Amazon’s HQ2 Is Bad for the D.C. Area

The continued concentration of big tech in coastal cities hurts everyone.

The announcement of Crystal City as the site for Amazon’s new satellite headquarters was greeted with predictable cheers by area chambers of commerce and local politicians. But is it really good for most people who live there? Despite what local boosters are saying, it is a bad deal.

Why does Greater Washington need another mega-project? The latest official figures show a 4.2 percent unemployment rate for the metropolitan area, an excellent showing in light of recent government downsizing. It’s also proof that the local private sector is growing jobs to offset the losses without the $573 million in subsidies promised to Amazon. What’s more, the jurisdictions directly impacted by the decision, Arlington and Alexandria, have unemployment rates of 2.2 and 2.4 percent respectively; these are hardly pockets of poverty in need of deliverance.

It is true that the District of Columbia’s 5.9 percent unemployment is above the national average, but the Amazon agreement provides no hiring quota for D.C. residents. Even if it did, adding several thousand commuters to the Potomac bridges will likely create further headaches for a metropolis that has the worst traffic in the country.

The gridlock and overdevelopment that characterizes the D.C. region are the root of the problem. The area undertook a frenzied building boom in the wake of 9/11 (intelligence agencies alone added the equivalent of almost three Pentagons—or 17 million square feet of space), while infrastructure growth has lagged woefully. As anyone who has slogged up U.S. Highway 1 through Crystal City can attest, it is no ghost town. The quality of life for its residents who are not Amazon employees will deteriorate.

The entire process of cities and states using taxpayer money as corporate bribes is already morally suspect. This practice has become a $90 billion per year national scam, and there is no evidence that it is a net job creator: it either rewards companies for decisions they would have made anyway, or poaches jobs from other localities. Like the scandal of cities building free stadiums for billionaire sports franchise owners, kickbacks for corporations lavishly benefit the richest at the cost of addressing urgent public needs.

If not for this deal, the taxpayer funds now headed for Amazon’s coffers would have done more good for a greater number had they been spent on education, housing, or transportation. D.C.’s Metrorail urgently needs both operating and investment funds, as breakdowns, schedule delays, and station closures are a chronic occurrence. The idea that the Metro can handle thousands of more riders every day between the Pentagon and Alexandria—a line which is now experiencing major service delays—is unrealistic. Auto traffic there is already a rush hour nightmare. Spending the $573 million to fix these and other infrastructure snarls is the solution; bribing Amazon to add more traffic volume merely exacerbates the problem.

The selection process itself shows signs of having been a charade all along. Starting with 238 cities, Amazon conducted a very public, reality TV-style circus designed to tease the applicants. In the end, it settled on the financial and government hubs of America for its split award. Not to mention, Amazon CEO Jeff Bezos just happens to own a home in both cities. But the feverish hype created a bidding war that the firm exploited under what appears to be the false pretense of fair competition. And the 20 “finalists” had to provide Amazon with reams of detailed economic information; in effect, the company conned them into surrendering valuable marketing data for nothing, which Amazon is free to use or sell.

In recent years, serious data breaches, propaganda manipulation by hostile foreign powers, and concerns over tech giants’ market dominance have caused the American people to regard the IT sector as a distinctly mixed blessing. Seattle, Amazon’s hometown, is saddled with sky-high rents, unmanageable homelessness, and political extortion from Amazon and other companies when the city tries to use its taxing power to solve the problems that tech has partially created.

This is not just a NIMBY (Not in My Back Yard) issue. The continued concentration of big tech in coastal metropolises will only aggravate existing differences in regional income, professional skills, lifestyles, and political attitudes—a situation that, in the long term, cannot be good for corporate America or anyone else who desires political stability and broadly shared prosperity. The fact that this process is being subsidized by taxpayers only adds a perverse incentive.

Mike Lofgren

Mike Lofgren is a former career congressional staff member who served on the House and Senate budget committees. His latest book is The Deep State: The Fall of the Constitution and the Rise of a Shadow Government.