Just How Bad Are Those Payouts for Amazon HQ2?

The two-billion dollar payoff Amazon got to open its secondary headquarters in Crystal City, VA. and in Queens, NYC, is so bad that even the New York Times had to ask, “Did New York and Virginia Overpay for Amazon?


If you have to ask, you can’t afford the subsidies.

What really stands out about this story though (hat tip to Michael Strain) is New York Governor Andrew Cuomo’s hilarious cluelessness. Well, it’s hysterical if you aren’t a New York taxpayer. The NYT report says that “Cuomo defended the deal, arguing that New York has to offer incentives because of its comparatively high taxes.” And they quoted Cuomo saying, “It’s not a level playing field to begin with….All things being equal, if we do nothing, [Amazon is] going to Texas.”

Cuomo has the self-awareness of a sea sponge soaked in cask-strength bourbon.

When you were a kid, did you ever play the game where you see how long you could balance an upright baseball bat on the palm of your hand?

You put the knob (the wide part for grip at the bottom of the bat) on your flat, outstretched palm, then let go with your other hand. The top-heavy bat will move a little in one direction, so you move your hand in the same direction to get back under the weight. The problem is, you always overcompensate, and create slightly too much counterbalance with each little move. The bat oscillates more wildly, your countermoves become increasingly exaggerated, until you’re waving your arm like a spastic politician on the campaign trail, then finally crouched down and shuffling your entire body left and right and forward and backward. But eventually, inevitably, the bat falls over. You hope it doesn’t smack you in the forehead when it does.


Government intervention in the economy is no different. Government tries to promote this virtuous behavior, or punish that unwanted behavior, or raise revenues, or distribute benefits, or whathaveyou. But in each case, the result ends up being too much or too little of what was desired. So taxes go up and up until less revenue is actually collected. Regulations meant to promote competition end up stifling it. Subsidies to encourage different behavior become ever more expensive, but (or even because) people and businesses keep doing what they wanted to do in the first place.

And so it goes, until the whole house of cards collapses in what Robert Heinlein famously termed “bad luck.” You hope it doesn’t smack you in the forehead when it falls.

This is the position New York (and the other high-tax, high-regulation Blue States) finds itself in. Albany and Gracie Mansion have made it increasingly expensive and difficult to conduct business, so much so that they have to spend tax dollars collected from businesses and their employees in order to attract and/or keep businesses and their employees. This game is going to get ever more expensive, just like the baseball bat’s ever-increasing oscillations.

And as David “Iowahawk” Burge noted on Twitter this morning, “What did we learn today kids? By giving away the farm to land Amazon, New York incentivized every business in New York to threaten leaving unless they get a farm of their own.” That bat is moving even faster now, thanks to the official bribes paid to Amazon.


Texas, on the other hand, and as Cuomo correctly noted, could have gotten Amazon HQ2 for free. And nobody would have gotten smacked in the forehead with anything.

That said, I hope New York’s economy doesn’t smack too many people when it falls. But judging by what’s happened to the middle class (or what’s left of it) in California (which is always at least one full lap ahead of everyone else in the Big Dumb Government Olympics), it would be unwise to depend much on that hope.

Ibuprofen, anyone?

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