Losing Amazon

Above photo: An aerial view of Preston, England. Neil Mitchell/Shutterstock

Last week, the cities still in the running for Amazon’s HQ2 officially found out the bad news: despite months of effort and billions of dollars in subsidies assembled, they will not be the new home for Amazon’s much ballyhooed second corporate headquarters, now split between two expansions in New York and Arlington, Virginia.

This is, of course, how the game was going to go. The corporate attraction strategy behind these failed bids is premised on scarcity: in the end, it’s a zero-sum competition between cities. As the indefatigable researchers at Good Jobs First have amply demonstrated, this competition often turns into a race to the bottom, leading to questionable value for ordinary city residents as subsidies are lavished to bring the next big thing to town.

Such reasonable critique is, however, cold comfort for the cities now contemplating their future without Amazon.

But in the North of England, there’s a story to be told that might help these disappointed mayors and economic development officials pick themselves up off the floor. The problems of Preston, a city of 120,000 up the road from Manchester, are not all that different from the ones facing many American cities—deindustrialization, dislocation, and persistent poverty (one in three children, for instance, live below the poverty line). This all adds up to an uncertain economic future, and political volatility: Just substitute Brexit for Trump.

It’s easy, then, to understand why the local government was so excited by a £700 million pound investment—almost $900 million—that was going to rejuvenate their suffering downtown by bringing national chains to a giant new shopping mall in the center of the city. Seen as the only game in town, it was devastating when the deal completely fell apart in 2011.

But thanks in large part to Preston City Councilor Matthew Brown, the city seized the opportunity to take a different path. Brown had been inspired by something he had learned about on the other side of Atlantic—innovative work in Cleveland, Ohio, with the Evergreen Cooperatives, a network of worker-owned businesses designed to create living wage jobs by localizing the purchasing power of “anchor institutions” like the cities’ large nonprofit hospitals and universities, including the world-famous Cleveland Clinic.

Rolling up his sleeves, Brown went to work. This was back in 2012—well before Jeremy Corbyn’s surprise 2015 win as Labour Party leader put left economic populism back on the party’s national agenda. With the support of the rest of the council and the help of the Manchester-based Centre for Local Economic Strategies, Preston took stock of its own economic assets.  If they couldn’t attract new money from out-of-town corporations, they could at least stop the money being spent by Preston’s anchors—the University of Central Lancashire, local hospitals, and the city government itself—from leaking out through purchases of goods and services from companies outside the region. Once gaps in the local supplier ecosystem were identified, the city could work with its partners to create new worker cooperatives to fill them, creating jobs and anchoring wealth in the community.

But Brown and his allies in Preston didn’t stop there. They looked at how the city’s banking sector extracted wealth from the town—and catalyzed a new credit union to keep residents’ savings circulating locally rather than fueling the city’s speculative casino economy. They looked at where residents were getting their electricity and created a municipal energy company to keep those profits working to keep prices affordable, rather than lining the pockets of corporate investors. They also looked at where city workers’ pensions were invested and arranged for£100 million in pension funds—about $129 million—to be invested in new development in the city center.

Today, the strategy is paying off.

Today, the strategy is paying off. Already £70 million ($90 million) more are being spent each year in the local economy, supporting 1,600 jobs, thanks to the shifts in anchor institution purchasing. The first gap-filling worker cooperatives are ready to launch. Plans are afoot for a publicly-owned bank to serve the entire county of Lancashire.

And you can meet Matthew Brown downtown at the newly renovated city-owned market to talk about Preston’s remarkable progress, a sentiment confirmed by a recent study from PricewaterhouseCoopers and the British think-tank Demos (which is not affiliated with the American organization that shares the same name) which named Preston the most improved urban area in the country this year.

Meanwhile, politics in the United Kingdom has caught up. “The Preston Model,” as it is being called, has received national attention—not least from Corbyn, whose Labour Party has recently announced a “Community Wealth Building Unit” to replicate what’s been done in Preston elsewhere in the UK. Within the frame of “alternative models of ownership,” Corbyn and his Shadow Chancellor John McDonnell have laid out an ambitious plan to remake the economy, building from cooperative and municipal levels to large-scale regional and national deprivatization, with joint worker/public control.

This is what happened in one small city when one councilor decided not to give up when the business-as-usual plan for corporate-driven urban renewal fell through. Imagine what could happen here if the cities who lost out today in Amazon’s bidding war seized their own chances to reinvent their cities.