Jeff Bezos and Ohio’s Scandalmongers
Although Amazon is revitalizing some of our most troubled communities with much-needed jobs, the media’s mantra is warehouse work sucks. Then we found the media is hiding something sinister about what it pays its hourly journalists.
(This article also appeared in Chief Executive Magazine)
“Adversity builds character and it is the character of this community that makes it the best location to start new beginnings with happy endings.”
— North Randall Mayor David Smith
Too Small To Save
For 850 mostly African Americans living in a gritty suburb of Cleveland, the diagnosis was pretty bleak: “North Randall, Town of 850 is close to collapse.” One look at the Olympic pool in the old shopping mall told you all you needed to know; the community wasn’t just dying, it was drowning.
After the Randall Park mall closed in 2009, the retailers shut down. Then a few real estate tycoons sniffed for bargains but ran away, big labor was a no show, and the housing czars under Obama made soothing sounds but did nothing because it was a recession, and the election was over. The media just saw flyover country. North Randall was a case of too small to save.
The best idea anyone in town hall had to avoid bankruptcy was to sell the fire truck. For North Randall, it was a jack and the beanstalk moment.
But where was Jack, the town was asking?
The Little Village That Could
Fortunately, the town’s mayor, David Smith, is an incurable optimist. On the town website, he posted: “Adversity builds the character of this community and makes it the best location to start new beginnings with happy endings.” At the time he wrote those words, Smith had no idea North Randall’s luck was about to change.
Fortunately, Smith is the kind of public servant whose job is meant to be part-time but puts in hundred hour weeks visiting his people in a 10-year-old Ford Crown Vic. The way Smith saw it, the town had potential. All he needed was a smart business partner.
It is hard to find a good strategy when you are up against multiple survival threats. So there wasn’t much to lose when Smith threw the longest Hail Mary since the town was incorporated in 1908. North Randall filed an application that would part the waters for this forsaken town in the American midwest. It was for an Amazon fulfillment center that would bring 2,000 jobs.
They were not just any jobs, either, but right smack in the digital infrastructure, and came with good wages, benefits, tuition reimbursement, parental leave, and would give North Randall a reason to go on. As a scout will tell you, to light a fire, you need a spark.
Long Odds
In 2017, Amazon sent RFPs to communities across the state inquiring if they were interested in bidding on a new fulfillment center along with its 2,000 jobs. The Amazon jobs were right smack in the digital infrastructure, came with good wages, benefits, tuition reimbursement, and parental leave. Many towns were bidding on the project, which left North Randall with an existential question, why should Amazon take a chance?
The Amazon warehouse RFP was a moonshot and the odds against this deal happening were astronomical. There were classier towns, richer towns, and less troubled places bidding on the project. There was also the question of whether North Randall could get its house in order. The town’s fiscal condition was deemed un-auditable. That wasn’t the only problem. The dead mall needed rezoning, investors needed to buy a vacant, dilapidated hotel they didn’t want, and then pay for demolishing it. Finally, the North Randall Village Council had to approve property-tax abatements while operating on an austerity budget. All these details were revealed in a public meeting one evening, and they needed to happen now.
Indomitable Spirit
Twenty-four hundred miles away in Seattle, Amazon’s North American customer fulfillment group concluded its review of the Ohio proposals. According to Vice President Sanjay Shah, the company wasn’t looking for just ‘anywheresville.’ Amazon takes into account many factors that go into the warehouse location algorithm because “our ability to expand is dependent on incredible customers and an outstanding workforce.” When they looked at North Randall, they didn’t see a desperate town in the middle of nowhere as most others aw. They recognized an indomitable spirit.
When news of Amazon’s decision to consider North Randall leaked out on a public meeting agenda, Mayor Smith was exultant. “I’m lost for words because we are so fortunate….”
Warehouse Country
No one dreams that one day — if they’re lucky — they’ll get a job in a warehouse. But for working-class families, the Amazon jobs were a reason to celebrate. The wages, starting at about $14 per hour or $30,000 per year before stock options and bonuses, are the best starting salaries of their kind, according to Digital Commerce, “and significantly exceed federal and state minimums.”
The medical benefits can have a life-changing effect. Unlike more short-term conscious employers or labor unions, Amazon’s package begins day one: Employees who work more than 20 hours receive life and disability insurance, dental and vision insurance with premiums paid in full and partial funding of medical insurance, as well as a 401(k) plan, paid time off and employee discounts.
To help employees develop the skills for a digital future, Amazon grants one of the most generous tuition reimbursement packages in the United States, covering 95 percent of the costs. Nicole Smith, the chief economist at the Georgetown University Center on Education and the Workforce, commented that Amazon’s education-related benefits are unique for people with only a high school education, where the job market has crashed.
Amazon.jobs
At Amazon’s 100 fulfillment centers across the country, in one month alone in 2017, the company hired 50,000 workers. But until Amazon showed up, these places were like a mining town without any gold. No one else is offering that scale of the opportunity, not big labor, government, and for that matter not Facebook and not Google. Only Amazon. To paraphrase Winston Churchill, small-town America is saying, “give us the jobs, we already have the tools.”
Crates of Wrath
The cheering from places like North Randall may have drowned out the catcalls from a different corner of the state, ironically, one closer to money and politics than people and labor. PolicyMatters Ohio, a local labor activist, sent out a press release alleging the company underpaid its warehouse workers to the point they had to rely on food assistance. The intent was to embarrass Amazon not because it employs people who move packages but because they are non-union.
The press release noted: “more than 700 Amazon workers received (food) benefits…or more than one in every 10 of those Ohioans employed by the company.” Then the tearjerker, “It is troubling that so many of those who qualify are working and still don’t make enough to get by.”
It sent the media into a frenzy, but unfortunately, they forgot to check the facts. CNN to Salon.com, Slate, and Huffington Post, and others echoed a populist rant, “Jeff Bezos deemed the richest man in the world while Amazon warehouse workers suffer grueling conditions.” Money worshippers like CNBC and The Street made it about employee fairness: Amazon Warehouse Employees’ to Jeff Bezos — We Are Not Robots. Although the whole story was a red herring, journalists ate it up because Jeff Bezos in the same headline as food stamps was delicious schadenfreude.
Kafkaesque
More to the point, PolicyMatters Ohio claims were statistical sleight of hand. Every successful ‘con’ needs a ‘mark,’ and in this case, the mark was the media.
For instance, the difference between part-time and full-time worker’s wages was blurred. In Ohio, to qualify for food assistance, income for a family of two must fall below $20,826. Amazon confirmed its warehouse salaries with fact checker Snopes.com are in the range of $15 per hour or $31,000 per year, before stock and performance-based bonuses.
The labor activist implied 700 Amazon employees were on food stamps because someone in the household also received assistance. That was like inferring from a list of employees with children that the company employs child labor.
The third flaw was leaving a false impression that Amazon knew which employees were on assistance. Privacy laws prevented Amazon from finding out who those employees are, and Business Insider confirms the law of large numbers is the culprit, not Amazon: “Other large employers in the state, like Walmart, Kroger, Home Depot, the Cleveland Clinic, and Target also have employees that draw benefits.”
The fourth oversight was to conceal the ways someone can qualify for food assistance, leading readers to believe the wage level is the problem. Compassionate social programs like Ohio’s can offer assistance, for example, if a family member is elderly or disabled. It may not be based on income in cases like this. That is why, according to Snopes, “This circumstance might well qualify someone for food stamps even if their hourly wage at Amazon were otherwise not too bad.”
Kafkaesque, indeed.
Get The Facts
There are two inviolable rules of good journalism, and the first is to get all the facts. When the media fails to do this, the philosopher George Santayana said, “it has surrendered its skepticism to the first comer.”
In the big data, crowdsourced world, checking an employer’s reputation is simple. Glassdoor, the Yelp of employee review sites, reveals how actual employees feel about their company’s wages and benefits. It can also identify who is the labor advocate and who is the publicity hypocrite.
An employee of PolicyMatters Ohio posted a review complaining that as a research intern they weren’t paid any salary, which is ironic given the focus of the research was on blue-collar wages. It is also the case that, according to expert Alex Granovsky, “unpaid internships are nearly always a violation of Ohio and Federal law under the Fair Labor Standards Act:”
Arianna Gets All The Scratch
That second rule of journalism is to follow the money. This line of inquiry had a shocking revelation: people aiming for a media career might be better off taking a job at an Amazon warehouse. Glassdoor was quite revealing on the matter of pay and worker conditions at media companies as well as Amazon warehouses:
At The Street, the hourly rate is $10.12 and may explain why employees at “booyah” Jim Cramer’s stock tip website disparage the atmosphere: “People sit and stare at their computers. I go home and am in a depressed mood because I didn’t speak for 8 hours.” *
At Verizon-owned but uber liberal Huffington Post, the tagline is ‘know what’s real,’ so they will applaud our telling you the hourly rate, at $11.87, may be why employees say “40% of the staff was drunk. They fire everyone and hire back at half the rate. Work-life balance is off. Arianna gets all the scratch.”
Compare those to an Ohio Amazon warehouse worker where the hourly rate is $14 an hour, and as an employee notes, “Benefits from day one. I only pay $16 for medical, dental and vision. The trainer I had was awesome, and the atmosphere is awesome. Right off the bat, you get 10 hours personal time.”
This suggests the media is dreadfully elitist, if not downright hypocritical, towards the blue-collar world. Journalists see a high school educated warehouse worker making $12 an hour; they call it slave wages. But if they hire an Ivy League graduate as a reporter at $25,000 a year, which also computes to $12 per hour, somehow that’s following your passion.
The Visionary
In 2018, the most critical question to ask about Amazon is not its stock price or how rich is Jeff Bezos. The key metric is are people’s lives enriched by making a steady wage, healthcare benefits, educational options, and the opportunity of working for a company with a wide variety of disciplines, locations, and sectors of the digital economy?
As Bezos might say, the answer to that question begins with a number: 566,000. That is the number of people employed by the company today, making Amazon the second largest employer in the United States, more than the unionized labor forces of the U.S. Postal Service at 508,000 and far more than General Motors’ 209,000. Facebook’s 25,000 employees are a small gathering by comparison.
While Bezos moves the company forward through a combination of vision, skill, and high ideals, he knows his employees are his most valuable asset. As every equity analyst pleads to change his long term ways, Bezos snubs Wall Street by overinvesting in people and in the communities where he drops anchor.
Progressive leaders have publicly praised the company for these reasons. If the media and big labor can get over their parochial hysteria, even they will admit there is something for everyone to love about Amazon.
Amazon Tried To Help New York City — AOC Said “Scram”
A working-class neighborhood in Queens was about to experience a miracle. Then AOC and Mike Gianaris intervened.
Ben McVane was at the “epicenter of the epicenter of coronavirus.” He’s not complaining, however, it’s where he spends his days, where he chooses to be, as you’ll see.
As McVane related to the New York Times, “When I walk to work, I see women selling tamales and smell the strong Colombian coffee. Now, I see patients intubated and sedated,” and wondering out loud, he asked, “Why has it hit Elmhurst so hard?”
We should take his question seriously. McVane is an Emergency Room doc at Elmhurst Hospital in Queens and a Professor at the Icahn School of Medicine at Mount Sinai. More than a great doctor, he has substantial expertise in non-medical issues, completing an undergraduate degree in Political and Social Thought at the University of Virginia before he obtained his medical degree at Columbia University and emergency medicine residency at Mount Sinai. But his real passion is human rights. His work has taken him to refugee camps in Greece, Bangladesh, and Mexico. It is McVane’s experience with vulnerable populations that gives him insight into his patients at Elmhurst Hospital: “The people are immigrants, poor, and uninsured.”
Up From Nothing
Twenty-five thousand high paying jobs with outstanding healthcare insurance were heading towards Elmhurst and the surrounding neighborhoods, a gift from Amazon. The company canvassed the United States, and while there were digital-friendly metro areas like Austin or Denver for its HQ2, something about the gritty neighborhood where people sell tamales got the company’s attention. McVane’s wish was about to be granted.
The backstory, as some might be surprised to learn, is the mega-billionaire founder of Amazon feels more at home eating ethnic food than fancy canapes.
Jeff Bezos was born in 1964 in New Mexico, the son of a teenage single mom. His mother remarried Mike Bezos, a Cuban immigrant who adopted Jeff when he was four, and the family moved to Miami to be closer to Cuban relatives. Young Jeff showed promise. He was his high school valedictorian before heading off to Princeton, where he graduated summa cum laude in 1986.
Bezos has a habit of starting at the bottom and figuring out how to rise to the top. He became the youngest vice president in history at his Wall Street firm before embarking on a drive to Seattle. On July 16, 1995, he launched a strange-sounding online store by the name of Amazon long before there was a thing called eCommerce. After Bezos wrote the software, the company started making $20,000 per week and by 2018 reached a value of over $1 trillion.
Today, Bezos may be the world’s most prosperous individual, but he is still the child of an unwed teenage mother and a Cuban immigrant — which brings us back to Queens.
Media and Manipulation
Congresswoman Alexandria Ocasio-Cortez is adhering to that old rule, “follow the money.”
Elmhurst is 12-minutes from where Amazon was going to locate HQ2 in Long Island City. A wave of fruitful after-effects would have rained on Elmhurst, including 25,000 new Amazon salaries, healthcare benefits, tuition reimbursement, and hi-tech training. When jobs and skill training meet hard-working, entrepreneurial immigrants described by Dr. McVane, the result is a mercurial thing called prosperity. In laymen’s terms, it means parents afford college tuition, children grow up to be doctors and bankers, and they buy homes and cars. That sounds like the kind of neighborhood that survives a pandemic. But it never had a chance.
Labor unions bullied — or perhaps a better word is bribed — politicians to retaliate against the company after it announced intentions to locate in Queens. The company’s formidable growth makes it the second-largest employer in the country with the highest pay and benefits in jobs of their kind, and that is the main reason unions don’t want it on their turf. When word went out Amazon was coming to town, the unions dismissed the benefits of health insurance, tuition reimbursement, and tech training. They sent a firm message to two of their handpicked pols: “tell the company to scram.”
The attack strategy was led by Alexandria Ocasio-Cortez, better known as AOC, through her social media account followers.
She cleverly sidestepped any conflict of interest by adhering to that old rule, “follow the money.” While she tried to evict the company from Queens, significant campaign contributions were pouring in from people at Google, Apple, Amazon, and Microsoft, as the Campaign finance graphic demonstrates. Living with contradictions is the first lesson of Party politics.
The foot soldier in the battle was State Senator Michael Gianaris. He played Amazon’s chief antagonist while his labor union cronies called the shots, as you can see from the Gianaris Finances chart.
When Jeff Bezos raised Amazon’s minimum wage to $15, he earned rare praise from Vermont Senator Bernie Sanders, but the honeymoon was short-lived. While the media paid scant attention, labor unions went on the attack. The rationale was clear. With salaries now over $35,000, unions were able to ‘afford’ to organize. It became a growth opportunity for them.
If Bezos didn’t immediately recognize that HQ2 would backfire, it didn’t take long for unions to send the message. Eventually, he capitulated, writing, “While polls show that 70% of New Yorkers support our plans, local politicians will not work with us.”
While Governor Andrew Cuomo was a cheerleader for HQ2, New York’s local politicians made it sound like Amazon was coming to destroy the neighborhood. The ploy transformed the company from a corporate first responder to a B movie alien.
Media Cheerleader
The media joined the battle. Typical of populist journalists, most of whom were unknown bloggers until social media came along, was the Atlantic’s Amanda Mull. Her flagrant bias was no less evident than if she carried a placard that said, “Amazon keep out.” Although Mull isn’t a business reporter, she tweeted, “That New Yorkers Chased amazon out makes me proud.” She was not working on an Amazon story, and she does not live in Amazon HQ’s vicinity. Her attack was an attention grab disguised as virtue mongering, and it stepped over all bounds of professional journalism. The good news, at least for Mull if not Elmhurst, the tweet sent her social media following to a multiple of 30,000. It is the level at which one becomes an influencer, although not necessarily a credible journalist.
Who’s Crying Now?
On February 19, 2019, Amazon announced it would no longer pursue HQ2 in Queens. The company noted, “We are disappointed to have reached this conclusion — we love New York, its incomparable dynamism, people, and culture.” And so the real victims in the Elmhurst Hospital ER are left in the lurch. Politics isn’t their game. When they go back to selling tamales, they’ll wonder where those Amazon jobs went.
When Emma Lazarus wrote in 1883, “Give me your tired, your poor, your huddled masses, yearning to breathe free,” she didn’t realize that breathing is the symbol of the pandemic of 2020, just as ventilators are its salvation. Unfortunately, so is the hot air of politics.
The King Of Queens vs. Amazon
When Amazon announced that HQ2 would be located in Long Island City, New Yorkers cheered the 25,000 jobs it would bring. But in the backrooms of labor unions, some people were very unhappy.
(This article previously appeared in Chief Executive Magazine)
Amazon’s Jeff Bezos never met Senator Michael Gianaris, Deputy Majority Leader of the New York State Senate. But after the company announced that HQ2 would go to Long Island City, which happens to lie right smack in Gianaris’ District 12 in Queens, they got to know each other exceedingly well.
The message that Gianaris is sending to Bezos and CEOs is that there is a new sheriff in town. It will become a familiar refrain now that progressive Democrats are in ascendance after the Congressional election of 2018 amid the antipathy party members have for Republicans under Donald Trump. And for business generally, it is a harbinger of things to come. Chief executives may be asking if a ‘nobody’ like Gianaris could wipe the pavement with Jeff Bezos, what happens to the rest of us? This new breed of political mavericks is telling the big company bosses that they won’t kowtow to their money or prestige, or even the jobs they bring to town. How noble, right?
Might it help to look at some hard facts?
Senator Gianaris is a Harvard Law School graduate, a practicing member of the Eastern Orthodox church, and formerly a corporate lawyer — with Chadbourne and Parke, a top 25 New York firm whose clients are large, publicly held corporations, emerging growth companies, privately owned companies, and financial services. He left the corporate world to devote himself full time to politics. It appears he has learned the most important lesson, the care and feeding of donors.
Gianaris is a rising star of the new breed of politicians that came of age during the Clinton/Obama years. They are Democrat, populist, anti-business, and ethnically diverse, have immigrant roots, like his more famous counterpart, Congresswoman Alexandria Ocasio-Cortez, who represents the neighboring district in the U.S. House of Representatives. But when it comes to raking in campaign money, Gianaris plays the game just like his forbears in the Boss Tweed era.
It explains why Gianaris would mount a rebellion against Amazon’s HQ2 plans despite the fact that it would employ 25,000 people in high paying jobs in his district. Once you look at the campaign contributions he received, you’ll find they are from the smoke-filled rooms where Gianris does like to kowtow, his labor union minders.
The outspoken state senator’s top contributors are unions, dozens of them, including the Communications Workers (ironically, of New Jersey, probably to disguise the local’s involvement), famously anti-business SEIU, Airbnb enemy #1 Hotel and Motel Trade Council, Transport Workers, and a construction executive that works in Long Island City. He sees them as a cheerleading squad who can help him get to higher office.
Just as I wrote in an earlier Amazon story that showed how labor unions pilloried the company for warehouse wages (which on investigation turned out to be the highest in the country), the unions will attack any sign of Amazon because they loathe the fact the company is so successful and non-union. Whether his constituents get jobs or not isn’t Gianaris’ main concern, it is keeping labor bosses happy, and he has certainly has proved he is good at that.
Dangerous Antagonists
Banker’s Remorse: The Fury of Elizabeth Warren
Her brilliant ascendancy has been fueled by exceptional intelligence, relentless ambition, and more ominously, revenge.
When President Barack Obama nominated Harvard Law professor Elizabeth Warren to lead the Consumer Financial Protection Bureau, liberals cheered. Fearful of her reputation, financial institutions pushed back and she was passed over. It was the second time the banking establishment outraged Elizabeth Warren.
“Warren realized early that what you are is not what you have to be. Everything is subject to change.”
The Repo Man
At age 13, young Betty Ann Herring from Norman, Oklahoma, knew that sharing a last name with a smelly fish wasn’t a status symbol. In the future, she would find a better one and keep it through multiple marriages. Warren realized in her early days that what you are is not what you have to be. Everything is subject to change.
She had a few things going for her. There was her superb school record. Her debate skills were so formidable she dreamed she might be a lawyer someday. But after her father had a heart attack, he lost his job at Montgomery Ward and her mother had to find work at the Sears Catalog. It was a time when people would look down on a family with a working mom. The bills piled up and a bank called to say a repo man was on his way to take back the car. In Oklahoma, nothing was nearer than ten miles. How can you function without driving? The stigma left an indelible imprint, and Warren describes this period of her childhood as ‘living on the ragged edge of the middle class.” It would not be the last time she would reach for a poetic embellishment to glorify her ordinary, extraordinary life.
We see this in the current ruckus around Warren’s handwritten “American Indian” ancestry on her Texas State Bar registration card. Because her heritage wasn’t a condition of the bar license, pundits have called her a fabricator. But that is an oversimplification. The reason is that it made a graduate of an out-of-state law school (Rutgers) appear unique and stand out from the mass of University of Texas lawyers. In the way Warren looks at things, it brought her one step away from Norman, Oklahoma, and a step closer to stardom.
Throughout her life, Warren was up against superior resumes, as she is today in the race for her Party’s presidential nomination. While at college, for instance, she received a degree in speech pathology from the University of Houston but failed to take the required courses and so could not qualify for a teacher’s job. She didn’t let that stop her. Warren circumvented the rulebook by applying for an ‘emergency certificate.’ She may have skirted the rules again, according to a popular lawyer blog, by providing legal services in Massachusetts while not a member of the Massachusetts State Bar. Warren discovered early on that rules are meant for breaking, and with a splash of ingenuity, defects are turned into virtues. It became her mantra, and she began her climb.
“Goodbye Lonestar Republican, hello Cambridge uber-liberal.”
In Texas, Act Texan
By the time Texas granted her a law license, she had divorced her first husband, Jim Warren, a humble IBM salesman, and traded up for a Harvard Law School professor, Bruce Mann, although never took his name. During her early legal career, Warren worked from home doing wills and estates. She hadn’t yet developed a grudge against the high and mighty, so long as they were paying clients. Her work eventually led to her to the attention of the Senate Majority leader Harry Reid, and she pivoted once again.
What is less well known is that from ‘91–’96, according to the Boston Globe, Warren was a Texas Republican when George W. Bush was elected governor. Throughout this period, she maintained her Republican party affiliation even though Bill Clinton was elected and then reelected president (’92 and ’96). It makes her claim that she transformed into a Democrat for populist reasons a matter of convenient hindsight.
Warren has a chameleon-like instinct to become whatever is necessary to get what she wants. It isn’t a pretense, as her detractors suggest, but a talent for knowing what is going to impress influential people who can do her good. Not surprisingly, after she moved North, it was goodbye Lonestar Republican, hello Cambridge uber-liberal.
Warren’s biographical distortions haven’t hurt her in the era of Trump, and most likely, the Texas Bar registration fiasco will go away by the next news cycle. But it spells trouble for the business world, and not merely because of her lifelong grudge. She is in a different fight now than a Senate Banking Committee hearing where moderately liberal Massachusetts voters are her target.
“The secret to Warren’s success is that when in Rome she eats pasta.”
Primary Colors
Primary battles are the political equivalent of extreme fighting. Warren’s contestants in the 2020 gladiatorial exhibition are all-star quality women with equally enormous ambition. The discernible difference is they come from better states, politically speaking. It means she is going to have to take off the gloves. It spells trouble for business.
The six states that make up New England deliver 33 electoral college votes, only four more than Kirsten Gillibrand’s New York, where both candidates run close to even in search queries as a proxy of popularity, according to Google Trends. In California, with an electoral tally of 55, Warren trails Kamala Harris 26% to 68%. Democratic primary candidates do not win without New York and California.
The electoral map suggests the only way the math works is to push herself into the hearts and minds of New Yorkers and Californians. She has a surefire way to do that, as the people who wear pinstripes to work will find out soon enough.
When Democratic primary voters have a choice such as this, populist politics is likely to take a radical turn. Warren’s antipathy to banks is more profound than the memory of a car repossessed or the ganging up that denied her the CFPB job. The secret to Warren’s success is that when in Rome she eats pasta. She knows full well that what gets under the skin of coastal liberals is big business run amok. She is going to make sure the voters know she has the credentials to put it on a short leash, and the animus to get the job done.
Elizabeth Warren’s War on Big Tech
The Senator from Massachusetts is threatening to break up Silicon Valley. It could be the best thing that ever happened.
By Jeff Cunningham
You can tell the silly season has started when politicians who spend most evenings sipping champagne at $1,000 a plate fundraisers begin to sound like college protesters.
In that vein, Elizabeth Warren, the outspoken US Senator from Massachusetts, tried on some tough talk at a campaign rally recently: “We have these giant corporations — do I have to tell that to people in Long Island City? — that think they can roll over everyone. I’m sick of freeloading billionaires.”
According to The New York Times, Warren threatened total dismemberment for the likes of Mark Zuckerberg, Larry Page, and Jeff Bezos, of the companies they founded, to be sure. She published her tech busting manifesto on Medium, the same blog which gave us the Uber and Google women rebellions.
Do Unto Donors
Warren overlooks one inconvenient fact. The billionaire freeloaders of Silicon Valley are the staunchest supporters of the Democratic Party. Either this is poetic justice for tycoons who cozy up to crusaders or Warren’s rage against the ten-figure class is a simple ruse to propel her past slow-moving septuagenarians like Bernie Sanders and Joe Biden, and ultimately, her arch opponent, Kamala Harris.
Whichever strategy one accepts, her tactics against the algorithm gang leave her with only three likely outcomes. If she prevails, she will have to slice and dice these formidable companies without igniting a war against the Democratic Party’s most prominent stalwarts. There is also the chance that the bright minds of Facebook and Google will move into survival mode and defect to her opponents in the primaries or, as bankers did under Obama, to the other side of the aisle. Or a third possibility is that this is nothing more than a political moment, see what clicks and sticks, then act?
The people who run companies should monitor this carefully because not only is Warren a good reader of the political winds, she knows how to push an idea into the public arena where it can go viral in ways no one has predicted.
Not even her, as we will see.
Tech is Toxic
Warren’s solution to the problem of bigness has three glaring hypocrisies that suggest a “Big Tech Break Up” will be complicated both in enforcement and in execution.
The first ‘tell’ is that Warren’s anti-bigness turns out to be a dog whistle for good old fashioned ranting at the business community at election time. Long before Warren, Teddy Roosevelt wanted constituents to see he was his own man and tackled Big Oil. His cousin, FDR, later brought down the Big Banks during the Great Depression. Meatpackers were next.
Warren is following the script by attacking Big Tech. Like her trustbusting forbears, her timing is impeccable. Privacy problems at Facebook and unruly sexism in the Google C suite, according to The New York Times, make them rich and ripe targets.
Even millennials are undergoing something known as ‘tech-lash’ and taking a social media detox. According to a recent study of 5,000 students commissioned by Digital Awareness, 71% of college-age kids have taken a breather from social media and 63% said they would not care if it didn’t exist. Even heavy users like Kanye West and Lindsay Lohan have suspended their feeds.
California Scheming
The second irony is that Elizabeth Warren’s hi-tech enemies happen to tilt West. LA-based Wells Fargo is her favorite poster child for bankers gone bonkers, and now Silicon Valley and Seattle are her next quarry.
Politics is geography and that is why it is a smart move. Going after California based companies shields Warren from alienating donors in the Northeast and sends a signal to Kamala Harris to join the cause or ignore the issue and give Warren a debating point.
At this time, Harris is sticking with safety. She has issued talking pointsthat refer to privacy-related issues but stop short of any hi-tech divestitures. The other candidates, like Senator Amy Klobuchar of Minnesota and Bernie Sanders of Vermont, say they have an open mind.
In other words, don’t get your fingerprints on this.
History Lesson
Then there is the third and most crucial irony. To anyone who studies American business history, when a company controls an essential piece of the economy, some politician is going to charge restraint of trade under the 1890 Sherman Hawley Antitrust Act.
In our lifetime, we have seen this happen to IBM, Microsoft, and ATT. In an earlier era, General Motors was in the frame, and before that, as noted, the banks under FDR and the Oil Trust of John D. Rockefeller under Teddy Roosevelt.
But there was a surprise in store for the trustbuster in chief, one that Roosevelt never considered, nor did his nemesis, Rockefeller.
And the same could happen to Elizabeth Warren’s best-laid plan.
Innovation’s Spawn
Trustbusting began when Teddy Roosevelt assumed the presidency after the assassination of William McKinley. The new Oval Office holder wanted to signal that he was a man of the people, and brought suit against Standard Oil in November 1906.
The public saw the company as a kind of kingdom, with John D. Rockefeller as monarch. Journalists like Ida Tarbell pilloried its anti-competitive practices. By 1909, the Federal Court ordered the dissolution of Standard Oil into seven major independent entities with Rockefeller maintaining his ownership across the lot.
It only took a year for Capitalism to respond.
The new structure gave the country brands like Exxon, Mobil, Chevron, and Arco, all of them independent operations with their own research and development teams. Competition spurred the spawn of Standard Oil to experiment more aggressively, and within a year a new way to improve the efficiency of oil barrel to fuel conversion was discovered. It opened up a path for automobiles to use a combustion engine, which until then relied mostly on steam and electric energy. Henry Ford’s Model T was the result.
In the first year after separation, Rockefeller’s wealth doubled. He subsequently became the richest man in history and the most significant donor to charity. The oil business boomed and so did the country.
We have antitrust to thank.
If Elizabeth Warren succeeds to the presidency or if the other candidates follow her lead and force the break up of big tech, it would likely result in a more innovative hi-tech sector. It will most definitely give us a richer Bezos, Zuckerberg, and Page.
Wouldn’t that be poetic justice?
