The Intercept’s Zaid Jilani asked a really good question earlier today: Why Don’t the 20 Cities on Amazon’s HQ2 Shortlist Collectively Bargain Instead of Collectively Beg? Amazon is looking for a place to put its second headquarters and cities have fallen over each other to provide some startlingly desperate concessions to lure the tech giant. Some of the concessions, like Chicago’s offer to essentially engage in wage theft by taking all the income tax collected from employees and hand it back to Amazon, make it unclear what these cities actually gain by hosting the company. The reason that city mayors will never collectively bargain on behalf of their citizens is two fold: 1) America lacks an inter-city governance mechanism that prevents cities from being blackballed by corporate capital and 2) most big city mayors are corrupt as hell and don’t care about you.
In 1987 urban sociologists John Logan and Harvey Molotch put forward the “Growth Machine” theory to explain why cities do not collectively bargain and instead compete with one-another in a race-to-the-bottom to see which city can concede the most taxes for the least gain. The theory is rather straightforward: cities may have one or two inherent competitive advantages that no other city has, but beyond that you can only offer tax breaks. Maybe you’ve got a deep water port that big container ships can use, or you’re situated at the only pass in a mountain range. Other than that, location is completely fungible. All that’s left is tax policy and land grants.
Technology clearly makes cities’ competitive advantages even slimmer. Cities that flourished because they were well situated along water ways slowly declined as trains and the National Highway System surpassed canals as the preferred mode of freight transit. The list of things a city can exclusively offer a prospective employer seems to be getting smaller.
Meanwhile, the competition between cities has only got fiercer. “The jockeying for canals, railroads, and arsenals of the previous century,” wrote Logan and Molotch, “has given way in this one to more complex and subtle efforts to manipulate space and redistribute rents.” Instead of a handful of elites making handshake agreements over where to put a government arsenal or the Pennsylvania Railroad’s major terminus, the duty to attract major investment in the 20th century was turned over to teams of PR experts and economic development coordinators. Entire departments in cities and counties around the country were tasked with inventing incentive packages for major employers.
The Growth Machine puts business interests first, but some stuff does actually “trickle down” to some people. Public spending may be slightly increased to the extent that capital investment isn’t actively deterred. For example, a business won’t relocate to a city where their top management’s kids can’t go to a nice school, so a city might invest in its schools to lure new business. Businesses also demand things that the rest of the public can use like airports or high speed internet. A city might even adopt the Richard Florida playbook and invest in public arts and entertainment. There was a sweet spot, between the late 70s and the early 90s, where this way of doing business was defensible. Schools were less segregated and economic inequality was bad but not horrendous.
Now, in the twenty-first century, all that is old is new again. Inequality is reaching 19th century levels and cities and school districts in many parts of the country are more segregated today than they were in the 60s. What little benefits the public received when their local governments went after major companies, has now become privatized. Again, Chicago’s bid is illustrative here: Mayor Rahm Emanuel’s brutal fight to privatize the city’s schools has created a two-tiered education system with elite Charter schools and cash-starved public ones. Whereas Amazon’s presence would have signaled the possibility that Chicago public schools would see an infusion of cash, Charter schools promise a closed circuit of money and services.
In a world where 82% of the wealth created goes to the wealthiest 1% of people, city leaders are bargaining with Amazon but with other people’s money. Some cities might have more enlightened mayors but, for the most part, there doesn’t seem to be a desire among the ruling class to extract wealth from private capital and redistribute it to average citizens. Rather, this is about securing closed circuits of wealth among a privileged few. To think that these mayors are first and foremost going to bargain for the best deal for their constituents comes off as, sadly, naive.
But lets say, for the sake of argument, a large portion of mayors did want to flip the script and collectively bargain on behalf of their citizens. First they would be confronted with the simple fact that they are organizing a detente on one level so that they can compete on another. Richard Florida, writing in CNN and also quoted in The Intercept, calls on city mayors, “to forge a pact to not give Amazon a penny in tax incentives or other handouts, thereby forcing the company to make its decision based on merit.”
What merit would that be though? Would the city with the least homeless people win? Bezos would be more apt to pick based solely on which city has the best weather. What would have been offered in explicit subsidies would really come down to the same low-tax business climate that the original Urban Growth Machine is predicated on but instead of a special gift to Amazon, cities would pass tax laws that gave away the farm to any company of sufficient size. Instead of Amazon picking from a list of tailor-made proposals, they would be looking for the city or county that just passed another staggeringly low tax policy. Chicago’s offer of routinized wage theft wouldn’t be impacted either, since it’s a state-wide program and has been in place since 2001. Mississippi, Indiana, and Missouri have similar programs.
The point here is that corporations and the people that run them are ideological. Companies do not set up shop based on what is good for people, they choose their location based on what is good for capital. How else do you explain all the businesses that set up shop in Delaware? The ideological fervor of CEOs also points to another problem: Even if cities bound together in some sort non-aggression pact so that none of them promised a single tax break, what would happen the next time a Fortune 500 company starts looking for a new headquarters? Would those cities get a shot? No. They would be blacklisted.
In Richard Florida’s latest book he laments that in an alternate universe President Hillary Clinton would have adopted his “detailed proposal for a new Council of Cities, comparable to the National Security Council,” This Council would foster “a new partnership between national government and the cities in which federal investments would flow.” This is a politically shrewd idea for reasons I have outlined before, but we are unlikely to see this happen any time soon. Even if we were to establish it tomorrow though, the larger problem remains: we have massive monopolistic companies that can make unilateral, undemocratic decisions that impact the lives of millions of people. More than anything it is our state of inequality and the attendant disinvestment in public resources that is, ultimately, the problem.
David is on Twitter.