Jeff Bezos's $150 Billion Fortune Is a Policy Failure
Lots of policy talk in rest of the article.
Last month, Bloomberg reported that Jeff Bezos, the founder of Amazon and owner of the Washington Post, has accumulated a fortune worth $150 billion. That is the biggest nominal amount in modern history, and extraordinary any way you slice it. Bezos is the world's lone hectobillionaire. He is worth what the average American family is, nearly two million times over. He has about 50 percent more money than Bill Gates, twice as much as Mark Zuckerberg, 50 times as much as Oprah, and perhaps 100 times as much as President Trump. (Who knows!) He has gotten $50 billion richer in less than a year. He needs to spend roughly $28 million a day just to keep from accumulating more wealth.
This is a credit to Bezos's ingenuity and his business acumen. Amazon is a marvel that has changed everything from how we read, to how we shop, to how we structure our neighborhoods, to how our postal system works. But his fortune is also a policy failure, an indictment of a tax and transfer system and a business and regulatory environment designed to supercharging the earnings of and encouraging wealth accumulation among the few. Bezos did not just make his $150 billion. In some ways, we gave it to him, perhaps to the detriment of all of us.
In contrast, half of Amazon's domestic employees make less than $28,446 a year, per the company's legal filings. Some workers have complained of getting timed six-minute bathroom breaks. Warehouse workers need to pick goods and pack boxes at closely monitored speeds, handling up to 1,000 items and walking as many as 15 miles per shift. Contractors have repeatedly complained of wage-and-hour violations and argued that the company retaliates against whistleblowers. An Amazon temp died on the floor just a few years ago.
The impoverishment of the latter and the wealth of the former are linked by policy. Take taxes. The idea of America's progressive income-tax system is that rich workers should pay higher tax rates than poor workers, with the top rate of 37 percent hitting earnings over $500,000. (The top marginal tax rate was 92 percent as recently as 1953.) But Bezos takes a paltry salary, in relative terms, given the number of shares he owns. That means his gains are subject to capital-gains taxes, which top out at just 20 percent; like Warren Buffett, it is possible he pays effective tax rates lower than his secretary does.
Moreover, Amazon itself paid no federal corporate income taxes last year, despite making billions of dollars in profits. It has fought tooth-and-nail against state and local taxes, and has successfully cajoled cities into promising it billions and billions and billions in write-offs and investment incentives in exchange for placing jobs there. (Given that Bezos is a major Amazon shareholder, such tax-dodging redounds directly to his benefit.)
Amazon's starting wage is about $5-an-hour below the country's national living wage, and its median full-time wage is a full dollar below it as well: The company is profitable and has money to invest in operations and expansions because its labor force is so cheap. Of course, it is not cheap for the taxpayer, which ameliorates the effects of poverty wages with policies like the Earned Income Tax Credit, Medicaid, and the Supplemental Nutrition Assistance Program. One in three Amazon employees in the state of Arizona is reportedly on food stamps.
The result of these decades of trends and policy choices is that Jeff Bezos has accumulated a $150 billion fortune while the average American family is poorer than it was when the Great Recession hit. Concerns about such astonishing levels of inequality are not just about fairness, nor are they just sour-grapesing about runaway success. The point is not that Jeff Bezos himself has done wrong by accumulating such wealth, or creating such profitable and world-changing businesses. But wealth concentration is bad for the economy and the country itself, and the government has failed to counter it. Rising inequality fuelspolitical polarization and partisan gridlock. It slows economic growth, and implies a lack of competition that fuels economic sclerosis. It makes the government less responsive to the demands of normal people, potentially putting our very democracy at risk. Bezos's extraordinary fortune shows that the game is rigged. He just happened to play it better than anyone else.
Lots of policy talk in rest of the article.
