By Alan Murray and David Meyer
February 19, 2019

Good morning.

I hesitate to draw broad implications from the battle between Amazon and New York—both are sui generis, in so many ways. Still, the fight is another manifestation of the anti-business, anti-capitalist, and anti-tech sentiment that is clearly on the rise around the U.S. and beyond. So it deserves some attention.

There is something unseemly about struggling cities and states throwing tax breaks at Amazon to convince it to locate within their borders. But while unseemly, it isn’t irrational. The benefits to New York of winning the business far exceeded the cost. Moreover, much that’s been said by Amazon’s opposition is irrational. Opponents complained, for instance, that Amazon would have raised real estate prices in Long Island City. True enough. But if the goal is to depress real estate prices, the playbook is clear—chase away all business. New Yorkers need only look north to Connecticut to see that in action. On this one, the activists shot themselves in the foot.

But Amazon also suffered a self-inflicted wound. The company looks petulant and spiteful, and has further burnished its image as a symbol of corporate greed. (That’s partly why this story was Fortune’s best read last week.) The result is more fuel on the growing populist flames that are threatening the future of American business.

Was there a better way? I think so. What if, instead of demanding tax breaks, Amazon had used its bargaining leverage to demand more investments in Long Island City that would have accrued to the company’s benefit, but also the community’s? Investments in local education and training programs, or upgraded subway service, or broadband infrastructure, that would have helped Amazon and non-Amazon workers alike. Maybe even investment in affordable housing, for lower-wage workers who will be needed to maintain the area. There was some training and infrastructure money in the deal, but it was dwarfed by the nearly $3 billion in tax abatement.

There’s nothing new in this idea, of course. As my friend Rick Wartzman of the Drucker Institute documented in his book The End of Loyalty, many American companies routinely made massive investments in their communities before the rise of shareholder supremacy and global supply chains. Amazon missed an opportunity to go back to the future here. If capitalism is going to survive, companies need a new approach. They have to stand for something more than pillaging the tax system.

By the way, on a related topic, be sure and read Peggy Noonan’s column in the Saturday Wall Street Journal on what the Republican party needs to do to save capitalism. Also, check out the Economist cover story on the rise of millennial socialism.

And for another example of how not to do it, read Jake Meth’s story on P&G’s slow reaction to the tragic misuse of Tide pods in the March edition of Fortune magazine, published online this morning.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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