On today’s show we are talking about elementary school arithmetic. It seems to me that elected officials should be able to perform third or fourth grade arithmetic. Multiplication and division would be a bonus, but we will settle for addition and subtraction.
Amazon announced last week that it had leased about 335,000 SF of office space in the Hudson Yards project on Manhattan’s west side. Hudson Yards is the project that was built on the old rail yards that bordered the shipping piers along the Hudson River. That was back in the day when shipping came directly into Manhattan. Today, most shipping commerce comes into much larger container ship terminals in Newark NJ. The Hudson Yards project was the brainchild of the Trump Organization and was more than 20 years in the making. The space will house some 1,500 employees. This despite the earlier Amazon announcement to pull out of locating the so called HQ2, satellite headquarters in Long Island City.
The original plan would have brought 25,000 direct jobs and nearly double that number in pull-through employment.
In response to the Amazon announcement, senator Mike Gianaris issued a press release on Friday declaring victory over Amazon. He said,
“Amazon is coming to New York, just as they always planned. Fortunately, we dodged a $3 billion bullet by not agreeing to their subsidy shakedown earlier this year. Now, we must enact reforms to our economic development programs to ensure no company can seek to take advantage of the public again.”
Since Amazon’s decision to leave New York in February, Senator Gianaris introduced legislation to ban secrecy clauses in economic development agreements, de-link state opportunity zone tax breaks from the federal tax code.
I don’t have a political axe to grind in any of this. I do have a strong opinion that arithmetic has no political affiliation. One plus one equals two. 25,000 jobs is a lot larger than 1,500.
A tax reduction is not the same as a government grant. In order for Amazon to benefit from the reduction, they would have to pay taxes, more taxes than NYC and NY state are collecting today.
The addition of 1,500 jobs is positive. But it’s really a loss of 23,500 jobs, instead of a loss of 25,000 jobs. The loss of 25,000 jobs was entirely the work of a few politicians actively doing the unfathomable.
New York has lost considerable population and considerable tax revenue in the past few years. One million people have fled New York City and the tri-state area—which encompasses New Jersey, Connecticut and Long Island—in the last nine years. According to Bloomberg, almost 300 people are moving out of the area per day.
When politicians make patently false statements in order to aid their narrative, they erode the political system as a whole.
Perhaps senator Gianaris would not mind a system whereby his income would be reduced every time he utters falsehoods. He probably would declare that consequence to be a victory too. He could use the same math that argued Amazon was fleecing the taxpayers of NY.
Reduction of revenue for the state of NY and NYC is hard for the city to tolerate. NYC has gone through considerable resurgence since the 1970’s and 1980’s when the city was on the verge of bankruptcy. They could not repair the crumbling infrastructure. The had 1.3M people on welfare at that time. After Mayor Giuliani took office, that number was reduced to 500,000. Nearly 800,000 people went back to work under Mayor Giuliani.
The fact is that business leaders know how to do math. The issue is not just with Amazon. NY has sent a signal to the business community that it is no longer open for business. When the most basic arithmetic is distorted to reflect a particular narrative, every business leader can see it for what it is.