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Why Did Amazon “Snub” the Twin Cities?

We wrote about Amazon’s plans for a massive second corporate headquarters, and the Twin Cities’ bid to be considered for its location, here, here, here and here. The last linked post, dated last Thursday, followed Amazon’s announcement of the 20 finalists for the project. The Twin Cities didn’t make the cut. The finalists were Atlanta, Austin, Boston, Chicago, Columbus, Dallas, Denver, Indianapolis, Los Angeles, Miami, Montgomery County, Md., Nashville, Newark, New York City, northern Virginia, Philadelphia, Pittsburgh, Raleigh, Toronto, and Washington, DC.

Now Star Tribune business columnist Lee Schafer has weighed in: “Why would Amazon snub the Twin Cities in headquarters contest?” With all due respect, Schafer’s column manifests a certain disconnection from reality.

Never mind that Amazon picked 20 other places as finalists for a new facility and up to 50,000 additional jobs. And sure, it wasn’t any fun to read in the Washington Post that the Twin Cities is the “clear loser” of the race for Amazon HQ2 so far, out of 218 also-rans.

What’s far worse than anything that’s happened so far is that a once-in-a-lifetime economic development project has passed us by and it seems doubtful there’s anything to be learned from the experience.

What are policymakers expected to do with news that this region doesn’t appear all that attractive to a fast-growing technology company, while places like Columbus, Ohio, and Indianapolis do?

Oh, I don’t know, they might take note of the fact that Amazon said “A stable and business-friendly environment and tax structure will be high-priority considerations,” and “The initial cost and ongoing cost of doing business are critical decision drivers.” Policymakers might also observe that Amazon wants a place with lots of tech workers, and the Twin Cities rank far down in that category.

The availability of transit featured prominently in Amazon’s criteria, so maybe our state has paid the price for having spent too little on public transit?

Too little? Seriously? Somehow, I don’t think that spending a few billion dollars more on trains that few people ride would have tipped the balance.

Schafer does eventually get to the thorny issue of the cost of doing business:

Of course no one could ignore the cost of doing business, including personal income and business taxes, as Minnesota is a high tax state. Yet Boston is on Amazon’s finalists list along with Los Angeles.

So high taxes are A-OK! But an observer not blinded by Minnesota boosterism might acknowledge that Los Angeles and Boston have advantages, from the perspective of a company like Amazon, that Minneapolis and St. Paul lack. The more relevant fact is that comparable metro areas like Atlanta, Austin, Columbus, Dallas, Denver, Indianapolis, Miami, Nashville, Pittsburgh and Raleigh made the cut, while we didn’t. Every one of those areas has lower taxes, and a generally friendlier business climate, than the Twin Cities.

Schafer goes on to lament:

Minnesota just was named the best-run state in the nation by USA Today.

Actually, it was a goofy, click-bait web site called 24/7 Wall Street that named Minnesota the U.S.’s best-run state. What were its criteria? As our economist John Phelan pointed out, 24/7 Wall Street’s criteria for being “well-run” included having high taxes and exceptionally generous welfare benefits. Minnesota certainly qualifies on both counts, but many would say that means the state is poorly run, not well run.

Schafer speculates that Minnesota’s problem was that we didn’t offer large enough subsidies. That might be true, although we can’t begin to judge that until we know what location Amazon actually chooses. We do know, however, that our governor, Mark Dayton, is not opposed to subsidies, and directed “Commissioner Shawntera Hardy and the Department of Employment and Economic Development to work with city, regional, and state partners on a proposal to bring Amazon’s new headquarters to Minnesota.”

Schafer concludes by saying that if others don’t recognize our state’s superiority, we should take our ball and go home. Who cares what they think, anyway?

If anything is ever learned it will be worth sharing. But maybe it’s better to simply stop caring about what anyone at Amazon thinks.

After all there has only been one approach to landing big private employers that has ever really worked in Minnesota: That’s building them from scratch.

Unfortunately, Amazon is not alone: lots of companies have left Minnesota, but who has moved here? No one. As for Schafer’s claim that building “big private employers” “from scratch” is Minnesota’s ticket to success, he is behind the times. Perhaps he doesn’t know that the last Minnesota-born company to enter the Fortune 500 was United Health Group, founded in 1977. That’s right: it has been 41 years since Minnesota has given rise to a company that has gone on to become one of the nation’s 500 largest. And in that time, many, many large Minnesota companies have either closed their doors or moved their headquarters elsewhere.

It is long past time for Minnesota’s politicians and journalists to stop making excuses for Minnesota’s lagging economy, and start thinking seriously about how our state can compete more effectively.

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