What does Big Tech owe America, especially the cities it has made home? It’s an increasingly pointed question.
A majority of Seattle City Council members sent a letter to Amazon earlier this month, seeking to “hit the refresh button” in their relationship.
And a good thing, too. Most other places would kill to have a hometown startup become one of the nation’s largest companies, generate thousands of well-paid local jobs, and build a green footprint in the heart of the city. All this during an era of slow national growth, aging firms and many metros that are a shadow of their former greatness.
Those other places are going to get their chance, short of homicide one hopes, in the competition for HQ2. The second headquarters, with $5 billion investment and perhaps 50,000 jobs, would be “equal” to Amazon’s Seattle home. It’s about time the local-yokel pols woke up.
Not everyone is happy. Professional activists and those sentimental for an earlier Seattle blame the company for rising house prices, worse traffic, even homelessness.
They’re not alone. “Big tech” — Apple, Google, Facebook and Amazon, chief among them — is coming in for national criticism for “not doing enough” for their communities.
Sen. Cory Booker of New Jersey, for example, said, “We’ve got to start having a conversation in this country: How are we going to measure the success of the tech sector?
“Is it by its ability to create a small handful of billionaires, or the ability for us to create pro-democracy forces — empowering individuals, improving quality of life, improving financial security, expanding opportunity — the kind of things we want largely for democracy?”
The former mayor of Newark singled out Amazon for antitrust scrutiny in buying Whole Foods, concerned it would hurt grocery stores in less affluent neighborhoods. And Booker has been friendly with Silicon Valley in the past.
Urban scholar Richard Florida, who coined the term “creative class” to define the future of work, is more explicit. He argues that the big companies that returned to cities in recent years helped create a “new urban crisis” of rising costs and inequality. And they owe their cities a big lift in return.
For Florida, this is especially true of the tech superstars, which create what he dubs “winner take all urbanism.”
He writes, “A select group of large, dense cities and an even smaller number of neighborhoods reap the spoils of innovation and economic growth. (Corporate) Anchors benefit enormously from this recent urban revival. And as a result, they must commit themselves to generating more inclusive prosperity.”
Specifically, he says, these wealthy giants should advocate and presumably help fund affordable housing for low-wage workers, move lower-skill workers up the ability and opportunity ladder, bolster innovation in disadvantaged communities, build “inclusive” public spaces, and help pay for mass transit, not just company shuttles.
Florida says this engagement is even more important as the federal government backs away from helping cities — indeed, is hostile to them.
This is all worthy stuff but I’m skeptical as to how realistic it is. One big roadblock is Wall Street. These are publicly held companies with an obligation to shareholders. Their prosperity gives them some latitude, but not without limits.
Also, “new urban crisis,” while catchy, risks giving us crisis fatigue. Hollowed-out Dayton, Ohio, and low-wage Phoenix should be so lucky to have Seattle’s “urban crisis.” This doesn’t invalidate Florida’s larger point — the world is “spiky,” as he says.
On our high spike, Amazon grew into a giant asking for no multibillion-dollar tax subsidy here (unlike some giant airplane maker I could think of). It and the larger diversified economy have filled city coffers with tax dollars.
This allows the city to spend an astonishing $60 million to allegedly address homelessness — or fund “service providers” — and the problem keeps getting worse. Two council members doubled down with a proposal to further tax the largest businesses to spend even more.
Amazon can’t fix that. Indeed, Seattle has greater shared prosperity than many metros. The 84 square miles of the city are pricey, but the larger metropolitan area has many affordable neighborhoods — although we do need to speed up building rail transit to bring people to job centers.
Great divergences in the fortunes of cities go back to antiquity. So does inequality.
In 19th century America, first rivers and canals, then railroads determined big winners and losers. Cincinnati, “the Queen City of the West” and one of the young nation’s wealthiest cities, made a colossal blunder when riverboat interests fought against making it a rail center. A rough town on Lake Michigan didn’t make the same mistake. You know it as Chicago.
In the 20th century, a big wealth divide opened between Detroit and its constellation of auto cities, and much of the rest of the country. The changes didn’t stop there. In 1970, Charlotte was little different from the other North Carolina locales of Raleigh, Greensboro and Winston-Salem. Now it’s a major national business city and one of the nation’s largest banking centers.
Still, today leaves a bad taste in the mouths of many Americans. While their towns and cities fell back and their wages stagnated, tech and finance made huge leaps. They compare it to the rising tide for almost all citizens from the late 1940s through the mid-1970s, which created a sense that this was the national normal, the American dream.
Regular readers know the national responses I recommend: progressive taxation; stopping corporate tax shelters; aggressive antitrust that includes breaking up giants; federal investments in education, transit, high-speed rail and green energy (huge jobs creators), as well as research; and making it easier to unionize. Medicare for all would allow countless aspiring entrepreneurs to cut the cord to the day job.
But getting to this would require winning many elections. At the moment, we’re going backward on almost all fronts.
Is that the fault of Big Tech? I’m not sure. It has vastly distorted Silicon Valley, provoking continued censure. But this goes back at least 20 years and the one-time Valley of Heart’s Delight has yet to face a biblical reckoning.
Companies will naturally seek to become as large and monopolistic as possible. That why we need an effective federal government. Americans knew this a century ago. Looks like many will have to learn it all over again — if they can get look up from their digital devices.