17 December, 2017

The Corporate City Looming? Part I


U.S. high tech and Internet giants such as Amazon, Apple, Google and Microsoft recently raised attention as they were, or are, investing heavily in the built environment, or at least plan to do so in the near future. Departing from previous experience, these investments are not solely about building trendy new headquarters for their own private use (such as Apple’s new ‘Spaceship’-HQ in Cupertino, Calif.). Rather, they are also about the development of new urban districts (such as the Smart Neighbourhood that Google is planning to develop in an as of yet still derelict part of the urban waterfront of Toronto, Canada), or the construction of an entirely new city located on a of desert west of Phoenix, Arizona for 100,000 people, as Bill Gates, the founder of Microsoft, envisages (apparently). 

Amazon is trying its hand at urban development with plans of building a second headquarter (HQ2) somewhere in North America. While Seattle, currently home to the seat of the company (which is actually registered in Delaware, MD), is somewhat nonplussed both with the prospects of a second Amazon city popping up elsewhere far away and with the present results of its domestic HQ2, Amazon is pushing ahead spearing new forms of urban development in the name of economic and community development and sustainability. If you want to investigate the Kool-Aid, you can find Amazon's promotional material here.


To help in the choice of location (or to help with squeezing as much profit out of this process as possible, depending on how you look at it), last fall Amazon.com launched a competition, where city administrations could present their efforts trying to convince the firm that they are the real place to be. So far, 238 cities have tried to butter up the business giant, and this "groveling ... has gotten embarrassing" (Los Angeles Times, 2017), with cities offering all sorts of extravagant gifts. Take, for example, the New Jersey Senator Chris Christie (close circle Republican of Trump). He was voted out of office in the senate elections just last November, but he was ready to give HQ2 the biggest subsidy offer of all -- in the order of billions. Indeed, as the mayor San Antonio predicted, exceeding the 3-billion-dollar gift that Wisconsin gave to Foxconn in September of this year. The desire of cities to – excuse our English – prostitute themselves to tech firm seems unlimited. And, for urban geographers, the massive output of media releases on this case provides a telling story of how location choice is negotiated and practiced nowadays. (Students may learn from this much more than is revealed in textbooks, btw).

The shadow sides of an investment as huge as the establishment of a headquarters of Amazon, however, not unbeknownst to some City representatives. Such a change could easily translate to the immigration of a work force up to 50,000-strong, many of whom would also demand housing for themselves and their families. The related strain for the real estate market can be easily imagined (unless, of course, we are referring to Amazon's CamperForce Program, which would open up a different set of sociopolitical and infrastructural questions). Moreover, some cities interestingly declined to become part of this race to the bottom at all, for good reason. This open letter to Jeff Bezos from the Mayor of San Antonio is really worth a read for several reasons. First, because the letter outlines why their city will NOT compete for Amazon. Second, and moreover, he points at the lurking malicious intents behind Amazon's generation of competition between cities. San Antonio has "long been impressed by Amazon and its bold view of the future. Given this, it's hard to imagine that a forward thinking company like Amazon.com hasn't already selected its preferred location." The outstanding question is then what would motivate an IT giant to generate a media extravaganza around competing cities, a process that in itself already exhausts state resources? Is it about billion dollar gifts, perhaps? Is it about becoming one of the new city builders, or a leading stakeholder or decision-maker in urban development processes?

It is now extensively discussed that the rising power of the 21st century tech moguls has neither evolved from genius alone, nor from knowing their customer best, but from political power to perform. This power materializes in giant tax exemptions awarded to them, as Luxleaks, Panama, and Paradise papers have revealed recently. These advantages foster their ability to establish huge, system-wide monopolies, feeding into a loop of self-fulfilling dynamics of growth and competitiveness. This is only possible through making use of public infrastructure of all kinds (legal, physical, educational), to whose financing, however, they don’t want to contribute. This letter to Tim Cook, CEO of Apple from the editor of the Süddeutsche Zeitung (in English) underscores the lack of financial commitment that these companies are willing to make, the lack of transparency around private profits and their redistribution within and/or across state borders, and their ability to engage legal resources to protect themselves against accusations of tax evasion. The implications are, in fact, more than "embarrassing": They pose a danger to financial sovereignty of cities (and nations), and democratic control over development.

From a scholarly perspective, then, obvious questions can be posed to this post-capitalist urbanism: What are the emergent urban geographies, pathways of dependency of these urban configurations? What kind of cities can we expect will be built by business giants with neither credible knowledge of the subject, nor willingness to make serious long-term commitments to the cities in which they settle? And what sort of society can we expect will dwell in these places?

Constance Carr /Markus Hesse

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