Saturday, October 14, 2017

Bill Crawford: Here comes Amazon

Rural communities just thought Wal-Mart was the great job killer. Now comes Amazon.

"If Amazon continues to grow its business by $20 billion a year, the annual toll of lost jobs for merchants, buyers and cashiers will be in the tens of thousands by my calculations," is the spin on Amazon by Scott Galloway, professor of marketing at the NYU Stern School of Business, in a recent Wall Street Journal article. "Disruption in the U.S. labor force is nothing new—we have just never dealt with a company that is so ruthless and single-minded about it."

At least Wal-Mart hires local folks and pays local and state taxes.

According to Galloway, Amazon "has replaced the expectation for profits with a focus on vision and growth, managing its business to break even while investors bid up its stock price." Amazon's efficient business model, what Galloway calls "a search engine with a warehouse attached to it," minimizes employment and taxes.

"Because Amazon is more efficient than other retailers, it is able to transact the same amount of business with half the employees," wrote Galloway.

He also said things are "deeply amiss" when "the fifth most valuable firm in the world" can get away "without paying any meaningful income tax:"

"Since 2008, Wal-Mart has paid $64 billion in federal income taxes, while Amazon has paid just $1.4 billion. Yet, while paying low taxes, Amazon has added $220 billion in value to the stock held by its shareholders over the past 24 months—equivalent to the entire market capitalization of Wal-Mart."

The Amazon story becomes particularly important as Congress and our Legislature move to revamp tax laws. We can only wonder if our tax writers even understand the vast changes in worldwide business models, much less how to levy taxes fairly.

Who's gonna pay how much towards our $4 trillion federal budget and our $6 billion state budget are top-of-the-mind questions for most Americans.

"If a giant firm pays less than the average 24% in income taxes that the companies of the S&P 500 pay, it logically means that less-successful firms pay more," noted Galloway. "In this way, Amazon further adds to the winner-take-all tendencies plaguing our economy."

If the biggies avoid taxes we know who's left to pick up the difference.

In Washington, politicians are trying to spin big tax cuts for corporations and the wealthy as a good thing for the average guy. The spin is so intense it's got conservative Republicans saying it's okay for tax cuts to increase the national debt. Huh?

Down here in Mississippi the spin on tax collections is positive. For the first quarter of fiscal year 2018 tax collections are up say news stories - 2.6% over last year. Further down in the stories you see that tax collections were up the first two months but dipped for September - 4.5% below last year. The dip, which should be of concern, was downplayed.

Meanwhile, lack of jobs and declining state and federal spending play havoc with our rural communities. They need a Rumpelstiltskin who can spin all this into gold.

 (Thanks to Kingfish for sharing the WSJ article.)

Crawford is syndicated columnist from Meridian (crawfolk@gmail.com)

Kingfish note:
One thing Mr. Crawford doesn't mention is that the cities don't get a share of the Amazon tax in Mississippi.

23 comments:

Anonymous said...

As the libo he is, Crawford is consumed with taxing everything known to man!In the words of the late, great Governor Kirk Fordice "he has never signed the front of a payroll check."

Anonymous said...

Without taxes this place won’t run.....period.

Anonymous said...

Amazon has opened fulfillment centers that employ over 2000 in Ohio. Perhaps a laid off employee from a failed Walmart should take their resume over to The fulfillment center, word has it Amazon has a fantastic benefits package.

Ophelia said...

Well, all very unfortunate, but really, is this any different from the cry of the horse-and-buggy trade once automobiles became the way to go? Times change, and the working business model of past days becomes cumbersome and outmoded. Sic transit everything. I love supporting my little local merchants, but also use Amazon all the time. Not sure what that makes me...

Anonymous said...

last year, state spending increased by over 13% from previous year. Over $2B increase in state spending

An analysis of state, local and federal spending would better serve than trying to find more ways to take more money from the citizen

Anonymous said...

There is no greed like government's greed. God forbid they learn to do with less income.

And, fwiw, amazon collects sales taxes on stuff they sell.

Anonymous said...

Serious question, KF -

Why does this anti-capitalist douche canoe get to post his boring drivel here regularly?

Anonymous said...

Native Seattlites don't too much care for Amazon either. Jeff Bezos thinks he's king of the city.

This tax break they're wanting to pass is going to balloon national government debt. It will mess things up and then a democrat will be voted in to fix it. Rinse. repeat.

There are basically two scenarios when it comes to this debt problem; either we'll become the next Greece OR the central banks of the world will just collapse and we'll have to figure out a new monetary system. I'm at the point to where I think the later of the two is more likely to happen--it plays into the notion of a global currency.


Actually, the situation is more like all of the world becoming like Greece simultaneously and we'll suffer so bad that a new, global banking system will be the only solution to continue global commerce and trade or we can just barter. One thing I do know is that the militarization of local police forces ins't just for pork barrel politics. There's a reason.

Anonymous said...

@1224 Over $2B more in state spending in Mississippi? Please back up that claim.

Anonymous said...

The rural areas of Mississippi will be completely gone in a few years.

Anonymous said...

Liberal or not, this article is spot on. Amazon has had an unfair advantage over companies located in the state. This is starting to change for the better. But if your kids or grandkids live and work in MS who gives a rats a$$ how many jobs a fulfillment center in Ohio employs? If you are too dumb to understand what it means to send all your money out of state than you are too dumb to find employment elsewhere when your local job closes shop.

Anonymous said...

Why is it that business innovates, and government stagnates? Are there no visionaries in government? It seems that state government could find opportunities to automate, consolidate and realize efficiencies through technology and reduce the cost of it. As long as Mississippi continues to feed the cowboy (government) and starve the horse (the economy), the state will never get ahead.

Anonymous said...

If the guy from The American Conservative is correct, a tax break FOR a British tea company is the last straw that caused the Boston tea party. Apparently they knew that an unfair advantage via taxation would put them at a disadvantage if not out of business.

One issue in this article that is discussed is not an issue of "anti-capitalism", but an unfair advantage via taxation which is sometimes called crony capitalism. It's a hot button issue not only for capitalists, but employees as well. If NAFTA and the TPP are "free trade", then my wiping buttocks is an investor-state dispute settlement.

If taxation equals theft, then why is it okay for government to steal more from one business than it is another?

jtmjxn said...

I used--key word is used-- to be a buyer at Macy's, a company in St. Louis called may dept. stores and lastly McRaes. Amazon is killing traditional brick and mortar stores. Been in a wal-mart on Saturday or Sunday lately. No line whatsoever. creative destruction at its finest. I'm not worried about the tax dollars, I'm more concerned about the jobs, which ultimately provide tax dollars

jtmjxn said...

I used--key word is used-- to be a buyer at Macy's, a company in St. Louis called may dept. stores and lastly McRaes. Amazon is killing traditional brick and mortar stores. Been in a wal-mart on Saturday or Sunday lately. No line whatsoever. creative destruction at its finest. I'm not worried about the tax dollars, I'm more concerned about the jobs, which ultimately provide tax dollars

Anonymous said...

Fierce competition breeds significant innovation. This year I have used Walmart’s Grocery app to shop for groceries and household items, and reserve a time to drive to my local Walmart store where very nice local Walmart employees load my car. No lines, and no waiting. If there had never been an Amazon, would Walmart have ever taken the time to innovate in this way?

Also, I agree there’s an unfair tax discrepancy between the two behemoths: Walmart is obviously paying too much!

Anonymous said...

With all that shipping, it's a wonder the USPS is a sinking ship instead of getting in on the action.

PittPanther said...

It's ok to wonder about and worry about where jobs are going to come from in the future. But if I need crap that is not unique, there's no advantage to be that crap from a local store versus Amazon. So let Amazon sell us crap, while local stores continue to sell us things that require hands on support and service. Fighting to keep minimum wage jobs at Dollar General or Walmart, is a waste of time. You can't fight the future.

Anonymous said...

USPS is in on the action. Unfortunately, one analyst believes they are getting hosed in the process:
http://fortune.com/2017/07/16/amazon-postal-service-subsidy/

Plain ol' Catfish said...

@ October 14, 2017 at 2:44 PM

I'll do you one better, ask them whether the additional "$2 billion in spending" came from General/State funds or Federal funds.

Because I will guarantee you one thing, any additional money spent was appropriated from Federal dollars.

Plain ol' Catfish said...

@ October 14, 2017 at 11:34 AM

Hell, tell that Triple Cheese Tater Thot Maximus and Joey "It's not your money" Filingane

Kingfish said...

Does that include Medicaid or not?

Plain ol' Catfish said...

@ Kingfish

There weren't any increases for Medicaid in FY2017 or FY2018

In FY2017 the state contributed $949 million and the Feds contributed $5.1 billion

In FY2018 the state contributed $918 million and the Feds contributed about $5.1 billion again.

So Medicaid didn't have anything to do with @October 14, 2017 at 2:44 PM - so-called "Additional $2 billion in state spending.



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