In Amazon, Jeff Bezos has created a company that has adapted to the information society and delivers the product very quickly from the time you order to the time the mailman drops it off at your front door. The company was an ode to free market capitalism, until recently.
Amazon has sold their free market soul to go into business with the federal government. To do so, they have hired an army of lobbyist to secure government contracts. Amazon is now a crony capitalist’s dream company and Jeff Bezos has gone from poster child for entrepreneurs to the head of a company that has become adept at securing massive corporate welfare contracts from the feds.
The definition of crony capitalism as defined by the Cambridge English dictionary as an economic system where “friends of government” are provided “unfair advantages.” According to Wikipedia it is an economy where business does not “thrive as a result of risks they take, but rather as a return on money amassed through a nexus between a business class and the political class.” The online Business Dictionary defines it as a “nominally free-market” economy that allows “preferential regulation and other favorable government intervention based on personal relationships.” Today, one could just put a picture of the Amazon logo aside of any definition of the term crony capitalism.
Amazon started small in 1994. According to Time who declared Jeff Bezos the 1999 “Man of the Year,” the company started “in a modest two-bedroom home” with a converted “garage into a work space.” The company used wooden doors as desks and they used a local Barns & Noble to interview for new staff. “By June 1995 a rudimentary website had been created on a hidden site (www.amazon.com:99, now defunct), and 300 friends and family members were sworn to secrecy and invited to crash-test it.” Then “on July 16, 1995, Amazon.com opened its site to the world” and “during the first 30 days, without any press, Amazon sold books in all 50 states and 45 other countries.” From there the company took off to where it is now expanding from books to everything under the Sun. As of 1999, Bezos was worth $10.5 billion, yet that looks like chicken feed compared to what he is worth today – over $100 billion.
Now Amazon is massive and Bezos is the wealthiest man on the planet. The Wall Street Journal reported on June 20, 2018 in a story titled “How Amazon Became One of Washington’s Most Powerful Players,” that “the company has built a huge presence in the nation’s capital with an army of lobbyists and a growing list of government contracts.” The WSJ reports that “revenues last year topped $177 billion, has become deeply entwined with the federal government. Mr. Bezos has built one of the largest lobbying operations in Washington, bigger than those of powerhouses such as Exxon Mobil Corp. and Walmart Inc. Its cloud-computing business is a major government contractor, with an estimated $1.5 billion in contracts last year, according to consulting firm GBH Insights. And the company has been pushing hard to change the law to allow government employees to buy more of their own supplies on Amazon.com.” And there it is – quintessential crony capitalism on display.
Amazon has locked down cloud computing contracts with the CIA in the past and now they are on the verge of a massive $10 billion over ten years no bid contract with the Department of Defense that, if given to only Amazon Web Services, is likely to last much longer than ten years. Amazon will become so entwined with the protection of classified information for the federal government, it will become a quasi-government entity that will be more powerful than most nations. That prospect is scary.
Amazon provides many services that I use today, yet I am terrified of a company becoming more powerful than the U.S. government and a CEO of a company having more de facto political power than the President of the United States. Bezos has already bought up the Washington Post and Bezos has annually liquidated $1 billion of his Amazon stock a year to invest in his space travel company Blue Origin. It will not be too long before Blue Origin becomes the primary contractor with NASA for space travel thanks to Bezos’ influence in government.
Amazon, and Jeff Bezos, went from a garage based start up to a company that will end up being the largest corporation in the history of man. To do so, Amazon has sold their soul to Uncle Sam so they can grow off the taxpayer’s dime with the help of a growing group of lobbyists resembling a small platoon of mercenaries. Amazon’s brand of crony capitalism that eliminates risk but amasses profits is something that taxpayers should watch, because they will end up paying the tab for losses, yet not profit from the gains they insure for Amazon and the growing Bezos empire.