While Bezos is perhaps the most obscene example of personal enrichment today, he represents a broader social layer that has amassed unfathomable wealth in the recent period. The recently released annual Billionaires Insights report by Swiss bank UBS and PricewaterhouseCoopers (PwC) found that the total wealth of the world’s billionaires rose by 17 percent last year. The combined wealth of these elite 1,542 individuals grew by nearly $1 trillion last year, surpassing a total of $6 trillion.
With Amazon
stock surge, Jeff Bezos becomes richest person in the world overnight
By Evan
Blake
30 October 2017
On Friday morning, Amazon CEO Jeff Bezos awoke in one of his
luxurious mansions nearly $7 billion richer, after Amazon stock rose more than
8 percent as a result of a strong third quarter earnings report released
Thursday. Over the course of trading Friday, Amazon’s stock value continued to
rise, finishing roughly 13 percent higher than the day before, propelling
Bezos’ wealth by $10.4 billion and making him the world’s richest person. His
net worth now stands at $93.8 billion, a solid $5.1 billion ahead of Bill
Gates.
The grotesque enrichment of capitalists such as Bezos expresses
the profoundly unequal character of the capitalist system. While Bezos “earned”
nearly $7 billion practically in his sleep, tens of thousands of Amazon
warehouse workers around the world assigned to graveyard shifts labored under
sweatshop conditions, gearing up for the “peak season” of high volume sales
during the upcoming holidays.
It would take the average Amazon warehouse worker in the US
earning $12 per hour roughly 416,667 years to earn as much money as Bezos did
in less than 24 hours. Or, to put if differently, Bezos reportedly made more
money in a single day than his entire global warehouse workforce of over
300,000 employees earns in a year.
In a rational society organized along socialist principles, the
wealth funneled to Bezos would instead be put to use for the benefit of society
as a whole. With $10.4 billion, clean water and sanitation could be provided to
the entire world’s population, roughly 40 percent of which lacks access to
these basic human necessities.
The real source of Bezos’ wealth stems from exploiting the labor
of his workers, who are currently facing intense speed-up and exploitation as
Amazon begins stocking up its warehouses prior to the Cyber Monday and Christmas
holidays. The company is engaged in a hiring frenzy of thousands of part-time
and temporary workers, many of whom will be fired around the start of the new
year.
Workers that have spoken with the International
Amazon Workers Voice (IAWV) have shared stories of being
worked beyond the point of physical exhaustion, with many reporting incidents
of heat stroke and a range of muscle injuries occurring at their facilities.
Two workers in the US were killed on the job in September as a result
of these speed-up policies.
Amazon’s stock—and thus Bezos’ net worth—rose in response to a
third quarter earnings report that surpassed investors’ expectations. The
company reported $43.7 billion in revenue, $1.6 billion more than analysts had
predicted. They also posted earnings per share at 52 cents per share, much
larger than the predicted 3 cents per share.
Revenue was 34 percent higher than the third quarter in 2016, as
Amazon finalized its acquisition of Whole Foods in August and reported $1.3
billion in grocery sales from the company. Total North American sales were
$25.4 billion, 35 percent greater than last year, while international sales
grew 29 percent to $13.7 billion.
Another significant influence on Amazon’s soaring stock value has
been its recent announcement of plans to build a second headquarters (HQ2) in
North America. The company is being courted by 238 cities from across the US,
Canada and Mexico, with incentives ranging from the quasi-illegal to
grotesquely fawning. With every bid, city officials have offered the company
immense tax breaks and government subsidies, and the lowest operational and
labor costs possible, plainly demonstrating the subservience of the state to
the interests of private profit.
In a move to attract Amazon, the California state assembly
recently introduced legislation that would grant the company $1 billion in tax
breaks over the next decade. To lure the company to New Jersey, the state has
offered $7 billion in potential credits against state and city taxes. Perhaps
the most sycophantic bid came from the mayor of Stonecrest, an Atlanta suburb,
who offered to create a new 345-acre enclave city called Amazon, where Bezos
could rule as mayor for life!
Canadian Prime Minister Justin Trudeau
recently hand-wrote a letter imploring “Dear Jeff”
to choose a Canadian city for HQ2. Trudeau hailed Canada as home to a “deep
pool of highly educated prospective workers” and “stable banking systems,”
while highlighting the fact that Canada “enjoys a universal health care
system,” which would enable Amazon to save the costs of paying its employees
health insurance.
Beyond his control over Amazon, Bezos
exerts immense influence on American political life through his ownership of
the Washington Post and through his connections to the
Democratic and Republican parties. Through Amazon and the Washington
Post, and in particular following a sordid 2013 dealbetween Amazon Web Services and
the Central Intelligence Agency, Bezos has become deeply connected to the
American intelligence apparatus. He sits on the Defense Department’s Defense Innovation
Advisory Board, which regularly meets with the Secretary of Defense and other
leading figures of the American state. US President Donald Trump has also
included Bezos on his American Technology Council, a panel of tech executives
intended to advise the President.
As a result of Amazon’s growth and Bezos’ connections to the
state, he has made $71.3 billion in the past five years, most of which came
during the Obama presidency. Since the inauguration of Trump—in which he issued
his bellicose, America First agenda—Bezos’ fortune has risen by $23.6 billion
alongside a broader stock market boom that has immensely benefited the entire
financial oligarchy.
While Bezos is perhaps the most obscene example of personal
enrichment today, he represents a broader social layer that has amassed
unfathomable wealth in the recent period. The recently released annual
Billionaires Insights report by Swiss bank UBS and PricewaterhouseCoopers (PwC)
found that the total wealth of the world’s billionaires rose by 17 percent last
year. The combined wealth of these elite 1,542 individuals grew by nearly $1
trillion last year, surpassing a total of $6 trillion.
At the opposite pole of society, the great mass of the working
class faces ever deepening poverty and the elimination of the most basic social
services. According to a recent report by the US Federal Reserve, the bottom 90
percent of the American population saw its share of the total wealth decline
from 25 percent to 22.9 percent from 2013 to 2016. The bottom three quarters of
the population now owns less than 10 percent of all wealth.
Beyond the instinctive contempt felt toward figures like Bezos and
all the other plutocrats, workers must fight to fundamentally transform the
underlying social relations that give rise to such conditions. Through their
collective labor and mastery of the processes of distribution, Amazon workers
possess an immense potential to transform society for the benefit of the entire
working class. To do so, they must begin by establishing connections within and
between their warehouses through the formation of rank-and-file workplace
committees, which can then be geared toward mobilizing the entire working class
in a struggle against capitalism.
THE BANKSTERS DESTROYED A TRILLION IN AMERICAN HOME EQUITY AND WERE REWARDED WITH NO-STRINGS, NO INTEREST LOANS TO BUY THEIR COMPETITORS. THEY’VE BEEN A CRIME WAVE SINCE.
"The top 10 percent of Americans now own roughly three-quarters of all household wealth."
http://mexicanoccupation.blogspot.com/2017/08/america-unravels-millions-of-children.html
"While telling workers there is “not enough money” for wage increases, or to fund social programs, both parties hailed the recent construction of the U.S.S. Gerald Ford, a massive aircraft carrier that cost $13 billion to build, stuffing the pockets of numerous contractors and war profiteers."
Senate Votes To Nullify Rule Allowing Class Action Suits Against Banks
As the AP notes, the rule from the Consumer Financial Protection Bureau “exposed banks to large class-action lawsuits. Supporters say that possibility would help ensure banks, credit card companies and other lenders treat consumers appropriately. The vote comes months after House action and reflects the effort of the Trump administration and congressional Republicans to undo regulations that the GOP argues harm the free market.”
"While telling workers there is “not enough money” for wage increases, or to fund social programs, both parties hailed the recent construction of the U.S.S. Gerald Ford, a massive aircraft carrier that cost $13 billion to build, stuffing the pockets of numerous contractors and war profiteers."
"The Trump tax measure, however, will raise to a new level the plundering of society’s resources by the ruling class."
"Its provisions read like a Christmas wish list for the rich: slashing the corporate tax rate from 35 percent to 20 percent, generating additional corporate revenues of $6.7 trillion by 2037; reducing the top personal income tax rate from 39.6 percent to 35 percent; abolishing the alternative minimum tax, which applies only to the wealthy; and slashing to 25 percent the rate at which business owners are taxed on money recorded as “pass through” income."
The American oligarchy prepares a new tax windfall for the rich
25 October 2017
The drive to enact the most massive tax cut for the rich in US history accelerated Tuesday as Donald Trump met behind closed doors with Senate Republicans to finalize the plan.
The House of Representatives is set to approve Thursday the Senate budget resolution passed last week, a parliamentary maneuver that will allow the Republicans, under expedited rules, to pass the tax plan by a simple majority in the Senate rather than a filibuster-proof three-fifths vote. The actual proposal will be released on November 1, setting the stage for the final push to secure passage by the end of the year.
Wall Street celebrated the stepped-up push for the plan with a 167-point surge in the Dow, bringing the index closer to 24,000. Since Trump was elected last November, the Dow has risen by more than 25 percent. It has quadrupled since 2009, thanks to the multitrillion-dollar bank bailout and other handouts to the corporations and banks under Obama.
The Trump tax measure, however, will raise to a new level the plundering of society’s resources by the ruling class.
Its provisions read like a Christmas wish list for the rich: slashing the corporate tax rate from 35 percent to 20 percent, generating additional corporate revenues of $6.7 trillion by 2037; reducing the top personal income tax rate from 39.6 percent to 35 percent; abolishing the alternative minimum tax, which applies only to the wealthy; and slashing to 25 percent the rate at which business owners are taxed on money recorded as “pass through” income.
It also abolishes the estate tax, which affects those worth over $5 million, just 0.02 percent of the population. This measure has long been desired by the corporate oligarchy, allowing its members to pass on to their children all the wealth accumulated through fraud and speculation, effectively establishing a form of dynastic rule.
The top 1 percent will see their after-tax income rise by 8.5 percent if all these measures are adopted. The Center for Budget and Policy Priorities estimates that half of the tax cuts will go to the top 1 percent of households, those making more than $700,000 per year. Within this group, the top 0.1 percent will receive 30 percent of the tax cuts, for an average cut of $800,000 a year.
The bottom 90 percent of the population, the working class and lower-middle class, will get little or nothing. A married couple with one child that earns less than $24,850 a year will receive no tax cut, while a similar family earning $48,700 will see a cut of just $180. At the same time, the budget deficits produced by the tax cuts will be used by both parties to demand massive cuts in social programs, including Social Security and Medicare.
As is to be expected, Trump and the Republicans are promoting the plan with shameless lying, denying that their plan is designed to benefit the rich and insisting it is aimed at cutting taxes for “hard-working Americans” and creating jobs.
The Democrats, for their part, support a huge cut in corporate taxes and are offering only token opposition to the other handouts to the rich. Following the Republican meeting on Tuesday, Senate Minority Leader Charles Schumer and other Democratic senators held a press conference. Schumer, the senator from Wall Street, accused Trump of lying about the plan but said nothing about corporate taxes. Other Democrats attacked the plan for being fiscally irresponsible.
As always, the Republicans set the reactionary framework for policy and the Democrats ensure that it is enacted virtually intact. The Democrats’ main function is to disarm the working class by creating an illusory smokescreen of democratic debate and opposition.
The Trump tax plan is the outcome of a decades-long social counterrevolution that has produced a colossal transfer of wealth from the working class to the rich and the super-rich, creating levels of social inequality unseen since the 1920s and transforming the United States into an oligarchy.
The Sixteenth Amendment to the US Constitution, granting Congress the power to tax people’s income, was passed in 1913, as part of the progressive movement’s efforts to rein in the robber barons. The estate tax was enacted at the same time.
During the Great Depression, the Roosevelt administration raised the top rate from 25 percent to 63 percent as part of the New Deal reforms aimed at heading off a socialist revolution. During World War II, the top rate peaked at 94 percent. Over the next three decades, the top rate never fell below 70 percent.
The first postwar reduction was carried out by John F. Kennedy, but this was only a foretaste of what was to come, as the ruling class adopted a policy of social counterrevolution under Ronald Reagan. The Democrats, who controlled Congress, capitulated to Reagan in 1981 and slashed the top rate from 70 percent first to 50 percent and then to 28 percent. This gradually rose back to the current rate of 39.6 percent.
At the same time, taxes on capital gains from stock and bond speculation were slashed to 25 percent as part of the inflation of the stock market that has proceeded since the 1980s. Tax cuts for the wealthy have been an essential part of the mechanism by which the stock market and other forms of financial speculation have been used as the primary mechanism for wealth accumulation by the financial aristocracy.
The consequences are clear. Since the 1980s, the share of national income going to the top 1 percent has risen from 12 percent to 20 percent, while that of the bottom 50 percent has fallen from 20 percent to 12 percent.
The most recent Survey of Consumer Finances from the US Federal Reserve shows that the top 10 percent of Americans now own 77 percent of all wealth. The top 1 percent owns 38.5 percent, an increase even since 2013. The share of the bottom 90 percent has declined by more than two percentage points to 22.9 percent.
The impact of these shifts in wealth and income on the conditions of life of millions of people can be seen in myriad forms: declining life expectancy, rising infant and maternal mortality, rampant drug addiction and a rising suicide rate.
This growth of parasitism has coincided with the destruction of large swathes of industry, the devastation of former industrial centers all over the country, and the impoverishment of broad sections of the working class. Now, with the Trump tax cut—authored by the Goldman Sachs alumni Treasury Secretary Steven Mnuchin (net worth $500 million) and economic adviser Gary Cohn (net worth $610 million)—a new level of enrichment of the oligarchy is being launched that will make current levels of inequality seem quaint by comparison.
The conditions are being created for a social upheaval. The emerging working-class opposition must take up the demand for a massive revision of tax policy to break the stranglehold of the financial oligarchy and radically redistribute the wealth in favor of the working people. The top rate for both personal income and corporate wealth must be raised once again to what it was in the 1940s and 1950s, to end the theft of social resources and provide for the social needs of the broad masses of people.
These are in themselves democratic demands. They cannot be achieved, however, without a frontal assault on the source of the power of the corporate and financial elite: its control of economic life, and with that, the entire political system. The redistribution of wealth to the working class must be connected to the fight for workers’ power, the transformation of the giant corporations and banks into publicly owned utilities, and the socialist reorganization of economic life.
Barry Grey
THE GOAL OF ALL BILLIONAIRES IS OPEN BORDERS, AMNESTY, NO WALL, NO E-VERIFY AND NO LEGAL NEED APPLY.... It's all about keeping wages depressed!
For the last few decades, regardless of the political party in control of American governance, mainstream America remained frustrated by a lack of representation. The more things changed, the more they remained the same. A year after the ...
An American Oligarchy vs. We the People
For the last few decades, regardless of the political party in control of American governance, mainstream America remained frustrated by a lack of representation. The more things changed, the more they remained the same. A year after the ...
October 25, 2017
An American Oligarchy vs. We the People
For the last few decades, regardless of the political party in control of American governance, mainstream America remained frustrated by a lack of representation. The more things changed, the more they remained the same. A year after the election of President Trump, we have yet to see a Republican Congress make good on its promise to repeal Obamacare and institute tax reform. The election of Donald Trump held hope for millions of Americans who believed they now had a voice in our halls of governance, but that voice is continuously trampled on as the puppet-masters behind the scenes succeed at stifling the will of the American people.
The greatness of America was a government for the people and by the people, but that ideal has been eroded in favor of a new American oligarchy led by billionaires such as George Soros, Tom Steyer, Bill Gates, Warren Buffett, and Mark Zuckerberg, to name a few. They are men of the left and unlike prior rich men in American history, they can now control our election process, both halls of Congress, our courts, our schools, the press, and media outlets. Yes, there are conservative billionaires, but they are not nearly as influential as today's globalists. It has been reported that 39% of the wealthiest donors back Democrats and that number will only increase with the new young card-carrying liberal titans from the Silicon Valley. After all, Google, Facebook and most Internet titans are fueled by government projects; thus, their interest lies with big government favored by Democrats.
Frustrated by the presidential election of Donald Trump, George Soros has doubled down and recently pledged to contribute $18 billion to his Open Society Foundations for an overall total of $32 billion. Contrary to its mission claim, "to built vibrant and tolerant democracies," Soros seeks to subvert and suppress the will of the people by using his billions to control America's agenda towards a One World Government without borders, and with him at the helm.
Beginning in 1994 with the defeat of Hillary Clinton's nationalized health care bill, Soros' groups and a few other leftist organizations began to bankroll front groups whose aim was to persuade Congress that Americans were clamoring for "campaign finance reform." In a ten year period, they spent $140 million dollars to promote it, and the result was the McCain-Feingold Act signed into law by President George W. Bush in 2002. The new law placed restrictions on political donations. It prevented citizen-activist groups and corporations from advertising on T.V. for 60 days prior to elections and 30 days prior to primaries while exempting media networks; thus, giving Democrats an automatic advantage since they enjoy the near universal support of America's leading media outlets.
As a result, a network of "527 Committees," named after code 527 of the IRS code, were set up, and unlike PACS, were not required to register with the FEC; nor were they bound by any legal limits to raise soft money. While steering clear of "express advocacy" as prohibited under the McCain-Feingold bill, they were permitted to steer their funds to issue-oriented ads, voter education initiatives, and get-out-the-vote drives to favor one party or candidate over another. By giving directly to independent groups rather than to the party itself, big ticket donors could influence campaign strategy and tactics more directly than they had previously. Thus, Soros gained control of an alternative network of soft money supply and power.....all absent prior to the passage of McCain-Feingold . In 2010, the Supreme Court overturned much of the McCain-Feingold Act, but kept in place the ban on soft money donations to political parties. This ban has permitted Soros to continue to use his billions to influence our election process and thwart the will of the people.
Another billionaire with a globalist agenda is Bill Gates who has used his millions to fund Planned Parenthood and U.N. agencies. He is responsible for the creation, implementation, and promotion of Common Core state standards, and he was pivotal in advancing Barack Obama's educational agenda. Aside from rewriting history with a biased curriculum in disfavor of Western Civilization, Common Core eliminated local school governance and placed it under the control of an ever-growing federal bureaucracy. As Karl Marx noted in his Communist Manifesto, "government-controlled schooling is essential to achieving the goals of Socialism." In that effort, texts and analysis are used to guide students thinking towards a predetermined outcome.
A free press is essential to a free society, but with the development of the Internet and the handful of leftist billionaires who now control it, conservatives are finding it difficult to get their message out without being threatened with sanctions and exclusion under the guise of "hate speech." Google and Apple control 98% of the market share in mobile phone operating systems; thus, they are erasing the First Amendment rights of conservatives on the information highway. Although they are private companies, the information highway is a public utility and as such all are entitled to equal access. Facebook is an important distributor of news and Mark Zuckerberg, its founder and a globalist, is notorious for muting conservatives while amplifying progressives. Along with Saudi Arabia, a state known for silencing free press and Saudi Prince Alwaleed bin Talal, who has invested $300 million in Twitter, conservative Americans are at a loss as we watch our First Amendment rights guaranteed by our Constitution being eroded by American and foreign billionaires.
While the oligarchs have used their billions to influence both sides of the aisle within our halls of Congress, George Soros in particular has financed a $45 million scheme to reshape state supreme courts. His mission with the aid of state trial lawyers associations is to replace conservative rule of law judges with leftist men in black robes who will apply foreign law (Sharia) and theories into their decision making process. In effect, Soros is creating a judicial oligarchy as well as a judicial supremacy. The left now controls more than half the district courts and more then half the circuits. By placing nationwide injunctions against President Trump's executive orders, a handful of district lower court judges are illegally dictating our immigration policies reserved for Congress and the Executive Branch.
Then there is Tom Steyer, an environmentalist hedge fund billionaire from California who has spent $90 million to back Democratic candidates. Currently he has spent $10 million on a campaign to impeach our current president by running fraudulent television informercials calling for President Trump's impeachment. With an utter disregard and disrespect for the 64 million Americans who voted to elect President Trump, Steyer, the self-righteous globalist, knows better then working class Americans what is in their best interest; thus, he too uses his millions to erase our voice and right to self-governance.
Many Americans are waking up to the reality that American politics is no longer about Republicans and Democrats. Now more than ever, it is a war between the elite established American oligarchy and the American people. If Americans seek to regain control of self- governance, then the oligarchy whose allegiance is not to America, but to a global community governed by globalist billionaires, must have their power removed. We have fought for our self- preservation for over 200 years, and we are not about to quietly yield it over to a handful of globalists without a fight. It will take Americans from all walks of life to come together to oppose this un-American oligarchy and nothing will facilitate that more than the removal of a duly elected president.
Shari Goodman is an educator, activist, public speaker, and journalist.
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WALL STREET TO THE AMERICAN PEOPLE: DIE YOUNG… your company pension dies with you!
OPIOID AND ALCOHOL ADDICTION KILLS OF MIDDLE AMERICA
SOARING POVERTY AND DRUG ADDICTION UNDER OBAMA
"These figures present a scathing indictment of the social order that prevails in America, the world’s wealthiest country, whose government proclaims itself to be the globe’s leading democracy. They are just one manifestation of the human toll taken by the vast and all-pervasive inequality and mass poverty.
AMERICA UNRAVELS:
Millions of children go hungry as the super- rich gorge themselves and ILLEGALS SUCK IN BILLIONS IN WELFARE!
"The top 10 percent of Americans now own roughly three-quarters of all household wealth."
http://mexicanoccupation.blogspot.com/2017/08/america-unravels-millions-of-children.html
"While telling workers there is “not enough money” for wage increases, or to fund social programs, both parties hailed the recent construction of the U.S.S. Gerald Ford, a massive aircraft carrier that cost $13 billion to build, stuffing the pockets of numerous contractors and war profiteers."
TWITTER TRUMPER’S PROMISE TO DEMS & MEXICO: NO (real) WALL, NO E-VERIFY and NO ENFORCEMENT of DACA
WHILE THE SWAMP KEEPER TWITTER TRUMPER SERVES THE SUPER RICH…. The wall remains a joke on Legals and HUNDREDS OF STORES across America’s OPEN BORDERS are being shuttered by the hundreds!
http://mexicanoccupation.blogspot.com/2017/08/the-real-american-economy-stores.html
Only Amazon Wins
October 31, 2017
Only Amazon Wins
After Seattle-based Amazon began soliciting proposals from North American cities in early September, the business news media was abuzz with speculation about where Amazon will locate its second corporate headquarters. The site will be announced next year.
Of course, not just any city will do. Given the criteria Amazon has laid out, only about 20 metro areas in the United States and Canada are serious contenders. Predictably, though, commentators who fail to see below the surface say that the contest to lure Amazon to one of those cities rather than another will be “transformational” for the winner by creating as many as 50,000 new, high-paying jobs, stimulating economic growth and generating additional tax revenue.
And so, in addition to efforts aimed at convincing Amazon that their city fulfills the company’s requirements, local officials predictably will top up their bids withtax breaks, taxpayer-financed infrastructure upgrades, and similar concessions known in the economic development literature as “selective incentives.” A subsidy by that or any other name would smell as sweet to Amazon’s owners.
If history serves as a guide, politicians will defend giveaways of taxpayer dollars to Amazon by claiming that the benefits flowing from new jobs and higher wages exceed the costs of financing a subsidy. The same arguments routinely are heard when it comes to building a new sports venue, hosting the Olympic Games or SuperBowl, and enticing other headline-grabbing businesses looking to move to greener pastures. Luring Amazon indeed will be a major publicity coup for local and state politicians who certainly will claim credit for a successful outcome in the runup to Election Day.
It turns, out, however, that the benefits of taxpayer-financed subsidies always are overstated. The economic costs of subsidy packages for private business enterprises are in reality much larger than their supporters admit, for several reasons.
First, the contest for Amazon’s second headquarters is a zero-sum game that only one metro area will win. Amazon already has decided to expand and the company will locate somewhere even without a targeted subsidy. Cities competing for Amazon’s new headquarters simply are seeking to shift already planned economic activity geographically, but are not creating any new economic activity.
Second, many economic development studies erroneously count every person hired by a new employer as a job added to the local economy and the new company’s total payroll as an addition to the local tax base. The mistake is that many jobs at Amazon’s second headquarters will be filled by individuals who transfer from existing local jobs (called a “displacement effect”). The taxable income base expands only to the extent that the wages of currently employed workers rise after changing employers. The full wages of people who move to the local area are gains for the city that lures Amazon, but are losses to the places from which they emigrate.
Third, politicians fail to account for the opportunity cost of business-location subsidies. The opportunity cost of any taxpayer-funded subsidy is the private-sector economic activity that would have been generated (but is lost) had the dollars financing it remained in private hands. Nor do economic development studies typically recognize that additional public goods and services (such as public schools, transit systems and police protection) -- and additional taxes to pay for them -- will be needed to accommodate Amazon’s 50,000 employees and their families.
Finally, politicians argue that new wage earners will spur economic growth through a multiplier effect as their larger incomes circulate around the regional economy. That is certainly true (although multiplier estimates are wildly overstated), but removing income from the private sector to finance subsidies means that the multiplier effect works in reverse. Politicians baldly assume that every dollar of subsidy is worth more to the economy than if the dollar remained in taxpayers’ pockets. Politicians, in other words, believe that they know better than ordinary people how best to allocate resources to their highest valued uses. The historical evidence against that belief is overwhelming.
We won’t know how much the contending urban areas will spend in total to lure Amazon’s second headquarters until the contest is over. New Jersey’s Economic Development Authority and the City of Newark alone have offered an incentive package worth a stunning $7 billion over 10 years. Amazingly, Amazon has received 238 proposals thus far. The social waste in time, money, and effort devoted to buying Amazon’s favor will be monumental, dwarfing whatever benefits net of costs are captured by the winning city.
Most economists conclude that targeted business-location subsidies, often committing more taxpayer spending per job created than the new employees will earn in a year, do not pay off. State and local politicians may win when they lure Amazon to their city and we undoubtedly will see them standing front and center to take credit for an economic development windfall as they help cut the red ribbon at the shiny new headquarters building.
Don’t be fooled. Such victories impose heavy costs on taxpayers, who stand to lose more than Amazon gains.
Thomas A. Garrett is associate professor of economics at the University of Mississippi; William Shughart, research director of the Independent Institute, is J. Fish Smith Professor in Public Choice at Utah State University’s Huntsman School of Business
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