Bernie vs. Bezos

By Dave Smith, Contributor, US Daily  Review.

“If you want more of something, subsidize it; if you want less of something, tax it.” – Ronald  Reagan

Jeff Bezos is at least $50 billion richer than anyone else in the world, and, at a net worth of over $150 billion, is the richest person in modern history. The Amazon founder owns 16% of the company he founded, which recently became only the second company in history to reach a market cap of $1 trillion (Apple was the first). He has celebrated his super-wealthy status by purchasing the Washington Post for $250 million, and recently by announcing a $2 billion donation towards helping improve the plight of the homeless and providing non-profit schools in impoverished  areas.

Along the way, Bezos has made some powerful enemies, proving that money does not necessarily buy friends in high  places.

Donald Trump, himself a billionaire, is one such Bezos anti-fan. The President has railed against both Amazon and the Post, accusing Bezos of using the newspaper to “keep[] taxes down” for Amazon in an effort to use a “big tax shelter” and “screw [the] public”. He’s accused the Post of being “fake news”, and Amazon of “not paying internet taxes”, despite the fact that Amazon is now collecting sales taxes in states that have them, and actual internet taxes are permanently banned by federal law under the Internet Tax Freedom  Act.

While President Trump’s actions against Amazon and its founder have largely been relegated to Twitter and appearances on Sean Hannity’s Fox News TV show, another Bezos enemy has been busy writing legislation so directly targeted against Bezos that it literally mentions him by name (albeit via an acronym): Senator Bernie Sanders has filed the Stop Bad Employers by Zeroing Out Subsidies Act – aka, the Stop BEZOS Act. Following a previous petition posted by Sanders urging Bezos to pay a “living wage” to all of his Amazon employees, the Senator has now taken it a step further, eschewing the voluntary nature of petitioning in favor of the coercive force of the  government.

Dave Smith Said That

Citing a University of California at Berkeley study that claims that “low wages cost US taxpayers $152.8 billion each year in public support for working families”, Sanders targets “large employers” (greater than 500 employees) for a “corporate welfare tax” that is “equal to the amount of federal benefits received by their low-wage workers.” The legislation makes no distinction between full-time, part-time, contract, and franchise workers, and makes it illegal for an employer to ask if an employee if they are eligible for federal benefits such as food stamps, Medicaid, school lunch program, or housing assistance. The legislation is based on the assumption that such programs “subsidize” corporations, thus meaning that they can pay lower wages to  workers.

In purporting to help low-income workers, however, Sen. Sanders fundamentally misunderstands the real world labor market. In a competitive marketplace, “workers’ pay and benefits tend to match the value of the work they’re doing”, as the Cato Institute points out. Workers paid less than the value of their output will likely move to another employer that pays more commensurately, while companies that overpay compared to productivity will falter against  competitors.

Perversely, the Stop BEZOS Act could actually hurt those it purports to assist: by making the hiring of part-time workers and low-wage workers more expensive, it creates a disincentive to hiring such workers at all. Even worse, it could lead to what the Mercatus Center calls “statistical discrimination” – since they couldn’t lawfully ask if an employee or potential hire is eligible for government assistance (or likely to be in the future, e.g., by having children), employers would start profiling; this would mean that some people who aren’t eligible for federal welfare benefits might fit the profile, making them less employable. People with disabilities and single mothers could be especially  hard-hit.

The Sanders legislation is the opposite of helping low-income workers: it disincentivizes companies from hiring low-skilled workers and helping them end a cycle of dependence on government assistance. It disincentivizes employee flexibility for part-time work. It incentivizes profiling and automation and creates an incentive for companies to reduce the labor force to fewer than 500 workers (or to shirk hiring growth to remain under that magic arbitrary  number).

Perhaps some enterprising, free market legislator can address the real problem and file a SANDERS Act: Stop Adding New Disincentives & Eliminate Ridiculous Socialists. In the meantime, in the battle of Bernie vs. Bezos, the smart money is on the  billionaire.

Born in the same county as Davy Crockett in East Tennessee, Dave found his way to Texas where he works in the petrochemical industry. He’s written and spoken about politics on various media outlets including Fox, ABC, and Townhall. He is a graduate of Tennessee Tech with a degree in chemical engineering. Follow Dave on Twitter:  @semperlibertas.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.