Big Brother Amazon Offers Faustian Bargains

This Christmas you may decide to buy books and other presents from Amazon because it is cheaper and/or more convenient.

But think again because you may be falling into a honey trap.

Here in the Nordic countries our society is largely based on the Nordic model – the rule of law, transparency, inclusiveness and equality. Most of us understand and agree that taxes should be paid because our public sector has developed a cost efficient way to provide excellent basic services like healthcare, education, security, public transport, etc., for the population. The result is that we have one the highest standard of living in the world shared by the largest percentage of the population. Things could always be better but they are already pretty good.

Amazon, Facebook, Google, Microsoft, Apple, and Netflix along with a few others, are weakening this Nordic model and are replacing it with a much harder one without any safety nets unless you can afford one. They are not out to get us, that would be a wrong description, but their business model is designed to beat the competition into submission under the guise of shareholder value.

Smooth right-wing politicians and neo-liberals can challenge the above as much as they like, but they would be just out for grabbing more at our expense – the facts speak for themselves:

  1. The Nordic countries export between 35% and 50% of GDP to the global markets.
  2. Nordics do well in GDP per head – GDP per head: USA $62 000, UK $43 000, Finland $50 000, Sweden $54 000, Norway $82 000, Denmark $61 000.
  3. And even better with low Income differentials – The 2019 Gini Coefficient for UK is 32 and Finland 27, Sweden 25, Norway 27, Denmark 28. A lower Gini coefficient means more wealth distribution and here are a few more extreme examples  – the 2019 Gini Coefficient for Russia is 41 and the USA 45, China 47, Brazil 49, South Africa 62.

So why should we avoid Amazon? Big American companies like Amazon can grow in their own huge domestic market and become very dominant. It is much more difficult for European companies to grow because Europe is split up into almost 30 countries. 

Market dominance in the US has also meant that the company has the possibility of lobbying sympathetic politicians who grant big tax breaks and investment grants to these companies in the name of investment and employment.

The current nature of these tax breaks and grants give companies like Amazon huge competitive advantages in the US and in the global markets where they have no hesitation in taking the full benefit from their massive financial advantage.

Amazon wreaks havoc for smaller and mid-cap companies that do not have access to such tax breaks and grants. The playing field is far from being level in terms of competition, and it is the consumer who will eventually end up paying a higher price and more taxes.

But there is another group that will suffer from the dominance of big American companies like Amazon. They are the workers that will be paid less for longer hours in plants where the speed of their work is monitored by automated cameras.

In 2018, Amazon paid $0 in U.S. federal income tax on more than $11 billion in profits before taxes. It also received a $129 million tax breaks from the federal government. In the US it receives tax breaks on its investments in Research & Development, on its investment in property, plant, and equipment, as well as tax breaks on stock-based compensation for employees who are mainly senior management. These tax deductions increase as the stock increases…

And while it receives these huge tax breaks Amazon builds warehouses in places like Baltimore and elsewhere with heavy public subsidies. In some plants cameras and computers monitor workers’ 10-hour shifts to find slow performers for firing…

… and we also know that Amazon employs “freelance drivers” by the thousands to deliver boxes in many countries at hourly rates that are often below the relevant minimum wage, while these same drivers bear the full costs of the vehicles and the risks of traffic congestion.

These US Tech Giants pay almost no tax to any of the Nordic countries where they reap substantial business. We cannot change American tax legislation, but we can stop buying from Amazon… Changing tax legislation at the European level is far too slow…

Amazon, Facebook, Google, Microsoft, Apple, Netflix are all watching you – they are following you and they are using you in a way that is not to your advantage – in fact quite the opposite. 

Theirs is a Faustian bargain, a pact where you trade something of great importance, your well-being for some material benefit. They already know about your secrets, your health, your assets, your money, your address, and your many preferences… and do you really think that they are not using that data for their tax-free profit?

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