Why Amazon is not the kind of company Chicago needs

Mayor Rahm Emanuel and Gov. Bruce Rauner are BFFs again. What brings the pair of Republicrat drinking buddies back together after some highly publicized spats, including personal name-calling, are school vouchers, more and bigger tax breaks for the rich, and Amazon.

Both of them, along with all but a few state and city pols, have been prostrating themselves before the Seattle-based king of global e-commerce, offering up some of the city's best real estate and a virtual tax-free existence if the low-road, parasitic company will only agree to open its second headquarters in IL, and bring "50,000 jobs" to Chicago.

Where have we heard those kinds of wild promises before? Think Olympic Games or Boeing's move here from Seattle in 2001, which, despite Mayor Daley's overblown promises, produced only a few hundred jobs and little in the way of taxes.

Ben Joravsky writes:

While 50,000 jobs sounds great, Chicago's got a checkered history when it comes to companies making good on job promises. The most infamous case was Republic Windows and Doors. In the 1990s, the city gave Republic more than $10 million in tax increment financing money to build a factory on Goose Island that would employ at least 610 people. In 2008, Republic closed the factory but got to keep the TIF cash.

Amazon's founder, CEO and Trump clone, Jeff Bezos  claims that his company is going to invest more than $5 billion to create a second headquarters in a city like Chicago. He says the move will produce thousands of high-paying jobs over the next 10 to 15 years. And all he wants in return is free land and billions in corporate tax incentives. Bezos has been playing the same game for years.

When Bezos was first deciding where to base his new e-commerce business in 1995, Seattle was not his first choice. Instead, according to Newsweek, the CEO of Amazon, now the world’s largest online store, eyed a Native American reservation near San Francisco that would have considerably lowered his tax bill.

The state of California quashed that scheme, but Bezos’s zeal for tax avoidance did not stop there. Throughout much of Amazon’s more than 20-year history, he has carved out competitive tax positions for the company as it expanded globally. His business acumen in that regard has even attracted the wrath of presumptive Republican presidential candidate Donald Trump, who earlier this year accused Bezos of buying The Washington Post to gain political influence and avoid taxes. During a speech in Texas, Trump said, “If I become president, oh do they have problems. They’re going to have such problems.” 

Boy, did he lie. Bezos, with a net worth of more than $45 billion, pulls down and annual salary, including stock options, of nearly $2 million. That's a small part of what's local taxpayers are paying for if Amazon is allowed to ride virtually tax-free.

More from Newsweek:

Amazon’s IRS case in the U.S., which could force it to pay more than $1.5 billion in unpaid taxes, has revealed some findings that are, at best, awkward for the company. According to court documents, Amazon hired an economist from the global financial advisory company Deloitte in 2001 to review the various approaches that could be adopted to reduce its taxes.

Bezos is also a big backer of charter schools and other school privatization schemes in the state of Washington. According to a report in the Nation, the Bezos Foundation has donated to Education Reform Now, a nonprofit organization that funds attack advertisements against teachers’ unions and other advocacy efforts to promote test-based evaluations of teachers. Education Reform Now also sponsors Democrats for Education Reform (DFER).

Other education philanthropy supported by the Bezos Foundation include KIPP, Teach for America and many individual charter schools, including privately funded math and science programs across the country.

Both Rahm and Rauner, facing upcoming elections, see landing Amazon as a feather in their respective caps and are eager to jump at the bait. Bezos' name popped up in recently-released Rahm emails. In January 2013, Emanuel emailed Bezos, asking for more information about the possibility of the online retail giant locating a facility in Chicago.

"While this is below you, this is very important to me and would like to know if there any chance to set up a phone call with you to discuss?" Emanuel wrote the billionaire, who also owns the Washington Post. "Hope you had a Happy New Year."

Bezos responded by adding one of his executives to the email, "who leads our global fulfillment." Amazon has built multiple facilities in suburban collar counties, but only one in the city.

Bezos

While the city needs jobs, it's questionable whether all, or even most of those promised jobs will go to Chicagoans or to those in communities with the greatest need or highest youth unemployment rates. More likely, Amazon would move many of its existing staff and top execs here from other cities. It's not even clear that these execs will live in the city or in the burbs.

Secondly, there's the question of the negative impact this giant tax giveaway will have on public education and the current pension-debt crisis? America's corporate tax rate is 35%. But Amazon is one of 115 companies along with Boeing on the S&P500 that pay much less -- around 4%..

Finally, there's the problem of Amazon's unethical and even criminal modus operandi. The company was just hit with a $293 million fine from the European Union for failing to pay its tax obligations there.

According to the International Business Times, Amazon is far from alone in shrinking its effective tax rate by racking up state subsidies and credits — as those same states struggle to keep their public pension funds afloat. It cites a study released Wednesday by the advocacy group Good Jobs First and the National Public Pension Coalition which makes the connection between the huge tax breaks used to attract giant corporations to states and cities and their growing pension-debt crisis.

Greg LeRoy, the founder and executive director of Good Jobs First, said the best policy solution for governments looking to attract companies to their states is to prioritize small startups with high growth potential, rather than flocking to well-established behemoths, as well as choosing firms that require a lot of human capital, as opposed to those based mostly on automation. Either way, he said, the bottom line is there needs to be a clear payoff to not just the company but the surrounding economy — in which access to stable retirement income plays a significant role.

Mr. LeRoy makes a lot of sense.

In short, writes Joravsky,

 ...bringing Amazon to town will probably cost untold millions in tax credits—money diverted straight from the state's coffers. That spells a tax hike for everyone else as the state jacks up taxes to compensate for the money it's giving to Amazon.

 I'm hoping the Rahm/Rauner deal with Amazon goes the way of George Lucas' Star Wars Museum.

SmallTalk Salute to FOTP and Judge Darrah

A SmallTalk Salute goes out to Friends of the Park and it's fierce Ex. Director Juanita Irizarry, as well as to U.S. District Judge John Darrah for standing up to Rahm's bullying and the unlawful Lucas lakefront land giveaway.

Now that greedy billionaire land-grabbers, Lucas and Hobson have left town for the greener pastures on the west coast, local media seems to have finally come to its senses, here, here and here.

In case you don't know about Judge Darrah, Trib's Blair Kamin writes:

It was Darrah who let Friends of the Parks' case against Lucas proceed, thereby checking a "fix-is-in" political process that had Emanuel, the City Council, Gov. Bruce Rauner and the General Assembly doing Lucas' bidding.

Though the case never went to trial, Darrah is the real hero of this titanic struggle. Without him, Friends of the Parks was powerless. Also without him, the case could have set a dangerous precedent. It would have allowed the powerful and wealthy to foist their vanity projects on the people's shoreline — and control those edifices for decades, even centuries, to come.

And shame on the usually stand-up Father Michael Pfleger for his brain-fart equation of FOTP with a notorious street gang and for being unable to distinguish "between Friends of the Parks and the Gangster Disciples?" I hope that $200,000 he took in church contributions from Lucas' foundation went for something positive in the community and was worth the embarrassment.

A collage of what passes for school reform around here.

Correction: Thanks to John Merrow and several other readers for catching this error in the story below. As John points out: The Emerson Collective is run by Laurene Powell Jobs, not Mark Zuckerberg and Pricilla Chan. While there is a former USDE official working there, it's not Jim Shelton; it's Russlynn Ali.  I actually knew this and had it right on my Schooling in the Ownership Society post from a week ago. --- M.K. 

If somehow we could collage these four articles from today's Tribune, it would offer a realistic look at the current state of what passes for Chicago school reform:

Can Duncan save Lucas' ghastly Star Wars Museum?

Article #1 --Yes, Arne Duncan is back in town. In case you were worrying about whether or not Obama's former Ed Secretary would land on his feet after the Race To The Top Debacle, fear not. He's doing fine, thanks to billionaire friends like Mark Zuckerberg, Pricilla Chan, and George Lucas.

Zuckerberg and wife Pricilla hired Duncan for a leadership role in their so-called Emerson Collective where he joins up again with his own former U.S. Education Department deputy secretary Jim Shelton to advise of corporate-style reform and privatization matters.

No word yet on how much they're paying him. Whatever it is, it's just chump change to MZ. He's the guy who once dropped $100M to underwrite Newark's version of school reform under Gov. Christie and former mayor, Corey Booker. Nobody knows exactly how all that money was spent. But suffice to say, it hasn't done much to improve teaching/learning. Most of it, I'm told, went into the pockets of the charter school operators.

As backup, Arne has secured a spot on the Lucas Museum's Board of Directors. They are all hoping that this appointment leaves a glimmer of hope that the horrifically ugly Star Wars Museum will still end up on the city's valuable lakefront property, for free.

Duncan, who also served as Chicago Public Schools chief from 2001 to 2009,  previously worked at Ariel Investments, where George Lucas' wife, Mellody Hobson, is president. Ariel's CEO, John Rogers. has long been one of Duncan's benefactors.

Hey, if a man can't call on billionaire friends for a job, what kind of society have we become?
Right?

"Reform Specialist"

Article#2 -- A "reform specialist" retires. This Trib story about the retirement of North Chicago's Chief Education Officer Ben Martindale, refers to him as the district's "reform specialist" who got his high-paid position when the district (4,000 mainly poor and children of color) became the target of a state takeover five years ago.

Fast forward to today to see the only results the reformers seem to care about.

 On the academic front, only 10 percent of North Chicago students met or exceeded state standards in math and English language arts last year on the new statewide standardized exam called the Partnership for Assessment of Readiness for College and Careers, or PARCC, compared to 33 percent statewide, according to state data. About 7 percent of North Chicago students scored a combined score of at least 21 on the ACT, an indicator the state uses to determine college readiness, compared to 46 percent statewide.

"There's a lot of room left to go in terms of improvement," Martindale said.

Something to consider. Maybe the district's students needed something more than a state takeover and a "reform specialist."

Article#3 -- Rahm won't go to Springfield to lobby for CPS funding.
The reason, he's got no juice. Nobody, from Gov. Rauner to Speaker Madigan, gives a damn about what Rahm wants or thinks.

As it stood Tuesday, an Emanuel trip to the Capitol this week seemed unlikely, said top administration officials who were not authorized to discuss the mayor's schedule public.

 For the mayor, deciding whether to insert himself into the delicate situation at a stalemated Capitol carries some risk. Though he could claim some measure of credit if a funding bill that helps CPS passes following an eleventh-hour visit, Emanuel could get stuck with an even bigger share of the political blame if he goes there and the legislature then doesn't act on education funding, or passes a bill that doesn't help Chicago the way he wants.

So this isn't really about school funding, is it? Rahm won't advocate in Springfield for the school for fear of being rejected. Luckily thousands of union members heading for the capitol don't see it that way.

Schools are filthy but Magic cleans up. 

Article@4 -- Millions more for SodexoMAGIC.  So far, Rahm's privatization of custodial services has been a disaster for garbaged-up schools and their principals. But that won't stop the mayor from doubling down. 

The district, citing its bleak financial condition, privatized many building maintenance duties in 2014 but quickly started receiving complaints about dirty schools.

"These are the same companies with complaints against them for dirty, filthy schools," William Iacullo, president of the International Union of Operating Engineers Local 143, told the school board Wednesday. "But you guys are going to reward them with an expansion."CPS has so far paid Johnson's company more than $37 million since the district's 2014 budget year, according to school records. The Aramark division responsible for school maintenance has received about $167 million.

So there's the picture. It ain't pretty. Is it? Reform needs reform.

A win-win proposition

Although I'm squarely against Rahm's lakefront land giveaway to his billionaire campaign donor pal George Lucas, I am open to a compromise into order to keep George, Melody and their money from abandoning Chicago.  How about this one?

We replace the monument to fascist, anti-semite Italo Balbo in Burnham Park, with a statue of Yoda and rename Balbo Drive after Princess Leia.

A win-win. Thank you very much.

Why not blame torture on teacher unions?

OINK! -- Rudy Giuliani blames "liberal guilty whites", teachers, and their unions for violence in black community. He claims that by resisting vouchers, expansion of privately-run charters, and teacher pay based on test scores, teachers are fomenting black violence.

BTW,Giuliani is an admitted water-boarder (of Americans and Italians).

MIXED SIGNALS...And how about former Chicago cop Steve Mandel, sentenced yesterday to life-plus-5 years for plotting gruesome kidnapping and torture. I guess it's illegal -- unless the government does it. I doubt that even monster Mandel could have imagined rectal feeding.

Burge

The Chicago PD has an inglorious record of such stuff. And it's not just about Daley's guy Commander Burge. Last month, a U.N. committee addressed the issue of torture committed by Chicago Police Department Commander Jon Burge and other police officers between 1972 and 1991 and share its dismay that no officer has been “convicted for these acts of torture for reasons including the statute of limitations expiring.”

It acknowledged that a federal investigation had asserted there were no “prosecutable constitutional violations” uncovered, however, the committee criticized the fact that the “vast majority of those tortured—most of them African Americans—have received no compensation for the extensive injuries suffered.”

Now top U.N. officials are calling for  individuals responsible for the "criminal conspiracy" revealed in the torture report to be "brought to justice, and must face criminal penalties commensurate with the gravity of their crimes." Good luck on that one.

Maybe Burge, Giuliani, Brennan, and Cheney types will blame it all on the teacher unions.

BEST CHUY QUOTE...Chuy Garcia held a news conference at Dyett High School in Bronzeville where he embraced the community's plan to turn the school that has been on the chopping block for years into the Dyett Global Leadership and Green Technology High School.

Emanuel’s handpicked school team recently reversed course and announced that Dyett would remain open. But instead of adopting the community plan, CPS is issuing a request-for-proposals from all comers.

Garcia likened the mayor’s decision to ignore the community plan for Dyett to his giveaway of 17 acres of precious lakefront parkland to movie mogul George Lucas to build a new interactive museum.

“You fly into Chicago from Hollywood. You give the mayor a lot of money and say, 'I would like to build a museum for Darth Vader.'” City Hall says, 'I like it. Here’s some of our lakefront. We’ll lease it to you for a $1. The mayor calls it 'bold,' " Garcia said.

“If you don’t live in Hollywood—if you have to take the bus downtown from Bronzeville—[but] still, you bring a plan supported by thousands of people to improve your community and save your high school. You bring a plan backed by the best institutions. City Hall says, 'You don’t know what’s best for your own kids. You’re not an expert. You don’t understand your own neighborhood.’ ”

'Don't worry. I'll talk to the mayor' -- Ka ching!

Lucas and Mayor 1%

David Sirota at IBT continues with his great exposures of the "dark side" of Chicago politics. Is there any other? Nothing captures it better than Melody Hobson telling billionaire husband George Lucas, "Don't worry, I'll talk to the mayor. I'm sure he'll love it," referring to the plan to give Lucas publicly owned lakefront land. for his wacky blob of a Star Wars museum. Of course there was nothing to worry about. Lucas and Hobson had just deposited another $50K into Rahm's campaign bank account.

Keep 'em coming David.

Huffington Post reports that progressive City Councilmen Bob Fioretti, John Arena, Scott Waguespack  are calling on the Securities and Exchange Commission (SEC) to conduct a full investigation of Rahm's accepting illegal campaign contributions from financial firms that manage the city’s pension funds.

Says Dick Simpson, a political science professor for the University of Illinois at Chicago, the allegations against the well-funded incumbent have the potential to cast a longer shadow over his campaign.

Simpson told The Huffington Post that Emanuel's fortunes may shift if his opponents decide to make the campaign cash allegations a bigger issue. First, however, Emanuel's opponents have to make the problem crystal clear to voters.

At last night's Chicago school board meeting...

Much of the heat from the audience was directed at Vitale, who previously served as CPS' chief administrative officer from 2003 to 2008. Vitale is also the former president and CEO of the Chicago Board of Trade and the former vice chairman and director of Bank One Corp.

"Responsibility for pursuing such a risking financial course rests squarely on David Vitale," reads the city council resolution calling for hearings into CPS' borrowing practices.

Speaker after speaker, meanwhile, noted that the CTU and activists have been sounding the alarm on these deals for the past three years. -- Progress Illinois