Minnesota’s Economic News — W/E 9/24/21
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On December 29th, Sen. Bernie Sanders responded to the news that five people had been stabbed at a Hanukkah party in New York with the following tweet:
I’m outraged by the knife attack in Monsey. We must confront this surge of anti-Semitic violence, prioritize the fight against bigotry, and bring people together – instead of dividing people up.
— Bernie Sanders (@BernieSanders) December 29, 2019
A fine sentiment, but it rang a little hollow coming from Sen. Sanders. Just the previous day, he had done a bit of “dividing people up” himself, tweeting:
What motivates some of these people is greed and greed and more greed. It is like a sickness. It is like an addiction. https://t.co/NMjQJOBRXv
— Bernie Sanders (@SenSanders) December 28, 2019
The idea that “these people” suffer from “a sickness” or “an addiction” which makes them different from us is, surely, as divisive as it gets. The fact that this rhetoric is intended to divide ‘the 99%’ from ‘the 1%’ as opposed to legal immigrants from illegal immigrants, for example, does not make it less divisive. It is rank hypocrisy for Sen. Sanders to deploy such divisive rhetoric on December 28th then denounce it on December 29th.
One of the great things about free market capitalism is that it – better than any other system – aligns private benefits with social benefits.
Amazon founder Jeff Bezos – identified by Sen. Sanders as one of the ‘Faces of Greed‘ – may have set out to make the world a better place. He may have set out to make a few bucks, or a lot of bucks. His motives are unimportant. In a free market, he can only make money by providing a good or service which people value. This is why the supposed tension between ‘people’ and ‘profits’ is a myth. You can only make profits by providing a good or service which people value. Indeed, there is evidence that Amazon’s impact on lowering prices has had a noticeable impact on inflation. Making stuff cheaper is a great way to help the poor.
As Adam Smith put it in The Wealth of Nations back in 1776,
…by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.
Back in September, Sen. Sanders tweeted
Billionaires should not exist. https://t.co/hgR6CeFvLa
— Bernie Sanders (@BernieSanders) September 24, 2019
Thankfully, we do not – yet – live in a society where some all powerful guy gets to decree who should and who should not exist or how much wealth we should all have.
Instead, in a free market, that decision is taken by all of us. As I wrote recently, who decides whether billionaires should exist? We all do.
According to Forbes, the richest guy in the world in 2019 with a net worth of $131 billion is Jeff Bezos, founder of Amazon.com. Who made him a billionaire? Every Amazon customer did. By choosing to purchase a good or service from or through Amazon and choosing to hand your money to Jeff Bezos’ company in exchange for that good or service, you played some small role in making him a billionaire. Add together all the relatively small amounts that individuals have freely handed over to Jeff Bezos in exchange for the goods and services his company provides, and you see where his billions come from. You also see who made him a billionaire. You did.
You didn’t intend to. Neither did I when I bought Jonathan Wilson’s ‘The Names Heard Long Ago: How the Golden Age of Hungarian Football Shaped the Modern Game‘ from Amazon for $16.33 in July.
But that is beside the point. I wanted that book and Amazon had it at a price I was willing to pay. I wanted the CD ‘Christmas Music From Medieval Hungary‘ and Amazon had it at a price I was willing to pay. In both cases – and many others – I had a demand and Amazon supplied it. It profited by doing so, as it should. And because it did such a good job and satisfied so many people’s demands, those profits were large and Jeff Bezos got rich.
If you hand your money to Jeff Bezos in return for a good or service, you are choosing to play a part in making him a billionaire. Again, motives are unimportant.
And, according to an article in Bloomberg, the Sanders campaign (along with that of Sen. Warren) has been an enthusiastic enricher of Jeff Bezos, despite what the Senator from Vermont might tweet.
…it may surprise voters to learn that the eight leading Democratic candidates and Trump have spent almost $600,000 on Amazon in the first nine months of 2019, mostly for office supplies, according to federal campaign records reviewed by Bloomberg. (Michael Bloomberg, founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, hasn’t filed campaign expenses yet because he didn’t enter the race until November.)
As the following table shows, the stridency of the anti-Amazon rhetoric tends to correlate with the size of the outlay on its website.
CANDIDATE POSITION ON AMAZON SPENT ON AMAZON Bernie Sanders “I stand in solidarity with the courageous Amazon workers engaging in a work stoppage against unconscionable working conditions.” $233,348.51 Elizabeth Warren “Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version.” $151,240.90 Cory Booker “I will single out companies like Halliburton or Amazon that pay nothing in taxes, and our need to change that.” $58,572.90 Donald Trump “I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy.” $37,180.73 Joe Biden “No company pulling in billions of dollars of profits should pay a lower tax rate than firefighters and teachers.” $33,715.96 Andrew Yang “Amazon is . . . soaking up $20 billion in business and causing 30% of American malls and stores to close and taxpayers are seeing zero in return.” $31,756.31 Tom Steyer “Last year on Cyber Monday, Jeff Bezos’s wealth grew by $6.28 billion. It would take a family saving $100k a year for 62,800 years to save what he made in those 24 hours.” $30,766.01 PeteButtigieg “Antitrust law as we know it has begun to hit its limits with regulating tech companies.” $12,639.52 Amy Klobuchar “You want this innovation that Amazon brought into the market. You just don’t want them controlling everything under them.” $4,036.19
Talk is cheap, even when it isn’t from Amazon.
John Phelan is an economist at the Center of the American Experiment.