A Tale of HQ2 Cities: Amazon and America’s Dickensian Tragedy
Charles Dickens penned these fabled words in 1859. In the light of Amazon’s HQ2 announcement and the current state of American affairs, these words have more relevance for today’s world than ever before.
A Tale of Two Cities takes place in London and Paris in the years leading up to the French Revolution: a time punctuated by lawless bloodshed and political turmoil. Sympathetic to the plight of the working poor, Dickens was affected both by the suffering that gave rise to the Revolution and the social inequality of his day. By the mid-19th century, Great Britain had been swept up in the throes of industrialization. Machine might brought unprecedented wealth to the Brits — along with unprecedented levels of poverty.
From Sydney Carton’s self-loathing to the desolation of Saint Antoine, A Tale of Two Cities is, foremost, a panorama of human suffering. Yet, for all its trials and tribulations, it is also a tale of redemption. A story of sacrifice and the possibility of rebirth. Beyond the gore, beyond the guillotine, you can just catch a glimpse of a better world to come.
Modern society is plagued with the same contradictions. We, too, are fighting for purchase in the face of mounting uncertainty. The rich only seem to get richer, while the wolves of nationalism are once again at our door. The only difference? 21st century technology has amplified these problems ten-fold.
In the U.S., the top 1 percent’s share of the national income has climbed to 20 percent since 1980 while the bottom half’s share has experienced a steep decline. Compare that with Western Europe, where the elite earn just 12 percent of the national income and the bottom half clocks in at a stable 22 percent. And yet, with business booming and the unemployment rate at a 48-year low, the U.S. economy appears stronger than ever. What’s the catch?
With the widening gap between the rich and the poor, one thing is certain: Americans are living in a new Gilded Age. The first Gilded Age, beginning from the Reconstruction Era to the turn of the 20th century, was characterized by enormous growth in American industry — but most of that money remained in the hands of a few business savvy tycoons.
And although the Rockefellers and Vanderbilts made their fortune on oil and railroads, today’s robber barons draw their wealth from an even mightier source. The world as we know it is the product of tech titans like Zuckerberg, Jobs, and Gates. Their companies have brought mindboggling wealth to the U.S., along with infinite opportunities for innovation, connection, and growth. But such great computing power comes at an even greater price.
The ICT Revolution took off in the 1980s, resulting in the cell phone and the personal computer. Like the Industrial Revolution that preceded it, this new Information Age completely transformed how society operated as a whole. The Model T mass-produced mobility and changed the very face of the American landscape. Google gave us a world of knowledge at our fingertips, and now we can never turn back.
Such wide-reaching paradigm shifts can only be understood through Joseph Schumpeter’s theory of creative destruction, an economic process through which each innovation brings about the demise of its predecessor. And each oncoming innovation calls on all members of society to reckon with its consequences — the good and the bad.
The Digital Revolution has had incontrovertible effect on our lives. ICTs have changed the way we see the world and how we interact with others. Concretely, ICTs have also upended the way we work. This is due in part to the restructuring of business practices that occurred with the rise of Silicon Valley and other ICT companies — a shift that has contributed to the growing income equality we see today.
Leading up to and following the dot.com boom, ICT companies shifted gears toward the New Economic Business Model (NEBM). Contrary to its Old Economic predecessor, this new model encouraged deunionization and lack of organizational commitment.
Economist William Lazonick talks about this shift in his book Sustainable Prosperity in the New Economy (2009). He writes:
Unemployment in America may be at historic lows, but such statistics mask a festering problem: too many jobs in this country are unsustainable. This is partially due to lack of labor protections. Gone are the days when workers could climb the corporate ladder at the same company, then be rewarded for their loyalty with a generous retirement package.
Layoffs are also increasingly common, with some companies offering very little in terms of severance. With the decline in union presence, employees have less leverage to demand liveable wages. More and more people have started to look for second or third jobs to supplement their incomes, forcing struggling workers to the gig economy in droves.
There’s no question that technology has brought extraordinary wealth to the U.S. But that wealth has simply not resulted in the social uplift we should expect… And that brings us to the case of Amazon.
On November 13, after months of grovelling and fanfare, Amazon announced the chosen cities for its highly coveted HQ2. To the dismay of the other contenders, Amazon decided to split the prize between New York City and Northern Virginia. These locations were selected due in part to their concentration of talent and well-connected transportation networks. Another major factor Amazon took into consideration was how much they could leech from each city in terms of incentives.
All in all, the e-commerce giant will gain $3 billion in state and city tax breaks in exchange for establishing its new headquarters in the two locations. That’s money that won’t go towards the D.C. metropolitan area’s public school system, nor towards New York’s crumbling infrastructure. Amazon promises to bring thousands of high-skilled, high-paying jobs to these cities. But is it worth the money they have agreed to cough up?
Amazon’s decision was met with fierce backlash, with some critics slamming the widely anticipated mega-deal as another example of corporate welfare. Some fear the negative effect the new headquarters could have on the New York and D.C. housing markets, which are already the priciest in the nation. Amazon’s original headquarters have been blamed for Seattle’s skyrocketing real estate and cost of living, which have priced many locals out in favor of the tech elite.
As companies like Amazon grew, so did Seattle’s homeless population. Only time will tell if New York and D.C., already struggling with homelessness and housing problems of their own, will meet a similar fate.
Too often, providence creates divisions in society. There are those who reap the benefits of innovation, and there are those who get left behind. Someone who scrapes by in a tent city alongside the freeway does not experience Seattle the same way as a millionaire with a waterfront view of the Puget Sound. And let’s not forget the bottom 50 percent of income earners, some of whom are leapfrogging from job to job and struggling to keep afloat.
The tech industry can bring immense opportunities to any community. With these opportunities, however, come unintended consequences. Tech companies, whether in Silicon Valley or on the East Coast, greatly affect the people in their established cities. It’s time for Big Tech to acknowledge the impact they have on the communities where they have chosen to take root.
Moreover, it’s time for companies all across America to reconsider what they owe to these communities — from the families who live there, to the people they choose to employ.
Capitalism is in constant evolution, barrelling through the changing times with little regard for any casualties incurred along the way. But it doesn’t have to be this way. On the other side of the channel, across the bridge, there’s hope for a more human approach to doing business.
The best of times for everyone — not just for the rare and lucky few.
This post was written for the course History of Technology Revolution at Sciences Po Paris. The course is part of the Digital & New Technology policy stream and is taught by Laurène Tran, Besiana Balla, and Nicolas Colin.
A Tale of HQ2 Cities: Amazon and America’s Dickensian Tragedy
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