Comment: Sold down the river

Tuesday 21 May 2019

In the light of a recent "collision" between Amazon and Social Democracy, the secretive business guru only known as The Fool discusses modern politics and what impact they have on the very people they are meant to protect.

“'Democracy is the theory that the common man knows what he wants, and deserves to get it good and hard.

'The curse of the country, as well as all democracies, is precisely that it treats its best men as enemies'

If ever there was an incident to demonstrate how perceptive these near century-old observations by the satirist and cultural critic HL Mencken were, it was the recent collision between the world’s second largest company, and Western society’s latest incarnation of Social Democracy in action. 

Pictured: Amazon was hoping to build their second Headquarters in the borough of Queens, New York.

After a year of fraught negotiations spanning the United States (238 cities would eventually table bids), in late 2018, Amazon finally decided to build their second Headquarters in the borough of Queens, New York. As with most negotiations, there was a little give and take between both parties in order for the deal to be finally agreed. 

The company promised to bring 25,000 new jobs and a projected $25billion of tax revenues over the proceeding ten years to one of the country’s most impoverished neighbourhoods. The city promised the company tax breaks on future earnings, which were likely to total around $3billion. (That’s tax the company wouldn’t have to pay, not $3billion which the city would have to pay up front to Amazon. Remember that distinction.)

That should have been that. The company would pump $5billion into the local economy on the building project. The residents of the area of Queens, where the building would be based, (average salary $18,000) would reap the benefits of the creation of 25,000 new direct jobs (average projected salary of $150,000), in addition to the creation of countless indirect opportunities provided by the new restaurants, bars, stores and support services which would be required. 

Pictured: New York promised Amazon tax breaks on future earnings.

The city of New York, meanwhile, (current annual budget deficit $2.3billion) could look forward to a long-term tax bonanza, averaging an additional annual take of around $2.2billion per year, even after the incentives offered to the company. 

The company’s business would have a low carbon footprint, would create little pollution, and would spur the re-generation of a previously deprived region, and potentially drive a new technology hub on the East coast to rival California. In the argot of the 70% of New Yorkers who supported the deal: “what’s not to love?”

Well, it turns out that if you were a politician, union official, or member of a vocal minority determined to smash capitalism - quite a lot actually.

After fraught negotiations between the company and the city’s representatives and a concerted campaign by activists and senior politicians - who argued that all the promised benefits would somehow make life worse for the residents of Queens - the company, eyeing the toxic nature of local politics, pulled the plug on the deal in February of this year. 

Pictured: Amazon pulled the plug on their deal with New York in February.

The leading opponents of the project argued that further gentrification of the area and the company’s previous preference for non-unionised labour was undesirable and that it was unethical for the city to promise tax breaks as an incentive (ignoring of course the massively beneficial long-term tax revenues). 

What these same opponents failed to come up with of course, neither before nor after, Amazon’s announcement, was an alternative plan to improve the lives of the very people the project would benefit. 

This, of course, goes to the heart of one of the major problem with modern politics. Politicians and activists might try to represent their actions as a victory against large corporation, however the people who will suffer most heavily from their ‘victory’ are those very same people whose lives the politicians are supposed to be trying to improve and who will instead be condemned to remain in penury. As many of those residents have realised since Amazon’s decision, you can’t eat good intentions. 

Pictured: "You can’t eat good intentions."

The impacts of these events should be a lesson to all governments, who would allow decisions to be made in the supposed interests of a certain sector of society. Whether it be proposals for artificial rent control, minimum wages, or encouraging union-led disruption, those who derive the benefit and those who pay the heaviest price, in the interests of Social Democracy, are very rarely the same people.

Or as HL Mencken himself put it: 'The Demagogue is one who preaches a doctrine he knows to be untrue to men he knows to be idiots.'”     

The views expressed in this piece are those of the author, and not of Bailiwick Express.

Read the Fool and more analysis in Connect Magazine by clicking here.