A coworker once said the problem with capitalism is that eventually someone wins.
I can’t help but dwell on his warning as the blood spatter from the ugly crime scene formerly known as a great online shopping service hits the press.
Who is Jeff Bezos really? And who is his victim? Here’s the evidence we’ve collected so far:
- In response to bad publicity, Amazon raises its minimum wage to $15 an hour.
- Shortly after, it begins lobbying Congress to force all other businesses (i.e., Amazon’s less wealthy competitors), to do likewise.
- Amazon makes a deal with NYC to open a new HQ.
- NYC’s mayor announces, “Amazon understood that if you come to New York City, you have to live by our values.”
- In return, the city offers Amazon $1.525 billion in tax credits and grants.
- Amazon also announces its intention to build an additional HQ in northern Virginia, near D.C.
I try not to cast blame without evidence. I try not to make assumptions about people’s hidden motivations. But in this case, we’ve at least got probable cause to dig deeper, because it doesn’t look good. If I were writing a mystery novel based on these scattered facts, the plot would write itself.
Here’s the synopsis: Corporate kingpin fears bad publicity about his alleged maltreatment of workforce. The bad press is not only hurting sales but also threatens to hijack his backroom dealings with NYC’s ruling monarch to open a new HQ in the East Coast’s most prestigious metropolis. He and his buddies concoct a brilliant solution. First, raise the minimum wage to the politically popular $15 an hour, which will garner favor with the press and NYC. Second, get reimbursed for the new cost through NYC’s financial incentives. Third, and this is the devious part, cancel out the competitive disadvantage of the $15 minimum wage by lobbying the government to force everyone else to follow suit. Not only does this cancel out the disadvantage–it actually flips it into an advantage for Amazon. The wage hike gives Amazon the street cred to pressure everyone else to do it, but guess what? Amazon’s competitors are far less capable of absorbing the cost increase. The result? Competitors go out of business, and small startups fail to grow, while Amazon comes out looking (in theory, if not in actuality) like a self-sacrificial moral superior.
That’s how it looks, and the stink of it makes me a little less inclined to shop on Amazon, as much as I love the service.
But whatever you think of Jeff Bezos and Co., this development does force us to revisit the question of whether capitalism, taken to its logical end, breeds its own worst enemies. When a businesman “wins,” his money gives him power, and he wields that power to buy politicians, change laws, create a monopoly, and institute a crony-capitalistic fiefdom.
When it comes to economics, I lean Libertarian. I say lean, because I’m not fully there. I just can’t shake the concern that there comes a point where big business is just too big and it begins to resemble the sort of authoritarian takeover that Libertarians so fear.
Where is that line, and what do we do about it? I’m open to suggestions.