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Amazon and Indiana

Milton Friedman, the renowned economist, liked to posture as an objective person, one who told his audiences the consequences of certain measures, what would happen if they did this rather than that. Friedman differentiated himself from normative economists who prescribe what individuals and organizations should do for their own and society’s benefit.

Most economists I’ve met or read are nuts: normative at the core with a shell of objectivity.

Recently, Mike Hicks, an economist at Ball State offered his analysis of Amazon’s choice of New York City and the D.C. area for its expanded operations. He described in some detail how those locations will be more expensive for the company and its employees than Indianapolis or Columbus (Ohio).

Amazon, Hicks explains, focused on the quantity and qualities of people drawn to those areas. It is a choice of value over costs alone.

I believe the value Amazon sees in those places are prestige, proximity, and decreased visibility. NYC and DC are peaks of the American financial, political, and cultural mountains. In those lofty climes, Amazon will not be as prominent, as easy a target as in Seattle, Indy or Columbus.

That’s all well and good for Amazon, but what would be good for America? The obvious harm done by Amazon’s choices adds to the congestion of the selected areas and increases already high prices for the limited resources of those metro communities.

Friedman and his acolytes would say the purpose of the corporation is to make money for its shareholders without doing harm to its employees, customers or fellow citizens. The corporation has no responsibility to the nation.

But consider the missed opportunity for the nation. Amazon will invest many millions in these growth areas as will other private and public participants. Would that money be better spent in Michigan City, Gary, or Hammond?

Today, none of those places is rich in prestige. But they do offer outstanding proximity to the Chicago metro area, an enormous pool of Midwestern academic talent, one of the most under-utilized airports in America at Gary, and four Interstate highways with the freight lines of three major railroads.

If a major corporation valued doing something great for America, it could locate in Northwest Indiana, an area of excellent options previously damaged by corporate pollution and neglect. The investors would accept the challenge to renovate, recreate and enhance the very core of America.

They would be builders of modern urban centers. Businesses and households would benefit from outstanding connectivity by road, air, and rail. Workers and residents could enjoy reinvigorated neighborhoods and currently-unimagined ancillary private and public services. Reasonably priced housing could be developed and environmental assets could be restored.

Yes, the Amazon choices have been made, but there will be future major corporations making big investments. Let’s hope they understand their opportunities to contribute to more than their own welfare.

– Morton Marcus is an economist. Reach him at mortonjmarcus@yahoo.com. Follow his views and those of John Guy on “Who gets what?” wherever podcasts are available or at mortonjohn.libsyn.com.