The South Asian Times

16 July 2019 08:42 AM

Amazon's pulling out of NYC is a wise business decision

By Prof A.D. Amar

Many states were so envious of New York City for its winning the fiercely contested location for Amazon’s second headquarters. It immensely contributed to NYC’s image as a leading technology destination. Some had even started to talk about the city displacing San Francisco as the global tech hub. Now, with Amazon abandoning its plans to locate its second headquarters here, Silicon Valley must be taking a sigh of relief and Northern Virginia dancing in the open.

As a business professor, I find what Amazon did very understandable. For a company that is deeply engaged in disrupting the workings of any and all industries through technology to not get into a situation that divides its attention between putting its mind into what it does best and trying to constantly work to maintain peace with its agitated communities. It does not want to be consistently haggling with politicians on its operational policies, arguing with local leaders on what it does or does not do to keep them from opposing it, and negotiating what to give the activist demonstrators to keep them from disturbing its attention. 

What I saw happening in New York, both city and state, since the last year, is not a transitory entropy that would smooth out itself after Amazon came in, behaved like a good community citizen, and employed 25,000 people as announced. To the contrary, it could have likely become the starting point of a new normal for the Amazon companies that operate by having their employees fight for better rewards by following meritocracy rather than relying on the rights to collectively bargain, or laws to get treatment based on employees’ demography.

New York value system has changed a lot in the last few years. It has started to move fast to a kind of European-style political economy, led by socialistic ideology. These signs can be read from the behavior of both the politicians in New York City and Albany. They seem too keen to engage in anti-business activities mainly to appease their voters, such as raising taxes and imposing levies whatever way they can. Business decision-makers see this in the demands to raise income taxes to 70%, collect monies from taxi riders and shoppers, make healthcare a birthright, the green deal, and the use of political power to force untenable community wills on businesses.

We can’t say that the New York bent on the socialistic economics is just an outcome of the newly elected politicians who believe that the way to add emphasis to expressions comes from the use of uncivil and abusive language, and demands are best received by those in power by street demonstrations and militancy.

Both New York state and New York City need to pay special attention to the causes that led to an opportunity like this, that comes once in decades, to slip away. If they do not strictly hold on to the values on which this country was founded and has thrived, Amazon’s departure would not be an isolated example in itself. This abandonment can literally open exit doors for many others because the new Federal Income Tax code has already reduced the attractiveness of the NY-NJ-CT metropolitan area.   

A.D. Amar is Professor of Management, Stillman School of Business, Seton Hall University. His areas of interest are strategy, knowledge, and operations. Email: AD.Amar@shu.edu

Update: 09 April, 2019

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