Deep into the Amazon question

Deep into the Amazon question

The origins of the phrase “Be careful what you wish for” remain fuzzy. Some, without documentation, ascribe it to a Chinese proverb.

 

But other literary historians trace it to Johann Wolfgang von Goethe, the 18th/19th century German writer and statesman. His version – whether this is a direct quote or paraphrased is not clear – was “Beware of what you wish for in youth, because you will get it in middle life.”

 

Over the centuries, the aphorism was truncated to the still-popular and all-encompassing cliché of “Be careful what you wish for.”

 

OK, history lesson over. But Western Pennsylvania officials might consider the phrase, carefully, as they angle to come up with the “winning bid” to lure the Seattle-based internet retailing giant Amazon to Greater Pittsburgh to build “HQ2,” its second campus headquarters.

 

Officials say the specter of landing upwards of 50,000 promised jobs and up to $5 billion in investment is too good to pass up; all reasonable stops must be pulled out to land this “game changer” for the region.

 

Of course, one person’s “reasonable” is another person’s “corporate wealthfare.” And as so often comes with “government economic development,” those behind it seldom consider with much diligence all the consequences.

 

It’s a malady best described by Frederic Bastiat, the 19th-century French economist and statesman – “the seen” versus “the unseen.”

 

While the Amazon giddy see new jobs for as far as the eye can see and that touted multibillion-dollar investment as some kind of economic nirvana, there are a number of “unseens” in this endeavor.

 

Seattle has been a textbook case of the “unseen” economic consequences – of Amazon and of “progressive” public policies.

 

As Seattle Times business reporter Mike Rosenberg documented in June, “Seattle’s new median price for a single-family house is “$729,000, an extra $7,000 from a month ago and up 13.7 percent from a year earlier.”

 

And Amazon’s growth, which dominates Seattle, is blamed, in part, for the explosion, precipitated by the proliferation of high-tech companies in the city.

 

A “bubble,” fueled by overzealous lenders and unqualified homebuyers? No, say the experts; buyers have the financial wherewithal. But for those not involved in the tech boom, affordable housing this is not. Many have been priced out of the city’s core market, pushed to Seattle’s periphery. Homelessness is a chronic, and growing, problem.

 

Rents, too, have exploded – 63 percent higher since 2010, the newspaper reports.
Just last week, The Times, declared Amazon “the biggest company town in America.”

 

To wit, it occupies 19 percent of all office space in the city, the highest for any major U.S. city. And some analysts wonder if such reliance on one employer – a la the way it once did on Boeing – is a recipe for disaster. Others insist Amazon, because of its diverse business interests, is different.

 

Perhaps so. But it is the same company controlling them.

 

All that said, “Amazon has become the go-to scapegoat for people complaining about Seattle’s problems associated with growth … ,” The Times reported. Just as surely, as previously mentioned, Seattle’s “progressive” political climate has contributed.

 

To be fair, one real estate analyst offered this: “It’s hard to keep pace in terms of development infrastructure” but, overall, “the positives, economically, outweigh the potential of the downside.”

 

Perhaps they will. But … .

 

Several questions confront Pittsburgh as it prepares its bid to Amazon.

 

Of course, there’s the matter of how much (and in what form) any “incentives” should be. In the least, they should be performance-based. That is, if any such incentives are appropriate, given Amazon’s robust bottom line.

 

But there’s also the question of Pittsburgh’s basic infrastructure. Think of its failed water and sewer system, its public pensions’ chronic underfunding, its systemically failed public schools and a lagging public transportation system, among myriad other issues.

 

If Pittsburgh has failed, to date and over many decades, to deal with such fundamental issues, can it somehow magically and suddenly remedy them now and deal with a whole host of new challenges/problems that Amazon, lured here with aggressive public incentives (specially ordered by Amazon, no less), would bring with it?

 

For as Goethe also said, “There is nothing worse than aggressive stupidity.”

 

Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).