Amazon has announced it will expand to a second headquarters outside of its current base in the Pacific Northwest. It is inviting companies to bid to be the next home of the Amazon corporation, and there are some 50,000 jobs at stake.
The contest is not the kind of development in the modern economy that I like to see. Instead of companies staying in a particular community and investing in its development, which would be the most ideal situation, giant corporations are instead often eager to relocate to whatever city offers them the best deal.
Of course, mayors have lobbied business leaders to bring jobs to their home cities for decades. However, companies considering expansion into a new region often appear to have a clear shortlist of contenders and a largely internal relocation process, rather than promoting this type of publicly-announced nationwide bidding free-for-all. Very unlikely markets have expressed their hopes of winning the Amazon second headquarters lottery, just as pro basketball fans in almost every city with an NBA team, even unlikely contenders, think their local franchises will somehow convince LeBron James to sign with them. Sorry to break it to the people of New Orleans, but the Pelicans aren’t going to get LeBron, and the Big Easy isn’t going to become Amazon’s next tech hub either.
Although I regard this municipal bidding war for corporate goodies as somewhat unseemly, I am happy to hear that Amazon will be creating new jobs and bringing prosperity to another city. I’m already happy that Amazon and Microsoft are in Seattle, so that not all of the major tech powerhouses are concentrated in one metropolitan area (Silicon Valley).
Nevertheless, too much wealth has been concentrated on the coasts, which has created a few metropolitan centers of prosperity but has left many cities, towns, and rural areas struggling and stagnant. For this reason, I hope that Amazon branches out beyond the West Coast and locates their second headquarters in a Middle American “flyover state.”
Amazon should locate its new headquarters in the Midwestern Rust Belt, and not in the thriving super-metropolis of Chicago, but instead in a struggling medium-sized city such as Detroit, Cleveland, Milwaukee, St. Louis, or Cincinnati. Unfortunately, some of these cities may have a difficult meeting the criteria that Amazon has laid out, which include having excellent public transit and good educational system. In fact, any city may have difficulty meeting the requests that the company has laid out for the ideal home of its new headquarters.
But Amazon has the power to transform whatever region it chooses, all the more so if they choose a city where they will be the key economic player in the region (instead of a super-city like NYC, LA, Chicago, Boston, or Philly). I know that humanitarian or patriotic considerations alone won’t be enough to sway a tough, competitive businessman like Jeff Bezos. On that point, I will note that Amazon will likely benefit from a less restrictive regulatory environment and lower taxes in a red or purple state than it would face in solid-blue Massachusetts, New York, or California. Amazon can also exert more political muscle if they go to a city that they could make a virtual company town instead of a city where other large corporations compete for municipal attention. Instead of waiting for the perfect city to emerge, Amazon can take a city that already has a large population and some solid infrastructure, and then ask it to improve itself in accordance with Amazon’s demands. It seems likely that a state like Ohio or a city like Milwaukee would eagerly promise to expand its public transit or fund new tech programs at its universities in exchange for Amazon’s arrival.
Such a decision would improve the image of tech companies by making Amazon the economic savior of a municipal victim of deindustrialization and globalization. This would also be a self-interested move, in terms of long-term public relations. The current backlash against big tech could be mitigated by Amazon if it gets favorable media attention for bringing jobs back to the Rust Belt. I think it was a positive development when Jeff Bezos bought the Washington Post, particularly because that high-quality newspaper appears to have retained its journalistic independence, including being willing to run material critical of the parent company. If Amazon moves to the Rust Belt, it will be a similar shot in the arm to the tech industry’s declining reputation, by making it seem as though these companies are concerned about public goods beyond their stock price.
In a time when U.S. politics are beginning to reflect a disturbing gap between the coastal elites and the geographically & economically marginalized populations, it is important for major corporations to consider that, while Middle America may not have the climate or the cultural amenities that Ivy League-educated executives desire, refusing to open up offices and to employ people in those regions comes at a potential political cost. After all, the American democratic system features an Electoral College that gives disproportionate political power to the landlocked majority of states over the minority of coastal states. Because of this system, the Midwest, the South, and the Mountain West can have “revenge” on large companies that don’t benefit their regions by electing populist candidates that may attack the power of those companies, or who may at least destabilize the political order that those companies depend on.
If anything good came out of the recent presidential election, it is the fact that it has made coastal elites aware of the dangers of having large socioeconomic and geographic segments of the American population that are not seeing improvements in wages and are not sharing in the benefits of economic growth. One step that all corporations, and technology corporations in particular, could take to mitigate this phenomenon taking action to give a greater number of U.S. regions a stake in these tech companies’ financial success. If Amazon chooses to revive the economy of a struggling Midwestern city, that would be a useful first step in tech companies’ campaign to regain the trust of Middle America.