Thursday, March 30, 2023

Amazon made richer cities richer and also more dystopian

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How did telling this story become a book that is largely about Amazon? Wasn’t the internet supposed to spread prosperity by making physical location less relevant than it used to be?

I wanted to write a book on regional inequalities, then I had to decide how to frame them. I chose Amazon as the framework for the book for two reasons. The first was that the business is so ubiquitous that it’s a very convenient way to take you across the country because it’s everywhere, but everywhere in different forms.

But more importantly, I chose it because it’s also a huge contributor and explanation of regional inequalities, because if the internet was meant to allow us to disperse and be anywhere, it actually has opposite. There are well-documented agglomeration effects of the innovation economy – you want proximity to other engineers and programmers and, not to mention, venture capitalists – but the main reason for Big Tech’s role in regional inequalities is more economic policy. Much of our geographic focus is related to market concentration. Business, commerce and wealth that was once spread across the country, across various industries, is now increasingly dominated by a few businesses that reside in certain places. This is happening with media ad revenue, which was once split everywhere between newspapers and local television and radio, but is now increasingly being used as digital ad revenue for both companies. [Facebook and Google] who control 60 percent of that market, both of which reside in the Bay Area. And the retail business that was once prevalent across the country, from moms to regional department stores, is now increasingly dominated by a Seattle-based company. And that’s how I got to Amazon.

One thing that stands out in the book is how Amazon’s footprint – both its economic footprint and its physical footprint – is really different in different parts of the country. You spend time on the ditch between DC and Baltimore. I live in DC, you live in Baltimore. How does Amazon’s footprint differ between these two cities that are just 40 miles apart?

Yes, the Baltimore-Washington divide is really at the heart of the book, because it’s something I’ve been seeing up close for 20 years now. I have bounced back and forth between Baltimore and Washington for the past two decades. Watching this gap widen during this time has been truly overwhelming, and Amazon is very emblematic of it. On the one hand, Baltimore is essentially becoming a sort of warehouse town. It now has three large Amazon warehouses in the city or just outside the city limits. It is symbolically resonant that the first of these warehouses entered a large old GM plant that closed in the years to come. And then the second and third warehouses have now entered Sparrows Point, which is home to what had once been the largest steel mill in the world. The fact that these warehouses are literally found in the same sites of old Baltimore industrial life, with people doing less than half of what they would have done in these factories, it really resonates.

Amazon names its warehouses by nearby airports, and it’s so striking that some of Baltimore’s warehouses are named after DC Domestic Airport terminals. The names were available because DC does not have warehouses. Instead, he now gets a headquarters. So the fact that you have the second head office, with 25,000 well-paying white-collar jobs, and all the massive investments that will come with HQ2, in a metropolitan area that was already arguably the richest in the country – that’s l ultimate example of a winning economy for everything, rich to get richer.

And one of the themes of the book is that this win-win economy makes life miserable not only for people in losing cities, but also, to some extent, for people in winning cities.

This imbalance is not good for anyone. In the same set of places you have stagnation and scourge, abandonment, resentment and sadness. And then in the other set, in the win-win cities, you have what we see in San Francisco and Seattle, which are the opposite issues. You have housing affordability crises, you have terrible traffic jams. You have too many good things. In the book, I call it “hyper prosperity”.


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