Amazon Rampant

Amazon, the internet sales conglomerate, as opposed to the river for which it is apparently named, is now very big. Some would say too big.

And getting bigger by the day: the company is now one of the fastest-growing on the planet, and its founder and chief executive officer, Jeff Bezos, is the richest man in the world. His story, of a rags-to-riches entrepreneur who started his now seminal business in a garage with a loan from his parents, is the kind of Horatio Alger tale of which Americans used to be proud.

On the subject of Amazon, though, a growing number are less proud than angry.

Donald Trump for one, and perhaps for the best of reasons (although Bezos’s ownership of the Washington Post isn’t one of them). Usually, anything that Mr Trump despises I am reflexively inclined to favour, but for once I share his distaste. In that state of grace I happily join Senator Bernie Sanders, and the British Treasury, not to mention a growing number of concerned citizens and governments, united in the belief that Amazon doesn’t quite play by the rules.

Our disquiet is not caused by the quality of Amazon’s products. In my own admittedly limited experience, Amazon offers a most efficient service. I have ordered books and an increasingly diverse range of products from Amazon and all have been delivered with a promptness that the mail-order firms of old could never achieve, and at a considerably lower cost than I could have obtained from any local retail establishment. The operation is as impressive as the simple corporate business model that spawned it. Investors obviously think so too, since they have sent Amazon’s stock market value, and Mr Bezos’s fortune, soaring to heights unattained since Microsoft under Bill Gates.

All the more curious then that Amazon, and Bezos himself, have been increasingly subjected to attacks by social critics, including this writer.
Their first complaint is that Amazon’s on-line global reach is putting local shopkeepers out of business. Many, it is true, deserve their fate by not keeping up with the times, but doing so is easier said than done in a fast-changing world. Take the small company that runs my local bookshop, a place where I can happily browse and share literary opinions with the well-informed book-worm who runs it. She can’t possibly compete with a multi-billion dollar global corporation. I do enjoy a loyalty discount of 10 percent there, but Amazon offers 40 percent. Sooner or later, the shop will close, and the High Street will be a poorer place for its passing. Many a British High Street now hosts nothing but estate agents, charity shops and coffee bars, and even they can’t fill all the boarded-up premises that now surround them.

Does it matter? Time will tell. We go along with Amazon and others like it because buying on-line is quick and convenient. But while we don’t mourn the death of the High Street now, what kind of community will we be left with if it has no core, no place where people can derive pleasure from bumping into friends and neighbours?
We will adjust to that, no doubt, and may be in the process of doing so already, but will we adjust to the other consequences of Amazon’s business methods.
We are told that the company serves a useful civic purpose by hiring workers at its vast distribution centres. That is less true than it seems at face value. Amazon hires only what we used to call piece-workers – that is, positions which carry no security or pension or benefits. Few of these workers are paid more than the prevailing minimum wage. All can be fired without notice. And stories about their mistreatment, usually from its victims, are legion. Anyway, most of them will be replaced before long by robots, as the company has already indicated.

Still, Amazon does at least contribute to the tax base, or so its defenders claim. Well, actually, it does not. In Britain, or so I have read, Amazon turned over 3 billion dollars last year and failed to pay more than a pittance in corporate taxes, using loopholes in a tax regime that most multi-national corporations exploit – and not just in Britain. That is precisely why so many governments, including Mr Trump’s, are angry at Mr Bezos. Who can blame them?

Meanwhile, local governments fall over themselves to please the company, offering subsidies and tax abatements for the supposed employment benefits to be derived from having an Amazon plant in their jurisdiction. Amazon has just completed a beauty contest in the United States for the privilege of playing host to a new Amazon headquarters facility, with an attached promise of creating 50,000 jobs. More than two hundred cities entered the contest, including many with high rates of deprivation and unemployment, so raising the incentive stakes in what many critics believe was an event scripted for that very purpose.

In the event, Amazon decided to split the facility into two locations. The proud winners, now shamelessly shorn of billions of dollars in public funds, were (according to industry sources quoted in the media) New York City and Arlington, Virginia – hardly the most needy places one could think of. Amazon claimed that they were the only two applicants that could supply workers in sufficient numbers and with the skill levels needed to operate such a facility.

A corporation can scarcely be blamed for milking the system by performing a fiduciary duty on behalf of its shareholders, but how absurd it is for authorities with a fiduciary duty to their taxpayers to be encouraging it to do so by poaching companies from one another.

So there, in a nutshell, is my profile of the world’s smartest and most successful corporations: one that shuts down mom and pop stores, hires sweatshop labour, pays few if any taxes and takes money from the very governments that it intends to cheat.

Only the robot manufacturers should be laughing. And, of course, Jeff Bezos.