Amazon scraps NYC HQ2 over politics, a 'magnificent opportunity' lost
Amazon said on Thursday that it was telling local NYC politicians to take a flying leap. Well, those weren’t the exact words the tech giant used in its announcement.
"For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term … a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City," the company wrote in its blog.
In case you didn’t know, the deal was expected to bring with it:
- 25,000 high-paying jobs to Long Island City, which could grow to as many as 40,000.
- Investment of more than $2.5 billion, which could grow up to $5 billion.
- Construction of 4-million square feet of space, which could rise to 8-million square feet.
- Between $27.5 and $186 billion in revenue for the city and state over the next 25 years, with the city hoping to net roughly $13.5 billion.
The complaint from politicians was that they were giving the company too much in subsidies to make the move. The same politicians who inefficiently and ineffectively deployed money to boondoggles throughout the years have a magnificent opportunity put in their hands, and what do they do? Most that know me, know I am not a big subsidy guy, but this one was the gimmee of all gimmees.
On Monday, one of those politicians appeared on FOX Business Network's Bulls and Bears show hosted by the brilliant David Asman. (Watch a clip of the segment in the above video.) As a guest, I got to ask the man a question. I went last.
After listening to him call Amazon an extortionist, I was taken aback. I asked the gentleman if he realized he was accusing Amazon and Jeff Bezos of committing a felony. I then asked if he was worried about missing out on a magnificent opportunity. He couldn't care less.
This is what the gentleman and the rest of the local NYC politicians who opposed Amazon do not understand: It is not just the hard dollars, but what those hard dollars would do … and for the long term.
Imagine: Amazon moves in. 25,000-40,000 people earning six figures move into the area. Because of this, construction starts. Because construction starts, those jobs are created. Because construction starts, materials need to be bought. Because of this, companies that supply all those materials are doing more business … which increases their profits and potentially they hire more people.
Because of this construction, new roads, new access, sewers and infrastructure start up. You remember how important infrastructure is? Because of all this, even more jobs are created. All those jobs created increase the customer base. Because of the increased customer base, retail and restaurants do better. Because they are doing better, maybe they expand, creating even more jobs.
Those new retail and restaurant jobs also expand the customer base. As more and more companies see how well those retail and restaurants are doing, they now decide to open up in Long Island City. Because they open in Long Island City, they now have to hire more and more people. On and on and on.
But no! Even though a good part of Amazon's deal was performance based, screw you Jeff Bezos. Even though a gargantuan long-term opportunity for Long Island City was at hand, screw you Jeff Bezos. Even though the longer-term tax base would expand (and we know how much NYC politicians love a new tax base), screw you Jeff Bezos.
But it now ends up the other way around. Jeff Bezos just told the local politicians to go screw themselves, and rightfully so.
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But don't worry Mr. and Mrs. local politician, you always have Rep. Alexandria Ocasio-Cortez's, D-N.Y., ("AOC" -- who was loudly against Amazon) Green New Deal. Maybe the high-speed rail from Coney Island to Long Island City will create those 40,000 jobs.
Gary Kaltbaum is a registered investment advisor with more than 30 years of experience in the markets. He is owner and president of Kaltbaum Capital Management, a financial investment advisory firm headquartered in Orlando, Florida. He is a Fox News Channel Business Contributor regularly appearing on Fox News Channel and the Fox Business Network. Gary is the author of the book “The Investors Edge” and is also the host of a nationally syndicated radio show with the same title “Investors Edge” which is broadcast on numerous stations across the U.S.