Jeff Bezos, Amazon and Why ‘Charity’ Is the Wrong Solution

In January, Jeff Bezos announced that he would donate $33 million to help 1000 people go to college. This week, shortly after Amazon posted a $2 billion quarterly profit to end 2017, his company announced hundreds of layoffs at its headquarters. Meanwhile the 20 finalist cities for Amazon HQ2 are working feverishly to put together the most lavish package of taxpayer-funded subsidies.

It’s great that Mr. Bezos wants to help 1,000 Dreamers – immigrants who were brought to the United States illegally as children – to attend college. But just imagine how many people he could help if Amazon paid taxes, wasn’t focused obsessively on replacing workers with automation, didn’t employ hundreds of thousands of temps who are paid low wages and receive no benefits, and declined to engage in reality TV-style “contests” to find out which state and local governments will succumb to desperation and give his very, very profitable company billions of dollars that might otherwise be spent on things like…education, for one.

Charity is good. A system in which handouts from the wealthy weren’t necessary in order for people to access basics like education and healthcare would be vastly better.

Andrew Carnegie, the Scots-American 19th Century steel baron, is almost as famous for his philanthropy as for his tremendous wealth. Toward the end of his working life he wrote The Gospel of Wealth (published in1889), calling upon the rich to commit themselves to charity and good works. To set an example he gave away over $350 million (nearly $9 billion in 2017 dollars), establishing his famous Carnegie Libraries and other educational and cultural institutions.

Inarguably Carnegie’s philanthropy was on a grand scale and his causes worthy ones. At the same time, his wealth was built in no small part on the low pay and shabby treatment of his workforce for decades. And he hired strikebreakers to kill his employees who dared to unionize (the infamous Homestead Strike of 1892 was at the main Carnegie Steel plant and resulted in the workforce being replaced with non-union immigrants). He used every legal subterfuge available, as was common during the Robber Baron era, from price-fixing and collusion to bribery and brute force to build his business empire.

Carnegie’s charity and philanthropy were nice. But it might have been better for the country and society if he had devoted more of his immense fortune to human capital and less on parting gifts toward the end of his life. The greatest beneficiary from his philanthropy over time has been his own name and reputation.

The same problems arise when Amazon’s Jeff Bezos announces a donation of $33 million to fund the education of 1,000 Dreamers affected by the recent anti-immigrant vitriol flowing from the White House and GOP leadership in Congress.

It’s a nice gesture, and certainly it makes Jeff Bezos look very good. It might be better, though, if instead of giving charity to a small group of would-be college students Amazon paid taxes and wasn’t ruthlessly aggressive in skirting labor laws, hiring over 100,000 temps with no benefits and lower wages to undercut his own employees.

The company also relies heavily on classifying workers as “independent contractors” – delivery drivers in particular. What the company website sells as the opportunity to “Be your own boss!” is shorthand for “Welcome to the gig economy” and vastly reduced payroll taxes for Amazon. It’s hard to get too excited about 1000 scholarships when many of Amazon’s employees are on food stamps. Maybe fix that first, Jeff.

Imagine if people like Bezos and companies like Amazon paid in practice anywhere close to the tax rates that apply to people of such great wealth in theory. Imagine if a company of such staggering wealth – $43 billion in revenue in a single quarter of 2017 – paid its employees enough to send their own kids to college. If that happened, college applicants might not need to pray for the good will of benevolent billionaires to afford an education.

Indeed, the American public would be better served if all the Bezoses kept their charity and instead committed to paying their share as they traveled down the road to great success and wealth. Replace philanthropy with robust, equitable funding of institutions like schools and libraries and the result is a public better served without resorting to prostrating ourselves to wealthy benefactors and their agendas. Companies with large workforces could do far more good by treating their own employees better (or at least as employees, not “contractors”) than by plastering their names on charity donations.

Americans, and certainly the media, reflexively laud charitable acts. Giving away money is uncritically lavished with praise. It’s nice to see people giving back to a system that has rewarded them so grandly, but even gentle questioning causes the feel-good bubble to burst.

What are the consequences of a person worth $105,000,000,000 amassing that kind of wealth?

Is a person donating 0.03% of his net worth an act deserving of the amount of press and praise it receives? The equivalent is a person worth $1 million donating $300.

Why not make the charity anonymous, unless the act is motivated partly by a desire for good PR?

Wouldn’t more be done to improve education in the U.S. if instead of funding 1000 scholarships Amazon stopped taking billions in tax breaks from local and state governments starved for public education funding?

Wouldn’t vastly more people be helped if instead of funding 1000 scholarships Bezos traded a small part of his net worth – one or two billion of his $105 billion in wealth – to offer health insurance and education benefits to tens of thousands of temps Amazon uses? Or 10-20% raises for all his warehouse employees earning about $12 per hour?

The problem is not charity. The problem is that charity from the rich is often used to address problems caused directly by the system that enables them to become so fabulously rich – namely the underfunding and under-provision of public services. How many rich men and women have put their name on a hospital wing (or entire hospital) using money they earned leading a company that didn’t provide health insurance for all or part of its workforce? How many scholarship funds are named for rich individuals who didn’t pay most of their employees enough to send their own kids to college and didn’t pay taxes that could have made public education better and cheaper in their state?

I focus on Bezos and Amazon here simply because the scholarship donation is recent; in reality there is nothing exceptional about him, and that’s the problem. The story is the story of the American labor force since 1980 in a nutshell – the replacement of full time employment with temping, the disappearance of benefits, stagnant or falling wages, and an astonishing accumulation of wealth by the few people at the apex of the pyramid. The wealthy use charity to burnish their images (and reduce their tax burden handsomely, by the way) and the public is supposed to be so dazzled with gratitude that obvious flaws in this cycle are ignored.

Charitable acts have value, but under the slightest scrutiny the magnanimity of the super-rich often proves to be a Band-Aid – and a self-aggrandizing one at that – over social consequences of the process that allows such unprecedented accumulation of wealth. Decades of skirting social responsibility to maximize profit can’t be undone with a few magnanimous gestures.