Amazon's aggressive capitalism model is destroying American communities

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Kimi Wei <kimiwei88 () gmail com>
> Date: February 19, 2019 at 12:58:15 AM EST
> To: David Farber <farber () gmail com>
> Subject: Amazon's aggressive capitalism model is destroying American communities
>
> https://www.nationofchange.org/2019/02/18/how-a-failing-capitalist-system-is-allowing-amazon-to-cripple-america/
>
> Capitalism is failing in America, and Amazon is both the cause and beneficiary of much of the breakdown. Jeff Bezos 
> said, “We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re 
> successful: Put the customer first. Invent. And be patient.” He might have added three capitalist practices familiar 
> to his company: (1) Pay no taxes; (2) Drive competitors out of business; and (3) Exploit workers. 
>
> Anarcho-capitalism: The sordid details of Amazon’s tax avoidance
>
> In 2018, according to its own SEC filings, Amazon claimed a refund on its $11 billion in U.S. profits. It did the 
> same on nearly $6 billion in profits in 2017. The company has reportedly positioned itself to avoid even more future 
> taxes with unspecified tax credits.
>
> In the most extreme form of capitalism taxes do not exist. This is called “anarcho-capitalism.” Among all 
> corporations, Amazon may be the leading advocate of this philosophy. They haven’t paid federal income tax for the 
> past two years. They set up headquarters in Luxembourg for tax breaks that are now being challenged. They claim 
> minimal profits on hundreds of billions in revenue, resulting in one of the lowest profit margins among major 
> corporations, and thus much less tax. Of course, Amazon claims to be using tax credits from past losses that stemmed 
> from investment in research and development (R&D). But the company appears to overstate and obfuscate the R&D 
> numbers. Its only ‘explanation’ of R&D in its annual report comes in an ambiguously all-encompassing section called 
> “Technology and Content.” Plus, that’s no excuse to dodge taxes. Walmart and Google each spent nearly $12 billion on 
> technology in 2018, almost as much as Amazon, but Walmart paid 28 percent in federal taxes, and Google 14 percent.
>
> We learn much more at the state level. Amazon has played one state against another for tax breaks over the years, 
> most recently negotiating an estimated $3 billion tax credit from the state of New York before residents rebelled – 
> as well they should have. The Economic Policy Institute found that employment levels don’t significantly change in 
> communities with new Amazon warehouses, and a recent study by The Economist concluded that the opening of a 
> fulfillment center in a given community actually depresses warehouse wages. Furthermore, as an indication of the 
> folly of wooing corporations with state subsidies, Upjohn research found that in the great majority of cases 
> incentives are not even a part of a company’s decision to locate in a given area.
>
> Most insidiously, Amazon’s seemingly fair-minded acceptance of state sales taxes likely has a dark side. For years 
> the company fought the state tax as it built a competitive advantage over smaller firms. Now that it’s firmly 
> established, online variety and convenience have replaced price as the primary incentives for most consumers, and so 
> Amazon now supports a sales tax, very likely to discourage competition. Evidence comes from one study that found 
> Walmart 34 percent cheaper than Amazon in four of five product categories. 
>
> Monopoly: Amazon and the killing of competition
>
> Kiplinger compiled a remarkable list of 49 companies, many of them familiar to almost all Americans, that are in 
> danger of being driven out of business by Amazon. One of them, Toys ‘r’ Us, has already succumbed. Sears is nearly 
> gone. Others include Barnes & Noble, Kroger, Rite Aid, Best Buy, Etsy, Yelp, Pandora, and even stalwarts like Target 
> and Trader Joe’s and UPS and Fedex and Office Depot and Staples. Investopedia agrees, adding Macy’s and even 
> Walgreen’s and CVS and Costco.
>
> In a summary of “The Myth of Capitalism,” by Jonathan Tepper and Denise Hearn, it is argued that “an increase in 
> market concentration across the United States has resulted in a system that is not true capitalism, since freedom is 
> being restricted…Amazon is crushing retailers…It can determine what products can and cannot sell on its platform, and 
> it competes with any customer that encounters success.” Columbia University and UN economist Howard Steven Friedman 
> adds, “Monopolies are one example of capitalism failing. Monopolies have virtually no competition and can dictate 
> prices to their customers unless they are restricted by regulators.”
>
> Of course, along the way Amazon has destroyed or dismantled or discouraged many smaller businesses. Like the jewelry 
> store in New Mexico owned by Candelora Versace, who said her customers have started buying gems online, in part to 
> avoid state taxes, and then visiting her store just for the settings. She considers the far-reaching effects of 
> Amazon’s tax avoidance: “The roads don’t pay themselves. The schools don’t fund themselves…When they don’t want to 
> pay the tax, it cheats us.”
>
> Labor in decline: The economic and physical abuse of Amazon’s workers
>
> Amazon warehouse workers make about $13 per hour. That’s not a living wage for a U.S. family of four, and not even 
> for a single person in many areas of the country. So the employees of this super-rich company turn to food stamps, 
> letting U.S. taxpayers take care of them. In Ohio and Pennsylvania, one in ten Amazon workers were recently on SNAP. 
> In Arizona, one in three. Along with the low pay comes intolerable working conditions, with overheated warehouses and 
> employees using water bottles to avoid bathroom breaks in order to meet their schedules. And worse, employees have 
> suffered workplace injuries that leave them homeless, disabled, or unable to earn an income. Employees are also 
> forced to deal with constant surveillance, anti-union pressure, and the threat of losing their jobs. Much of Amazon’s 
> over-hyped R&D spending is focused on the development of robots to replace human workers.
>
> Capitalism has failed workers, and it has caused a surge in inequality that gets worse with each passing year. In 
> Capital in the 21st Century, Thomas Piketty showed that for 40 years, from 1970 to 2010, labor’s share of national 
> income (wages and salaries) has declined. Stanford research reveals that “the declining labor share at the economy 
> level is driven by the growth of large firms.” Like Amazon.
>
> A good reason for democratic socialism
>
> There may be no better argument for democratic socialism in America than the way individual state leaders have been 
> falling over each other trying to lure corporations to their states with tax subsidies. We Americans have never been 
> able to cooperate in ending this pointless waste of tax money that should be going to education and jobs and 
> infrastructure.
>
> Does Jeff Bezos have any sense of social responsibility for all the societal benefits heaped upon his company? Amazon 
> has arguably benefited more than any other company from what The Economist calls the “game-changing breakthroughs” of 
> the Internet, which was built with our tax money through the National Science Foundation since the 1980s, and before 
> that by the taxpayer-funded Defense Advanced Research Projects Agency (DARPA). Fortune refers to Amazon’s actions as 
> “extracting public money for its own enrichment.”
>
> But perhaps the Amazon boss doesn’t care. According to The Atlantic, “Bezos has argued that there is not enough 
> philanthropic need on earth for him to spend his billions on.” If that truly reflects the man’s attitude, it shows an 
> incomprehensible ignorance or disdain on his part. Bezos himself said, “The only way that I can see to deploy this 
> much financial resource is by converting my Amazon winnings into space travel…I am going to use my financial lottery 
> winnings from Amazon to fund that.”
>
> Good work, Jeff. Benefit from seventy years of public inventiveness and productivity and funding, and then fly off to 
> the skies before you have to pay for it.
>
>
> Kimi Wei
> kimi () thewei com  @kimiwei
> facebook.com/thekimiwei
> 862-203-8814



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