The jungle: Markets red in tooth and claw

The jungle: Markets red in tooth and claw

Amazon, nightmare employer that it is, has to beat off highly skilled, desirable job seekers with a stick. And it does that so you can have what you want, when you want it, wherever you are.

Amazon founder and CEO Jeff Bezos. (ViaWikipedia)
Amazon founder and CEO Jeff Bezos. (ViaWikipedia)

WASHINGTON, Aug. 17, 2015 — A New York Times article this weekend laid bare the brutal corporate culture at Amazon and struck a consumer nerve, prompting an immediate response from Jeff Bezos.

Bezos, Amazon’s founder and CEO, refused to be interviewed for the Times article. However, almost immediately after it was published, he sent a link to the article to Amazon employees, encouraged them to read it carefully, then observed that the Darwinian environment described in it “doesn’t describe the Amazon I know or the caring Amazonians I work with every day.”

Bezos expressed his hope that Amazon is not “a soulless, dystopian workplace where no fun is had and no laughter heard.”

The response from social media and many op-ed writers has been to condemn Amazon and call for a boycott. For many people, that’s easier said than done. Amazon sells much more than books now; it sells everything from consumer electronics to clothing to breakfast cereal to streaming video services.

It not only sells products, but also invents and produces them: video content, music, software, hardware — Amazon has its fingers in them all.

More importantly, Amazon is convenient. Whether you live in a rural hamlet with no stores or in an urban center, Amazon delivers, and often with amazing speed. Many products can now be delivered within a day, and in some places, some orders will be in your hands within an hour. The Kindle offers instant reading gratification, and the ability to take every detective novel you can think of with you on vacation.

The convenience and efficiency of Amazon service and the promptness with which it often deals with consumer problems and complaints are far beyond the abilities of most brick-and-mortar stores and beyond the performance of other online retailers.

Amazon is a godsend to invalids, shut-ins, people in small towns and people who enjoy shopping in their pajamas with a cat on their lap and a cup of coffee close at hand. There’s something deeply satisfying about the arrival of a UPS truck bearing a thousand bags of your favorite breakfast tea, a new TV or a single bottle of vanilla — with free delivery.

Yet Amazon has not been a universal hit with consumers who consider themselves socially concerned. Labor practices in its warehouses have drawn fire, as when it made the news for forcing workers to wait around, off the clock, to be searched before leaving the premises. At one warehouse it kept an ambulance on hand to take away workers who fainted in 100-degree heat. (Amazon finally installed air conditioning.)

People who love small bookstores hate Amazon, and Amazon’s plans to launch a fleet of delivery drones could be a PR disaster in the making.

As it is, the NYT piece is a PR problem, not just for Amazon, but for free markets and market economists. It’s another data point with which anti-market critics can bash heartless firms for treating employees like cogs in a machine, using them up and then tossing them out.

A popular anti-market argument is that firms don’t just produce and provide goods and services; they provide jobs to real people, who want not just a paycheck, but appreciation and a sense of security. The role of firms isn’t just to make a profit, but to provide a social good. It isn’t enough that firms do well, they must also do good.

If investors were more interested in doing good than in making a return, that model might have a chance, but not much of one. Failure to put profit first is a recipe for failure, period. Good people should do good with their money, but before you can do good with it, you have to earn it.

Profit isn’t just a business imperative; it’s a moral imperative.

As it happens, Amazon does a world of good, and so do firms like Walmart. In towns across the country where poor people used to pay local monopoly prices to mom-and-pop businesses or do without, Walmart created a world of choices. Yes, Walmart sells cheap plastic chairs from China, but do critics really believe that poor people would be lounging on finely crafted wood furniture if they didn’t have the cheap plastic to sit on? Do they expect the poor to grow their own produce, can it, make quaint and tasty jams and jellies, then sing folk songs on the village square?

Walmart brought “everyday low prices,” and it sent the petty monopolists scrambling to provide a competitive product or put them out of business. Walmart didn’t put craftsmen out of work with cheap substitutes from China; it brought low-paying jobs where there were no jobs, cheap products where before there were only bad credit terms. There are still plenty of people with money willing to spend an average worker’s monthly wage on a hand-made chair.

Walmart isn’t an unambiguous boon to small towns, but the winners were more likely to be poor than not.

Amazon is like Walmart on steroids. It brings the world to towns where there was nothing. Its ruthless efficiency keeps prices down and gives us what we want, when we want it, where we want it. That’s all to the good, but it comes at a cost.

It is unlikely that Amazon corporate culture is quite as bad as the Times suggests. No company that hires the high-skill, high-demand talent that Amazon needs could survive if it didn’t offer something in return. But even if, as an extension of Jeff Bezos’s quirky genius it were exactly as the Times describes, it isn’t a model that will work for other firms. Bezos’s data-driven approach to management is organic to his company. Imposed on another firm from outside, it would provoke an exodus and failure.

In some ways Amazon is like athletics, journalism and show business. For the winners, the rewards are huge. The losers hang on, hoping for their big break, waiting tables, working in minor productions for scale and finally fade away into the dark. And there’s always someone younger, more beautiful, hungrier, cheaper and more talented waiting to take your place. There’s no sentiment spared for the faded diva. All that matters is your performance today.

We may crave it, but security is the enemy of efficiency and success, the mother of complacent mediocrity. Security is the enemy of innovation, and it keeps outsiders at bay. You make taxi drivers secure by banning entry, banning Uber, keeping a new generation of hungry kids from taking away your business. Crony capitalism is all about security, both for the capitalists and for their political patrons.

Security feels good; we all want it. If we’re willing to live in a museum, keeping the peasants wearing homespun and singing their songs in the village square, security might almost be a possibility. But it really isn’t. The world isn’t a heartwarming film from the ’50s. It isn’t happy peasants living fulfilling lives to support a kind and eccentric aristocracy that sheds sentimental tears over the golden peasant life.

The world need not be a dystopian, Darwinian nightmare like the one described by the Times. But if you want stuff, there’s a cost. And if you want stuff without places like Amazon, you’d better be prepared to explain to people less fortunate than you why they don’t deserve stuff, too.

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Jim Picht
James Picht is the Senior Editor for Communities Politics. He teaches economics and Russian at the Louisiana Scholars' College in Natchitoches, La. After earning his doctorate in economics, he spent several years doing economic development work in Moscow and the new independent states of the former Soviet Union for the U.S. government, the Asian Development Bank, and as a private contractor. He has also worked in Latin America, the former USSR and the Balkans as an educator, teaching courses in economics and law at universities in Ukraine and at finance ministries throughout the region. He has been writing at the Communities since 2009.