Protectionism Vs. Innovation
Trump Has a Point About Amazon That Resonates With His Base
The post brick-and-mortar retail empire is destroying the hourly wage job downtown at the local store; as such it’s part of the America Trump’s voters tend to distrust.
President Trump has an ulterior motive for his attacks on Amazon.com, whose owner also owns The Washington Post. But does he also have a point?
Yes and no, it seems.
Trump has claimed the company pays “little or no taxes to state & local governments.” The truth is that Amazon pays hundreds of millions in taxes. The valid criticism is that, once upon a time, Amazon (which had no physical presence in most states) didn’t collect a sales tax in most states. But today, Amazon collects sales tax in 45 states that have a sales tax, and some experts believe that any additional federal legislation would only help Amazon monopolize, by creating additional hurdles to stifle any potential upstart competitors from emerging.
There’s also the aforementioned fact that Jeff Bezos owns both The Washington Post and Amazon.com. There is little reason to believe that the Post is doing Amazon’s bidding against Trump, but it’s hard to deny the perception on the part of some people that it might. The average American—the guy who assumes that everybody is a corrupt swamp creature—assumes Bezos would use the Post do his bidding—even as they accept the fact that Trump uses his perch to punch back.
What about Trump’s claims about the post office? “Only fools, or worse, are saying that our money losing Post Office makes money with Amazon,” the president tweeted on Monday. “THEY LOSE A FORTUNE, and this will be changed.” PolitiFact pooh-poohs Trump’s tweet, but it’s not like he made it up or got it from InfoWars.
Trump’s take is likely based on a 2017 Wall Street Journal op-ed, which notes that an “analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip—a gift card from Uncle Sam.” How could this be? According the op-ed’s author, money-management executive Josh Sandbulte, “select high-volume shippers are able to drop off presorted packages at the local Postal Service depot for ‘last mile’ delivery at cut-rate prices.”
The bottom line seems to be that this might be a sweetheart deal, but Amazon probably isn’t breaking the law. It’s just very good at utilizing current laws, which (let’s be honest) haven’t adapted to the digital age.
This is to say I don’t think most of what Trump is specifically alleging holds much water. What I do think deserves our attention (aside from the ethics of using the bully pulpit to intimidate an adversary) is a question that helped Trump win the presidency in the first place: How has modernity harmed middle America?
And here, I think Trump’s move is pretty consistent with his rhetoric about economic protectionism. If globalism and immigration are serious problems for America’s workforce (as Trump seems to indicate), then automation poses an even bigger problem. “[O]ur fully tax paying retailers are closing stores all over the country...not a level playing field!" Trump tweeted Monday. Forget the tax part. We are losing mom and pop shops. On this, he has a point.
And this realization transcends the left-right paradigm, uniting a coalition of populists, communitarians, and working-class Americans. “What we are seeing all over this country is the decline in retail,” said Sen. Bernie Sanders on Sunday. “We’re seeing this incredibly large company getting involved in almost every area of commerce. And I think it is important to take a look at the power and influence that Amazon has.” Minnesota Rep. Keith Ellison, a leftish Democrat, has also urged the Trump administration to “rein in” Amazon.
Progressives like to frame this as big vs. small, but it could just as easily be defined as virtual vs. local. The truth is that companies like Amazon are destroying some brick and mortar retailers. And even if these job losses are more than made up for by increases in the e-commerce sector, we are still losing something more precious than money.
Once upon a time, elites and businesses were tied to a community—and owed that community at least some perfunctory responsibility for its wellbeing. In The Revolt of the Elites, Christopher Lasch recalls a time when “wealth was understood to carry civic obligations.” “There has always been a privileged class, even in America,” he concedes, “but it has never been so dangerously isolated from its surroundings.” When we lament the loss of trust in elites and institutions—and the sense that the working class is being left behind—the loss of local jobs that physically exist in local communities is worth considering.
To be sure, modern tech companies donate loads of money to good, philanthropic causes, but they do this from Seattle or Silicon Valley, or—even more ethereally—“the cloud.” As Lasch writes, “what mattered [in the old days] was that philanthropy implicated elites in the lives of their neighbors and those of generations to come.” Middle Americans, even if they derive some income from a tech company, owe no such allegiance or reverence to them. It’s just business.
Ultimately, the fight against Amazon is part of a much greater struggle in battle between protectionism and innovation. Until recently, conservatives were uniformly in favor of the latter. Rather than buying the argument that the world is static, there was a sense that we could grow the pie. Sure the automobile put the horse and buggy maker out of business, but it ended up creating more—and better—jobs in the process. And let’s be honest, most innovations have made many of us more comfortable and prosperous. I can’t tell you how many affordable household items (never mind books) I purchase on Amazon each year.
Yet, today’s Americans are increasingly pessimistic that “creative destruction” will be have a happy ending this time around. What happens when automation and artificial intelligence really kick in? How many of us will even be employable or needed? Never mind money, what about our need for purpose and meaning and community? When drones deliver all our necessities to our front door, we will have even less reason to set aside VI headsets (or sex robots—depending on how things shake out) and venture outside and see our neighbors.
Amazon is a part of this story. But I suspect that at least some of the animosity aimed at Facebook (a company that, frankly, has earned some legitimate scorn) is based on this same deep-seated fear. These tech companies have suddenly become less popular with the public, and this is because we have gone from a nation of tech utopians to a nation of tech dystopians.
In my mind, questions about anti-trust violations, the post office, and taxation are merely the convenient subplots in a much larger story. If the public ultimately sides with Trump over Amazon—as they might—it’ll have little to do with the details, and everything to do with fear of a dark future.