Technology Investments
U.S. Senator Bernie Sanders (I–VT) claims it is “unacceptable” for Jeff Bezos to spend $630 million on luxuries while “planning to throw 600,000 Amazon workers out on the streets and replace them with robots.”
IN FACT, buying luxuries employs workers, Amazon isn’t planning mass firings, and technology investments create better living standards for all types of workers. Here are the specifics:
- Per the textbook Principles of Economics, a 1990 federal “luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars” was repealed in 1993 because it hurt the workers who made these items, and the burden of the tax fell “more on the middle class than on the rich.”
- Sanders claim about Amazon putting 600,000 “workers out on the streets” is a distortion of a New York Times article that reports Amazon is planning to use automation to “flatten Amazon’s hiring curve over the next 10 years,” not fire current workers.
- Per the Times article, “Executives told Amazon’s board last year that they hoped robotic automation would allow the company to continue to avoid adding to its U.S. work force in the coming years, even though they expect to sell twice as many products by 2033. That would translate to more than 600,000 people whom Amazon didn’t need to hire.”
- As explained by a wide array of economists with diverse political views, including liberals like Paul Krugman and Janet Yellen, “The most important factor determining living standards is productivity growth.”
- The overall productivity of each nation impacts the compensation of low-income workers, and this is part of the reason why McDonald’s workers in the U.S. have 6 times more real purchasing power than McDonald’s workers in Latin America, even though these workers perform the same jobs with the same technology.
- Contrary to the assertions of certain politicians, journalists, and scholars, average U.S. labor productivity and hourly worker compensation have generally risen at about the same pace for the past 70 years.
- Per economists like those on the staff of the U.S. Senate Joint Economic Committee, “Productivity growth is driven by three factors: investment in equipment, buildings, or other productive resources; increasing worker skills; and innovation.”
- The Times article notes that Amazon is employing all three of those factors, including expanding its current “million robots at work around the globe” and training “both hourly workers and managers” to utilize and maintain them.
- Encapsulating the facts above and the fatal flaw in Sanders’ logic, a paper in the Oxford Review of Economic Policy by Harvard economics professor Jeffrey D. Sachs explains that “Marx’s most deadly legacy” was the false belief that “gaps in income between rich and poor are caused by exploitation rather than differences in productivity.”
