01:52 - Source: CNN Business
Amazon cancels plans for NYC headquarters

Editor’s Note: John Avlon is a CNN senior political analyst and anchor. The opinions expressed in this commentary are his own. View more opinion articles on CNN.

CNN  — 

This is why we can’t have nice things.

Local liberal activists – championed by Congresswoman Alexandria Ocasio-Cortez – loudly protested Amazon’s decision to move half its eastern hub to Long Island City ever since it was announced.

Amazon just called their bluff and is now pulling the plug on the $2.5 billion deal that would have permanently brought 25,000 high paying jobs to the heart of Queens. This isn’t a win for liberal Democrats – it’s a face plant, an epic fail.

You kept sending Amazon stories. We couldn't stop reading them

  • We wanted to know what CNN Opinion readers across the country were thinking about this critical decision. Were you cheering or jeering? Did you see the pullout as an economic setback to New York City or a blow struck on behalf of the little guy?
  • Your answer: all of the above – and more.

    The activists were outraged that the incentives given to the world’s wealthiest company were too generous. But they just screwed their community by depriving it of a transformational investment. It’s a painful reminder that nobody wins when the not-in-my-backyard activist crowd stands in the way of the real progress that comes from investment.

    Remember that Long Island City won the lottery when New York City and the state successfully bid on the campus that every large – and most medium size – cities were hoping to land.

    After all, Amazon choosing a community could shift its fortunes overnight with the promise of sustained investment. It would have been a game changer for Baltimore, Newark or Philadelphia. But Long Island City won on the strength of New York City’s resurgence and a generous $3 billion incentive package that included massive tax incentives – which means a reduction in New York’s sky-high business taxes. For what it’s worth, that was less of a tax incentive package than other cities, such as Newark, were offering.

    But the activist class doesn’t understand that the real prize isn’t tax revenue. It’s local economic growth and the kind of vibrancy that occurs when local small businesses – restaurants and shops – start springing up in the community.

    Yes, there are winners and losers when investment comes and local rents rise. But it is foolish to fetishize rusted-out communities that have little economic activity or to presume that government investment can create a vibrant local community as much as private enterprise can.

    Perhaps the protesting local pols were merely hoping that their anger would translate to a better deal on the margins – more money set aside for infrastructure, for example. But people tend to negotiate in better faith when they’re not being yelled at.

    So New York is left looking like a loser, out of touch and extreme. It just spurned an investment that other cities and communities were competing hard for. And Amazon announced that no other city would get second prize; they would focus their efforts on more business-friendly Virginia and Tennessee.

    In the process, the right wing gets a substantive talking point to bolster their negative Alexandria Ocasio-Cortez obsession. This will only reinforce their fear-fueled hyperpartisan narrative that all Democrats are anti-business proto-socialists. But every political stereotype has a kernel of truth – or it wouldn’t stick.

    There’s a lesson here for business beyond the fact that they don’t need to be a perpetual punching bag. Income inequality in our country has become unsustainable and destabilizing. The three richest Americans control as much wealth as the bottom 160 million.

    And for the record, it’s totally offensive from a policy standpoint that a company like Amazon, with $11 billion in profits, can legally pay zero in federal taxes. That’s different from local competition for investment. But it’s an indication of why there could be overheated calls for pitchforks in Palo Alto and Seattle if things don’t change.

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    Indeed inequality creates a destructive dynamic that is going to logically lead to more redistributionist policies. Businesses are going to need to think bigger about the connection to communities. But that conversation will be around inclusive public-private partnerships, not protesters who pretend that they can win with unilateral demands.

    There should be scrutiny when big business tries to write special rules for its benefit. But local investment unleashes larger creative dynamics that improve the quality of life for the community. And that’s what the activist class should be focused on.