Casual Lurker Spills The Amazon Beans

[Ed. Note: Casual Lurker posted the following as a comment to this post, because he reads SJ in spurts, invariably far behind most people, and then leaves long, prolix comments that are occasionally fascinating but, as I’ve told him, tend to be more like private conversations between us since others have long since moved on to more recent posts. Much as he can be a huge pain in the ass and he’s too damn smart for his own good, he really should get his priorities straight and put SJ ahead of his work, his family and his health, so other readers can timely benefit from his comments.

Anyway, his comment was good enough to be a stand alone “guest” post, not to mention was longer than my original post, so I post it here without editing or revision. Just wait until he finds out about this post. Heh.]

Rumors of my demise are… yada, yada yada…

As usual, things are far more complicated than anyone, except the actual negotiating parties involved in drafting the initial Amazon MOU realizes, and so the pols, the media, Etc., all liberally dole out the BS, slanting it toward their respective agendas.

When the dust settles, I suspect they will be replacing Donald Manes name in the old ‘screwed Queens’ gag.

Just prior to the deal’s collapse, at a meeting in City Hall, some off-the-cuff remarks were made by some local lawmakers, within earshot of anyone in the room. The gist of those remarks is that they thought the process was sufficiently far along, where Amazon would not dare pick up their marbles and leave, thus giving the pols more leverage. The pols were playing a game of ‘Chicken’ and they lost. The unions also had a hand in this, as they were putting pressure on city and state lawmakers (other than the Gov. and Hizzoner) to extract additional concessions or suffer the consequences. (The unions in this town have an outsize influence on elections).

One of the main sticking points, given only cursory media coverage, was a demand that new hires only come from within NYC. Amazon said “are you kidding?” While I suspect it was only an opening bid by those making the demand and they were willing to expand to Long Island and Westchester, as a sizable percentage of the jobs created were going to require folks with advanced STEM degrees, several years of experience, and a proven track record of achievement, Amazon was not willing to limit its hiring pool to a narrow region of NY.

After the Dec. 12, 2018 City Council hearing,* that I was (purely by happenstance) present at, I had a good sense that the political theater on display was just the beginning. However, I didn’t think council members, along with their state allies, would go so far as to kill the deal.

While everyone knew Gov. Cuomo and Hizzoner, Comrade de Lousy-O, had a hand in the deal, it was primarily the EDC** that did the math, structured the deal, and drafted the MOU that Amazon agreed to. At that hearing, it was EDC’s rep’ that acted as Amazon’s counsel.

Moreover, the EDC had made non-binding assurances to various “non-parties with interest”, but did not make the MOU available to them. Unfortunately, the “non-parties with interest” made several incorrect assumptions about what was in the MOU.

For the most part, Black Bellamy has it right: State Sen. Michael Gianaris (with prodding from Deputy Council Leader James Van Bramer) is one of the main architects for killing the deal.

As an aside, it annoyed the heck out of me when Van Bramer kept repeating how “Bezos is the richest man in the world and can afford to accommodate workers and area residents”, conveniently ignoring that Amazon is a publicly traded company, with a fiduciary responsibility to shareholders.

But make no mistake: There’s going to be blowback. Local lawmakers are already getting an earful from voters who were in favor of the Amazon deal. In spite of the spin they’ve been trying to publicly put on the deal’s collapse, with the exception of the completely clueless, like AOC, several pols are carrying an extra change of underwear in their attaché cases, in anticipation of said blowback.

Fact is, NYC needed Amazon more than Amazon needed NYC. The pols came with a laundry list, and when Amazon wouldn’t give them everything they wanted, they said “we’ll show ’em how NY does business!” However, Amazon has to remain competitive and therefore cities have to remain competitive. Amazon isn’t here to subsidize your socialist dreams. The pols kept saying “look at all of what NYC is giving you”. Amazon didn’t see it that way. The pols overplayed their hand.

Now, any business that was considering opening a NY office is reconsidering that idea, as they experience Amazon’s bitter aftertaste by proxy. Some have jokingly referred to this effect as “Bismarck’s Hammer”:

“Fools you are… to say you learn by your experience…. I prefer to profit by others’ mistakes and avoid the price of my own.”

—Otto von Bismarck, 19th century statesman and Prussian Chancellor (1880).

At present, NYC is largely a service economy. And with the exception of the financial sector and tourism, it brings in comparatively few outside dollars. Other than the EDC, very few have done the math. And noticeably absent from all the speeches and posturing are actual dollar amounts, as those numbers don’t favor the progressive narrative. Even conservative estimates say the capital influx would have been a big plus to the local economy, and not just in the short term.

As to public transit and the subways, in spite Politico’s cheap shot,*** Gov. Cuomo gave an excellent presentation at the Albany Luncheon on Feb. 7, largely covering the MTA and the NYCTA. The Gov. laid out some scary numbers and some surprising facts. (A few years back the state was picking up less than 25% of the NYCTA’s $8B+ annual budget, and now the numbers are reversed). BTW, Amazon had agreed to pick up part of the tab for improving the transit infrastructure in the area surrounding the planned HQ2. Nobody is mentioning that.

*SJ: Big Cannabis And The Corner of 168th and St. Nicholas.
(See first asterisk bottom note in my comment).

**Economic Development Corp. For those outside of NY, the NYC EDC is a quasi-governmental, non-profit entity, parts of which are a “public-benefit corporation” under NY law. It operates similar to the various NY State “Authorities”. (e.g., the NYS Thruway Authority, the School Construction Authority, Etc.) Because it can borrow money, float bonds, Etc., it largely remains outside of the usual legislative (but not executive) oversight. The reasons are long and complicated, but the various “Authorities” were created primarily as a means to circumvent the NY State constitution’s economic provisions, many of which require voter approval. The catch is that the veil between the city/state and the “Authorities” can be pierced if the city/state becomes too hands-on. (So sayeth the corporation counsel).

***Politico: “Cuomo tries a new MTA tack: Ridicule”

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5 thoughts on “Casual Lurker Spills The Amazon Beans

  1. Patrick Maupin

    NYC is apparently full of Trump wanna-bes who think they know how to negotiate.

    Good on Bezos. If they pull that sort of shit now, what will it be like in 5 years?

    1. SHG Post author

      This was Bezos negotiating nicely. Imagine if they really pissed him off and he pulled the plug on Amazon for Manhattan for one month.

  2. Billy Bob

    Keep this up, and Casual Lurker will be writing for The New Yorker. God forbid they give him some petty real estate at The Times!

    CL is definitely a funny man. Thanx for posting. Comments are now Closed. Amazon dot bomb, …now they’re in the food delivery busyness? That will never fly in NYC. Too many pigeons, if you catch my drift?

  3. Billy Bob

    Jeffrey is busy like beesoz. We hear he’s suing the Enquirer for blackmail and defamation plague. Everybody sues the Enquirer sooner or later. So what else is new? Beezos is not going to be taken in by the evil, corrupt empire which is NY. Sorry folks.
    Can’t have your cake and eat it too. (Count von Bismarck, 1882.)

    1. Tim

      Kind of thought Bezos was crazy to select NYC in the first place.
      If I could see this situation coming, surely the richest person in the world could have projected it.

      IMHO Any CEO of a public company that purposefully locates in a high tax, forced unionization state should be liable to shareholders for damages incurred.

Comments are closed.