Bezos' Decision To Raise Wages Is Largely A Machiavellian Distraction

Authored by Mike Krieger via Liberty Blitzkrieg blog,

For the many low wage Amazon workers - both full time and temporary - set to receive a raise thanks to the just announced boost in minimum pay to $15/hour, the news is certainly a big plus. It should also be noted that had Amazon not been subject to intense scrutiny and criticism from the likes of Bernie Sanders and others, Jeff Bezos never would have responded with such an aggressive move. That said, if you think a little beyond the surface level about why he’s doing this now and what his real motives are, it becomes clear nobody should take this move at face value.

Stacy Mitchell, co-director at the Institute for Local Self-Reliance, is someone whose work on Amazon I’ve cited on various occasions. She tweeted out an important thread this morning that helps you take a step back and not miss the forest for the trees.

1. It’s nice to see Amazon workers get a raise today, and not just the regular hires, but the temps too.  What led to this?  Five things...

  • 2. First, it’s a very tight labor market and Amazon needs a bunch of people in its warehouses right now for the 4th quarter.

  • 3. Second, advocacy by @SenSanders & @RoKhanna, & groups like @jwjnational & @ilsr, compelled Amazon to act. Amazon almost never responds to critics. But Sanders and Khanna unnerved Amazon deeply, as I pointed out in an earlier thread:

  • 4. Third, Amazon is run by the world’s richest man  (net worth = $160 billion) and his recent attempt to make this unconscionable disparity seem okay with a $2B charity pledge just didn’t cut it. Bezos is the face of inequality. That’s still true after today.

  • 5. Fourth, Amazon has another way to cut labor costs: automation. It needs fewer workers today to sell & ship $100M worth of stuff than it did just a few years ago. That trend is only accelerating. Some e-commerce warehouses in China have a staff of 4 people. They fix the robots.

  • 6. Finally, and this is the big reason: Amazon fears an antitrust case to break it up. They’re right to be nervous. In the last week: @SenWarren called for it. The EU's @vestager opened an antitrust probe. A former Amazon exec said competition depended on splitting Amazon in two.

7. To keep its grip, Amazon is going to try to buy off constituencies, one by one.

8. Workers getting a raise is a good thing. But what we need is so much bigger. No company should have this much power. Inevitably, it means that Amazon gets to set the rules, economically & politically. And those rules will always privilege Amazon's interest over the public’s.

Bezos is naturally attempting to portray this as a come to Jesus moment, but you shouldn’t buy his spin for a second. Based on what we know of his business practices, the guy’s built the behemoth that is Amazon by operating in a Machiavellian fashion (see my recent post: Amazon is Far More Dangerous and Powerful Than You Want to Admit).

The real tell here is Bezos’ immediate emphasis on raising the national minimum wage to $15 an hour under the law. Pushing for a forced across the board wage hike everyone knows Amazon can cope with better than current or potential competition, makes his company look good while likely harming other business models in the process.

This is how Bezos rolls, he’s willing to take short-term losses to dominate a market. What sacrifice is a wage hike if he assumes everyone else will have to do it as well? He knows Amazon’s got the resources and capability to automate in a way others simply can’t. Bezos see this as a win-win if he can also get everyone to pay $15 an hour. He gets to look like a leader, while also positioning Amazon for even greater market dominance in the long-run. You really think Bezos is advocating for a national minimum wage increase because he’s suddenly a Bernie Sanders populist? Don’t be stupid.

Which brings us to the next point. While Bezos’ well documented piss poor treatment of low level employees is well documented, Amazon poses a much larger threat in other respects. It’s not just the company’s increased ties to the U.S. military and intelligence agencies, though that’s dangerous enough. The company’s largest threat resides in its desire to not just dominate the market, but to become the market itself. 

As Stacy Mitchell noted in her excellent 2017 article:

To describe Amazon as a retailer is to misunderstand what the company actually is, and to miss the depth of the threat that it poses to our liberty and the very idea of an open, competitive market.

It’s not just that Amazon does many things besides sell stuff—that it manufactures thousands of products, from dress shirts to baby wipes, produces hit movies and television shows, delivers restaurant orders, offers loans, and may soon dispense prescription drugsJeff Bezos is after something so much bigger than any of this. His vision is for Amazon to control the underlying infrastructure of the economy.Amazon’s website is already the dominant platform for digital commerce. Its Web Services division controls 44 percent of the world’s cloud computing capacity and is relied on by everyone from Netflix to the Central Intelligence Agency. And the company has recently built out a vast network of distribution infrastructure to handle package delivery for itself and others.

Jeff Bezos is a highly intelligent and cutthroat individual. He’s able to see multiple steps ahead of most people, and this move to raise wages is a perfect example. He figures he can look like the good guy in the near-term, while solidifying market dominance and monopoly power in the big picture. Bezos plays the long game and he plays it really well. Don’t take your eye off the ball or believe the hype for a minute.

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