Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board

Former IMF Chief Economist: Here’s How Amazon Bungled HQ2

June 11, 2019, 6:53 PM UTC

When Amazon announced plans to build HQ2 back in 2017, mayors and state governors clambered over each other in a bid to impress the multi-billion dollar tech giant.

Kansas City’s mayor bought 1,000 products from Amazon, while Birmingham scattered giant Amazon boxes throughout the city. States including New Jersey, New York, and Virginia meanwhile offered tax or cash incentives all under the assumption that the project, which is expected to add 50,000 jobs to the communities with $5 billion in investments, would be a boon to their constituents.

But communicating with those constituents is where Amazon fell short and failed to land its first choice, says Former IMF Chief Economist and current Professor of Finance at The University of Chicago Booth School of Business, Raghuram Rajan.

Amazon had focused on talking with higher level politicians, and not enough on addressing one of the communities that would eventually house HQ2: Long Island City in Queens New York.

“Every mayor and every governor was killing for (HQ2)…and yet Long Island City and Queens said ‘Sorry, we’re not interested,'” he said Tuesday during The Fortune CEO Initiative conference in New York City. “Why did they say no? The first thing was that Amazon never talked to the community in detail before announcing it. They should have said: ‘Here are your worries, here’s how we deal with them, and here’s our plan for the community.”

In late 2018, Amazon revealed that it had chosen two locations for HQ2: Long Island City and Arlington, Va. But the Seattle-based e-commerce firm kept the process relatively mum to the public. That didn’t prevent onlookers from observing that the entry of such an affluent tech giant could drive up prices and rents in the city where it eventually decides to lay down a second set of roots.

Amazon would have achieved better success had it assured existing residents that they would not be displaced due to rising rents and prices, and opened up about potential benefits to the local community prior to the announcement, he said. “These are the conversations that didn’t happen,” Rajan said.

To Rajan, the failed negotiations between Amazon and Long Island City is part of a larger trend that threatens the current state of capitalism: An over centralization of power. As a tech revolution sweeps through the world, making jobs in some industries and cities obsolete, localities should be given the reins in deciding how to deal with their unique challenges—not the federal government.

And the former IMF Chief Economist sees signs of this trend everywhere.

“What is Brexit about? It’s about taking back control—from London it had migrated to Brussels,” he said.

More must-read stories from Fortune:

Fortune CEO Initiative 2019: Watch the livestream

—These communication tools can radically improve workplaces

—Four ways algorithms can boost diversity in hiring

—Find out which Fortune 500 CEOs are most admired by their peers

—Uber’s CEO has absorbed the COO role for more control

Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.