July 30, 2013

The Obama business plan: Be like Amazon


From any angle, President Obama‘s decision to appear at an Amazon warehouse in Chattanooga, Tennessee to hold it up as an exemplar is deeply disturbing. Also, bizarre.

On the one hand, in the wake of the successful Department of Justice lawsuit that rendered Amazon a government-sanctioned monopoly, a fact essentially acknowledged by judge Denise Cote in her decision, it’s unseemly to a degree that’s insulting … rather like the president’s decision in the wake of the 2008 banking scandal, precipitated largely by Goldman Sachs bankers and their ilk, to hand over his monetary policy and financial regulation to … a bunch of former Goldman Sachs bankers. Fox raids henhouse, fox should be rewarded, seems to be the Obama principle.

It’s insult added to injury to those of us in the book business, of course, and as Laura Hazard Owen points out in a report on Gigaom.com, booksellers are “furious” about the speech. And Claire Kirch reports in a Publishers Weekly story that the American Booksellers Association, the New England Independent Booksellers Association and the New Atlantic Independent Booksellers Association have all written protest letters to the White House. “What is the thinking behind this decision?” asks the NEIBA letter, while ABA head Oren Teicher calls the president’s decision to speak in Chattanooga “woefully misguided.”

The NAIBA letter is even stronger: “We cannot believe this is your vision of job creation and the future of American middle class,” it says. “We would hope your administration would be standing with Main Street, and investigating the monopolistic practices of Amazon, rather than explicitly or tacitly endorsing those practices.” A Shelf Awareness report has some of those letters in full, and some others.

On the other side, in Owen’s Gigaom report she cites a Publishers Lunch commentary (blocked by paywall) by stalwart Amazon defender Michael Cader noting that “Obama has also visited independent bookstores the last two Small Business Saturdays.” But counter that with Garth Stein‘s waggish comment on Twitter: “When Obama’s favorite indie on the Vineyard goes under, where will they get the First Family’s summer books? An Amazon locker at 7-Eleven?”

It seems a fair enough question to me. The president can’t have it both ways. This is a deeply depressing move by a chief executive who seems every bit as big a champion of brutal big business and an oppressor of artistic and contrarian culture, i.e. free speech, as his predecessor.

Okay, so that’s my perspective as a publisher. But what must the rest of the business world make out of this endorsement? According to a report in the Chattanooga Times Free Press, White House deputy press secretary Amy Brundage says the president is making the appearance because, “The Amazon facility in Chattanooga is a perfect example of the company that is investing in American workers and creating good, high-wage jobs. What the president wants to do is to highlight Amazon and the Chattanooga facility as an example of a company that is spurring job growth and keeping our country competitive.”

But here’s what the president considers a “good, high-wage job”: According to Glassdoor.com, the average salary of the 1800 employees at the Chattanooga warehouse is $11.20 per hour. Meanwhile, the living wage for a parent of one in Chattanooga is $17.31 per hour.

Equally warped is the president’s concept of investment in America: Brundage’s statement failed to note that Amazon only created the jobs as part of the tax avoidance scheme it’s been enacting across the country for years now, robbing states of billions of dollars in income. In Tennessee, for example, Amazon has never paid sales taxes — not once in its 15-year existence — and when the state finally pursued payment, Amazon struck a deal to delay paying sales taxes yet another year, until 2014, in return for agreeing to employ 2000 people in the state. But Amazon got out of all those taxes to do what it needed to do anyway: Open warehouses in Tennessee as part of its larger plan to expedite shipping around the country. Tennessee, in fact, is key to that plan. As a Shelf Awareness report notes, “as FedEx, Ingram and others can attest,” Tennessee “is a ideal central location in the country for shipping.”

Even without knowing the details, the president’s exaltation of Amazon as a job generator, a paragon, an ideal for middle-income America, seems like the declaration of a willfully blind demagogue. Is there anyone who doesn’t know that Amazon is a monopoly? Really — the president of the United States? As Sheri Olson, owner of Reading Frenzy Bookshop in Minnesota, tells Shelf Awareness, “I am trying to understand how supporting a monopoly such as Amazon helps small businesses & middle-income Americans.

And then there are the other unspokens of Amazon’s history as an employer — unspoken by the president and for the most part by the media covering this specious episode. They concern the conditions under which those “high-wage” earners labor.

There is, for example, the fact that it preferred to hospitalize its employees at its Allentown, Pennsylvania warehouse rather than install air conditioning … apparently because it was cheaper to station ambulances at the back door.

There’s the fact that it hired neo-Nazi security forces for its German warehouses, who actually physically intimidated employees.

There’s the fact that there are class-action lawsuits here and abroad pending against the company and the false-front employment agencies it engages to filter its employment of minimum-wage and temporary employees.

There’s the fact, in other words, that Amazon has a long history of reprehensible labor practices around the world — this Businessweek report details government investigations of labor conditions and worker strikes in Germany, France, and the UK — that make it a shocking company for the President of the United States to hold up as an exemplar of anything save a rather brutal, nineteenth century sweatshop ethos.

So I ask you, fellow business owners, what’s the lesson that Barack Obama hopes to get across in a speech that holds up Amazon.com as a model?

In short, it seems it can’t be anything but this: Don’t pay taxes, beat your employees, ignore the laws of the land, and the President of the United States will come visit you.



Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.