Amazon Gets $3 Billion in NY Tax Breaks While Underfunded Public Transport Enters ‘Death Spiral’

Prof. Richard Wolff explains why the $3 billion subsidy for one of the world’s largest corporations is a terrible waste of public money

Amazon Gets $3 Billion in NY Tax Breaks While Underfunded Public Transport Enters 'Death Spiral'

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Story Transcript

BEN NORTON: It’s The Real News Network and I’m Ben Norton.

Amazon is one of the most powerful companies in the world and it is owned by the richest man on earth. Jeff Bezos, the founder and CEO of Amazon, has a net worth that is well over one hundred billion dollars. In just one day of April in this year, Jeff Bezos’ wealth increased by 12 billion dollars, 12 billion dollars in just one day. And now, the New York state and city government are going to use our tax dollars to help further subsidize the richest person on the planet. Amazon has announced that it will be creating a new headquarters in Queens, New York. The New York state and city government enthusiastically fought for this new project, which is known as HQ2.

To attract the corporate giant to New York City, the local government offered Amazon a staggering three billion dollars in tax breaks. New York State is giving Amazon one point seven billion dollars in grants and tax breaks, and New York City is giving an additional one point three billion dollars in tax breaks. This is the biggest tax incentive package that New York State has ever given to a private company.

Residents here in New York City are furious, because rent is already unaffordable and real estate developers are rapidly gentrifying longtime residents out of their homes. Bringing in a new Amazon headquarters will likely pour fuel on the fire of gentrification in Queens, pushing out longtime poor residents. And meanwhile, while Amazon is getting three billion dollars in tax breaks, the public transportation system here in New York City is also falling apart as social spending continues to decline. The Guardian reported this week, New York City’s subway and bus services have entered death spiral. The newspaper noted that officials at the Metropolitan Transportation Authority, MTA, warned that without a major infusion of cash, without major increase in local government funding, they will have to drastically cut service and/or increase fares on the system, which carries around millions of people every single day. Likely next year, the MTA will increase fares, even while its services are declining.

So joining us to discuss why the New York government is subsidizing one of the most powerful corporations while our own social infrastructure is falling apart is the world renowned economist, Richard Wolff. Richard Wolff is a professor emeritus of economics at the University of Massachusetts Amherst and at the New School University. He has authored a dozen books, including most recently, Capitalism’s Crisis Deepens: Essays on the Global Economic Meltdown. And Rick’s organization, Democracy at Work, has a new book out called Understanding Marxism, which you can find more information about at democracyatwork.info. Thanks for joining us, Rick.

RICHARD WOLFF: Glad to be here. Thanks for the invitation.

BEN NORTON: So, Rick, let’s talk about this the story here with HQ2. Why do you think the New York state and city governments are providing such large tax breaks to bring Amazon here? What we’re told from Mayor Bill de Blasio and Governor Andrew Cuomo is that they’re doing this to bring 25,000 new jobs to New York City. But the thing is, that’s actually not a lot of jobs for New York City. In fact, in 2017 alone, New York City gained over 72,000 new jobs, so 25,000 new jobs is just about four months of job growth in New York City. Don’t you think that four months of job growth is not much for three billion dollars in state and city tax breaks? What is your take?

RICHARD WOLFF: I agree with you, but it’s actually – and I’m sad to say this – much worse than that. And let me just give you a few examples. We’re not even clear that the 25,000 jobs will mean new jobs or whether they’ll just move personnel from other parts of the Amazon to come here, in which case New Yorkers will be subsidizing job movement for existing employees and not at all new jobs. Let me give you another example. When you give a deal like this to a corporation, let alone a super-rich, super profitable one, you ought to accompany it by some sort of guarantees. It’s like you hire a construction firm to build something for you. If they do the work they’ve promise on time, well and good, you pay them. But if they don’t do it on time, if they don’t meet the deadlines, well then, they have a penalty to pay, et cetera.

This interaction between the city and the Amazon corporation is all for Amazon and none for the city. The city has to give three billion dollars with the state, but what share of the profits that flow from Amazon will the city, that is the public taxpayer who provides this money, what will we be getting as our share of their profits? Answer, nothing. If they don’t meet the deadline, if they don’t have 25,000 jobs, or a it takes them ten years to get there, will we be compensated for having been promised something that wasn’t delivered? No, there’s no such involvement. There’s no such commitment. And then there’s even the further question, which makes me so angry at the politicians, in this case Governor Cuomo and Mayor de Blasio, that they’re not telling us that if you take three billion dollars of the city and state’s money, that leaves the city and state with two options.

The three billion dollars would otherwise have gone for public services, but they are not going to be available because they’re being given to Amazon. That’s going to cost jobs, jobs for the city, jobs for the state and jobs for all of the people and businesses who aren’t going to have those three billion dollars spent on that. Where does that figure in the calculation? Well I can answer the question, it’s ignored. And likewise, finally, there’s all the consequences of not using three billion dollars, for example, on our subway system. As you rightly point out, the Guardian and any other newspaper that cares to investigate it, would quickly discover that the city of New York has, if not the most filthy subway system in the world, we are certainly in contention for that dubious prize. And we’re not doing anything about it, which is why people don’t use the subway as much as they otherwise would, which decreases the amount of money it gets.

So you get this situation that some service, like the subway, which serves billions of people, is being ignored and sacrificed to give additional profits to what is already an extremely profitable company generating the richest person on earth as the CEO. You put all this together and it is a really revolting display of politicians basking in the public relations done by Amazon as if they’re doing us a great service. And by the time we figure out that, once again, this hasn’t worked to the benefit, these politicians will be on to higher office. It’s a sad commentary on how American capitalism works.

BEN NORTON: Let’s talk more about those politicians, specifically the two leaders who are trumpeting this as some kind of great victory for New Yorkers, are the mayor Bill de Blasio and the governor, Andrew Cuomo, both of whom are Democrats. Andrew Cuomo is known as a pro-business Democrat, a kind of neoliberal, corporate Democrat. But Bill de Blasio, interestingly, is at least portrayed in media outlets and by some Democratic organizations as a progressive. In fact, we recently saw that he was invited to a progressive summit in Vermont. So why do you think that we have this neoliberal corporate Democrat, Andrew Cuomo, and Bill de Blasio, this ostensible progressive, united on a deal that, as you point out, would really effectively amount to subsidizing an already very profitable corporation?

RICHARD WOLFF: I think that Mr. de Blasio, who is definitely to the left of Mr. Cuomo, which is, you might say, a very low bar – being to the left of Andrew Cuomo is not much of an achievement, but Mr. de Blasio has at least achieved that. I think they’re both caught up in the mythology of American capitalism, that it is the job of city and state politicians to get down on their knees, begging any corporation, large or small, to come to their jurisdictions, offering tax holidays, subsidies, every kind of direct and indirect support, that’s in the nature of what has come to be meant by the term “economic development.” And they love the publicity, they like that front page picture, and the New York Times, for example, made that available to the governor and the mayor. There they are, touting the jobs that will come to the city, leaving the details of how many jobs, the details of who will get these jobs, the details of what jobs will be lost when city and state money is diverted into the hands of this corporation. They leave all that unhappy detail out of the picture so that they can get a wonderful photo op for their political careers.

And then, the newspapers and the media tend to go along, they don’t look a gift horse in the mouth. In fact, the most interesting thing that has happened here in New York is that a number of observers have been so grossed out by the sheer size of this tax giveaway to another corporation that they have opposed it. Local politicians, more than we would have expected, have come out against it. The New York Times, despite that front page picture, has editorially spoken against. Now, they pick up on this or that detail, when what is really going on here ought to be a protest against the absurdity of democratic political institutions giving up their own money and putting it in the hands, without conditions, of private profit corporations. At least there is more opposition this time than I have seen, and that gives me a little bit of hope, even though the political leadership is AWOL, big time.

BEN NORTON: Let’s talk more about the state of social spending in New York, because as you’ve critically pointed out, this three billion dollars in tax breaks could go toward actual social spending, which in New York, is every year dwindling. It’s not just public transportation. In fact, a shocking recent report found that roughly one out of every ten students in New York City public schools is homeless. That is more than one hundred thousand children that are homeless, and this is actually more than at any time since records began. So we see massive homelessness, we see the dwindling public transportation system which is falling apart around us, we see gentrification pushing people out of their homes, rents skyrocketing, and now we see this Amazon headquarters, HQ2, that is going to come to Queens and push out further many of these poor residents who have been in Queens for many generations.

So why do you think that our politicians, people like Bill de Blasio, are not prioritizing fighting homelessness and investing in public infrastructure? Instead, they’re putting this money into a corporation like Amazon. I mean, why haven’t we seen a drive for more social spending?

RICHARD WOLFF: Well, we have. We have seen demands around the community for help in the schools, which are a problem, housing, as you put it, the homeless children, the subway. It’s a scandal, it’s talked about in the media and so on, but I think that’s the general problem of American capitalism, that the mass of people have needs, those needs are pretty well known, but that the political system and the political actors who run it, the politicians, have learned the basic lesson, that the bulk of the wealth has been concentrated in the hands of the corporate leadership of America. They call the shots. If you want a political career, you’d better do what they want or else they will fund your political adversaries and you won’t keep your job and you won’t rise up in the political system. You will barely be able to survive, so you better please the people who sit at the top of the economic pyramid and basically fob off the rest of us with speeches and promises that you hope everybody will forget.

Mr. Bezos is in the position to donate to political campaigns because he’s a super-rich person. Let me remind you that the three billion dollars that the city and the state have to take from the social services those monies would provide, if they were taken from Mr. Bezos, they would still leave him the richest person on earth with excess of one hundred to one hundred and fifty billion dollars of wealth. If he had any decency, just as a person, he wouldn’t make a request to make life harder for the millions who depend on the city and the state of New York in order to become even richer than he already is as the richest person. And if that weren’t enough, he recently purchased the Washington Post newspaper, and Mr. de Blasio and Mr. Cuomo are very keen on getting good stories from that important newspaper in America, and they don’t want to displease Mr. Bezos. And there you see it again, a system in which the mass of people’s needs are ignored, because the power derives from the money, and the people sitting on the big piles of money are the corporate leaders in America. This is just the grossest recent example of what that means.

BEN NORTON: Well, we’ll have to end our conversation there. Thanks so much for providing this analysis. We were speaking with Richard Wolff, who is a world renowned economist and a Professor Emeritus of Economics at the University of Massachusetts Amherst and New School. He also has recently released the book, Capitalism’s Crisis Deepens. And you can find another book recently published by his organization, the Democracy at Work organization. Their website is democracyatwork.info. Thanks so much for joining us, Rick.

RICHARD WOLFF: Thank you, Ben. Glad to have been on the program.

BEN NORTON: For The Real News Network, I’m Ben Norton.