Political Math and Creative Accounting
Amazon recently had to abandon a major construction project in New York City because of various political protests. It’s a great illustration of how politicians do math.
We have to get a few basic viewpoints and then we’ll look at how the math is done. New York Governor Andrew Cuomo posted an “Open Letter From New York State Budget Director Robert Mujica Regarding Amazon” on his website last week. Here are a few pieces from it.
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“In my 23 years in the State Capitol, three as Budget Director, Amazon was the single greatest economic development opportunity we have had. Amazon chose New York and Virginia after a year-long national competition with 234 cities and states vying for the 25,000–40,000 jobs. For a sense of scale, the next largest economic development project the state has completed was for approximately 1,000 jobs.”
“Incredibly, I have heard city and state elected officials who were opponents of the project claim that Amazon was getting $3 billion in government subsidies that could have been better spent on housing or transportation. This is either a blatant untruth or fundamental ignorance of basic math by a group of elected officials. The city and state ‘gave’ Amazon nothing. Amazon was to build their headquarters with union jobs and pay the city and state $27 billion in revenues. The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits — a program approved by the same legislators railing against it — would provide up to $3 billion in tax relief, IF Amazon created the 25,000–40,000 jobs and thus generated $27 billion in revenue. You don’t need to be the State’s Budget Director to know that a nine to one return on your investment is a winner.”
“The seventy percent of New Yorkers who supported Amazon and now vent their anger also bear responsibility and must learn that the silent majority should not be silent because they can lose to the vocalminority and self-interested politicians.”
“Make no mistake, at the end of the day we lost $27 billion, 25,000–40,000 jobs and a blow to our reputation of being ‘open for business.’ The union that opposed the project gained nothing and cost other union members 11,000 good, high-paying jobs.”
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From that we can get the basic numbers. Amazon was going to spend billions in construction and employee a bunch of people in high paying jobs. New York decided that it didn’t want that. Why?
There were two major groups that opposed this. One was the union RWDSU that Mujica said did some illegal things like paying people to go to council meetings to protest. The other was a vocal group of politicians and activists led by New York Congresswoman Alexandria Ocasio-Cortez, often known as AOC.
There were other good propaganda pieces, like headlines in major news outlets that read “Here’s Why New York Is Resorting to Paying Amazon $3 Billion for What Google Will Do for Free” and “NY taxpayers to pay $48,000 per Amazon HQ job”, but Alexandria Ocasio-Cortez seems to have a unique ability to spread the various Communist, Socialist, and Anti-Capitalist ideas. When Amazon pulled out of the deal she Tweeted:
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Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.
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It’s interesting because Amazon was defeated. They wanted to build a business center and now they are not. But who won? And what did they win? Here’s what AOC said to a reporter:
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“If we were willing to give away $3 billion for this deal, we could invest $3 billion in our district ourselves if we want to. We could hire more teachers, we can fix our subways, we can put a lot of people to work for that money if we wanted to.”
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Now, this obviously makes no sense. How can you spend 3 billion dollars that you didn’t get? Well, I’m sure AOC and the other politicians can find a way, because they do math differently. AOC has a degree in economics and she’s a politician, she knows the game that she’s playing. She just got caught this time. Usually the public isn’t able to see through these scams.
Here’s how this math works. Let’s use smaller numbers so it’s easier to grasp, I’m not used to having numbers in the billions. Let’s say you have a business and you get a prospective client. This client is going to pay you 30,000 dollars. But, because they’re spending so much on your products and services they want a discount. You negotiate with them and decide to give them a 10 percent discount. So, they’re going to pay you 27,000 dollars. But, your partner says, “Hey, that’s not fair. They’re a big company and I don’t like them, and they’re taking 3 grand from us.” Because of the mess that your partner causes the other company decides to take their business elsewhere. Now your partner comes to you and says “Great, now we have an extra 3 thousand dollars to spend on anything we want.” You would obviously look at your partner in disbelief and ask, “Where is the extra 3 thousand dollars coming from?” Your partner would then talk about her mother being poor, that she’s a woman, that she was poor, slavery, climate change, dancing, and then excuse herself to go to a meeting. This would seem ridiculous. But, in the world of politicians like Alexandria Ocasio-Cortez, this is just another week in politics.
To be fair there are two perspectives that can be taken on this. Either: A) AOC doesn’t understand basic math despite having a degree in economics, or B) she’s purposefully lying and being deceitful. Either way I don’t think it’s good. I’ve met more than one economics major that have said the same thing, so maybe it’s just what they’re taught in school. That’s a scary option. What’s even more amazing is that people like and respect her. The people in the Bronx and Queens voted her into public office to represent them.
When businesses do this type of math they go bankrupt, or the IRS puts them in prison. But, AOC didn’t do anything illegal, that I know of. She just lied and deceived.
The thing is this isn’t unique. People just seem to be a bit more aware of the crazy math this time. This type of corrupt math is the past, present, and future of politics. Coming to a tv news channel or magazine near you right now.
You can find more of what I’m doing at http://www.JeffreyAlexanderMartin.com