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.”

-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.