If Jeff Bezos wants to help low-income people why not just pay them better?
theguardian.com
theguardian.com
Amazon has yet to learn this one little trick. They think they're being clever by underpaying unskilled labor and leaving them to rely partly on government benefits, but then they end up having to make up for it by hiring more often, losing time to training, having to load up schedules to make up for lost time (making each employee more expensive anyway), and ultimately defending themselves against nasty articles documenting their work practices.
If Walmart--the company which practically invented the practice--can move on from it, so can Amazon... a company that's mastered the art of reinvesting profits both for continual growth and to dodge Wall Street payouts for well over a decade.
But, if I'm allowed to be cute and meaningless, Bezos' wealth comes from Amazon stock, whose value comes from its future earning potential. Pay workers more, and that stock becomes worth less, so there is less to give away. But because Amazon doesn't earn any money today, the present valuation comes from promises of future fat profit margins, so a simple statement by Bezos that he will continue to increase worker wages with revenue would instantly make the stock almost worthless. And of course, Amazon can't really pay workers more today, since it doesn't have fat margins, all it could do is shift expenses down, but that doesn't really end up being so significant. At a 5% discount rate, Bezos networth of, say, 100 Billion, would be enough to pay each current Amazon employee an extra $5 per hour in perpetuity, and over time, inflation would eat away at that.
If Americans would like people to have proper access to healthcare, they would not make it dependent on having a job and make it a universal right funded by the government, but they don't.
I actually am an advocate for higher wages for all, and more government subsidy of healthcare, education, and access to daycare / pre-school; but we can't leave achieving these to whims of each business or the largesse of billionaires.
Americans recently elected a president who enacted tax cuts that benefit Jeff Bezos and the wealthier segment of society, at the expense of government programs that could benefit the poor, the homeless, and the children in need of care.
Also, from a purely business viewpoint: Walmart employs drastically more customer-facing retail employees compared to Amazon thus (1) their morale and behavior has a direct impact on the immediate customer experience (2) the training costs (hence the cost of replacement) is higher due to the need to train soft-skills and customer-facing skills etc. Amazon does pay hard-to-replace employees way above minimum wage, including software engineering, marketing jobs, automation, managers, etc.
Curious when it becomes rational? Literally every federal income tax bracket is more than the taxes on "tea" before the revolutionary war.
Most of us making decent money in high-cost world city are paying 50% or damn near close to it in taxes.
What is left to tax? If you start taking much more from me I simply quit and move to the third world where I can retire today with my current savings.
This whole meme of "irrational fear of taxation" is ridiculous. Those that make money pay 50% or so in taxes, and we aren't seeing a whole lot of return for that money. I'd pay 7% more if I moved to the Netherlands today, and get a whole lot more than 7% in additional value.
The point is that, if a tax system relies on some, even arbitrary structure, there will always be a way for a rich person to pay less by restructuring, and the cost of restructuring will always be worth it the richer you are. The main problem of this tax the rich fuckery is that the supposed rules usually bleed onto the middle class in 10 to 20 years due to trying to make the ends meet. Also, the unsolicited spending, of course, but that's another story.
Economy can be displayed as flows of money, labor and goods. We should look hard at these flows and think where even the rich can't evade by restructuring.
I don't have a pre-made solution, only ideas. The crucial idea is that one rich person is a person after all. What do people do? They consume, give money to others and export funds. Catch them when they do that. They can't avoid eating and sleeping.
Therefore switching the focus of taxation onto things nobody can avoid would be something society needs to contemplate and perhaps tackle. A completely novel way would be something I call affluence source tax. It is similar to a value added tax, however it is levied on everything a rich person does: buying stuff, paying for labor and rent, bartering, and especially for exporting funds!
Forget taxing legal entities because they are always being restructured to minimise taxing. Just look at the people themselves, not the legal entities.
Probably this wouldn't be the granddaddy of all taxing solutions, and most surely the rich will be successful in stopping this, but at least nobody can stop me thinking about this problem.
Now to your example that some other entity controlling the net worth, this won't help because if the rich person wants to buy a private jet with the help of that other entity, the other entity will just pay taxes instead.
Because people are taxed, not companies, rich people can't avoid taxation. It is just an idea.
The flaw in the entire capitalist premise is that this investment is assumed to be an implacable driver of productivity, but as the market is purchased (a free market is either for sale, or it's not actually a free market - it's a manipulated market), investments flow into non-productive asset classes, freezing consumptive momentum (ala Thomas Picketty's book).
Moreover, the sale of the market makes zero-sum games more attractive, since, without the protection provided by competition, squeezing resources from others becomes more attractive than creating new opportunity.
Proof, please. A cite or three to peer reviewed studies will do.
Like everyone else my opinions are formed by a combination of experience, anecdotal evidence, and locigal deductions from facts. This is especially so in the realm of politics where one tends to make sweeping statements about large groups of people.
I’ve encountered many people who claim taxation is theft and heard their views on other political matters. This experience has led me to the conclusion that people who say that taxation is theft largely vote a certain way. Of course I might be wrong.
This is a forum where people post their opinions. Asking someone to be prepared to cite three peer reviewed articles for each opinion is weird. You know I probably can’t cite such articles so I guess that you make the request in an attempt to point out that there are things I think are true that I can’t prove. I suppose you think this diminishes the merits of my opinions. I think you are wrong. Your request says more about you than it does about my opinion.
Why put the onus on private business to implement above market wages and pay people more than the free market allows? This causes all sorts of unintended consequences.
There is a simple answer that doesn’t distort the private market - expand the Earned Income Tax Credit.
Instead of giving it out once per year, give it out every month to people who qualify. The EITC has traditionally been supported by Republican and Democratic administrations. I don’t know how it would fare in today’s political climate.
As it is now, some companies pay below what people need to survive, and force their employees to collect welfare to make up for the difference... effectively forcing tax payers to subsidize their business.
Without that adjustment, (your idea with) the EITC distorts markets.. by reducing the pressure employees and job seekers place on a company to pay adequate wages. In a market without EITC/welfare, working a job that paid too little to survive would result in your employees leaving, or at least unionizing/striking. No one would work for you knowing they wouldn't obtain enough money to pay their bills.
Sounds like a convoluted way of having a job and getting paid for it.
It is all about labor being performed at a loss.
People cost money to just exist. Showing up for work is not free.
What happens when business operates at a loss, ignoring investment plays?
It runs dry and then dies.
People laboring and not making enough to fund their labor do the same thing. They die. Really.
Since we do not generally look at people tipping over as being acceptable, especially ones who are employed, others step in, or are forced to step in and subsidize the business.
It is one thing to suggest doing that for a small business makes sense. Fine.
It is quite another to suggest large, very profitable ones need us to do that.
They don't, and that is what this is about.
How much it costs to exists has no bearing on what companies should pay you. That would be like me trying to get a raise based on my mortgage being unaffordable.
People laboring and not making enough to fund their labor do the same thing. They die. Really.
And that’s a social issue. Raising minimum wage to take care of that makes about as much sense as your health insurance being tied to your employer.
Let the free market sort out how much people should get paid and let the government and the taxpayers (including corporation) provide a safety net.
Yes I consider myself to be a “big government free market capitalist”.
It is one thing to suggest doing that for a small business makes sense. Fine. It is quite another to suggest large, very profitable ones need us to do that. They don't, and that is what this is about.
Okay, so we have the government provide a safety net, tax all business the same at a graduated tax rate like we do individuals and let them deduct wages like they do now.
I do not care how much money people make, encourage them to make as much as they can, but insist they also pay their own way.
For about 40 years, in the US, wages for basic labors have been near flat, while cost and risk exposure have gone through the roof.
Back when this all started, the promise was it would get cheaper to live, so no worries.
So which is it?
Actually make it cheaper to live?
Fund labor properly?
Let people suffer and die early?
I do not find any subsidy acceptable, unless there is real need.
Amazon has no such need. Amazon has a want, and so does it's many peers. Understanable. But, labor has real needs being unmet and those come well before I have any real concern for wants expressed by people unwilling to fund real, basic needs of labor helping them to make more than enough money otherwise.
I know, rough. Get that. But, we are talking about real people here, lives, kids, families. All of that matters one hell of a lot more than persuing an idealized, fantasy free labor market ideal ever will.
In fact, the only way to change that is results. Better answers to the "which is it?" question I just posed.
Answers today are trending worse, not better. And that is a primary driver behind a large and growing number of people, myself included, seeking to do things very differently.
People should get as wealthy as they can. Business gets as big as it can too. All good, so long as doing those things does not leave the carnage it currently does.
I will not respond again, but will gladly read replies.
You can't just randomly pick an issue, see it hasn't been done, and conclude no one cares about it. Voting isn't that simple. And getting things done within the government isn't that simple.
But in any case, let's say you're right... there's nothing wrong with pressuring individual companies. Pressure, whether applied socially, economically (through boycotts), or legally are all valid ways of achieving a goal. Some of those may be more effective than others, but people should use whatever tools they have available.
Totally agreed voting isn't simple! Also I tried to word my sentence carefully: I didn't claim no one cares; or that even the majority didn't care; just that they didn't "care enough" i.e. prioritize this to influence their vote over other issues.
If Americans would like people to have proper access to healthcare, they would not make it dependent on having a job and make it a universal benefit funded by the government, but they don't.
I actually am an advocate for lower prices for all goods, and some government programs for healthcare, education, and access to daycare / pre-school;...etc.
Literally, don't support Amazon and get as many people to not support it.
https://www.forbes.com/sites/briansolomon/2013/07/24/the-wal...
Costco also invests in its workers who perform really well. An executive actually said once that they decided not to advertise specifically to pay workers more which would create incredible service which would spread company word of mouth. They got around $100 billion a year in revenues that way.
https://www.investopedia.com/stock-analysis/040915/3-reasons...
So, companies like Walmart lost $100 billion / yr to Costco and $35 billion / yr to Publix when I looked at the numbers. Plus whatever they lost other years. Walmart finally learns having workers that care a tiny bit about the company might be good for the bottom line. Costly lesson. Also shows the benefit of dominance: they can literally throw away billions in potential sales from obvious strategies with no negative effects on their executives. ;)
Remember, Amazon excels at high volume logistics and labor is merely another good.
They may well actually be clever. For example, hypothetically, they first squeeze labor until cementing some cost threshold acting as a defensive moat for competition then second they play nice. Or not.
Those people have to show up for work and doing that costs them more than they make doing said work.
So, they either die for lack of resources, and that is not civilized
, or
someone else has to pay.
I value and support public assistance. Could be any of us who needs help.
I do not support assistance being necessary when it is clear the enterprise can fund it's own labor.
Market dynamics do not tell the whole story here.
If we were to actually watch people die, no assistance at all, those wages would come right up.
The rich and powerful get their wealth from the masses and significantly impact the lives of the masses. World leaders need the people more than the people need them. An individual with a hard scrabble subsistence existence is similarly well off whether they have a hut and must hunt for food or live in a trailer and have some shit job. But wealth at the top has increased tremendously as world population has increased.
Bezos is not exempt from people getting tired of his crap and he would be wise to listen up and do something more effective.
Articles like the above suggest the rich aren't really aware enough or trying hard enough to avoid a dystopian nightmare future. Their luxuries require a functioning world. Locking themselves away in a bunker like a self imposed prison after they make sure everything goes to hell appears to be their current idiotic plan.
https://politicalgates.blogspot.com/2011/12/citigroup-pluton...
Plus, they give people plenty of distractions to shout at instead of improve their situation. Human nature takes over from there.
It may be "stupidity" rather than malice driving this. What I'm saying is they need to up their game out of enlightened self interest, even if they don't care one bit about the people.
If the de facto pie shrinks due to global mismanagement of resources, the richest of the rich have the most to lose.
Looking at politics around the world it seems like the world is slowly demonstrating that we learned nothing from the history of the 1930s.
Yes, the act of charity is better than nothing but it seems people think that money might be better spent on improving the quality of the jobs he offers from the dismal self-destruction they are famous for. Also pointing out that donating to charity ends up being tax deductible so it is truly the most selfish public display of giving and that treating your workers with human decency would be a selfless act he seems unwilling to do.
i mean, he still ends up with less money. he just doesn't get taxed on the money he gives away.
one could argue that donating is more tax efficient than paying workers more, because then their income would be taxed.
Eh? Taxing a corporation less is better than having its employees earn more?
although since we're on this topic, I would note that the US already spends as much or more money per grade school student than most of the European countries that we look to as models. this leads me to think that just shoving more tax dollars into the bureaucratic rube goldberg machine might actually be less impactful than a targeted charity effort.
It's not really charity if you have a hand in creating the problem. A thief who pledges to contribute 10% of his loot to help his victims isn't doing good. Likewise a multi-billionaire businessman who employs people at low wages isn't deserving of kudos for setting aside a little of his wealth to help the poor, especially when he could make decisions that would help much more.
No, and if you'd read more closely you'd have realized I didn't do that. I merely used a analogy involving a thief that clearly illustrates one characteristic that's relevant here. Analogies don't map one-to-one onto a topic.
You really should have gotten it, too, since I didn't just stop at the analogy. I went to apply the concept it was meant to illustrate directly to the situation.
Furthermore, the fact that Amazon is a "job creator" doesn't hold it, its labor practices, or the jobs it creates above criticism.
To do that unfortunately he needs exploit. It's not great, but if people are dumb enough to still do the jobs at those rates it's not going to change. The wages would go up if all the people actually created a need for them to go up.
In addition, if he gives people raises, they will be pleased....for about a year. Then people will establish that as the new normal and demand further raises because he capitulated the first time so why not try again.
Your hypothesis didn't play out when management were committed to taking care of employees with a good baseline.
A new study found that 700 Amazon employees in Ohio are on food stamps: https://www.businessinsider.in/A-new-study-found-that-700-Am...
Homelessness is a real problem that requires creative, focused and ambitious solutions. If Bezos can even partially match Bill and Melinda Gates' accomplishments the world will be a MUCH better place (https://www.businessinsider.com/charts-bill-gates-loves-2017...). Here's hoping Bezos gets some singles in philanthropy paving a path to home runs.
Instead we got a piece about how CEOs use philanthropy to boost their image. It leans more on a moral argument against the practice while ignoring the practical, political barriers put in place that prevent CEOs from actually doing anything about addressing wealth disparity. It almost gets there with the lobbying against tax, but not quite.
Corporations are structurally sociopathic. They are legally bound to maximize shareholder value above all other concerns.
Bezos only just became richest person in the world this July 2018. It is perfectly reasonable for him to wait till he gets rich enough to claim the richest person title once before entering philanthropy. Also, he is only 54. Give him a break...most CEOs haven't even retired by them.
Also as CEO, Bezos has a fiduciary duty to make as much money for the company, which might unfortunately mean paying workers market rates. However by starting his own personal philanthropic fund, he can spend money for that however he believes best helps people, without worrying about what is best for a company.
Amazon Inc. employes and pays people, where as a CEO he has certain responsibilities and duties, and is answerable to the board, which he needs to take into account.
Here he's donating his personal money which does not require any such considerations and he can do what he wants.
They are following the rules. The rules have given us soooooo much over the last 100 if not 10 years. They can be vastly improved but lazy, monolithic ideas that take no consideration of cause and effect is the wrong populist movement to effect meaningful change.
Legal does not equal ethical does not equal legal.
^1 Arguably, although even that's a topic of debate.
Putting humanity first over shareholders is not an "ethical" problem
Costco is not acting illegally, or even against their own interests, by paying workers higher wages. They can make the very true argument that paying higher wages results in happier employees that reduces turnover (and therefore training costs), increases sales (since employees are more knowledgeable about products), and results in happier customers that increases repeat visits/member retention.
If the shareholders disagree with the way that the CEO is maximizing company value, then the correct response is to replace the board through a vote, who will replace the CEO.
There's no legal or ethical argument here. Costco doesn't exist in a hypothetical world where everything stays the same, but wages get reduced to minimum wage. Taking that action has costs for Costco, and the end result may or may not result in an increase or decrease of company value. Hypotheticals aren't valid legal cases.
That’s not how ethics works. Ethics is concerned with what is morally correct, not what a business can get away with. In fact, a common question about ethics is whether a business can be ethical.
By the way, I’m a business owner, so I’m not anti-business. I just know a BS argument about ethics when I see one.
> A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties.
I'm talking about ethics in a very narrow sense. Like if you're wearing blinders or have tunnel vision. That's my criticism. Shareholders come first. People play a "role" in society, they put on their masks and costumes, and quit being human. They become the role.
> In fact, a common question about ethics is whether a business can be ethical.
This is the exact question I'm asking. I tend to think not, at least if they're publicly traded. It's our responsibility as a society to keep them honest, through regulations and shame.
> I just know a BS argument about ethics when I see one.
This isn't a BS argument, or argument at all. I was musing about the ethics and philosophy of the world we live in, and being critical of it. Not saying things should be that way, just that they often are.
No. People are human at all times. They are not machines. Yours is not a view taught in management. I think you need to put more effort into understanding where/why/how decisions are being made.
"whether a business can be ethical" ... I tend to think not, at least if they're publicly traded.
You've taken a very closed minded approach to business operations, and somehow elevated it to a responsibility to act unethically.
All decisions have trade offs and consequences. For example, if you pay someone minimum wage, the consequences might be higher turn over, higher training costs, lower ability to recruit workers, higher rate of theft, lower customer satisfaction, boycotts by outside groups, etc.
If you pay people more, you may lessen these consequences, but then you'll be paying more money in wages.
Is management acting in the company's best interest by paying minimum wage and ignoring these risks? No one with any sort of management training would agree with you that there is a duty to pay minimum wage and risk incurring consequences that may out weigh the costs of increased wages.
Why do you imagine that companies are duty bound to hurt themselves, and judged solely on wage expenses?
The people I interact with certainly can be. People are very willing to cede their "personhood", to act according to their "role". This is an idea I've stolen from philosophers, but it seems to be how the world works (in my experience); for better, or worse.
> You've taken a very closed minded approach to business operations, and somehow elevated it to a responsibility to act unethically.
No, this isn't my argument at all. The idea was never that the decision was "purely" ethical, just ethical from a perspective that is often taken in the business world. I'm trying to criticize this perspective. Also, I don't think businesses, especially publicly traded ones, have the ability to act ethically. The incentives and philosophy are too perverse, which is why we need regulation.
> Is management acting in the company's best interest by paying minimum wage and ignoring these risks? No one with any sort of management training would agree with you that there is a duty to pay minimum wage and risk incurring consequences that may out weigh the costs of increased wages.
I agree wholeheartedly, and made the same point in this very thread. I don't think it's "smart management" to have employees that want to leave at the first opportunity, and hate the companies guts. Seems shortsighted and stupid to me. I was just commenting on a perspective that is very narrow, and in my opinion dangerous, but extremely common. Just a bit of frivolous, socioeconomic commentary.
Let me try rephrasing my point...
The world is complicated and decisions can be justified in a variety of ways. Morally good and bad decisions can equally be made. Therefore, companies are as moral as the people who run them.
Some immoral people would have you believe that when they make management decisions they must act in a way devoid of moral concerns... but this is a radical statement and an attempt to excuse their immorality. Even Adam Smith wrote at great lengths about the moral concerns of businesses. These two are not divorced from each other.
Occasionally, industries will ask as a group to be regulated because it's too hard or risky to take a step on their own, even if they all agree it's a good idea. Salt would be an example where the big companies all generally agree they can easily reduce it without anyone noticing if they all do it at the same time, but if only one does it they'll taste noticeably worse. So the only way they can figure to start reducing salt is by getting a regulation written to make it happen.
It's a curious system.
To me, the article more supports than denies the stance of "it's a myth that companies can't improve their workers situation because that would breach their responsibility to shareholders". The responsibility to shareholders exist, but it's not as absolute as argued.
Some quotes:
> First, the business judgment rule provides broad protection for managers and directors when they make decisions that benefit customers, employees, suppliers, the community, and other non-shareholder interests, as long as these actions are reasonably believed in good faith to promise some shareholder benefit. Enabling corporate social responsibility is not the purpose of the business judgment rule; it is, rather, to avoid the courts’ second-guessing of reasonable decisions by officers and directors. However, it serves, albeit unintentionally, to enable corporations to act responsibly without risking legal challenges from shareholders.
> In any event, the elements of the plan that were struck down by the Delaware court were aimed at question- able objectives, which need not have been attained to preserve the Craigslist culture and way of doing business, at least in the short run.
Having said all that I still agree with his approach. I'm not a big fan of artificially distorting the market (vs providing better social/community services which I am a fan of)
the realities of the labor "market" are far from a perfect market, mostly because of the massive leverage imbalances between employer and employee (e.g. it's a lot easier for amazon to replace a singular employee than for that employee to find another job). You're not distorting the market by leveling the playing field, in fact it may be you are un-distorting it.
You can also argue that a company being a good corporate citizen adds intangible value to itself by way of excellent reputation. You can see this happening with Amazon because they’ve done so much evil good engineers no longer want to work with them. This is directly related to their shitty shortsighted policies.