Editor’s note: This blog post was written by Fred Clements, executive director of the National Bicycle Dealers Association. Clements’ previous blog posts can be read on bikedealerblog.wordpress.com.
Anti-technology pundits have been around for a long time, but there is increasing negative coverage related specifically to one company, Amazon.com, with strident criticism of its business practices, its ethics and its impact on society at large.
Jim Hightower recently added to the public record in a much-discussed article entitled, "4 Ways Amazon's Ruthless Practices are Crushing Local Economies," published and shared in numerous places, including in both Alternet and salon.com. Hightower also publishes a monthly newsletter and has written a book, "Let's Stop Beating Around the Bush," a 2004 takedown of the George W. Bush presidency.
Hightower and his headline writers took out the big bat for the Amazon piece on salon.com, writing that "Jeff Bezos (Amazon CEO) has forged an empire by exploiting low-wage workers and extracting billions in government subsidies."
Many bicycle dealers have similar views, regularly deriding the unfair competition from what they see as a powerful, clever and slippery business adversary, a job destroyer, a tax evader, a continuing emitter of general toxicity.
Bezos is described here as a ruthless predator, "overlord of amazon," with the "power to stalk, weaken, and even kill off retail competitors." He is taken to task for going "for the throats" of his suppliers, who are squeezed like snake prey by "unrelenting pressure to lower what they charge Amazon for their products."
The plight of booksellers in the path of Amazon's ruthless bulldozer squad of on-line business parasites was summed up as "brute force."
"While it's true that Amazon is innovative, efficient, and focused on customer satisfaction, such factors alone did not elevate Amazon to its commanding level of market control," Hightower writes. "To reach that pinnacle, Bezos followed the path mapped by Rockefeller and other 19th-century robber barons: (1) ruthlessly exploit a vast and vulnerable low-wage workforce; (2) extract billions of dollars in government subsidies; and (3) wield every anti-competitive weapon you can find or invent to get what you want from other businesses."
Hightower notes that "much of Amazon's competitive advantage has been ill gotten, obtained by dirty deeds," and then moves on to describe those deeds.
- The tax subsidy. Many Amazon transactions are inappropriately tax free, he writes. He notes that the government has been subsidizing amazon.com sales with special tax breaks for 20 years by not requiring that sales tax be collected in states where it is required.
"In Texas, where I live, the sales tax rate is 8.15 percent, so by claiming to be exempt, Amazon gets a price subsidy of more than eight cents on every dollar of its sales—that's more than the entire profit margin of most independent shops. The tax subsidy ranges from about four to more than 10 percent across the country," Hightower notes.
Communities that offer tax subsidies and incentives to attract Amazon warehouses are also effectively giving out public subsidies, he notes. He also subtly concludes that "flimflammery and government favoritism help Amazon overwhelm honest competition and extend its monopoly reach."
- The Amazon crush. Hightower describes several instances where Amazon has gained power by buying competitors and/or marketing its own versions of competitors' products which it sells at a loss to squeeze competitors out of business, "the very definition of predatory pricing."
- Showrooming. John Crandall, owner of Old Town Bike Shop in Colorado Springs, is cited as a retailer who has seen many shoppers check out the bikes he sells, ask questions, try out bikes, leave without buying, and show up days later with the parts for a new bike bought online for less.
"These shoppers have used their smartphones in Crandall's store to scan the barcode of a product they like and then gone online to buy it from Amazon at a discounted price—lower than Crandall's wholesale price," Hightower writes.
- Monopolistic Behavior. Amazon has a track record of demanding discounts from suppliers, and then increasing those demands until the supplier is no longer profitable. The dependence on Amazon becomes a destructive force. One supplier is quoted as saying "I offered them a 30 percent discount, they demanded 40, and after a time demanded 45 … Amazon may be able to operate at a loss, but I'm not in a position to do that." Dropping Amazon or keeping Amazon, either choice is destructive.
Hightower also criticizes those who praise Bezos as an exemplary corporate leader who benefits consumers by relentlessly lowering price. "They smile cluelessly when he says it's not Amazon killing off local businesses and turning work into a low-wage, roboticized nightmare— rather it's 'the future' that is producing these changes.
"Bezos has gotten away with this hornswoggle up to now by endlessly reciting his mantra that EVERYTHING Amazon does is to benefit consumers by relentlessly lowering prices. But I don't want a price that's stained with gross worker exploitation, the crushing of local enterprise, and the creation of a corporate oligarch. It's up to us to reject this way of business," Hightower concludes.
He wants more people to know what's going on between "that jazzy website and the FedEx guy, for Amazon is insidious, far more dangerous and destructive to our culture's essential values than Walmart ever dreamed of being. Remember: price is not value. Exchanging value — and our society's values — for Amazon's low prices is a raw deal."
Whatever your views of Hightower's article, you'll have to admit it's not that common to read an article that contains the words hornswoggle and flimflammery within paragraphs of each other. His newsletter, the Hightower Lowdown, is described as "America's Hottest, Feistiest Newsletter," www.thehightowerlowdown.org.
