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Corporate Welfare.4: Avoid Amazon

-1Salon.com published a piece today with the provocative title, “Amazon is worse than Walmart.” Their argument centers on the notion that Amazon’s business strategy for years has been to accept near-perennial losses on a quarterly and yearly basis in exchange for achieving a near monopoly size “market share.” Walmart, by contrast, actually makes a profit. Carson Moss of the Strand Book Store in New York is quoted as saying “Our discount cannot compare to what Amazon was setting their prices at, even before they started selling their books at 60 percent off. There’s frustration that a company that hasn’t turned a profit continues to be rewarded with higher stock prices and they can make seismic shifts in this industry.”’strand-1938

Why would the stock market back a company with a history of being in the red?  Because they know that the government will, on both a state and federal level.  They have a history of granting massive taxbreaks to massive companies with the political leverage (read: ability to use legalized bribery of politicians) to lower their overhead by wiggling out of taxes in exchange for promises to create jobs for the local “community” – shitty jobs.  They use this low overhead to drive smaller competitors who have no such tax breaks out of business, and then they jack up prices.  Investors willing to wait for the payoff in the long run keep buying stock in these companies because they know that the playing field will continue to be slanted in their favor. Melville House publisher Dennis Johnson dennisloyjohnsonargues that “A price rise is inevitable, of course, whether it’s happening now or not. No monopoly in history has ever lowered prices. That’s not what monopolies do. That’s not why they exist. Amazon did not suffer losses for 18 years in order to achieve total market domination and nonetheless continue posting the kind of losses it posted yesterday … and the quarter before that … and the quarter before that, dating back to the company’s inception in 1995.”

This is the classic paradigm David Cay Johnston outlines in Free Lunch.  Major league sports are the most absolute version of a contemporary monopoly.  Other industries usually follow the Republican / Democrat Pepsi / Coke model of pseudo-choice between two semi-monopolies with similar business models.  With Borders gone and Barnes & Noble going, Amazon may yet achieve world domination imageswith an MLB style total monopoly.  Dennis Johnson writes that Denise Cote, the presiding judge in a successful Deparment of Justice lawsuit that gave more power to Amazon, “essentially acknowledged” that her decision “rendered Amazon a government-sanctioned monopoly.”  He also provides the following rebuttal to the notion that Amazon is succeeding in generating high-quality jobs, in the wake of President Obama’s appearance at an Amazon plant in Tennessee to praise the company for doing just that:

“White House deputy press secretary Amy Brundage says the president is making the appearance because, “The Amazon facility in Chattanooga is a perfect example of the company that is investing in American workers and creating good, high-wage jobs. What the president wants to do is to highlight Amazon and the Chattanooga facility as an example of a company that is spurring job growth and keeping our country competitive.”

But here’s what the president considers a “good, high-wage job”: According to Glassdoor.com, the average salary of the 1800 employees at the Chattanooga warehouse is $11.20 per hour. Meanwhile, the living wage for a parent of one in Chattanooga is $17.31 per hour.

Equally warped is the president’s concept of investment in America: Brundage’s statement failed to note that Amazon only created the jobs as part of the tax avoidance scheme it’s been enacting across the country for years now, robbing states of billions of dollars in income. In Tennessee, for example, Amazon has never paid sales taxes — not once in its 15-year existence — and when the state finally pursued payment, Amazon struck a deal to delay paying sales taxes yet another year, until 2014, in return for agreeing to employ 2000 people in the state. But Amazon got out of all those taxes to do what it needed to do anyway: Open warehouses in Tennessee as part of its larger plan to expedite shipping around the country. Tennessee, in fact, is key to that plan. As a Shelf Awareness report notes, “as FedEx, Ingram and others can attest,” Tennessee “is a ideal central location in the country for shipping.””

I’m sure Al Gore would agree.

This entry was published on July 30, 2013 at 7:01 pm. It’s filed under Anti-Neoliberalism, Corporate Welfare, Economics, Politics, Series of posts and tagged , , , , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

One thought on “Corporate Welfare.4: Avoid Amazon

  1. Pingback: Corporate Welfare.9: Markets and Chains | johnhdavisdotcom

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