L.I.C. AMAZON AND OUR ECONOMY
The first business I ever owned was a Long Island City luncheonette in 1971.
L.I.C. (Long Island City) was then a neighborhood of factories where most of my customers worked. I was open from 6 a.m. — 3 p.m. for breakfast and lunch six days a week. The place was only steps from the #7 subway stop at the cross streets of Jackson-Vernon Blvds.
Through the years, I owned and managed property there. I even had a G.C. shop where I kept trucks and supplies in nearby Greenpoint, Brooklyn in the late 70s. During the last 25 years, I would pass through L.I.C. occasionally but hadn’t paid much attention to its impressive transformation. Two months ago, I attended a wedding in Long Island City. There have been significant changes in the nearly 50 years since I had that luncheonette.
The neighborhood is no longer the gritty place it had been. Beginning with the Citicorp office building built in the 1980s, the area, like so much of New York, has become a better place. It is no longer a neighborhood of factories and warehouses. New residential high-rises, office buildings and hotels dot the area.
Now full of hipsters and young families, I didn’t see the Archie Bunker types that frequented my little luncheonette. The neighborhood bars that had catered to these men and women with a shot and beer have given way to new lounges and cocktail places. One of the few things that is still the same is the largest public housing project in the country that anchors one corner of L.I.C.
Amazon has chosen this neighborhood to be one half of its 2nd headquarters along with Crystal City, Virginia, which is right outside of Washington D.C. Why did this company choose these two areas instead of 20 other cities that wanted to be part of the Amazonian Empire? It is really simple. New York is the home to the largest concentration of tech workers in the country and Washington is the 2nd.
Many have asked why didn’t Amazon choose Baltimore or Detroit? They could have made a huge difference in those cities through revitalization. What every government seems to forget is that Amazon is not in the business of urban renewal. They went to where they could find qualified employees, and they understood that these same employees wouldn’t relocate to those other places.
Amazon will be receiving billions of dollars in economic subsidies from New York, Virginia, and the federal government. Those governments are being played for suckers because Amazon needed to locate to the places they chose because that is where the talent is.
Cities like New York, London, Shanghai and San Francisco are international, and their economies are tied to each other more than they are to their respective states or countries. The economies of these cities are bound by global trade and not local regions. Data and ideas are what these workers and companies produce, not cars or widgets. Amazon is much more than a seller of things. It is a purveyor of media and cloud computing. That is where they see their future.
The other and more revealing fact about both Washington and New York being chosen is that global companies don’t care about being located in high-tax regions or where there is a high cost of living. The key to the decision was to locate where the people are who will make the company expand. It is not in Milwaukee. Jeff Bezos, Amazon’s largest shareholder, C.E.O. and the richest person in the world, knows that you can’t put a tariff on an idea or coded language. His product is immune to trade wars.
As more and more of the world’s economy becomes information based, 2nd tier cities will be left behind and will be unable to compete for these type businesses. These businesses must have access to talent and talent wants to be where there are other talented people. Cultural opportunities and the arts are important, as are good universities.
So, what should these other 2nd and 3rd tier cities concentrate on. First and foremost, their infrastructure and cultural institutions. Housing will be critical, and it should be the type of housing that is wanted by the people you hope to attract. Forget economic subsidies, they have yet to be proven cost effective in the long run. Don’t expect one company or industry to be your economic and civic savior. You will need to look to what your strong points are and then exploit those.
Economies are changing at blinding speeds. What was done in 1950 or 2000 will no longer suffice. It is important that these cities do not play to their past but look to their future. As we move into that future, New York and other such international places will do just fine. They will become less attached to the economies of their surrounding areas but more interactive with other like cities.
L.I.C. is an example of a 20th century economy morphing into the 21st century. It changes not because of governmental policies and initiatives but in many cases despite it. The average wage is $132,000 for these tech employees. There is not much of a possibility to move 10,000 of these highly trained and competent people to Buffalo. Amazon was smart to not even try.
