Amazon in New York? I’m with AOC

Surely, Alexandria Ocasio-Cortez is the most visible and most vocal new member of the House of Representatives, and it is easy for defenders of freedom and free markets to find fault with almost every policy she promotes. When she objected to the massive subsidies Amazon was to receive to locate a new headquarters in New York, she received criticism from the left and from the right, and for the same reason. She helped tank the deal.

While I disagree with almost everything AOC says, I’m with her on this one.

When government subsidizes one business, other businesses and households have to pick up the slack. Lower taxes for Amazon means higher taxes for someone else. Why should Amazon be treated any differently than the businesses that are already located in New York?

Make up all the justifications you want, but the deal was just another example of crony capitalism. The economic and political elite conspire for their mutual benefit while imposing costs on the masses.

AOC is right. Amazon employees would have sent their kids to government schools, added their cars to the roads, placed more burdens on the police, and used the same government services as everyone else. The tax money not paid by Amazon as the deal was negotiated would have had to have been made up by other taxpayers.

The left is pretty good about seeing deals like this for what they are: government support of the well-connected. The right tends to look at these types of deals as “pro-business,” but pro-business is almost always a euphemism for anti-free-market. That’s clearly true in this case.

Capitalism embodies all the right incentives for people to engage in economic activities for the benefit of others. As Adam Smith said, people pursuing their own interests are led by an invisible hand to do what’s best for everyone. That’s not true when government “incentives” distort the market and push people into rent-seeking to get profits through politics rather than production.

New York’s Amazon deal was one of many examples showing how our mostly capitalist economy is evolving toward political capitalism, in which people benefit more from political connections than through adding value to the economy.

While I almost always disagree with AOC and find her advocacy of socialism a bit alarming, I almost never say so. She’s too easy a target, and the political right is already relentless in their attacks on her (giving her more publicity than she deserves). But when she’s on the right side of an issue, I’m happy to say so, and even more willing to speak up in this case because the political right is attacking her for opposing government interference in the market.

Randall G. Holcombe is a Senior Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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