Wednesday, 8 April 2015
What the politicians won’t talk about at this election
SOME years ago I used Amazon. That was a sin. Having learned more, I abstain.
A Victorian mill owner, observing Amazon’s ‘fulfilment centres’, might admire the high-tech ways to exploit, control and abuse a workforce. Not for much longer, perhaps: last May, Amazon boss Jeff Bezos announced his intention to have 10,000 robots in place by early 2015.
Amazon doesn’t just wipe out its own workers: it destroys whole businesses, particularly the small and local. 3,000 UK bookshops in 2005 fell to 1,000 in 2014. Bezos decreed that ‘Amazon should approach small publishers the way a cheetah would pursue a sickly gazelle’ if they resisted the company’s crushing price and payment rules. As ‘The Everything Store’ spreads tentacles ever further, job-killing devastation grows: it’s estimated that since 2012 a net loss of 27,000 jobs in the USA alone can be attributed to the Amazon effect.
Monopolising sales and distribution across swathes of consumer goods, Amazon reinforces its power by developing its own products (the Kindle, for example) and buying up parts of the distribution chain, such as the United Parcel Service.
Distribution, of course, relies on roads built and maintained at taxpayer expense, while Amazon’s business model depends on the internet, its infrastructure funded largely by telecoms customers and taxpayers. Yet Amazon’s devious ways of avoiding its just share of taxes are notorious.
Escaping such overheads incurred by traditional businesses extends to exploiting free labour from customers. Amazon lives off advertising revenue. Advertising directed personally to a customer’s interests pays best. Each search or purchase captured on its website helps the software build up that individual’s profile to target future advertisements. Every click is free help for Amazon. (A Facebook engineer remarked – with conscious irony, I hope – that ‘the best minds of my generation are thinking about how to make people click ads.’)
Miserliness with employees, customers and taxpayers doesn’t include Amazon’s founders, financiers and shareholders, who wallow in wealth. With huge turnover ($83,000 was spent with Amazon every minute last year), the company’s 2014 value was $150 billion; boss Bezos has a $30 billion fortune.
This pattern repeats with the other major internet businesses like Google, Twitter, Facebook, YouTube, Uber...
Company value out of all proportion with the jobs provided? Google was worth $400 billion last year with 46,000 employees – seven times the value of General Motors ($55 billion) with under a quarter of GM’s 200,000 workforce. Its two founders, Larry Page and Sergey Brin, are personally worth over $30 billion each. In 2014, Apple’s net profit of $88.9 billion was, at comparable money values, 76 times greater per employee than was General Motors’ in 1960.
Working conditions? BBC Panorama’s recent investigation into Apple’s supply chain exposed shameful abuses, including of child labour, in manufacturing processes in China and Indonesia. Such practices aren’t limited to Apple among end-users.
Destroying jobs? Foxconn, a Taiwanese company dominating manufacture of consumer electronics such as iPhones, iPads, Kindles and parts for Microsoft, plans a million factory robots. Its current global workforce? 1.2 million. Conclusion?
Wiping out businesses? Uber, the unregulated app-based taxi system in over 200 cities, has been called ‘the software that eats taxis.’ Trained and regulated taxi drivers in many places have protested at the threat to their businesses and professional standards.
Exploiting the customers? Listen to Andrew Keen, himself an internet entrepreneur: ‘We’re all working for Facebook and Google for free, manufacturing the very data that makes their companies so valuable.’
Instantly global market
Monopolising the world? It’s characteristic of internet businesses that one company dominates its field: the market is instantly global, so scale is vital. Name a genuine competitor for Google or Facebook or Twitter or any of the household names, at least outside China. The bigger the internet, the fewer the competitors. Google has a large stake in Uber. Uber does taxis, with drivers; Google is developing driverless cars. Work it out. Google has, and Uber-drivers soon will.
Paying taxes? Big companies aren’t alone in wriggling free. Last year New York City challenged 15,000 residents letting out rooms through Airbnb (a sort of Uber for unregulated accommodation) but suspected of not declaring the income.
And robotics? Oxford University’s Dr Carl Frey predicts that over the next two decades automation could put at ‘high risk’ nearly half of jobs in advanced economies – including much traditional ‘white collar’ work. Economic writer and sharp observer John Lanchester foresees a world in which ‘0.1 percent own the machines, the rest of the one per cent manage their operation, and the 99 per cent either do the remaining scraps of unautomatable work or are unemployed’.
‘The world of capitalism-plus-robots,’ he warns, ‘may prove just too grim to be politically viable.’
Of course the internet brings benefits. The zealots claim among these greater democracy, equality and harmony. But will Google-world be democratically controlled? Financial inequality, increased over recent decades by run-away capitalism, is being accelerated by the internet companies. Previous economic revolutions, proceeding slowly, allowed new jobs to replace old; but the speed and scale of the digital revolution outpaces itself. Do Facebook and Twitter foster harmony more than loneliness, bullying, anger and fear?
Pursuing convenience and cheapness, we may prove Marx right: with vast riches for the few, deep financial and cultural poverty for the rest, capitalism could self-destruct. Silicon Valley may give us low prices today; but what if tomorrow we incur unendurable social costs which governments cannot pay because the plutocrats deny them taxes and power?
We have been warned. ‘The Space Merchants’, a 1952 novel, describes a world ruled by monster advertising agencies controlling all other businesses and governments; in a degraded natural environment, an élite with private security forces rides roughshod over the masses (called ‘consumers’) living in debt-ridden, drug-stupefied squalor.
The internet is a public utility: we should use it for good, not allow it to abuse us for ill. But where in the currently trivial politics are the necessary ideas? Meanwhile, buy books from Serendip.