What We Can Learn from Amazon
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By James Nelson
Principal, Head of Tri-State Investment Sales
New York, New York – On February 14th, to the surprise of many, Amazon canceled its plans to build what The New York Times describes as “an expansive corporate campus” in Long Island City. According to The Times, this was largely due to backlash from lawmakers, progressive activists and union leaders, who argued that a large tech company did not deserve nearly $3 billion in government incentives. To discuss what we can learn from Amazon’s departure, I had the pleasure of interviewing Seth Pinsky, Executive Vice President at RXR and former president of the New York City EDC.
Mayor de Blasio was in favor of Amazon. Governor Cuomo was in favor of Amazon. A Siena College poll released on February 12th indicated that 56 percent of voters statewide approved of Amazon’s plan, while 36 percent did not. According to Cuomo, Amazon would have paid $27 billion in taxes over the next few decades, which he described as a 9-to-1 ROI, “the highest rate of return for an economic incentive program that the state has ever offered.” I asked Pinsky his opinion on how those in opposition were able to get enough attention to cause Amazon to change its plan.
“Getting big projects in New York done is hard,” Pinsky said. “It's hard under the best of circumstances and we're living in a world now where, between social media and just the fast pace of the news cycle, it's very hard to make complicated arguments when people are making simple arguments in opposition, even if the complicated arguments may be right.”
He goes on to say that the effect of Amazon on the future of New York City was “a complicated story to explain to the public” and that at the end of the day, Amazon made its decision based on maintaining its reputation, even though it may have been possible for them to get approval to open a headquarters in New York City.
“It's unfortunate,” he said, “it's a real missed opportunity for the city, but it's a lesson learned and hopefully one that we'll be able to take to heart and make sure it doesn't get repeated going forward.”
I asked Pinsky about what lessons we can learn moving forward. He said that it is very important for the people who care about economic growth in New York City to do a better job of explaining to the public why growth is important.
“As challenging as the impacts of growth are, the impacts of decline are more challenging,” he said. Pinsky added that elected officials and others that want to have a positive impact on economic growth in New York City need to improve their advocacy platforms in the future because their opponents now have new tools at their disposal, such as social media.
"The biggest tragedy out of all of this is that there was the chance to use this transaction to have a really thoughtful and intelligent conversation about how we do economic development, what benefits should come with economic development and how to distribute them more widely to the community,” said Pinsky. “We ended up degenerating into a bunch of ad hominem attacks against a company, and arguments that really were more specious than accurate.
“What I don't think people fully appreciated was Amazon's [unwillingness] to go through the attacks on them,” said Pinsky. No one expected that Amazon would pull out before the approval process was complete.
Pinsky hopes going forward that advocates are going to be able to have more thoughtful, intelligent conversations with other entities that might positively affect New York City’s economic growth.