New York and DC Bribed Amazon for HQ2 — and Amazon will pay for it

John Katsos
4 min readNov 15, 2018
Photo by Christian Wiediger on Unsplash

A bribe is “something that serves to induce or influence”.

When Amazon amounted that it would split its new second headquarters between New York and Crystal City, VA, it also announced that it would receive over $2 billion in “subsidies” from both localities.

Sounds like something that might have induced or influenced Amazon.

So…a bribe.

Locating in New York and the DC area make sense for economic reasons: they are the two largest metro areas on the East Coast of the US which itself is the most highly populous area of the US.

But Amazon will have nothing but trouble from these sites for the foreseeable future all because they took the bribe, even though they didn’t have to.

What’s interesting is that management theorists like Peter Drucker have been making this point for more than 20 years.

By the 59th Street Bridge near where Amazon’s NY HQ2 will be. Fredy Martinez on Unsplash

Corporate strategy on bribes by local governments

In his famous, “Management Challenges for the 21st Century”, Peter Drucker describes the “New Certainties” of organizational strategy. The fifth is the growing incongruence between political and economic realities. He offers first some context.

Because the political unit is becoming increasingly less powerful economically, it is increasingly tempted to offer all kinds of bribes — exemption from taxes, for instance…— to obtain an economic advantage.

Drucker was writing in 1999 and already many local governments in the US and governments of smaller countries throughout the world were providing these sorts of “bribes” to get big companies to locate facilities there.

Companies will often locate to places where they receive these bribes, usually more-diplomatically termed as “incentives”.

Drucker’s advice?

Just say no.

“There ain’t no bargains” is old folk wisdom…The first question has to be: “If [the company] didn’t get the bribe, would [it] do this as…

John Katsos

Scholar. Educator. Writer. I help people learn to start and manage better, more sustainable businesses and be better humans. Opinions my own.