Corporate Subsidies

Did Jeff Bezos Earn His Fortune?

~ R. Stanton Scott ~ Leave a comment

Last week the Wall Street Journal published an opinion piece by Marian Tupy arguing that “Jeff Bezos Earned his Fortune.” Tupy founded Human Progress, sort of a web magazine based on the idea that escape from social stagnation – human progress – requires a “culture of optimism and progress.” In this framing, we owe our rise from subsistence living with no running water and medicine or other technological advances to the rise of this culture in the West. Human Progress is a Cato Institute program. CATO exists to move “public policy in the direction of individual liberty, limited government, free markets, and peace.” This is a free-market libertarian think tank that works against policy that regulates Capitalism in any way.

With this background in mind, it’s no surprise that Mr. Tupy believes that Bezos does, in fact, deserve to control an almost unimaginable amount of wealth (something on the order of $280B). 

I don’t disagree that Jeff Bezos should be a very wealthy man because of the businesses he started. But did the creation of online retail stores and internet cloud storage centers earn Bezos the obscene level of wealth he now controls? My back-of-the envelope math suggests that if he started spending a million dollars every day, he would need more than 750 years to spend all his money, assuming he never added another nickel to his bank account.

This level of wealth in the hands of one person is immoral and ridiculous. How does Tupy justify it?

He nods briefly to Amazon Web Services but focuses most of his argument on whether Amazon’s online retail platform saves people time, and how much. 

“Consider the arithmetic. Suppose an hour of labor is worth about $64, roughly the average gross domestic product per hour worked in the countries in which Amazon operates. If Mr. Bezos’ fortune corresponded to the total value that Amazon created, his $275 billion would represent about 4.3 billion hours of saved time. Divided among Amazon’s more than 300 million active customers, the saving comes to about 14 hours per customer over Amazon’s life. That’s nothing. Many customers save that in a month…

At $64 an hour, that means Amazon has saved its customers about 214 billion hours. Across 300 million customers over roughly 32 years (Amazon was founded in 1994), the saving equals about 22 hours per person a year. That is 25 to 26 minutes a week, or a little less than four minutes a day.“

I won’t challenge this math except to point out that if an hour of labor is worth about $64, and the pay range for most hourly Amazon workers is between $18 and $20, Bezos is paying this part of his work force less than a third of what their productivity is worth. Since Amazon’s gross profit in 2025 was around $360B, they could have paid each of their hourly workers another $20/hour and still raked in around $300B in profit. So while Amazon might be saving people a few minutes a day because they can order diapers online, they also exploit people who work for them. In other words, part of Mr. Bezos’ fortune comes from capturing productivity gains provided by others. 

Amazon cuts other costs on the backs of workers, most importantly by refusing to keep workplaces safe. In 2023, the US Strategic Organizing Center (a pro-labor group) reported an OSHA finding that Amazon workplace policies, especially in its warehouses and fulfillment centers, creates a hazardous workplace through inhumane discipline and monitoring systems. These policies require workers to remain on the floor except during specific breaks, even if they need a bathroom visit. OSHA and SOC have also documented cases of management refusing to provide medical treatment for workplace injuries. Changing these policies to improve workplace conditions would cost, money so Amazon leaves them in place. This of course means that some portion of Bezos’ fortune comes at the expense of worker safety. To the extent Bezos earned his wealth, he did so by exploiting and harming others.

Tupy also argues that Amazon forced other retailers to improve their websites, delivery speed, and product selection. What he fails to mention is the key change Amazon forced other retailers to make: lower prices. Target, Walmart, and other chains all had to match Amazon’s pricing, and to do this they had to keep their own employees’ wages low. This business model only works, by the way, because government subsidizes it through social welfare programs like Medicaid and SNAP, but that’s a subject for another day.

To do this, competitors had to adopt many Amazon policies, including worker pay rates. To cut costs while improving websites and delivery, Target and Walmart had to cut labor costs and degrade workplace safety. 

Amazon’s success carries important social costs as well. One reason for the death of small towns in America was the arrival of cheap retail, first in the form of Walmart stores and later with the ability to order goods online from Amazon. Yes, this saved people time, and in some cases money, but it also destroyed a key part of American social life: shopping trips to the city center or department store, lunch or dinner after, and the associated connection people form with others. 

We came to know the shop owners, cashiers, pharmacists, and other business owners and workers personally. Sometimes they helped us out of a jam. They almost always kept the proceeds from their business in the community, which Walmart and Amazon do not do. They created jobs that gave kids a choice to stay in the area rather than migrate to larger cities in search of a job.

Immigration, feminism, homosexuality, and slides away from the Church isn’t what killed small-town America. These groups in fact kept it alive by bringing new products and ideas (that killer taco place, for example). Cheap big-box and online retail killed it, and with it much of the economic activity that sustained it.

To be sure, retailers like Amazon and Wal Mart create efficiencies, with their best innovation coming in changes to supply chain management. We now have more choices, and goods that come at lower prices. Maybe Tupy is right, and each of us saved four minutes a day because we can click to order diapers instead of making a trip to a store. But this has come at a cost, both to individual workers and society as a whole. 

All of this means that Jeff Bezos deserves to be a wealthy man. But he has not earned the obscene fortune he now controls. He built this fortune by exploiting and harming workers, and by destroying a key component of community life, especially in small towns. His workers, and the local business owners he chased out of small-town America, paid much of the cost of building it. Is four minutes of time saved a day worth it?

Rob Wittman Pushes for Rural Broadband Internet Access – Except When He Doesn’t

~ R. Stanton Scott ~ Leave a comment

Rob Wittman never had much to say about broadband internet access in the Congressional District he represents until the issue came up in the Democratic Primary this spring.  Much of the district is rural and without connection to the web services that stimulate economic development, support businesses and allow remote access to medical care.  They are without this connection because private markets do not provide what amounts to a public utility in remote areas, and no amount of deregulation will make them want to.  The return on investment simply isn’t there.

Back in the day, much of Tennessee had a similar problem with electricity.  The Federal Government, not private enterprise, solved the problem through the Tennessee Valley Authority, a New Deal Democrat effort to modernize rural areas of the state.  Could we learn something from this very successful effort? Continue reading →

Sunday Morning Coffee

~ R. Stanton Scott ~ Leave a comment

A few things I read over coffee this morning…while watching the talking heads discuss Iowa:

Morton Guyton, writing at Patheos blog Mercy Not Sacrifice, discusses an ideological perspective he calls ” White Evangelical Nihilism:”

There’s a genuine ideological foundation for the ethos that makes Trump and Cruz so popular. I call it white evangelical nihilism.

When you’re told by your pastor that all the people outside of your ideological tribe are utterly wicked and deserving of eternal torture, that’s how it becomes a sin to compromise with your opponents politically and work together for the common good.

Everything about secular liberalism must be utterly antithetical to the Christian gospel and profoundly offensive to God. It has to be, or else secular liberals wouldn’t be worthy of damnation. So everything about liberalism is put into binary opposition with “God’s truth.” To believe in climate change is to believe that God is not in control of the environment. To believe that the government should provide for the poor is an emulation of atheist communism and a usurpation of God’s sovereignty. To promote “political correctness” is to silence the courageous proclamation of “Biblical truth.”

This tracks with a point I make when discussing today’s polarized American political climate.  Conservatives run on a set of existential issues on which there can be no compromise: abortion, homosexuality, taxes, and guns.  Two of these have their basis in religion and two in racism, but all four depend on the fundamental premise that only wicked, lazy or authoritarian people disagree with the right wing on these issues.  This is the fundamental American political problem we need to resolve.

Guyton goes on to reframe salvation.  Rather than a search for God’s help in saving individual sinners from themselves, he argues we should seek His help in saving other people from our sin:

Philippians 2:3 says, “Do nothing from selfish ambition or conceit, but in humility regard others as better than yourselves.” Imagine if Christians, and especially Christian politicians, were known as the people who regard everyone else as “better than [them]selves.”

Read the whole thing.  Excellent essay. Continue reading →

Taxpayers Subsidize Wealthy Capitalists

~ R. Stanton Scott ~ Leave a comment

Steven Attewell, over at Lawyers, Guns and Money, gives a pretty good rundown of the politics behind Mario Cuomo’s call for increasing the minimum wage for some workers in New York City. Can’t think of anything to add on this.

But I would like to highlight this statement in the Cuomo op-ed Attewell cites:

Fast-food workers and their families are twice as likely to receive public assistance compared with other working families. Among fast-food workers nationwide, 52 percent — a rate higher than in any other industry — have at least one family member on welfare.

Yes, US taxpayers support fast food workers with $7 billion in public assistance every year while the industry generates huge profits and generous CEO salaries.  And it’s not just the fast food industry.  Retail giants like Wal-Mart generate huge fortunes for small groups of people while taxpayers subsidize their wages to the tune of billions of dollars.  Fast food and retail CEOs take multi-million dollar salaries, and wealthy families and stockholders take billions in profits while their workers live in poverty and taxpayers subsidize their business models.

These CEOs and shareholders will argue that paying higher wages would cut into profits and force them to raise prices.  But BLS statistics show about 3.3 million workers making the minimum wage or less.  Paying them all $15 an hour, plus employer contributions for Social Security and Medicare, comes to less than $110 billion a year.  This is not the total cost of increasing the minimum wage from $7.25 to $15 – this is the total cost of paying all current minimum wage workers $15 an hour, 40 hours a week, for 50 weeks each year.

This is less than 1.5% of all US corporate after tax profits in 2014.  This means that Corporate America could pay a $15 minimum wage to all current minimum wage or below workers – and still generate more than $7 trillion in profits.

Why don’t they do this?