The one-click civilization
A conversation with ProPublica investigative reporter Alec MacGillis on the power and tactics and cultural significance of Amazon
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It is a book about Amazon, the retail monopolist, and what it does to our communities. For the sake of our “fulfillment” and instant gratification, a swelling underclass of workers toils in “fulfillment” centers, their work often temporary and grueling, their careers often a shadow of what they once knew in more stable industries, whose carcasses, in the form of steel mills and other plants, become Amazon warehouses.
Amazon is no longer just a company. It is a way of life conquering the world, but one that faces increasing calls for regulatory, union, and antitrust pushback. I reached out to Alec to learn what he found when he dug deep into the company’s employment practices, tax-avoidance strategies, manipulation of governments, and more.
The warning he sounds in “Fulfillment: Winning and Losing in One-Click America” is rather stark: Left unchecked, he told me, Amazon is creating “a world where the fortunate among us fulfill most of our daily needs and whims by placing a one-click order, and where the less fortunate among us rush to fulfill those orders for us.”
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“A zero-sum sorting”: a conversation with Alec MacGillis
ANAND: I want to start by asking an overly basic question. Everyone thinks they know what Amazon is. But as someone who has gone deep and investigated the company and its ways and its cultural meaning, what is Amazon? And what does it tell us about us?
ALEC: Amazon has come far closer than any other company to realizing the consumer dream of near-instant gratification. You place the one-click order and your desire is fulfilled in a day or two, without so much as having to interact with another human being. The fact that this has proved so enormously appealing to so many of us is a matter probably best left for the novelists and spiritual leaders.
ANAND: You interviewed many people who work for Amazon in the course of your reporting. What did you find in their stories that most surprised you?
ALEC: One thing that struck me was the diminishment of expectations that is often involved when working at Amazon. One reason that Bill Bodani, Jr., a former steelworker who went to work in a fulfillment center on the same piece of land where the old mill stood, had such a problem with the new job was that he had known the other sort of work that, while very strenuous and often dangerous, had been much more purposeful and social, not to mention better paid.
But many younger Amazon workers have nothing to compare the warehouse work to. It's just a job. You do it for a bit; then you leave, often before the year's even out. You have so little expectation of finding any lasting fulfillment on the job.
ANAND: You frame Amazon as a reflection and cause of a “zero-sum sorting” in American life — regional inequalities that made “parts of the country incomprehensible to one another — one world wracked with painkillers, the other tainted by elite-college admission schemes.” What is this zero-sum sorting that you observe, and how does Amazon both reflect and exacerbate it?
ALEC: The retail industry is now, with the shift to e-commerce, increasingly dominated by a single company that controls more than 40 percent of all e-commerce.
So, to put it crudely, business activity that was once dispersed all across the country — from mom-and-pops to department stores — is now flowing to a single company based in Seattle, which has been transformed into a hyper-prosperous tech hub with soaring levels of inequality. The company has now chosen as its second headquarters the wealthiest metro area in the country, Washington, D.C., which will make that city even more unaffordable and congested.
A similar effect has happened in other industries, such as media, where Google and Facebook now control the lion’s share of all digital ad revenue. This is money that used to be spread all around local media markets, and now flows to the even more hyper-prosperous and dystopian Bay Area. It's a zero-sum sorting into winner-take-all cities and left-behind ones that serves neither set of places well. One experiences displacement and loss of character, the other suffers from blight and despair.
ANAND: Amazon quite famously makes local governments dance for it and offer it tax breaks and other lures. What do these tax breaks do to the communities Amazon operates in?
ALEC: The tax breaks undermine local governments’ ability to pay for public services, even as the arrival of the warehouses increases the demand for those services. For instance, when the first warehouse arrived in Baltimore in 2014, the company received $43 million in state and local tax incentives.
Then the city's taxpayer-funded development corporation paid $100,000 for shuttle buses to take workers to and from the warehouse. And a few years later, there was the cost of the first responders who had to come to a second warehouse on that same site when its wall collapsed in a storm, killing two delivery drivers.
ANAND: There are a lot of players in retail. What is it about Amazon that allowed it to become so singularly vast and powerful? What is it about it that made Jeff Bezos one of the world’s richest plutocrats?
ALEC: The company had first-mover advantages, as Bezos was one of the first to recognize the edge that e-commerce companies would hold over brick-and-mortar, notably that they wouldn't have to assess sales taxes on many customers.
He was also able to persuade investors to accept thin margins for many of the early years on the promise of future growth. He delivered good customer service and tapped into the id of the American consumer with Prime's promise of "free delivery." And he took advantage of lax antitrust enforcement to build an empire in which the company controls the selling platforms while at the same time competing against other retailers on them. Increasingly, it is getting a cut of a vast swath of daily commerce, from retail to the cloud.
ANAND: In the book, you emphasize that Amazon’s influence came about due to the decline of American manufacturing and by taking advantage of industrial consolidation. Why was Amazon, compared to other manufacturers, able to gain the most benefit from this?
ALEC: The decline in American manufacturing, which intensified in the first decade of this century, precisely as Amazon was building out its warehouse network, left countless workers willing to do the grueling warehouse work for relatively little pay.
It left numerous local and state governments willing to shell out large tax subsidies for the warehouses because they were desperate to bring in any jobs at all to replace those that were being lost in manufacturing and brick-and-mortar retail. This substitution process is often quite literal: in one town after another, you see warehouses built on the very ground that once held steel mills, factories, and shopping malls.
ANAND: Do you believe those, like Senator Elizabeth Warren, who have called for Amazon to be broken up on antitrust grounds are on solid footing, and, if so, why?
ALEC: There is a growing consensus that, as Lina Khan laid out in her 2017 "Amazon's Antitrust Paradox" article, the company's dominance is having a distorting, anti-competitive effect on the economy and that the government needs to adopt a broader view of antitrust enforcement, beyond the "consumer welfare" test that rationalizes away monopolies as long as prices stay low.
There is still a good debate to be had about the best ways to go about breaking up or reining in the company. It could mean spinning off Amazon Web Services, the cloud operation, or preventing the company from competing against third-party sellers on the very marketplace platform it controls — or any number of other possible approaches.
ANAND: In the book we meet Katie and Scott, and their quest to challenge the incredibly regressive tax system in Seattle. We think about Seattle as a progressive place. Tell us the story of what the tax system there reveals.
ALEC: Seattle and Washington State have among the most regressive tax systems in the country — there is no state or city income tax, which means that the poorest households in the state pay about 17 percent of their income for state and local taxes, while the richest pay less than 3 percent. There was a big referendum push for a state income tax in 2010, but it lost amid a well-funded opposition campaign that was paid for by — among others — Jeff Bezos.
ANAND: It is hard for me to ask this question this way, but I’ll try for readers’ sake: Alec, if all these rich people at Amazon and in Washington State generally are giving money away philanthropically, what’s the problem with not taxing them so much? Why does it matter whether the public receives what Carnegie called “surplus revenues” through taxation or philanthropy?
ALEC: I'll leave this one to Katie Wilson, the Seattle activist, to answer, since she does it so eloquently: "In principle, there's a democratic process for deciding how we use that money. There's transparency and accountability. That's kind of what government is for. With philanthropy, there's none of that. We just depend on our corporate overlords to decide what's good for us."
ANAND: How exactly does Amazon avoid taxes?
ALEC: It does so at multiple levels. For years, it avoided having to assess sales taxes by deliberately holding back on building warehouses in large states where many of its customers lived. Now that it has to put warehouses just about everywhere to meet its promise of one and two-day delivery, it demands breaks on property and payroll taxes from local governments, as it also does in selecting sites for its many data centers.
At the national level, Amazon keeps its corporate income tax rate low. It paid zero in 2018 — by using the sorts of tools that so many other large corporations use: claiming large deductions for losses and R&D investments, and moving profits to offshore shelters like Luxembourg.
ANAND: You describe in your book how Amazon moves into some of these vulnerable communities. Can you walk us through the process?
ALEC: Amazon decides which areas it needs new warehouses in to meet its delivery promises, and then, amazingly, manages to extract subsidies from the governments in those places, even though it's not like it will be able to put the warehouse in a different state hundreds of miles away, given its needs.
In hard-hit Ohio, for instance, it just told the state economic development agency that it's considering other states if it didn't get the state tax subsidies it wants, and, voilà!, the state gave it what it was asking for. Meanwhile, it also demands extraordinary levels of secrecy about the negotiations. In southwest Ohio, which has been devastated by the loss of manufacturing, one local official emailed an apology to the company for having a quote in the local news about the warehouse that was coming to town.
ANAND: What did you make of President Biden’s full-throated endorsement of the (ultimately unsuccessful) Bessemer, Alabama, unionizing project by some Amazon employees, a statement some labor historians were flabbergasted by as a break from past presidencies?
ALEC: It was indeed a big deal, to borrow Biden's language. It was particularly striking in contrast with President Obama, who held a big photo-op at an Amazon warehouse, hailing the company as a harbinger of future American prosperity.
ANAND: You write in the book about the gradual weakening of unions. Can you describe how unions lost so much power? How do we build them back up?
ALEC: Unions lost ground for two primary reasons: the sector where they were strongest, manufacturing, suffered huge losses in recent decades; and changes in labor laws, going back to the Taft-Hartley Act, have made it difficult to organize new workplaces.
Building unions back up will mean making inroads in the growing sectors of today's economy, very much including the logistics industry. And as Bessemer’s loss showed, that will likely require overhauling labor laws to level the playing field in union elections.
ANAND: It’s hard to maintain the kind of power Amazon does without an elaborate lobbying operation to keep the rules of the road favorable to the business. What sort of lobbying operation does Amazon maintain?
ALEC: The company is now the second-biggest spender on lobbying in Washington, after Facebook. But its presence in Washington goes beyond lobbying itself.
Bezos owns the local newspaper, spent $35 million on a double-wide mansion for soirees with the local elite, and the company is building its second headquarters just across the Potomac in Arlington, Virginia. The extent of Amazon's growing influence in Washington has yet to be fully reckoned with.
ANAND: There has been some debate about whether consumers should have the moral fortitude to avoid shopping at Amazon, or whether that is victim-blaming and the only real solution is via policy. How do you think about that question?
ALEC: Policy is paramount, but consumers do have agency. It's not necessarily about boycotting or going cold turkey, but rather about moderating. The reason that Amazon grew so wildly this past year is that many of us decided to embrace the one-click approach to daily life, even more fully than we had before.
The question coming out of the pandemic will be whether consumers — that is, citizens — will be willing to re-engage with the physical world around them, with their local businesses and communities.
ANAND: If Amazon is left unchecked, what kind of world do you think it will eventually create?
ALEC: A world where the fortunate among us fulfill most of our daily needs and whims by placing a one-click order, and where the less fortunate among us rush to fulfill those orders for us. And a world where the communities we live in — both the winner-take-all cities and the left-behind towns — become the poorer for it.
Alec MacGillis is a reporter for ProPublica. His new book is Fulfillment: Winning and Losing in One-Click America. This interview was edited and condensed for clarity.
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Photos: Elijah Nouvelage/Getty; ProPublica Website