Thread by @asymmetricinfo

My column on Amazon and New York is up. TL;DR: there's a war coming between Big Tech and the left, and it's not clear the right is going to ally themselves with Big Tech: washingtonpost.com/opinions/2019/…

One point of confusion I'd like to clear up: a lot of people seem to be operating under a misunderstanding: they think that NYC/NYS can now take the $3 bb in incentives that Amazon stood to collect if all went well, and redirect that into direct government spending.

Ummm ... no.

Most of the incentives were tax incentives--i.e, they meant that Amazon would pay less taxes than it would if it had just located in NYC without any incentives. However, thanks to Mike Gianaris & AOC, NYC will now collect virtually $0 in tax revenue from Amazon.

There is no stock of cash that can be redirected.

However, conservatives who are pointing and laughing should consider the possibility of crowdout, which means Amazon deal wasn't necessarily free.

Who would have occupied that office space? What would they have paid? How many new workers would have relocated to NYC to take jobs, vs. simply not filling other jobs that then aren't generating tax revenue?

I have no idea how to begin to calculate the net benefits and costs, which include the fact that Amazon was going to be next to a subsidized housing development w/astronomical unemployment rates, benefits of development outside Manhattan core, supply constraints in housing market

Both the very simple narratives are wrong, though the "Whee! Now we have $3 billion to spend on other stuff!" is clearly much wronger.

Now, I mentioned this in my comments, and encountered resistance from the "tax subsidies are no different from direct subsidies crowd".

Weeeeellll ... yes and no.

Ceteris paribus, this is true. Giving someone a tax credit is the same thing as giving them a direct subsidy of the same amount.

But, umm, the whole point of what happened yesterday is that it's not ceteris paribus. You can't hold Amazon's presence constant.

Amazon's presence in the city is, you might say, an endogenous variable. Which means that tax subsidies can be very much non-equivalent, fiscally speaking, to having a $3 billion pile of cash you can spend on something else.

Anyway, read the column, which is about the politics of killing the deal, who wins, and who loses.

washingtonpost.com/opinions/2019/…