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With all the fixin’s

SoVaNow.com / November 22, 2017
Consider this your optional meal plan for Thanksgiving: leftovers, loose scraps and covered-dish surprises. Let’s dig in:

» There are lots of deplorable news stories out there — numero uno on the list has to be the disgusting tale of Alabama Senate candidate/teen sex predator Judge Roy Moore, a mighty conservative champion he — but one could go on forever about such stuff. How about a big national story with non-obvious yet irritating local consequences? Ladies and gentlemen, I give you the business scandal of the year: the headlong and frankly pathetic rush by states and cities to land the second corporate headquarters of Amazon.com.

Full disclosure: I have a personal rule about shopping online, or going to WalMart for that matter. I buy stuff only from places like these when I can’t find what I want locally. Years ago, I made the mistake of purchasing paper at WalMart for a tractor-fed, dot matrix office printer. The roll fell apart as soon as I scrolled it through the printer. Cheap does not equate as value, as that unfortunate consumer decision showed. No shopping experience is ever perfect (despite what Jeff Bezos wants you to believe), but I’ll put my bet on small business owners who are personally accountable to their customers and who stand behind what they sell. If I pay a little extra (and there are plenty of times when I don’t), I figure it’s worth it.

So with Black Friday and Small Business Saturday coming up, please keep our local shops in mind as you go out merch-hunting after turkey-gouging. Meantime, the Amazon story has stuck in my craw ever since the online retailer announced it would build a second headquarters, dubbed HQ2, to complement its current Seattle digs. The company has pledged to create 50,000 positions paying an average of more than $100,000 for the lucky municipality that wins the project. In response, 238 cities have submitted proposals to Amazon. David Dayen, a redoubtable chronicler of corporate excess and greed (he’s done great reporting over the years on the 2008 housing bust), captures the upshot in an Oct. 27 piece in The New Republic. Here's the intro:

"The nation’s largest bribery scandal is playing out in real time, a brazen act of collaboration between government and a powerful corporation. This epidemic spans across cities large and small, in red states and blue states, in rural communities and established metropolises; it’s also happening in Washington, D.C., but incredibly doesn’t involve Donald Trump. Thousands of public officials are implicated, and they haven’t been particularly quiet about it. In fact, many of the attempted bribes are on video.

"We won’t see a flurry of public corruption trials in this case, because the bribery has become accepted as a normal part of economic development. But the embarrassing orgy of corporate welfare directed recently at Amazon, for the privilege of hosting its new corporate headquarters, ought to be illegal. It’s a shakedown by a $500-billion company that’s pitting communities— out of desperation for jobs or prestige — against one another in a bleak competition. The gambit doesn’t even deliver the promised boon for localities, but officials have been so seduced by bad economics and threats of abandonment that paying corporate tithes has become a leading government service."

If the Amazon success story isn’t familiar to everyone by now, here are some important things to know: One, Amazon’s retail operation doesn’t actually make much, if any, profit; two, the rise of Amazon was enabled by its long-time exemption from state and local sales taxes, giving the tech giant a huge leg up over brick-and-mortar retail competitors who pay these same levies; and three, Jeff Bezos is an absolute genius at convincing investors that he’ll dominate the retail roost sometime before the 23rd century, which is why Amazon’s stock is priced wildly in excess of its generally lousy earnings. (By the way, Amazon’s most profitable unit, by far, is Amazon Web Services, the company’s cloud computing business. Number two in this market segment and rising fast is Microsoft, which of course offers its band of cloud wizardry out of its Boydton complex.) Amazon’s penchant for selling goods at a loss is textbook predatory behavior, but instead of slapping the company for anti-competitive practices, state governments compete to see which can offer the Amazon the biggest handout. It’s everything wrong with “economic development” in one neat package.

It may seem presumptuous to accuse Amazon of running a shakedown racket when cities and states are willing participants in the company’s site selection scheme. But that’s precisely the point: Dayen describes “the public bidding war” for Amazon’s new HQ as “just a ploy to squeeze out additional subsidies, to play cities off one another.” How can communities be compelled to disarm? The idea of outlawing subsidies altogether gets kicked around from time to time, before the powers-that-be dismiss the notion altogether, but Dayen suggests an alternative policy: means testing economic incentives to give an advantage to smaller outfits. The general idea is to ensure that public subsidies go to start-ups, fledging companies and other independent risers in the market rather than big-foot incumbents who get all kinds of direct and indirect public sector help anyway. “We constantly give taxpayer-funded incentives to corporations with virtually limitless cash reserves,” writes Dayen. “Those incentives should be reserved for startups and young companies, helping to diversify the economy and perhaps even nurturing an Amazon competitor.”

Hear! Hear! Meantime, if you want to do your part to nurture a healthy local economy, there’s a step you can take without waiting around for an act of Congress: Shop local this holiday season. It really does make a difference, and it’s a way to make your money work on behalf of the community in a host of positive ways. Just as healthy markets should do.

***

It’s probably tempting to believe that economic development follies are limited to unelected bureaucrats and big government mavens plying their trade at rarified levels of society, but some of the worst foolishness is the handiwork of local representatives, including our own. To take one such example, state Sen. Frank Ruff is vice-chairman of the Virginia Tobacco Commission (these days formally named the Tobacco Region Revitalization Commission.) The tobacco commission has accomplished some good things over its two decades of existence, but it has laid more than its share of duds, too. JLARC, the legislature’s research arm, issued a withering report a few years ago on the group’s activities that led to some much-needed reforms, but every once in awhile the Tobacco Commission reverts to its old sorry ways. So I guess I shouldn’t have been shocked by this recent press announcement: “Blue Ridge Chrysler Dodge Jeep Ram to Move to Washington County.”

Get a load of this: the Tobacco Commission ponied up $140,000 for the car dealership to relocate to Washington County from its present address in Russell County — which, last I checked, is still part of Virginia. I get the idea of offering incentives to steal companies away from Tennessee or North Carolina, but up the road a spell in Virginia’s coal country? From press reports in the area, this sounds like nothing more than a garden-variety expansion of an auto dealership: something that other auto dealers all across Virginia and the country pay for themselves.

So why is this project worthy of public subsidies? I’d be interested in seeing Frank Ruff tackle this subject in the constituent column that he emails around to his supporters. What can we expect next: the Tobacco Commission doling out five-figure opportunity grants for people to operate food trucks, news blogs and eBay reseller stores?

Grrr.

***

Some post-election notes: Three races for Virginia House of Delegates remain unsettled, leaving unresolved the question of which party will control the lower chamber of the General Assembly next year. With the tsunami that hit Election Night, Democrats all but wiped out a 66-34 Republican advantage in the House, picking up at least 15 seats and possibly a 16th or even a 17th. If the latter eventuality comes to pass, Democrats will hold a 51-49 House majority. Such an outcome was unfathomable before the election and may be unlikely even today, but it’s no longer impossible.

Meantime, the State Board of Elections has declined to certify the result in the one of the closest races, in the 28th House district, long represented by retiring House Speaker Bill Howell of Stafford County. The Republican candidate there is leading the Democratic challenger by only 82 votes, and the Board of Elections has found that 83 voters were assigned to vote in the wrong contest (for the 88th House seat) in their split-district precinct. Oops. Maybe the crazy-tight gerrymandering of Virginia election lines wasn’t such a bright idea after all?

The closest unresolved race is for an open seat in Newport News area, where a Republican incumbent (Del. David Yancey, HD-94) leads the Democratic challenger by only 10 votes. With the Board of Elections having certified the vote totals Monday, this and one other close race in northern Virginia will now go to the recount stage. In the disputed HD-28 race in the Stafford-Fredericksburg area, about the only safe prediction is that everyone will soon be headed to court.

In other words, everything is a pluperfect mess, and control of one-half of the General Assembly will be determined … someday.

Till then, allow us to dwell on the present and wish everyone a Happy Thanksgiving. Despite appearances, we do have much to be thankful for. The holiday break is always a good time to reflect on our good fortune and bounty.

And enjoy those leftovers!





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