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Opinion: Losing Amazon Is The Biggest Unforced Error In NYC's Economic History

Contrary to what newcomers may believe, gentrification and congestion weren't always the city's biggest problems. Sometimes we wondered if lost jobs would ever come back.

Posted on February 14, 2019, at 8:41 p.m. ET

The Queensbridge Houses, located close to where Amazon planned to build a new corporate campus.
Mark Lennihan / AP

The Queensbridge Houses, located close to where Amazon planned to build a new corporate campus.

New York City just committed the largest unforced error in its economic history.

Contrary to what newcomers may believe, that history has had significant ups and downs. While those who arrived here in the last decade have only experienced a city of brutal housing prices and overcrowded subways, the periods of post-industrial decline that led to the ravages of the 1970s — not to mention our destabilization after 9/11 — are reminders that no economy ever travels exclusively upward.

During New York’s downturns, as I pointed out when the Amazon deal was first announced, gentrification and congestion were the furthest concern from people’s minds. When jobs fled the city, we wondered if they’d ever return.

Another major downturn will hit New York one day. And when it does, Amazon being run out of town might be remembered as a harbinger of what was to come. At best we might think of it as a moment when cooler heads could have softened the blow of widespread job losses, and created the diversity of jobs and industries that keep us growing.

Growing our economy is a necessary part of fixing our city — our aging infrastructure, creaking subways, and scandalous public housing situation are all profound challenges for New Yorkers. Our schools, health care system, and parks all need more money — not just to improve quality of life for existing residents, but also to maintain this city as a place of opportunity for strivers from across the country and the world for whom there is no political voice.

That infrastructure of opportunity has historically made New York a place of amazing social mobility. It’s the kind of pro-growth progressivism I believe in, and it only works when we build our tax base. And while today’s progressive instinct is to boost taxes on the rich to pay for services — which makes tremendous sense at the federal level, given the continuous trend of tax cuts since 1986 — it offers much less upside for New York City, which already has some of the highest local taxes in the country.

That dynamic has been made much worse in the wake of the Trump tax cuts, which included changes that punished high-tax states like New York and California, to the advantage of low-tax red states like Texas and the Carolinas.

Critics dismiss the idea that Amazon would have helped grow our tax base, pointing to the subsidies it was scheduled to receive and falsely claiming those dollars could have otherwise been spent on schools and subways. But the bulk of those abatements weren’t cash handouts — they were discounts on the taxes Amazon would have paid in the future. According to estimates of those taxes by the city and the state, we just lost something like $27 billion in future tax revenues, while also avoiding the $3bn in tax credits we’ll no longer be handing out. Critics of the deal should now explain to the public how those $3 billion in subsidies can be redirected to better causes. They can’t, because the money doesn’t exist.

There were many legitimate criticisms of the Amazon deal. Queens, our nation’s most diverse county, is suffering from straining infrastructure and increasing housing prices, despite a recent glut of new high-end rental housing in Long Island City, where Amazon planned to set up shop. People raised concerns about displacement of residents and small businesses, subway congestion, chronic sewage problems, and other issues faced by Queens residents in their daily lives. These all should be taken very seriously by our leaders, regardless of the fate of Amazon’s offices.

And of course the cautionary tales from the West Coast and its love-hate relationship with Big Tech loomed over all of this. Consider the multiple crises facing San Francisco, and the contentious relationship between the people of Seattle and their tech giants. But the idea that New York would be as vulnerable as the tech-dependent economies of Seattle or Silicon Valley is suspect at best.

For the residents of Queens and the rest of New York City, the arrival of Amazon’s 25,000 jobs most likely would have helped in some ways and hurt in others. It would have increased congestion — which, if you spend as much time in economically distressed cities as I do, you wouldn’t classify as all bad. It may have caused future residential displacement, a serious issue that would have needed redress.

The deal signed with the government also included important objectives like the hiring of residents from Queensbridge Houses, the nation’s largest public housing project. While progressives often rally for populations like those at Queensbridge, their job prospects rarely appear in their rallying cries. This could explain, in part, why we began to see a lot of daylight between the deal’s vocal opponents and Queensbridge residents, many of whom were represented by Bishop Mitchell Taylor. This is why the NYCHA Tenants Association issued a scathing indictment of local politicians in the aftermath of the deal’s collapse. In fact, while Amazon’s opponents claimed to represent the people, polling showed them consistently at odds with the majority of New Yorkers, including poorer New Yorkers and people of color.

Western Queens is now likely to get more luxury housing towers and fewer new offices and workspaces as a consequence of Amazon’s departure. Demand for new luxury residential property in Queens is much stronger than demand for new office buildings, a factor that will likely add to both gentrification and rush hour congestion (offices like Amazon’s would have driven commuters in the opposite direction, into Queens in the morning and out in the evening, for which there is more capacity).

The apartment towers that will likely emerge where Amazon’s buildings were planned to rise won’t add nearly as much to the city’s tax base. And most crucially, the business-to-business ecosystem that likely would have brought small businesses, construction, and other multiplier effects to Queens due to Amazon has also probably evaporated.

Nobody comes out of this looking good: Amazon, city and state politicians and the deal’s proponents and opponents all could have done a better job explaining its pros and cons. But the most worrisome group — and those who now need to be held accountable — are those who simply want no growth at all, believing that New York will somehow thrive forever regardless. Many of them have benefited from the city’s booming economy or rent regulations, and now they want to shut the door behind them. Put simply, they are playing with fire, and it is the rest of us who must either collectively stand up to them, or prepare to get collectively burned.


Vishaan Chakrabarti is the founder of PAU, an architecture practice dedicated to the advancement of cities, and a professor at Columbia University.

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