The publishing world is abuzz with news and opinions on President Obama’s trip to Amazon’s facilities in Tennessee last week. The President spoke on economic recovery, highlighting Amazon as a shining example of progress. He presented a new governmental plan that would lower taxes for large corporations like Amazon, which he thinks would spur job growth and result in the generation of more tax revenue. Read more about the particulars of the economics involved at the New York Times.
This speech comes at a particularly interesting time for Amazon. Recently, they have cut prices drastically on hardcover books, as low as $11.65 for best-selling author Dan Brown. His hardcover books could command a price three times that sum just a few years ago. Publishers believe this price cutting devalues their products, and fixes the market unfairly against independent sellers. Salon.com quotes Strand Bookstore employee Carson Moss as saying: “Our discount cannot compare to what Amazon was setting their prices at, even before they started selling their books at 60 percent off… There’s frustration that a company that hasn’t turned a profit continues to be rewarded with higher stock prices and they can make seismic shifts in this industry.”
Amazon has been gaining many advantages from the government that the average business does not have. Recently the state of Texas forgave the company $269 million in back taxes in an agreement to create new centers and jobs. Amazon will be hosting CIA data in their cloud storage system for the ripe sum of $600 million. Last but not least- The Governor of Tennessee, Bill Haslam, made a deal with Amazon in 2012 that EXEMPTS them from corporate sales tax until 2014 in return for creating 3,500 jobs. This means, naturally, other stores are forced to charge more for products due to the taxes they have to pay.
The American Book Sellers Association criticized the President in an open letter:
“As you’ve noted so often, small businesses are the engines of the economy. When a small business fails and closes its doors, this has a ripple effect at both a local and a national level. Jobs are lost, workers lose healthcare and seek unemployment insurance, and purchasing decreases. And while Amazon may now be boasting about the creation of jobs, any gains are elusive, and not a long-term solution. The simple fact is that Amazon’s practices are detrimental to the nation’s economy.”
Not all response has been negative. Some argue that Amazon’s practices are natural and that the ability to lower prices is what makes American capitalism competitive. To them, the pursuit of unending profit is not villainous, despite the uneven playing field on which the game is played. Regardless of what you think is fair or unfair, the relationship between Amazon and the government is unique and strong. The government is condoning their practices with the hope that jobs will be created, but there seems to be a blind eye towards the jobs and independent businesses that have been destroyed by Amazon and other online retailers. I’d be willing to bet if they had their back taxes forgiven and no corporate tax collection for roughly two years they’d still be around too. As Ann Prachett says in the Wall Street Journal, “I wish President Obama would have visited Parnassus Books on his way to the Amazon warehouse.”