STREAMING NOW: Watch Now

What Amazon HQ2 says about American inequality

More than a year ago, the leaders of scores of up-and-coming cities across America's Heartland entered Amazo...

Posted: Nov 15, 2018 4:56 AM
Updated: Nov 15, 2018 4:56 AM

More than a year ago, the leaders of scores of up-and-coming cities across America's Heartland entered Amazon's HQ2 contest, embracing the idea that the e-commerce giant might choose a mid-size city or metropolis in the Rust Belt, like Detroit or Columbus, for its second headquarters location.

Alas, we all should have known better. On Tuesday, Amazon officially announced its decision to split its award of 50,000 headquarters jobs — not to one up-and-coming city in the Midwest — but between Long Island City in Queens, New York and Crystal City, Virginia, just outside Washington, D.C. (The company also plans to create around 5,000 jobs in Nashville.)

Amazon.com Inc

Business, economy and trade

Companies

Economy and economic indicators

Technology

So much for the Rust Belt uplift story, one that might help knit a divided country together through mid-market, Midwestern economic development.

Which raises the real story here: Amazon's decision to invest heavily in two preexisting "superstar" cities perfectly epitomizes one of the most troubling aspects of digital economies: their strong tendency to concentrate people and investment in a very few well-educated, tech-rich hubs that have, in recent decades, continued to pull away from the rest of the country on basic measures of prosperity.

Scholars for years have suspected that tech might alter the hierarchy of cities. Economist Elisa Giannone recently found that beginning in the 1980s the wages of cities — after converging for generations — had begun to diverge as tech began to inordinately reward dense clusters of highly skilled workers and firms. Likewise, research at Brookings has shown that a short list of highly digital, often coastal, tech hubs are pulling farther away from the pack on measures of growth and income, concentrating more of the nation's tech activity and talent.

In short, the "digitalization of everything" is exacerbating the unevenness of America's economic landscape and making it increasingly likely that new tech headquarters go not to new places, but to the same places. What just happened proves the point.

This matters because the widening gap between "superstar" cities and the places left behind by economic transformation is creating a troubling panorama of untapped potential and frustration. On the one hand, the drift of scores of promising cities filled with talented people, outstanding institutions and underutilized infrastructure mean that America is not fully delivering on its promise for economic fulfillment. On the other hand, whole swaths of the country that have fallen behind in a changing economy are marked by political discontent that has contributed to the nation's populist backlash and widening social divides.

The nation as a whole will need to push back against today's widening regional gaps with specific, intentional action.

What might such action look like? For starters, it might begin by implementing policies that limit the kind of locational sweepstakes that impelled hundreds of places to ante up billions of collective dollars of business relocation subsidies in order to attract Amazon. One idea we endorse in a forthcoming paper is a 100% federal tax on every dollar in state and local tax incentives directed toward a specific company.

At the same time, local governments — ideally supported by Congress — should also take this moment to double down on focused initiatives that emphasize training workers with digital skills, while venture capitalists should ensure more local startups outside the coasts have access to the capital they need to grow. The federal government, for its part, should get serious about helping the Heartland and offer grants to 10 or so competitively selected, mid-sized business centers that show promise of emerging as regional "growth poles" that will ensure more people reside near top-quality jobs and opportunity.

To be sure, such an agenda would be an undeniably heavy lift for today's divided Congress. And yet, for all that, a growing chorus of policymakers and thought-leaders is increasingly calling for such action.

Indeed, even those who see the concentration of economic activity in cities like San Francisco, Boston and New York as a good thing for the national economy may soon find themselves calling for a more geographically balanced national economy. After all, concentrating economic growth in just a few prosperous cities works as a national growth stance only up to a point. Eventually, even today's winners will be left to grapple with the side effects, like traffic congestion and expensive housing, while others will continue to struggle with too little growth and hope.

Many hoped that Amazon would bring economic opportunity to the places left behind in the shift from a manufacturing economy to a tech economy. Now that it's clear that will not likely happen by itself, it is time for policymakers and concerned citizens to ensure that the current market forces don't deepen the economic and political divides between the places that have benefitted from the tech revolution and those it has left behind.

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 36680

Reported Deaths: 1250
CountyConfirmedDeaths
Hinds299254
DeSoto195920
Madison148439
Jones122449
Harrison117716
Rankin112619
Neshoba104677
Forrest103843
Lauderdale96681
Scott82415
Jackson79819
Washington73713
Copiah67016
Leake63420
Lee62822
Oktibbeha61928
Grenada6049
Warren60021
Holmes59541
Lamar5837
Wayne56519
Yazoo5607
Lowndes54817
Leflore53456
Lincoln53335
Lafayette5064
Pike50520
Sunflower5048
Monroe46135
Panola4546
Covington4465
Simpson4433
Bolivar41218
Tate39213
Attala38624
Newton37610
Adams35820
Pontotoc3556
Marion34512
Claiborne30811
Pearl River30332
Winston30111
Chickasaw30019
Marshall2923
Jasper2816
Noxubee2799
Walthall2708
Clay26111
Union25412
Smith25212
Coahoma2306
Clarke22325
Lawrence2132
Yalobusha2089
Tallahatchie1954
Kemper18414
Carroll18211
Montgomery1793
Calhoun1705
Humphreys16910
Hancock14813
Itawamba1478
Tippah14611
Webster13411
Jefferson1283
Prentiss1274
Jefferson Davis1254
Tunica1253
George1233
Greene11610
Amite1123
Alcorn1072
Tishomingo1061
Quitman1011
Wilkinson989
Perry914
Stone772
Choctaw764
Franklin542
Sharkey480
Benton470
Issaquena101
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 54768

Reported Deaths: 1096
CountyConfirmedDeaths
Jefferson6746170
Mobile4904140
Montgomery4547112
Tuscaloosa269053
Madison22689
Marshall198011
Shelby169125
Lee159637
Morgan13385
Baldwin127711
Walker107532
Elmore106721
Etowah101114
Dallas10029
DeKalb9677
Franklin93816
Autauga69815
Russell6860
Unassigned67928
Chambers67730
Butler65229
Limestone6393
Tallapoosa63069
Cullman6156
Houston6077
Lauderdale5776
St. Clair5443
Calhoun5155
Colbert5096
Escambia4888
Lowndes48422
Pike4795
Jackson4352
Coffee4284
Covington41612
Talladega4017
Barbour3992
Dale3951
Bullock37810
Hale35423
Marengo35411
Chilton3312
Blount3201
Clarke3176
Wilcox3038
Winston2995
Sumter29213
Marion29014
Pickens2746
Randolph2639
Monroe2603
Perry2502
Conecuh2318
Bibb2241
Macon2199
Choctaw21712
Greene1989
Henry1553
Washington1488
Lawrence1360
Crenshaw1323
Cherokee1247
Geneva980
Lamar891
Clay852
Fayette851
Coosa661
Cleburne451
Out of AL00
Tupelo
Clear
73° wxIcon
Hi: 94° Lo: 73°
Feels Like: 73°
Columbus
Overcast
73° wxIcon
Hi: 94° Lo: 73°
Feels Like: 73°
Oxford
Clear
68° wxIcon
Hi: 93° Lo: 72°
Feels Like: 68°
Starkville
Scattered Clouds
68° wxIcon
Hi: 91° Lo: 71°
Feels Like: 68°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather