AOC was Right about Amazon

Braver Angels doesn’t try to change peoples’ strong views or move them toward the center. It’s an organization very comfortable with the red/blue divide, as long we speak in productive ways that include empathy and careful listening. Still, there can be powerful moments when the red/blue divide breaks down, and when two people connect on a significant issue on which they do agree. These moments are very instructive because they show that peoples’ views aren’t monolithic, always aligning perfectly with the platforms of the Republican or Democratic Parties.

I had a moment like this a few months ago, when Representative Alexandria Ocasio-Cortez (AOC) made headlines for her opposition to Amazon’s deal with New York City choosing Queens for its second headquarters (HQ2.) Although I lean conservative and don’t agree with AOC on many issues, I absolutely agree with her on this one, as does conservative Fox News personality Tucker Carlson.

Representative Ocasio-Cortez wasn’t the only one in New York criticizing the deal. In December, two Amazon executives faced withering criticism at a New York City Council hearing. And shortly after, the New York State Senate appointed a critic to a three-person board with the power to approve or deny the deal. It’s no surprise Amazon felt that it wasn’t welcome. In February, the company abruptly pulled out of the deal.

The reaction was intense, and scorn was heaped upon the deal’s critics from both right and left. Because of her political stardom, AOC was particularly singled out, even though it was not her resistance but that of local politicians which ultimately sank the deal. She was accused of not understanding the nature of tax subsidies, of being too inexperienced for her high-profile position, and of putting her abstract progressive agenda ahead of the needs and wishes of working-class New Yorkers.

But I found AOC’s Amazon tweets to be eminently reasonable, at least the two I saw. What’s more, I would argue that at least on this issue AOC’s views are the rather conservative ones, conservative not in the sense of aligning with the Republican party, but in the sense of preserving and strengthening communities. Conservatism, rightly understand, knows that culture is fragile and easily damaged. It seems that AOC understood this, at least in regard to the potential consequences of the Amazon deal.

Here’s the first tweet:

“Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”

In the first tweet, AOC rightly praises grassroots democracy. In a cynical age, in which it is easy to fall into the self-fulfilling view that we are disempowered and at the mercy of powerful and impersonal social and economic forces, it’s a boon to the soul to be reminded that actual people still matter.

I think this was the great lesson of the 2016 election, as well. Love him or hate him, Donald Trump won the presidency because he spoke to the people, despite tremendous forces arrayed against him. He faced a formidable opponent, hostility from the press, scandals, and resistance from not only the Democratic party but the Koch brothers and the Republican Party establishment as well. Whatever you think of Donald Trump, it is remarkable that no amount of money or influence from American elites was able to defeat him.

In the same vein, Amazon’s New York deal was supported by both parties, including the Governor of New York and the Mayor of New York City. Nonetheless, resistance from ordinary people was able to slow down and ultimately stop the machine. If a community can stop Jeff Bezos, it can stop anyone.

AOC’s second tweet is the one which has received the most scorn:

“Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here. It’s possible to establish economic partnerships [with] real opportunities for working families, instead of a race-to-the-bottom competition.”

Critics accused AOC of not understanding that tax breaks don’t represent money coming out of the state or city budget, but a reduction of taxes Amazon would pay once it is making a profit in New York. In other words, the critics say, rejecting Amazon frees up no money for the sort of community investment AOC is suggesting. They think she’s too inexperienced to understand complex economic issues.

The critics miss the point, however. The alternative is not to do nothing. The alternative is to attract a different sort of investment in the community—as AOC says, “to establish economic partnerships with real opportunities for working families.” She’s arguing that we should attract businesses which will provide the same benefits as Amazon but without the costs. From this point of view, dismissing Amazon does represent real savings to the community and to city and state budgets.

Her critics might reasonably counter that such a thing is easier said than done and that such economic partnerships are few and far between. In one sense the criticism is fair. But that very criticism–based on the view that we are economically dependent on behemoths of industry to drive our economy and make a living—raises a larger issue that needs addressing, and which I also find to be fundamentally conservative: What kinds of economic opportunities do we want in our country, and how we do produce them?

When Amazon announced that it was establishing a competition to find the best place for its second headquarters, the ensuing frenzy among competing cities saddened me. I thought, “how desperate must our cities be to be racing around for the “privilege” of having Amazon bring jobs to its community!” It seemed too much like servants collecting the crumbs from the table of the plutocrats they serve.

I thought the whole thing incredibly strange. After all, in the grand scheme of things Amazon does not create jobs. It destroys jobs. In the documentary Inequality for All, the self-described plutocrat Nick Hanauer, who was the first non-family investor in Amazon and remains a defender of Amazon till this day, is at least honest enough to admit the negative consequences of Amazon’s success:

[As of 2013] Amazon.com employs 60,000 people and does $70 billion, $80 billion in sales. But if mom-and-pop retailers were doing that $70 billion or $80 billion in sales, it wouldn’t be 60,000 people employed doing it. It’d be 600,000 or 800,000 or a million people because those business models are so much less efficient. So Amazon created a huge economic windfall here in the Pacific Northwest, but all over the country, there are people who are no longer employed in selling stuff who are not happy.

Although Hanauer is still a proud investor in and defender of Amazon, he understands the enormity of the problem. In an economy with a serious labor shortage, such a business might make sense. But in an economy whose chief problem is not GDP growth but a shortage of meaningful, well-paying work, Amazon is not the answer, but part of the problem. The Amazon model, with its accompanying concentration of wealth and net job destruction, requires tremendous wealth redistribution in order to maintain a stable social order. As Nick Hanauer rightly sees, plutocrats like him need to act to prevent the people coming “with pitchforks.” Like AOC, I’d rather avoid the problem in the first place by encouraging different sorts of business models with different, more conservative, aims.

I would argue that Adam Smith-style free market economics (survival of the fittest) is not conservative because it has the potential to destroy communities by allowing the strong to get stronger while the weak get weaker. Trump style mercantilism–with its emphasis on tariffs—is not conservative because it gives the government too much power to control winners and losers.

What is truly conservative is the type of economics AOC references, which “create real opportunities for working families instead of race to the bottom competition.” Real conservatism recognizes the family and community as the building blocks of society, and an economics which strengthens them is conservative, while an economic system which destroys communities in the name of profit and competition is the literal antithesis of conservative. It doesn’t conserve, but destroys.

Although I don’t think behemoth businesses like Amazon are the answer, the selection of Amazon’s other new headquarters in Virginia offers an interesting contrast to the failed New York deal, and it offers an example of how we can make the best of a bad situation right now here in the present. In the Virginia deal, Amazon received comparatively small tax incentives, but it did receive a commitment from Virginia to invest in the community in a way which would be beneficial to both Virginia and Amazon. Specifically, the deal included Virginia’s commitment to fund education, investing a billion dollars in an “education pipeline” ensuring that Amazon will have the workers it needs in the years to come. I like this sort of incentive because the improvement of workers benefits the community first, whether Amazon is there in the future or not. Arlington, Virginia was apparently the only municipality to put education at the centerpiece of its pitch.

Like AOC, I believe locally-owned, small-scale businesses are superior to Amazon-style behemoths. These sorts of business create more net jobs, and they build local ties, allowing people to form attachments and connections to a community. They offer more Americans the opportunity to own their own businesses, instead of working for a wage at the mercy of impersonal corporations. They offer stability and strength, not the “creative destruction” which has become the fetish of modern capitalism.

Many would still have us believe in “trickle down” economics, the theory that when we give tax breaks to large companies they have more money to spend and therefore create more jobs. But this fails to recognize that job creation is only possible when there is demand. Increased demand is really what stimulates the economy, and that means that the middle class, not the upper class, should be the focus of economic policy. Eric Liu calls this “middle-out” economics. In this sense it is the middle class, not plutocrats, who are the job creators.

A plutocrat who earns 1,000 times more than the average worker doesn’t spend 1,000 times more. He might own 2 or even 10 homes, but he doesn’t own 1,000 homes. He might have three or even 10 cars. But he doesn’t have 1,000 cars. His excess cash goes toward investment, which today is funneled largely out of the U.S. into the global capital market. That is money that would be more usefully invested or spent at home in ways that produce well-paying and meaningful jobs.

There’s a famous story about the iconic libertarian economist Milton Friedman. Touring China, he came across a group of men digging a canal by hand rather, than with heavy machinery. He asked his guide why and the guide proudly responded, “This is a jobs program”. To which Friedman wittily replied, “Oh, I thought you were building a canal. If a jobs program is what you want, then you should give these workers spoons, not shovels.”

I imagine Friedman felt quite smug in that moment, as do many of his defenders who tell the story. But Friedman missed the point. There would not be enough workers to dig the canal with spoons just as there would be too many workers to dig the canal with machines. Moreover, digging the canal with a spoon would feel ridiculous to the workers, while digging with shovels, while hard, would feel meaningful. In that time and place, the shovel was the appropriate technology for full employment. And full, meaningful employment should be the goal of any society. The concept of “appropriate technology” is a key insight, as espoused by economists such as E.F. Schumacher.

What is true for technology is also true for businesses, both in their nature and size. While Amazon has offered great convenience and low prices, it has done so at a great cost, one which is never recognized and, to me, is far too great. What is wrong with the soul of our culture that we will sacrifice so much at the altar of convenience and price, putting aside all other societal goods?

Amazon has wreaked havoc on our economy and has destroyed far more jobs than it has created. It is tempting for communities to invite Amazon in, but its sugary veneer hides a bitter pill inside. The history of the 20^th Century is one of big firms moving into communities and later leaving them, leaving the population impoverished and unable to recover. My community has never recovered from the departure of coal companies more than 50 years ago.

AOC was right to celebrate Amazon’s decision to abandon plans to build their 2^nd headquarters in Queens. The short-term gain wasn’t worth the long-term cost. There are better ways to offer opportunities to working class families. I’m not sure all of AOC’s ideas are great, but on this one I agree with her wholeheartedly. As Hanauer mentioned in contrasting her with Howard Schultz, “She’s the true centrist” because she’s putting the interests of average Americans at the center of public policy. I agree. At least on this issue, AOC’s thinking is more conservative than that of either mainstream Republicans or Democrats.