Progress and Poverty at Amazon HQ2

“As has sometimes been noted, one can buy a castle in some parts of Europe for less than a modest condo in San Francisco.”

In the nineteenth century, the expansion of the railroad promised vast economic opportunities. Towns lived or died by where the track was laid, a fact that some unscrupulous companies used to extort bribes as they planned their routes. But, as the first transcontinental neared completion in 1868, there was at least one prominent naysayer. That year, Henry George published “What the Railroad Will Bring Us” in Bret Harte’s Overland Monthly. George argued that the railroad might well make his home of San Francisco “the first city of the continent.” These changes however “will not benefit all of us, but only a portion.” With the development of San Francisco, the city would grow wealthier, but also less egalitarian. At the time, George was a solitary voice in a sea of boosterism, but within a decade the city would witness a series of riots led by an angry, xenophobic “Workingmen’s Party.” By then, George seemed to have been a prophet.

In 1879, George formulated his ideas into a book entitled Progress and Poverty. From Adam Smith to John Stuart Mill, liberal economists had argued that land was a monopoly and that the landlord could claim in rent any financial advantage it offered. George’s epiphany was that the economic value of land was no longer just a function of how much grain one could grow on it. Whether one could afford space in the city determined access to a vast array of economic advantages of scale and proximity that were inconceivably greater than anything in the countryside. Furthermore, the city offered opportunities for culture, education, and socialization that far outstripped the offerings of small towns. If classical economists were right when they asserted that the value of land was proportional to its advantages, then the price of urban space would grow in tandem with the development of the city. That meant that every step forward for the community would be a step back for its tenants.

Today, Alexandria Ocasio-Cortez is playing the role of Henry George by attacking Amazon’s decision to locate its headquarters in Queens. Her criticism of the tax subsidies granted to Amazon is cogent and uncontroversial—even conservative commentators like Tucker Carlson acknowledge that it makes little sense to fork over billions of tax dollars for a company to relocate to a city it would have moved to anyway. But she has also expressed concerns much closer to those embodied in George’s critique of the railroad. The economic opportunities offered by Amazon will, she suggests, hurt her constituents by driving up rent.