As we gradually return to normal, we must stop the rampant Amazonization of our economy
WITH A shift from wholesale from brick and mortar retail to online shopping sped up by Covid-19, internet giants like Amazon have been among the big winners in the past 16 months.
Although we are all stuck at home, some of us have been fortunate enough to have disposable income, but nowhere to spend it. A one-click purchase and a package delivered quickly to your door can be a thrill, a little luxury, or sometimes even an urgent need.
Amazon isn’t the only thing that took off in a rocket. Jeff Bezos, founder of Amazon, the richest man in the world, and the plausible impersonator of super-villain Lex Luthor boarded a manned space flight this afternoon, traveling to the edge of space for about 11 minutes on Blue Origin’s first manned space flight, his outfit a workhorse to bring space tourism to the masses – well, more specifically, the super rich.
“What is the harm? You might be wondering if an innovative entrepreneur makes money by providing a service that keeps consumers coming back for more. For better or for worse, Amazon has revolutionized retail. Even if you don’t use it to shop for stuff, it’s often helpful to browse and compare prices. We have information at our fingertips that previous generations could only dream of. Arguably, the rise of the internet – along with cheaper imports from Asia – has helped contain price increases for all kinds of products over the past two decades. Lower prices, more choice, and greater convenience have all been a boon to consumers.
But does it come at a price?
Certainly Irish retailers would say. For decades, independent Main Street stores have come under pressure from chain stores, which themselves have had to compete with or locate in out of town malls, and big box retailers like Ikea Plus. recently. The online shift has long been underway, but the pandemic outbreak has accustomed us to the convenience of one-click shopping for groceries and a host of other products. This will not be maintained as things normalize after Covid, but it is also not likely to resume operations as usual. Amazon’s position as a world leader will only gain ground.
One of the outcomes of Brexit is that Amazon will establish a new “fulfillment center” with 1,000 jobs in Dublin. With some 5,000 existing employees, the company is already one of the largest private sector employers in the country. But jobs in distribution centers will be different from jobs in data centers or the Web Services branch of the business.
A lot of people are going to be desperate for any job they can get later this year, while consumers might see no problem and faster deliveries. But beware, workers! One of the ways Amazon manages to keep prices so low is by squeeze warehouse workers to the last drop, treating them as consumables and overwhelming efforts to organize in unions. Fair play, if it keeps prices low, some would say. But do we really want people in Irish workplaces? “preparers in distribution centers, or delivery drivers, for example – being under such time pressure to meet performance goals that they have to urinate in plastic bottles because they can’t make time to go to the bathroom?
There has been a lot of praise from “essential workers” during the pandemic. Not only did we applaud the frontline health workers, but many of us developed a new appreciation for the workers who keep the show on the road: stacking supermarket shelves, delivering food and, yes, running the show. Amazon orders. We have a duty to ensure the dignity of all Irish workers.
Another way that Amazon manages to keep prices so low is that, due to its massive size, it has massive power to lower the prices offered by publishers and other suppliers. We are unlikely to see an upsurge in Irish companies selling products to Amazon simply because they have a physical presence here. And those who do will likely be forced to sell at bargain prices.
Not only has the company been accused of using harsh practices with its workers and suppliers, it also pays little or no tax on its large profits. The company recorded a record turnover of 44 billion euros in Europe in 2020, up by a third compared to 2019, but didn’t pay a dime in corporate tax. Why? Because it would have transferred funds between various subsidiaries of its corporate structure in order to register 1.2 billion euros in its European headquarters based in Luxembourg. For once, Ireland is not the fiscal villain of the play. Globally, the company more than doubled profits to $ 21.3 billion for the year.
We have been conditioned to see ourselves as consumers first, citizens or workers second or third. We all have so much going on in our lives, with so many competing demands for our time and money, that it’s easy – maybe too easy – to just take the cheapest and most convenient option. Hands up: I do it myself.
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But it’s important to consider that our penchant for fast fashion, for instant gratification at rock-bottom prices, comes at a hidden cost. As we gradually return to normal, we must stop the rampant Amazonization of our economy.
Individual consumers can make a difference by voting with their wallets. But more fundamental changes must be voted on by the Dáil as part of a broader decent work and fair taxation agenda. We need new legislation to protect workers in the odd-job economy; guarantee the right to disconnect; and, more importantly, give all workers the right to collective bargaining. Everyone should have the right to a living wage, job security and decent working conditions.
As for large companies, they must pay their fair share of taxes. If reform of Ireland Inc’s corporate tax regime is to be forced upon it – which seems more likely amid global pressures after Ireland was one of nine out of 139 countries to hold the recent landmark deal on corporate tax – why not seize the opportunity for progressive tax reform and rethink our national economic model?
Ireland used to be a center of low cost manufacturing. But we moved up the value chain when we could no longer compete on wages. Rethinking corporate tax is our next big challenge.
In the last three decades at least, we have been at an all-time low – or sometimes not! – tax haven for multinationals, but we have never really set foot in the water to put their dynamism at the service of our indigenous industry, our start-up ecosystem or our research centers of excellence. This should be at the heart of a new progressive industrial policy. We can and must move up the value chain. Because the game has changed.
Victor Duggan is an economist.