Seattle’s “Amazon tax” and the capital strike

Readings:

  • https://www.theatlantic.com/technology/archive/2018/06/how-amazon-helped-kill-a-seattle-tax-on-business/562736/
  • https://www.currentaffairs.org/2017/10/being-held-hostage-by-rich-people
  • https://www.npr.org/2018/06/13/619444956/seattle-repeals-tax-on-big-business-after-opposition-from-amazon-starbucks

 

The capital strike is so powerful that it’s rare that we actually get to see it in action. Normally, the threat of a capital strike is enough to stop progressive movements dead in their tracks.

A capital strike occurs when owners of large companies threaten to move their businesses elsewhere if they don’t get their way. Because this would result in mass unemployment, overwhelmed social services, and empty food pantries, capital-owning oligarchs usually get their way. Owners of large companies get a veto over every decision we make.

In this case, the Seattle city council proposed a $500 per employee tax to pay for anti-homelessness initiatives. The tax would only have applied to Seattle’s largest and wealthiest businesses–those with revenues exceeding $20 million per year. This tax would have cost Amazon $12 million per year; Jeff Bezos alone is worth $112 billion. Amazon would hardly have noticed a $12 million per year tax.

To protest the new tax, Amazon stopped construction on a tower in downtown Seattle, and implied that they were prepared to relocate the entire Amazon corporate headquarters out of Seattle if the $500 per employee tax passed. Terrified of the mass unemployment that would result, the Seattle City Council obediently slashed the tax nearly in half, to a $275 per employee tax, still only for Seattle’s largest and wealthiest businesses.

This reduced proposal passed the Seattle city council unanimously. But Amazon and other large Seattle employers–including liberal Starbucks–fought back and it was ultimately repealed by the City Council in a 7-2 vote. The threat was clear: we will move if we don’t get our way. No one argued that the few businesses who would have paid the tax could not afford it. Everyone knew it was affordable. Threats and bullying–and not the idea that the tax was somehow unaffordable–caused people to turn on the tax.

This example of the capital strike illustrates why capitalism can never be democratic. Owners of large companies have the final say over all decisions, even if large majorities of people disagree with them.

 

Discussion questions:

  1. In Norway, a capital strike cannot occur because 76% of non-housing wealth is owned by the Norwegian government. Decades ago, the Norwegian government recognized the threat of the capital strike and started buying up Norwegian companies in order to prevent it. Is this the best way to solve this problem?
    • citations: https://www.peoplespolicyproject.org/2018/07/22/nordic-state-ownership-of-enterprise-is-a-real-thing/ and https://www.peoplespolicyproject.org/2018/03/14/the-state-owns-76-of-norways-non-home-wealth/
    • Ideally, people should realize that there is no solution to the capital strike in capitalism, no matter how progressive
  2. If Amazon was a worker-owned cooperative, would they behave in the same way? Even if they didn’t, is it fair for a company–even a worker-owned cooperative–to have so much power? Does it matter that a cooperative would face the same pressures of the free market to generate revenue?
  3. Amazon could only threaten to move because cities are willing to compete with each other for large employers. What do you make of this?

 

 

 

 

Future ideas for capital strike topics:

https://www.jacobinmag.com/2018/09/pittsburgh-upmc-hospital-single-payer-amazon

And:

 

  • https://www.sacbee.com/news/politics-government/capitol-alert/article213328069.html
  • Very good evidence that rent control would not have affected construction:¬†https://www.mercurynews.com/2018/09/28/will-rent-control-kill-california-housing-production-not-necessarily-data-shows/
  • Compare to Austin referendum:¬†https://www.bizjournals.com/austin/news/2018/11/07/2018-election-250m-affordable-housing-bond.html