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Donald Boudreaux: Angry at Amazon |
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Donald Boudreaux: Angry at Amazon

| Thursday, November 15, 2018 7:03 p.m
In this June 16, 2014, file photo, Amazon CEO Jeff Bezos walks onstage for the launch of the new Amazon Fire Phone, in Seattle.

I should be pleased that Amazon chose Arlington, Va., as one of two sites — along with Queens, N.Y. — for its new headquarters. While I don’t live in Arlington, I do live in Fairfax — which, like Arlington, is a D.C. suburb. If predictions pan out that Amazon’s presence in Arlington will raise property values in D.C.’s metro area, Amazon’s decision will likely raise the value of my home.

But because the bulk of the tax giveaways to Amazon will be paid by residents of Arlington, my tax bill will be largely unaffected.

Thanks, Arlingtonians! Thanks for spending your money to bribe Amazon to locate somewhere that will enable me to fetch a higher price for my home whenever I sell it.

As you probably can tell, however, from the tone of my words, I’m not really pleased. I’m angry.

My anger springs from the blatant cronyism that’s on display.

Jeff Bezos is the world’s richest man. I greatly admire his remarkable entrepreneurial vision and gumption — vision and gumption that he used to revolutionize retailing . I don’t begrudge Bezos one cent of what he’s earned.

But my admiration for him has taken a huge hit over the past year as he made clear his willingness to let local governments use taxpayer money to bribe him on where to put Amazon’s second headquarters.

I’m tempted to complain that hundreds of thousands of ordinary Americans in Arlington and Queens are being forced to subsidize a business owned by the world’s richest person. Yet this complaint — although I believe it to be valid — doesn’t quite capture the reason for my anger.

The root problem with
the tax giveaways to Amazon has nothing to do with the size of Bezos’ personal fortune and everything to do with the fact that government has no business bribing business.

Bezos has proven that his business acumen is top-notch. He doesn’t need taxpayer subsidies to ensure that his company will be run profitably.

But an even more fundamental consideration is this: Every resident of Arlington and Queens already possessed the ability to invest in Amazon. Each person had the freedom to invest nothing, a little or a lot.

That freedom is is now circumscribed. Sure, each resident of Arlington and Queens can still buy however little or much Amazon stock as she chooses. But she’s now also forced to invest in Amazon whether she wants to or not. She must pay that portion of her tax that effectively is transferred to Amazon.

Such cronyism isn’t capitalism. It’s corruption masquerading as serious public policy. Big businesses convince politicians to bribe them to do what, in many cases, these businesses would do anyway.

As my Mercatus Center colleague Veronique de Rugy wrote, “In all likelihood, Amazon first surveyed all available locations searching for factors that really matter most — factors such as the presence of a skilled workforce, adequate infrastructure and transportation options (airports and a vast subway network), as well as synergies with other companies for the purpose of enhancing production supply chains and access to professional services.”

In short, Amazon might very well have located in
Arlington and Queens without the subsidies.

And if, absent the subsidies, Amazon would have located elsewhere, then the subsidies achieved the dubious outcome of convincing Amazon to locate where it cannot operate at peak efficiency — thus harming the American economy. This fact should make all of us angry.

Donald Boudreaux is a professor
of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.

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