile enemy:

“Amazon has similarly been using its monopoly power to gobble up swathes of prime Seattle real estate, and extract plum deals from the city’s Democratic establishment. This political establishment has, in the meanwhile, overseen an explosion in homelessness and an acute crisis in affordable housing.”

You’d think Sawant was talking about an invading army, not a growing company that was founded here and provides tens of thousands of good jobs. The company isn’t “gobbling up” real estate, it’s purchasing and leasing the space it needs for all those jobs – you know, the usual process.

If that creates side effects, those are side effects that many cities in this country would be happy to take on. This headline says it all: “Cities are falling over themselves to be the site of Amazon’s next corporate headquarters”.

Sawant’s solution? Public ownership, of course. “Instead, we need to unionize, and to take these behemoths into democratic public ownership, so that they are run not for profit for a few, but in the interests of the majority of working people and of society.” This should sound familiar – this is the same person who called for taking over Boeing’s factories and making buses there instead, one of the all-time forehead slappers.

Maybe it’s time to drop the “Socialist” description of Sawant. What she calls for is just plain old fashioned communism.

John Burbank of the Economic Opportunity Institute at least gave Sawant a run for her money (wrong phrase – Socialists only play with other people’s money). His group is helping push the city income tax that is surely at least a factor in Amazon’s desire to expand elsewhere, and that topic was heavily on his mind in this doth-protest-too-much statement:

“Amazon has been a sociopathic roommate, sucking up our resources and refusing to participate in daily upkeep. Yesterday, the roommate announced that instead of making us do all of its chores, it will outsource some of its laundry to another city. Good.”

There’s one word for that metaphor: Overwrought.

A carrot, but no stick
The reaction to the news by Seattle City Councilmember Tim Burgess summed up the feelings of many. He told the Seattle Times that he learned the news from an alert on his phone and “I thought, ‘Uh oh. What’s that mean?’”

Part of the confusion may stem from the fact that Amazon didn’t make the kind of announcement we expect in this type of situation. The press release didn’t come off as a threat, or the opening to a negotiation. The company isn’t trying to extract concessions from Seattle. Its desire to expand elsewhere is straight-forward.

Left mostly unsaid by the company is its motivations for expanding elsewhere. Is this a move Amazon was going to make regardless? Is the very left-wing, anti-business makeup of the city council a factor? Is the city income tax?

Legislators react
Rep. JT Wilcox (R-Yelm) wrote on Facebook, “The basic assumptions around the Washington economy just changed. A rapid expansion in a second HQ, as the announcement seems to indicate, means that one of the greatest engines for economic growth known to history will be growing somewhere else.”

Sen. Joe Fain (R-Auburn) said, “It doesn’t take much reading between the lines to see what Amazon is trying to tell our region. Amazon, like every other business, needs a stable regulatory environment to feel comfortable making long-term investments.”

On the Democratic side, Sen. Reuven Carlyle (D-Seattle) saw the announcement as merely reflecting the difficulties of Amazon continuing to expand in Seattle’s footprint. “I don’t see it as anti-Seattle, I see it as long-term global growth for the company. We are a midsize American city. We have global companies, global scale and global vision, but our ability to absorb and effectively double the presence of one company is limited.”

His Democratic colleague, Sen. Guy Palumbo (D-Maltby) wasn’t so prosaic. Like Carlyle, Palumbo has a business background and is not reflexively anti-business. “Sad day for Washington and Seattle. How long after the new HQ is open until those 40k of existing jobs in the state start to move? What a dark day for our economy,” he wrote on Facebook.

I understand Palumbo has been receiving pushback from liberal allies for pointing out that Seattle’s income tax is likely part of Amazon’s decision. They don’t want that story highlighted, but Palumbo is correct that the lack of an income tax is a reason Seattle has Amazon’s HQ in the first place. He told Jason Rantz on KIRO 97.3:

“It’s well documented that when Jeff (Bezos) was driving across country and writing the Amazon business plan, he was looking at Texas, Washington, and I think there was one other state,” Palumbo said. “And one of the major things he was looking at was no state income tax. Had we had an income tax back in 1995, we wouldn’t have Amazon.”

Writing about political movements’ “shibboleths and sacred cows” last week, I noted that “In this age of social media-driven ideological silos and geographic sorting, it’s increasingly up to like-minded compatriots to challenge untruths on their own side.” Palumbo is doing that, telling his own side that pretending Seattle’s income tax isn’t related to Amazon’s announcement isn’t helpful.

As for the last word, I’ll give it to the Seattle Times editorial board:

“Seattle City Hall used tension over Amazon’s growth and wealth creation as leverage, to fulfill developer wish lists and advance labor’s political agenda, including an income tax that’s illegal under state law…

It won’t be lost on historians that two months after City Hall cheered itself for ‘taxing the rich,’ Amazon chose to seek a ‘stable and business-friendly environment’ for its next act: A $5 billion investment and 50,000 new jobs.”

Truth.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.
  • Seattle Sam

    What have we learned about economics today, class? When you make it more expensive for businesses to operate. Impose taxes on their executives. When you enact costly regulations and threaten more to come. What do businesses do? Anyone? Anyone? Buehler? Anyone?

    • DuchessofDownton

      They leave Washington state. Like we did. Because there are no jobs. Not in Whatcom county.

  • fight4liberty

    Has it dawned on voters yet that they may have elected someone that has never read either the US or State Constitution? Or maybe she meant to immigrate to Venezuela and landed in Seattle instead? One thing for certain, as long as she is city council for Seattle, more businesses will reconsider any moves to Seattle. But the buck doesn’t stop with Sawant, you can almost write her off as the nut case she is. Where is the voice of the rest of the city council? They may not run as socialists, but their silence is deafening. Closet radicals. I wouldn’t be surprised to find they march with antiFA on weekends.
    Let’s also be clear that the Governor’s office and legislature bear some of the responsibility for Amazon’s move. Months of gridlock to reach a partial budget, the Governor’s veto of a deal negotiated in good faith, lack of a capital budget — these things have consequences. Integrity and character matters, something Inslee is severely lacking in.

  • Deryl McCarty

    My Geekwire comment applies here:

    Even as a born and bred Seattleite (though now living in South Hill) and a well-satisfied Amazon customer, I can fully appreciate Amazon’s issues. While the company is growing by leaps and bounds, Seattle is not keeping pace – and only partly by Seattle’s own choices. Knowing the Seattle geography, Amazon by choosing its downtown urban environment is land-locking itself twixt lakes and the sea (Puget Sound). On thin strands of land that must share housing, entertainment, tourist, business, utility and a crumbling transportation system. Your (Geekwire) article says that Jeff considered but rejected a “suburban” environment that would have solved the land-locked growth problem but paid a price in company culture, hence – in his mind – productivity. That’s his call to make, but Bill Gates at Microsoft made the opposite call and has not suffered for it. Nor have the MSFT attendant gaming and service companies. But there is another issue not addressed in the article. Seattle’s (and nowadays many urban cities over a million) poisonous business climate. A climate that is also fuelled by anti-business and anti-tech major universities and urban K-12 school systems. I wrote on my FB page the following in a fit of pique:

    While there are both plusses and minuses to an Amazon move or “spreading out” there is also a lesson for Seattle and Washington. Certainly, there are some really great traffic reductions that would occur if Amazon moved. Of course, you could accomplish the same traffic reduction with more lane miles into and out of the city and fewer pot holes. Another plus is that new startups and smaller established businesses could move into the office buildings abandoned by Amazon because of the lease and rent cost drops – you know, more supply less demand. (I read recently that some 40% of Seattle’s downtown office space is occupied by Amazon. True or false I do not know – edit: your Geekwire article says 19% which is probably closer to the mark). Best of all, the gentrification would ease a bit allowing more middle-class folks to stay in their homes which reduces homelessness and its attendant social, criminal and drug problems. The downside is that property values would drop and property taxes would fall.

    The bottom line lesson is that we have once again proved George Santayana’s thesis: “Those who cannot remember the past are condemned to repeat it.”

    Boeing signaled long ago that Seattle was overtaxing and underperforming. Taxes are high and rising, but roads, public safety, housing, sewage, cleanliness, and other basic services are not addressed (the exception are water, internet and power). City Hall cannot and will not even clean up the “stuff” (read: crap – literally) in front of its buildings. The state is not much better but its ability to help is limited. Our State Constitution does not allow what other states can do with tax forgiveness and other tax-based economic “sweeteners”.

    On the other hand, the State of Washington forgot that Boeing sucked up every engineer that its premier educational institution, the University of Washington, could produce. So, when the pass/fail, liberal arts, I deserve a degree “just because” PC movement in the 70s-80s-90s began to reduce the engineering student production and quality, Boeing had to go elsewhere. Give some credit to Governor Dan Evans, he tried to offload the PC, pass/fail liberal arts, engineering-and-quantum-physics-is-too-hard and requires too much discipline crowd from the five major Washington Universities by creating a safe place for them called Evergreen State College. You see how that has worked out. So Boeing left for Chicago – absolutely America’s murder capital and perhaps our second most corrupt city (after New Orleans). And all we have is a City Council who says if you cross us we will nationalize your business. Or they fill up the streets with black-clad mercenary “groups” (identical to the brown shirts of yesteryear) or UW or SPU students who are getting extra political science credit for “very active participation in community affairs”.

    So what did we learn from Boeing? Nada. Bill Gates (et al) to his everlasting credit have poured gazillions into the UW for software engineering and our K-12 schools for STEM, yet still we must hire scientists and engineers from overseas. Businesses must still pay through the nose to have to their brick and mortar in Seattle and in return, what? Nada. Okay, not true, you do get the City Council to excoriate you for just being a business. But I must admit the Council is being even-handed: if you are a tax-paying business here you are a POS, and if you choose to complain about it you are a POS and if you leave you are a POS.

    Arghhhh!

  • My Two Cents

    Actually I’d probably prefer communism to socialism. In socialism the establishment makes all the choices “for the good of the people” but there’s no requirement to share equally or have everyone work. In communism everyone is supposed to do what they can and all get equal rewards. It will never happen – so we’re safe. But socialism is where we are headed at an increasing rate.

  • Marge Mary

    They are only looking for a city stupid enough to give them tax breaks on the land. They learned this from Boeing. Buy a bunch of land, tax free for 10 years and when they start to tax you, screw them and sell the building/business. That’s how you keep making bigger profits!

  • thekux

    I also believe a big factor is the ridiculous anti Transportation agenda from the left. They’re making it impossible to drive into Seattle. Sorry we’re going to always need cars in the Pacific Northwest. We don’t have the population density of New York City and I’m glad for that. You have to have a Subway system for a train system to work you have to be dropped off very close to your job. The left-wingers with their stupid tax proposals and the extreme environmentalist agenda will be pushing more companies out of Washington Seattle for sure

  • Bruce Kaslow

    And so it continues, the decline of a once great city, to long controlled by the forces of Democratic non leadership, the imagined benefits of Socialism, and worse the flirting with advocates Communism who know nothing of the track record of the socio/economic ideologies they tout. I don’t get to Seattle that often any more, there is little there to attract me to go there to spend my money or enjoy my day, but what really strikes me when I do go there is how much “Urban Blight” there is there now. Sure there are still a number of areas that are economically vibrant but it seems they are beginning to look more and more like islands in a troubled sea.

  • DuchessofDownton

    You are correct in everything you say, Rob. The lack of jobs and the lack of concern in Whatcom county was only a symptom. King County is the disease. You cannot continue to treat businesses and a state’s citizens as an ATM machine when that state can’t spend money wisely.

  • Michael Willis

    Another reality not covered is the ‘all our eggs in one basket’ position Amazon is currently in. Given a disaster, natural or otherwise, affecting the region Amazon, like Boeing, would have an alternate base of operations. As Seattle city politics continues moving further to the left there might also be a concern over another attempt at unionization of Amazon’s employees. I will not be surprised if the location selected is in a right-to-work state.

  • Subsistence Coder

    Amazon sponsors tons of H1Bs. Herself an immigrant from india, you’d think Sawant would at least show a little gratitude…

    Besides just a means for circumventing American labor laws, a secondary long-term goal of Microsoft, Amazon and other sponsors of work visas is to change the outcome of elections by changing the composition of the electorate. Foreign vendors bring their political beliefs with them, Sawant herself is a shining example of this, and a large percentage of them eventually immigrate. (like Sawant)

    You might say that Amazon is now fleeing the monster it has created, but you could also say its work here is done. It is now seeking a new home to flood with foreign-born laborers a.k.a. future democrat voters.