Friday, 4 July 2014

Dear Jeff: a letter to Amazon

Dear Jeff,
you don't know me. Your company thinks it does: it once emailed with the header 'Amazon loves you', which made me feel all warm inside until I realised that it just wanted my cash. I read recently that you read and pass on to your executives email sent to on the basis that anyone who bothered to get in touch must feel deeply about whatever problem has come up.

Jeff, I have a problem. Several in fact, but only a couple of them relate to you and Amazon. I've been an Amazon customer since 1999. My first purchase was a copy of The Mabinogion for which I paid £5.74. I've still got it. I didn't buy anything in 2000 or 2001, probably because I lived over a book shop. By 2002 I was buying books and music from Amazon: the first CD was a Steve Reich collection. Harry Potter turns up in the next year, alongside some computer peripherals. By 2006, I'm like an alcoholic in a free bar - music, books, DVDs, software, hardware: all sorts of stuff brought to me as if by magic. It's amazing looking at my order history and remembering that CD or this hardback, almost Proustian (though I've never ordered any madeleines, though you do stock them).

And so it goes on: 24 orders in 2007, 78 in 2008, 109 in 2009. 230 in 2010, 256 in 2011, 281 in 2012, 243 in 2013, 114 by June of this year alone. Mostly books, but also plenty of 'big ticket' items. I'm your perfect customer Jeff. I'm hooked. I just can't stop.

But let's look more closely. The value of my orders has decline massively over the last couple of years and the nature of them has changed. If you check my order history you'll see that 3 years ago, I cancelled a £1000 order for my beloved Nikon D7000 camera. I went elsewhere, and paid a little more. Since then, I've mostly bought second-hand books from independent sellers in your Marketplace. I used to buy through ABE, but you bought that. I bought from the Book Depository. You bought that too. If there was an independent global network of then I'd go there for secondhand books too. I buy new books from Waterstone's now, or from Webberley's in Stoke on Trent when I'm up there. The prices aren't too bad. Perhaps they're a little more expensive, but I go to them for one simple reason:
they pay their taxes. 
The other reason is that one of my friends worked at an Amazon warehouse. He and his friends toiled on incredibly low wages, at unsociable hours, with no job security, no benefits, and no trust. He and his colleagues were treated like indentured labourers.

I know what you're going to say Jeff. You're going to say that everything you do is legal. That tax-efficiency is a fiduciary duty to your shareholders. That if it isn't you, it's some other company. That workers are free to take their labour elsewhere (you don't like trades unions either, do you?).

It won't wash. Not any more. Do you remember a company called Standard Oil? Owned by Rockefeller, it was a pioneer of legal shenanigans, secret deals and market abuse, leading to John D. Rockefeller becoming the richest man in the world. It became such a threat to economic stability – to capitalism itself – that the US authorities broke it up. £8.57 gets you a copy of The History of Standard Oil, which I strongly recommend.

I know lots of other people have mentioned this to you, but I wanted to put it out there. Your nifty use of international tax law (and the absence thereof) is a form of vandalism, of self-harm even. Every pound you salt away is a pound removed from a country's education budget, its healthcare system, its social security budget, its road-building and railway networks, its police service and its courts. You need all these things. You need customers who can read and write to buy your products. You need customers who have skills they can sell to employers to earn enough to shop at Amazon. You need workers to keep your company going. You need a health service to keep them upright. You need a distribution network, good roads, health and safety officers to keep your warehouses standing and safe, lawyers to help you hide the cash and courts in which they argue their cases, a social security system that subsidises the appallingly low wages you pay your workers.

The problem is, Jeff, that you want and need all these things, but you don't want to pay for them. You're sponging off your workers and off the rest of us. Two people said interesting things that you should pay attention to. The first one is Henry Ford, who was a lot like you, except he didn't bother to hide the ruthless, oppressive nature of his capitalism. But he was a very clever man. His own company says this about his 1914 master-stroke:
…he startled the world by announcing that Ford Motor Company would pay $5 a day to its workers. The pay increase would also be accompanied by a shorter workday (from nine to eight hours). While this rate didn't automatically apply to every worker, it more than doubled the average autoworker's wage. 
While Henry's primary objective was to reduce worker attrition—labor turnover from monotonous assembly line work was high—newspapers from all over the world reported the story as an extraordinary gesture of goodwill. 
Henry Ford had reasoned that since it was now possible to build inexpensive cars in volume, more of them could be sold if employees could afford to buy them. The $5 day helped better the lot of all American workers and contributed to the emergence of the American middle class.
It's not complicated. He worked out that well-paid, well-rested workers were more productive, and that profits come from spreading the wealth: a lot of people spending some money is better – especially in your business – than a few people spending a lot of money. You don't do this. Your profits come from two sources: shutting down small competitors, and expecting the rest of us to pay for public services, infrastructure and social security support.

President Obama makes my point more eloquently. Ironically, this YouTube clip was put up by the Republicans, who appear to think that enunciating the complex web of social and economic ties we call a community is somehow subversive:

Elizabeth Warren makes a similar point: that massive tax cuts for people like you – who already avoid paying taxes – isn't just wrong: it wrecks the economy on which you depend.

They're not, from my perspective, rabid communists (if only). Of course, if my liberal bleating isn't enough to persuade you, buy a copy of Gibbon's Decline and Fall of the Roman Empire. He suggested, in a barely-veiled warning to his contemporaries, that Rome fell apart because the plutocrats of the day stopped paying attention to social cohesion. They stopped providing bread and diversions to the commoners, and spent more money on private pools, harems and of course higher walls and tougher slaves to keep them safe from the hungry mob outside. Remind you of anyone you might know?

So Jeff. I have a problem. I want to spend my hard-earned money in ways that will help my fellow citizens. If they're well-paid, highly-educated and healthy, they'll give you some of their money too. I'm a little self-interested here, I have to admit. I'm an educator. Everybody else's taxes paid for my BA, MA, PhD and teaching certificate. I get a decent wage courtesy of the taxpayer too, and in return, I help further generations educate themselves (too many generations actually, thanks to the extended retirement date occasioned by the tax-evasion you practice) and in theory they will fund future educators to aid their kids. See how it works? But if you insist on using the state to subsidise your low wages, while making almost no contribution yourself having exterminated your local competitors, we're all screwed, including you and your shareholders. But the way you do business makes it impossible. Your company, and companies like it, act as if you have no ties to human society. You make my friends ill, you make my city dark, gloomy and empty, you close hospitals and you degrade schools. I've helped you do that, and I regret it.

How are you going to make things right?

With best wishes,
The Plashing Vole.


chris y said...

I shall bring this post to the attention of my Piketty reading group. It seems relevant.

Stephen said...

Excellent post

Churm Rincewind said...

Ah yes, tax avoidance. Amazon takes steps to minimise its tax liabilities within the law. Just as the people of the UK avoid tax within the law by investing in ISAs. Or Premium Bonds. Or National Savings Certificates. Or pensions.

So by all means let's blame Amazon for applying exactly the same arrangements as are favoured by the majority of the UK population.

As the old saying goes, don't tax you and don't tax me, let's tax that man behind the tree!

The Plashing Vole said...

I see your point: I agree that governments should be making these kinds of shenanigans illegal, but I don't think you can equate corporate structures designed entirely to make profits disappear with ISAs, which were a specific vehicle for encouraging UK citizens to save money. Don't forget that money going into ISAs has usually already been taxed too, as income tax.

By the way, the majority of the UK population don't have ISAs or other tax-avoiding methods. One third of the population has an ISA. An HSBC study claims that a third of the population has no savings at all.