• Tag Archives Trump

  • Trump’s War on Amazon.com Explained

    Posted on by Azrael 1 Comment

    On February 2016, Donald Trump began a public relations war against one of America’s most successful companies. He directly threatened Amazon.com and its founder Jeff Bezos with political reprisal should he become president.

    Why? It seems like every consumer loves Amazon. What gives?

    “I have respect for Jeff Bezos, but he bought The Washington Post to have political influence, and I gotta tell you, we have a different country than we used to have,” Trump said. “He owns Amazon. He wants political influence so that Amazon will benefit from it. That’s not right. And believe me, if I become president, oh, do they have problems. They’re going to have such problems.”

    Problems? This is pretty dark. What kind of problems? He didn’t say. Regardless, Bezos is right that this is “not an appropriate way for a presidential candidate to behave.”

    This week, Trump filled in some detail. He thinks that Bezos bought theWashington Post to stop D.C. from taxing Amazon. “The politicians in Washington don’t tax Amazon like they should be taxed,” he said. They have to be taxed because right now “they are getting away with murder taxwise.”

    It’s not only taxes. He also thinks Amazon is too big, too controlling. “I would go after him for anti-trust because he has a huge anti-trust problem.”

    A Brutal and Baseless Attack

    These serious claims are all wrong on their face. Amazon customers once benefited from the lack of a sales tax when shipping out of state. But once Amazon established distribution centers in state after state, its goods are taxed like any other — thus taking away a pricing advantage for customers. It is fast service and variety that are driving Amazon to new heights.

    As for antitrust, it is hard to imagine what he is referring to. Not gouging. Not controlling (anyone can list on Amazon’s platform). Not even market share, since producers see its marketplace as an alternative venue to  their own main sites. In fact, the old antitrust laws don’t seem to have any application in the complex, multilayered, ineffable world that digital commerce has become.

    And by the way, if Bezos did buy the Post in order to editorialize against higher taxes on internet commerce, that would be absolutely fine, even praiseworthy. It certainly shouldn’t be condemned. The Post has historically served as a mouthpiece for state growth. That has noticeably changed since Bezos took charge, and the results have been a blessed relief.

    For his part, Trump says he is burned up at Bezos, the Post, and Amazon, because journalists have been digging around for dirt on him. Threatening journalists would be bad enough. This is straight out of the 1790s when the Alien and Sedition Acts led to the arrest of editors who criticized President John Adams. Such attacks on free speech nearly smashed the union. Certainly it led to the triumph of Thomas Jefferson in the upset election of 1800.

    The Old World Washed Away

    But what if there is more going on here than a bully politician intimidating newspapers and enemy businessmen? The struggle here is bigger and more historically significant. It’s not just about ideology; it’s a battle of economic interests.

    Trump is joining an emerging war between old-style economic institutions, rooted in brick-and-mortar and nation-state loyalism, vs. new-style digital institutions that span the globe and empower producers and consumers directly.

    The world has changed dramatically in the last 10 years, a change as significant as the move from feudalism to capitalism, from agriculture to industry, from rural life to city life. The digital revolution has fundamentally shifted the way we live, the way we communicate, the way we produce and consume. It has brought capital and power to the people. It has flattened old hierarchies. It has enabled an end-run around government bureaucracies and old-world institutions of mandated mediation between individuals.

    The change has been revolutionary. It has affected transportation, retail, entrepreneurship, friendship, the hospitality industry, intellectual property, and even choices over education, healthcare, and geographic location. In so many ways, the advent of digital innovation is in the process of sweeping away major swaths of the old world.

    And it’s just begun. Once technology is invented, it cannot be uninvented. Regulations can slow down its progress but cannot stop it. There’s so much more coming. 3-D printing puts the power of production in every home. Communication in all forms is free. Blockchain monetary technology has seen the proof of concept: it can exist outside the nation state. Space travel can be private. Law and contract can exist as scripts on distributed networks. Cars can drive themselves. Language differences are themselves becoming obsolete.

    In this emergent world, borders do not matter. Weight and space do not matter as they once did. Old categories of class, race, religion, and even formal certification and education are ever less significant. Exchanges are taking place peer to peer, value for value. Anyone can work for anyone or hire anyone, based not on some “art” but rather based on market signalling.

    Amazon has been a powerful tool in ushering in this new model. It has revolutionized the way we buy and sell things. Just now I faced a choice in buying shoes: drive to a store or click them for tomorrow delivery. I did the latter. Three-hundred million other account holders have done the same. This is why the platform moves $100 billion in product, employs 250K people, and the company is growing 20% per year.

    So, yes, that is disruptive. Amazon is the creative part of Schumpeter’s process. The destructive part is that many people in the old economy are very upset.

    The Empire Strikes Back

    It would be remarkable if the displaced elites did not organize politically. There’s no question, for example, that the hotel industry has funded the anti-AirBnB campaign.

    And it would be amazing too if some one leader didn’t emerge to represent their interests. Just as the landed caste resisted the onset of capitalism, and the entrenched economic relationships of an agricultural economy resists industrialization, so too are the barons of the analog age pushing back against the rise of digits.

    Consider that Trump is the consummate physical-world capitalist. He builds towers, casinos, hotels, country clubs, all rooted in real estate, and all with a gawdy 1980s-style aesthetic. With that comes “the art of the deal.” The deals are done on golf courses, in “old boys” clubs, through personal networks. It’s about meeting in board rooms with mayors and city planners and trading favors. He hires contractors to dig and build and rent. He puts his name on large structures and they reach to the skies to proclaim his personal glories.

    But what if technology makes it possible for people to work from home? Offices shrink. Revenues decline. Real-estate value falls. What happens if fancy hotels are losing marketshare to AirBnB? Hundred-million-dollar properties fall into bankruptcy. What happens when consumers can buy direct from China? Trade negotiators and entrenched establishments lose power.

    And what happens when the essential value that is being traded is not physical but intellectual and people can trade all over the world? That alone blows up the world that Donald Trump romances about.

    Think of it. When have you ever heard Donald Trump celebrate the new world of the app economy? He uses Twitter for his purposes. But when has he identified the tech sector as an important source of economic growth? He speaks not of innovation but of greatness. He is attached not to entrepreneurs as such but existing elites in the legacy sectors of the American industrialism of decades ago.

    The central campaign symbol that Trump has chosen is The Wall, the ultimate brick-and-mortar construction project. It will require contractors, buy-outs, eminent domain, the art of the deal, all in an effort to shore up the value of the real estate holdings of the nation state.

    Think of his remarkable demonization of Apple, another ornament of the new digital age. He has demanded that the company degrade its operating system to allow government surveillance. He has called for a consumer boycott (fat chance of that!). This company has enabled billions of people all over the world to produce and “break smart” rather than languish with the tools around them.

    The immigration issue figures into this as well. When I last visited Google in Silicon Valley and Uber in San Francisco, it was readily apparent that one of the great assets these companies have is the H1B visa, without which they would lose some of their mightiest minds. Of course Trump has thoroughly denounced this visa status: “I will end forever the use of the H-1B as a cheap labor program, and institute an absolute requirement to hire American workers for every visa and immigration program. No exceptions.”

    Method to the Madness

    What if Trump represents more than just an ideology? Of course, he is in politics and therefore represents some economic interest. If you consider the consistency of his attacks on the digital realm, and his attachment to old-model, physical-world property, we find a new rationale for why it is that he is as passionate as he is.

    Certainly Trump’s constituents feel themselves to be left behind by the progress of the 21st century, and, in this respect, they have blamed the wrong forces. It is not free markets but rigged labor markets and bad policy at the top that have driven down their economic prospects.

    As an exponent of protectionism, cronyism, surveillance, censorship, and migration restrictions, Trump has emerged as a consistent defender of a world gone by. With the power of the presidency behind him, he can’t turn back the clock but he could manage to slow the progress.

    In this respect, is he worse than Hillary who has directly attacked the “gig economy” in a way that Trump has yet to do? It’s hard to say; she depends on old-world unions for political support. However, her targeted demographic is young and more technologically sophisticated. That alone might curb her desire to roll back digital progress. And yet she has never been in business and does not understand its complex dynamics.

    Trump represents an old corporate guard that is increasingly furious about the revolutionary changes taking place in a digital-data driven age that points to a world without borders and without entrenched elites.

    When you think about the underlying dynamic here, it gives new meaning to the campaign’s slogan, “Make America Great Again.” Make: government will act. America: the nation state and its borders, not the individual, are of highest value. Great: as in big buildings, symbols of power, and ostentatious mountains of brick and mortar. Again: an age gone by that, thankfully, will never return, no matter how many powerful people try to make it happen.

    Source: Trump’s War on Amazon.com Explained | Foundation for Economic Education


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  • Trump Isn’t the First Politician to Threaten Newspapers

    Posted on by Azrael 1 Comment

    Donald Trump isn’t happy with the Washington Post, which has steadfastly opposed his presidential campaign on its editorial pages and now has assigned a reporter team to write a book about him. And he has repeatedly responded in Trump fashion: by threatening the business interests of the newspaper and its owner Jeff Bezos.

    Trump cited the Post by name in his February comments about how he wants to “open up” libel law so that “when the Washington Post… writes a hit piece, we can sue them and win money instead of having no chance of winning because they’re totally protected.” And he said then of Amazon, of which Bezos is CEO, “If I become president, oh do they have problems. They’re going to have such problems.”

    He has claimed for months that Bezos was using the newspaper as either itself a tax dodge or as a tool of influence to prevent Amazon from having to pay “fair taxes,” a theory hard to square with the institutional arrangements involved (Bezos owns the Post separately from his Amazon stake; the Post editors credibly deny that Bezos has interfered, and as it happens Amazon itself supports the idea of an internet sales tax.)

    More recently Trump has opened up a second front, arguing last week on the Sean Hannity show that Bezos employs the paper “as a political instrument to try and stop antitrust,” and implying that he, Trump, would hit Amazon with antitrust charges.

    As you might expect, many critics are crying foul. “He’s basically giving us a preview of how he will abuse his power as president. … He is clearly trying to intimidate Bezos and in turn The Washington Post from running negative stories about him,” writes Boston Globe columnist Michael A. Cohen.

    “Mr. Trump knows U.S. political culture well enough to know that gleefully, uninhibitedly threatening to use government’s law-enforcement powers to attack news reporters and political opponents just isn’t done. Maybe he thinks he can get away with it,” writes Wall Street Journal columnist Holman Jenkins.

    But as I wrote four years ago, if you think blatant use of the machinery of government to punish newspaper owners or interfere in papers’ management somehow happens only in other countries, think again:

    [Since-convicted Illinois Gov. Rod] Blagojevich, Harris and others are also alleged [in the federal indictment] to have withheld state assistance to the Tribune Company in connection with the sale of Wrigley Field. The statement says this was done to induce the firing of Chicago Tribune editorial board members who were critical of Blagojevich.

    And in 1987, at the secret behest of the late Sen. Edward Kennedy (D-MA), Sen. Ernest Hollings (D-SC) inserted a legislative rider aimed at preventing Rupert Murdoch from simultaneously owning broadcast and newspaper properties in Boston and New York. The idea was to force him to sell the Boston Herald, the most persistent editorial voice criticizing Kennedy in his home state.

    More recently, when the Tribune Company encountered financial difficulties and explored the sale of several large papers, city councils in more than one city passed resolutions opposing the sale to politically “bad” prospective owners; powerful Congressional figure Henry Waxman (D-CA) could not resist the urge to meddle as well in management issues affecting his hometown paper, the L.A. Times.

    This all goes back much farther, of course. Historian David Beito, writing about the FDR-Truman era, cites a long series of federal investigations of and retaliations against the distributors of pro-liberty books and pamphlets, including the proposal of Indiana Democratic Senator and New Dealer Sherman Minton (D-Ind.) to make it “a crime to publish anything as a fact anything known to be false,” a downright Trumpian idea that Minton let drop after an outcry.

    It is thoroughly appalling – but, alas, it is not new.

    Source: Trump Isn’t the First Politician to Threaten Newspapers | Foundation for Economic Education


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  • Trump’s Economic Plan: Higher Taxes, Higher Inflation, and Higher Minimum Wage

    Posted on by Azrael Comment

    That didn’t take long.

    It was only days after Donald Trump clinched the Republican nomination that the mask (such as it was) came off. Suddenly he was telling multiple interviewers that he could be talked into raising taxes, boosting the minimum wage, and printing enough money to pay the national debt in cheap dollars.

    “On my plan [taxes are] going down. But by the time it’s negotiated, they’ll go up,” Trump said. “In my opinion, the taxes for the rich will go up somewhat.” (After the outcry, he claimed he meant up from his proposed cuts.)

    As for the minimum wage, he talks like Obama, completely uninterested in market forces, as if what people are paid is purely at the discretion of political managers: “I think people have to get more… I don’t know how you live on $7.25 an hour.”

    Oh, but he says he would leave it to the states to decide the height of the wage floor, which raises the question of why he is talking about it at all, since that can presumably happen now. The Department of Labor he would head as president possesses plenty of power to strongly nudge states however it wants. If Trump favors a higher wage floor, he is going to get it.

    And, incidentally, such a higher floor could be an crucial part of an anti-immigration policy as well. If low-wage jobs become illegal, immigrants have no reason to cross the border at all. The eugenicists who passed the 1920s immigration laws understood this well.

    As for the national debt, he says it can’t be paid, we can’t default, and so there is only one way forward: “print the money.”

    Wow, what gives? Somehow this torrent of policy ideas has shocked even Vox to notice “the left-wing economics movement that Trump is adopting.”

    Trump’s Consistency

    Being generally opposed to tax increases and holding the line on job-killing minimum wage increases are two of the things that Republicans at least pretend to be good at. In any case, no Republican presidential candidate in my lifetime has said he would increase taxes, so this is a departure. And certainly none has actually toyed with the idea of inflating away the debt, at least not publicly.

    It’s a departure given his party, but no one should be startled at his willingness to grow government. If you think about the core of his program, it has always been about that. He wants to prevent American businesses from hiring people from abroad. He wants to take private property on the border and nationalize it by building a wall. He has praised Japanese internment, called for shutting down parts of the Internet, pushed for mass surveillance, and advocated vast new infringements on the right of Americans to buy products from abroad.

    That’s just for starters. From the very beginning of his campaign this past summer, he has worked to build up a case for bigger and more intrusive government. He began with rhetorical assaults on immigrants and international trade, while extolling his managerial prowess as a much-needed CEO for the whole country.

    Usually presidents run on a platform of reforming government, cutting government, improving government, controlling government, etc.. After all, government — not the whole country — is their bailiwick.

    But not Trump. He posits himself as the head of the whole country, running America the same ways he runs his businesses. He would stamp his name brand on the nation, as he does with everything else he owns, thereby imparting it with his own purported greatness. Probably the last president who was so open about his belief that he runs the nation was FDR himself.

    That Trump casually mentioned the possibility of raising taxes on the “rich” (we know how that goes), or inflate away the debt, should have caused no shock or alarm. It follows from his own philosophy of government, which is not that we live under a rule of law, but rather than we should be living under the rule of one man.

    Blinded by Anti-Leftism

    Why would anyone believe that Trump is anything but a state builder? Much of it has to do with the strange way in which people infuse candidates with their own ideological longings, hoping against hope that Trump shares their values.

    Trump has fashioned himself as anti-establishment, a classic populist. You might think that has something to do with being anti-government, but you would be terribly wrong. For him, “anti-establishment” has always simply meant that the wrong people are in charge.

    He has been disdainful of political correctness,  made the right noises on guns and global warming, and so on. He opposes the left, which the naive observer might misinterpret as opposing government overreach.

    Surely we should know better. The twentieth century, during which time fascism wreaked havoc on liberty, and did so in the name of opposing the communist threat, was not that long ago. In any case, illustrious minds like F.A. Hayek and Ludwig von Mises bore witness to this and tried to tell the world about the dangers of rightest authoritarians.

    They both published books in 1944 (Road to Serfdom and Omnipotent Government, respectively) that pointed out that despotism comes in many flavors. It can be left and it can be right. Opposing one and favoring the other is not the same as backing liberty.

    The right and left legs of statism dance in a devil’s ballet. One gains control and fosters resentment and reaction. The other takes over and wages war on its political enemies. The population is divided. It becomes a struggle over power, but each has an interest in gaining more. It’s better to think of right and left as factions of the same party. They can be right about some things some of the time but neither pushes simple freedom as an answer to social and economic problems.

    No One Wins the Culture War

    For generations, the Republican Party has tolerated within its ranks a liberty-leaning minority. There have been many iterations: the supply siders, the “leave-me-alone” coalition, the Tea Party, and so on. Their interests have generally aligned with the merchant class and rank-and-file bourgeoisie that is fed up with regulation, taxes, and wars.

    With the traditional Republican coalition now shattered, Americans are newly acquainting themselves with a different and more consistent authoritarianism that has a right-wing flavor. I’ve argued elsewhere that this is accurately called fascism. It might seem like a movement organized to stop the march of the left, but it uses the same means to achieve ends that are only slightly different in cultural tone and appeal.

    You can read a thousand definitions on what this is, but I favor Ludwig von Mises’s own analysis. He says that at minimum fascism is nativist on trade and migration and extols the leadership principle over national life. It is a form of socialism: it necessarily intervenes in the market. But its socialism dispenses with the parts that the middle class finds so annoying about the left. You can nominally keep your property, although in reality you merely administer it for the state. Family and religion can remain intact. What is required is that you direct your primary loyalties to the central state.

    In Mussolini’s immortal words: “All within the state, nothing outside the state, nothing against the state.”

    Trump has said something similar: “The nation-state remains the true foundation for happiness and harmony.”

    Beyond the Red Scare

    Whenever I post about Trump, I get angry commentators demanding to know why I’m not railing against Clinton and Sanders. Every amount of rhetoric against Trump, they say, only helps the left and its agenda. But it is precisely this approach (“the enemy of my enemy is my friend”) that has empowered regimes that are among the most murderous in history.

    True liberals should never be enticed by their seeming promise. In order to see and understand the danger, we have to look beyond the red scare and realize that politics is more complicated than merely opposing the worst evil. Those “lesser evils” who lower our guard by exploiting our fears of “greater evils” are often the greatest evil of all.

    Source: Trump’s Economic Plan: Higher Taxes, Higher Inflation, and Higher Minimum Wage | Foundation for Economic Education


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