None of Our Business? How Corporate Power Corrupts Local Economies and Democracies

June 29, 2021 State and Local Policy

Introduction:

In the last few years, corporate power has received a renewed focus at all levels of government, after some four decades of bipartisan neglect. At the state and local level, this has taken on many forms. New York, for example, passed a significant rewrite of its antitrust laws through the State Senate.[1] Lawmakers in several states introduced legislation to rein in the dominance Apple and Google have over app developers, with a bill advancing through the Arizona House.[2] In September 2020, Ohio made General Motors repay tens of millions of dollars to the state after it broke a promise to keep a plant open in Lordstown, and the same state levied a lawsuit attempting to impose common carrier rules onto Google.[3][4] State attorneys general joined a Department of Justice case against Google, while others launched an independent case, and they also filed their own multi-state effort against Facebook. Cities and states placed new regulations on predatory delivery app corporations.[5] Communities all across the country, from Prince George’s County, Maryland, to Grand Falls, New York, have said no to new Amazon facilities, citing the corporation’s anti-labor and anti-environmental practices, and Washington, D.C., filed a groundbreaking antitrust case against the corporation.[6][7]

Much of this renewed interest in grappling with corporate power can be traced back to the controversy over Amazon’s second headquarters, dubbed HQ2, and its ultimate defeat in New York by local activists and politicians.

In 2018, Amazon launched a continent-wide auction to place a division headquarters, which it dubbed Amazon’s second Headquarters (HQ2). Hundreds of cities attempted to convince the online retail giant to locate it within their borders, offering it billions of dollars in tax incentives and other monetary and regulatory favors, such as publicly-funded helipads.[8][9] New York Gov. Andre Cuomo, jokingly, said he would change his name to Amazon should the company locate in the Empire State.[10] He also, not jokingly, offered to rename a creek after the company.[11]

The winning bids – from Long Island City, New York, and Arlington, Virginia, a suburb of Washington, D.C., which were paired with a smaller outpost in Nashville, Tennessee – collectively pledged billions of public dollars to Amazon. Famously, activists and elected officials in New York were able to successfully organize against their state’s share, with Amazon abandoning its plans there.

But even that victory revealed how far state and city governments need to go to fully confront the power of today’s dominant corporations: Many cities not only refused to release details of their bids during negotiations with Amazon, but even after the competition was over and the winners chosen.[12] More than two years later, some cities are still refusing to say what they offered. Only Amazon employees and those negotiating on behalf of city and state governments knew what Amazon could have received in public resources.

This paper will look at several policies, like those that protect cities’ Amazon bids, that enable corporations to collude with state and local governments to extract resources from local communities and undermine competition, while shielding themselves and local elected officials from public accountability. It will show how these policies enable corporations to play elected leaders in different jurisdictions off against each other in order to maximize resource extraction, without the public having an ability to weigh in or activists to provide a counterweight and counter-narrative. It will provide case studies for each, and suggest changes that both city councils and state legislators can make to end these abuses, as well as offer model legislation upon which local and state officials can base their efforts.

Changing these practices will provide two important benefits to local communities: (1) Enabling them to focus on economic efforts that pay wider dividends and that build more sustainable, inclusive and equitable local economies, and (2) giving voters more say over when and how their local resources are used. It is imperative that these policy recommendations be adopted as part of the broader movement to rein in corporate power and check the growing economic and political power of today’s dominant corporations. They should be included as part of an overall policy framework aimed at reversing corporate consolidation and reining in corporate power.

Notes:

[1] S933, approved on June 7, 2021 https://www.nysenate.gov/legislation/bills/2021/s933

[2] Stoller, Matt and Pat Garofalo, “States Are Right to Rebel Against Big Tech,” The New York Times, March 18, 2021 https://www.nytimes.com/2021/03/18/opinion/apple-google-app-monopoly.html

[3] Hall, Kalea, “Ohio requires GM to refund tax credits, invest in Lordstown,” The Detroit News, Sept. 28, 2020 https://www.detroitnews.com/story/business/autos/general-motors/2020/09/28/ohio-requires-gm-refund-tax-credits-and-invest-in-lordstown/3561524001/

[4] State of Ohio v. Google, LLC https://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/Filed-Complaint-(Time-Stamped).aspx

[5] Tkacik, Moe, “Rescuing Restaurants: How to Protect Restaurants, Workers, and Communities from Predatory Delivery App Corporations,” American Economic Liberties Project, Sept. 18, 2020 https://www.economicliberties.us/our-work/rescuing-restaurants-how-to-protect-restaurants-workers-and-communities-from-predatory-delivery-app-corporations/

[6] Garofalo, Pat, “Amazon’s Grand Bribe Fails,” Boondoggle, August 13, 2020 https://boondoggle.substack.com/p/amazons-grand-bribe

[7] District of Columbia v. Amazon.com, Inc. https://oag.dc.gov/sites/default/files/2021-05/Amazon-Complaint-.pdf

[8] Garofalo, Pat, “The Frenzy Over Amazon’s HQ2 Should Be a National Embarrassment,” TalkPoverty, Nov. 13, 2018 https://talkpoverty.org/2018/11/13/frenzy-amazons-hq2-national-embarrassment/

[9] Capriel, Jonathan, “A helipad is likely out for HQ2. But there may be a workaround for Amazon,” Washington Business Journal, April 8, 2020 https://www.bizjournals.com/washington/news/2020/04/08/a-helipad-is-likely-out-for-hq2-but-there-may-be-a.html

[10] Taylor, Kate, “New York’s governor jokes he’ll change his name to ‘Amazon Cuomo’ to win the HQ2 bid hours before a report that New York City will be home to one of the company’s new headquarters,” Business Insider, Nov. 5, 2018 https://www.businessinsider.com/new-york-governor-jokes-amazon-cuomo-name-change-hq2-2018-11

[11] Lovett, Kenneth, “Cuomo ready to rename a Long Island City creek the Amazon River to woo Amazon into opening its second headquarters in NYC,” New York Daily News, Oct. 30, 2018 https://www.nydailynews.com/news/politics/ny-pol-cuomo-amazon-20181030-story.html

[12] Garofalo, Pat, “Open the Amazon files: A second scandal is that losing city and state bids across the country are still being kept from public scrutiny,” New York Daily News, Feb. 22, 2019 https://www.nydailynews.com/opinion/ny-oped-open-the-amazon-files-20190222-story.html