Taxpayer footed Amazon

The Rise of Amazon has been gifted by government support, Amazon  pocketed at least $613 million in public subsidies for its fulfillment facilities since 2005. More than half of the 77 large facilities it built between 2005 and 2014 have been subsidized by taxpayers.

Dodging sales tax collection was critical to Amazon’s early growth and continues to drive sales.

Today, Amazon still does not collect sales tax in 16 states, a competitive advantage that  destroys place based brick-and-mortar retailers

Amazon has used an overseas tax haven to skirt hundreds of millions of dollars a year in federal taxes.

The company’s tax-dodging scheme, is now the subject of multiple investigations. The scheme has grown Amazon into market power, enabling it to pay a federal tax rate of less than 1/3 the average paid by other retailers.

Those first class packages in the mail

The Postal Service is also subsidizing Amazon package delivery with first-class mail. If costs were fairly allocated, on average parcels would cost $1.46 more to deliver

Why is there no ‘net neutrality’ imposed on Amazon? 

Amazon has avoided being regulating common carrier rules. This would be similar to how we treat railroad companies and other firms that control essential transportation and communications infrastructure.

A platform draws its power from its position as a  broker that controls the relationship with producers and consumers.

As Amazon has achieved critical mass of consumers and producers, competing entities are vulnerable to platform control over standards and policies. Applying regulations, Amazon would be required to treat all producers and consumers equally, barring any discrimination among them.

Monopolizing the Economy

Amazon is using its market power to eliminate competition and take control of one industry after another.

We  are left with an economy that is less diverse and innovative, and which affords fewer opportunities for businesses to start and grow.

Amazon uses its financial resources to sell many products below its own cos, hooking customers into its Prime ecosystem, reducing chances they will shop around in the future.

Prime monopoly

Amazon has left rival retailers and manufacturers with little choice but to become third-party sellers on its platform. This is supplanting an open market with a privately controlled one, giving it the power to dictate the terms by which its competitors can operate, levying a unique tax on their revenue.

Amazon leverages the interplay between the direct retail and platform sides of its business to maximize its dominance over suppliers. As it extracts more fees from them, it hollows out their ability to invent and develop new products. 

Meanwhile, Amazon is rapidly expanding its own product lines, using the trove of data that it gathers. Amazon is fueling a sharp decline in the number of independent retail businesses, a trend manufacturers say is harming their industries by making it harder for new products and new authors and creators to find an audience.

Danger in the book industry

Amazon has the power to manipulate what we  encounter, remove books from its search results, threatening the open exchange of ideas and information.

Undermining Jobs and Wages 

Inside its 190 distribution facilities it resembles labor’s past more than a promising future. Many workers performing grueling and underpaid jobs, trapped in precarious temporary positions, or doing on-demand assignments that are paid by the piece.

Amazon has eliminated about 149,000 more jobs in retail than it has created in its warehouses, and the pace of layoffs is accelerating as Amazon grows.

Many jobs are at risk: the retail sector currently accounts for about 1 in every 8 jobs, and unlike Amazon jobs, these jobs are distributed across virtually every town and neighborhood

Work in Amazon’s warehouses paying its fulfillment workers 15 percent less on average than other warehouse workers in the same region earn.

Many of the workers in Amazon warehouses are subcontracted temporary workers, labelede seasonal but are, in many cases, year-round perma-temps. This set-up allows Amazon to skirt responsibility for these workers and any injuries they suffer on the job, and helps deter its direct hires from advocating for better conditions.

Amazon is expanding its reliance on on-demand labor. Using freelance delivery drivers who take instructions from an app and paying a small piece-rate for each package.

Frontiers of automation

Have you seen those orange robots in its newest fulfillment centers? 

Amazon is spreading its low-wage, precarious labor model to package delivery. This threatens the jobs of nearly one million unionized, middle-income workers at UPS and the U.S. Postal Service.

As Amazon squeezes its workers, it’s delivering taxpayer wealth to a handful of top executives and shareholders, and exacerbating income inequality. 

Weakening Communities 

Amazon is upending the longstanding relationship between commerce and place, changing the way that our communities feel and threatening the revenue streams and social capital that they depend on to function

Property taxes are the leading source of revenue for state and local governments. Brick-and mortar retailers shoulder a large share of this tax responsibility. As it displaces these businesses, Amazon, which has only a minimal footprint in the places where it does have warehouses, is not replacing this source of revenue.

Much of the vitality of cities is linked to commerce that is based on the street and the encounters with neighbors. At Amazon, shopping is a solitary activity, and this has profound implications for communities and how we relate to one another

Local business ownership is a powerful source of social capital, as well as an expression of closely held American values, like personal agency and community self-determination. In recent surveys, locally owned businesses name Amazon as the top threat to their survival

Amazon’s invisibility and lack of a physical presence

In virtually every city, Amazon has no physical presence, this makes it  harder to build a grassroots response to its impacts.

The Policy Response to Amazon

What of the Whole Foods employees. City executives and citizenry should make demands of Amazon:

1. Disclose a precise schedule of planned, or likely termination by location, city and state and position
2. Employees must be given at least 90 days notice of any planned, or likely, termination
3. Disclose a precise list of planned, or likely hiring
4. Employees must be offered to be retrained to other positions within the company or that they foresee staffing up

Congress is getting involved and need visibility and constituent support

Rep Cicilline sent out a request for a hearing: (Amazon’s purchase of Whole Foods) “raises important questions concerning competition policy, such as how the transaction will affect the future of retail grocery stores, whether platform dominance impedes innovation, and if the antitrust laws are working effectively to ensure economic opportunity, choice, and low prices for American families.”
and (the deal might) “increase Amazon’s online dominance, enabling it to prioritize its products and services over competitors.

Policymakers should restore the broader range of goals that guided antitrust enforcement for much of the 20th century. These policies should divide the beast into separate firms, preventing it from capsizing smaller competitors. This would also ensure fair and open competition on its platform.

Officials should update both state and federal labor laws to protect workers rights in the digital economy. This includes establishing stronger protections for temporary workers. It also defeats the loophole of companies classifying workers as independent contractors to skirt  wage and hour standards.

Local and state governments should stop providing Amazon with subsidies and tax breaks, and revise their planning and economic development policies to reflect the fiscal and community benefits of local, independent businesses. 

The End?