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You are here: Home » Blogs » Beating the Amazon Con

Beating the Amazon Con

Josh Stephens on
Nov 20, 2018

One of my favorite ruminations on the subject of self-sufficiency comes from Vincent van Gogh, in a letter to Theo: “If one hasn't a horse, one is one's own horse.”

While van Gogh could have painted pretty much any fantasy, equine or otherwise, that came into his singular mind, urban planners face more tangible challenges. And yet, as 18 of our great cities fret and stammer over their recent third-place-cum-last-place showing in the Amazon beauty contest, cities would be wise to heed van Gogh’s advice.

Plenty of us knew that Jeff Bezos’s version of The Bachelor was a ruse at best. Whether he did it to learn cities’ secrets, generate priceless amounts of free press, or just cackle in the glow of his own power, intercity competitions for supposed economic development prizes, be they stadiums, corporations, or other developments, rarely go well. The literature has long been clear on that. CP&DR’s own Morris Newman knew that the HQ2 search was, literally, a joke.

In short, cities should quit wasting money on corporate welfare and, if they’re going to proactively pursue economic development programs (itself a measure of dubious value), they should stick to homegrown assets. The pursuit of Amazon in particular, though, was as ironic as it was perverse.

Let’s remember what Amazon is. It’s not a factory, employing thousands of workers. It’s not a major league sports team, stoking civic pride. It’s not some promising little tech startup that might one day hit it big. It’s a retailer. It happens to be one of the world’s biggest retailers, and it happens to have put many other retailers out of business.

Amazon is hardly the first juggernaut to swallow up Main Street and send mom and pop into early retirement. Woolworth’s, A&P, Sears, and – most enormously – Walmart have collectively been at it for over a century. Amazon, though, could be the endgame. Its market power increases exponentially when you factor in not just its inventory and revenue but also its data. The more Amazon sells, the more it knows. The more it knows, the more it sells. And, of course, its market is everywhere and its inventory is everything.

The point here is that, taken to its extreme, Amazon could put every other retailer out of business.

If it creates even a fraction of that carnage, be it at the mall or on the street, cities will suffer mightily – more, that is, than they already have. Retail may be just one part of a city’s economic mix but it’s a crucial part of the built environment. Along with restaurants, stores are the most prominent private-sector inhabitants of the public realm. Pleasant, walkable, equitable cities are pleasant, equitable, and walkable only when there are things to walk to. Shopping can take place online, but nothing – not all the Zoomba studios, pet groomers, and coffee shops in the world – can compensate if Amazon keeps pushing traditional retail towards the endangered species list.

My point is this: cities’ pursuit of HQ2 (or HQ 0.5, as it turned out) was, to use the most apposite and disgusting analogy I can think of, like making a bed for the termite queen so her minions can eat not just your house but also everyone else’s houses. Cities don’t need Amazon as an employer, and they certainly don’t need Amazon as a retailer.

Now that cities can stop tarting themselves up for Amazon, they, led by their planners and community development people, can start doing what cities are supposed to do. They should build up their own economies and support their own people – and not let themselves get exploited by companies that are infinitely richer and smarter than they are.

Imagine if a city supported its own homegrown retail: local chains, mom-and-pops, even franchises. Imagine if all of this added up to, say, even a fractional reduction in Amazon’s $178 billion in annual sales and an equivalent boost to local economies. That would mean not just several thousand jobs (and their salaries) for one city but rather billions of dollars staying in every city. By contrast, the most generous (i.e. delusional) of Amazon’s also-rans – Montgomery County, Maryland – offered an estimated $8.5 billion to lure Amazon. The winners are giving away a mere $2.4 billion

Of course, a pro-city, anti-Amazon crusade would require a lot of hard work and a lot of creativity – kind of like what those folks in Seattle are doing. But this isn’t computer science – cities have plenty of strategies to support local retail if they choose to use them.

Well-planned new places support retail. Character-rich old places support retail. Smart development, especially mixed use, can support retail. Surely certain financial programs can support retail. Certain tax programs can support retail. Incentives for and/or regulation of commercial properties (such as vacancy taxes) can support retail. Streamlining of regulations can definitely support retail. Public relations, such as “buy local” campaigns, can get more aggressive. Hell, they should get militant.

I don’t have all the answers, but if Jeff Bezos can figure out how to make $275 million per day, surely someone can help Nancy’s Hobbies n’ Things and Bob’s World of Hats to stay ahead of the rent.

The great thing about the contest I’m proposing is that there’s not just one winner. Everyone wins. This is basically what Jane Jacobs advised in The Economy of Cities, and it’s what economists from François Quesnay to John Meynard Keynes to everyone with an ounce of common sense have in mind with the multiplier effect.

The only loser is Jeff Bezos. And he can afford it.

What happened with the Amazon contest was not the beautiful, imaginative transformation of a blank canvas into an economic fantasia that Amazon promised and that cities naively imagined. It was as gruesome and about as useful as the amputation of an ear. But maybe the pain cities are feeling for being rejected by Amazon will inspire them to finally saddle up.

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