A case study on Amazon’s CEO, Jeff Bezos – The Legal Criminal
Introduction
Throughout history, politicians and the media have propagated the stereotype of the ‘common criminal’, despite being the two least trusted sources of information (Frewer, 1996). The public are constantly being fed information, frequently exaggerated, about the crimes of working class individuals. Critical criminologists aim to challenge the traditional or perhaps old fashioned understanding of crime that focuses on the conventional image and views working class criminals as a “special category of people” (Hulsman, 1986). In contrast, crimes committed by the powerful (known as white-collar crime) are merely labelled as a ‘mistake’ or in some cases never reported.
Sutherland (1949) defines a white-collar crime as “crime committed by a person of respectability and high social status in the course of his occupation”. White collar crimes are arguably the most severe crimes as they affect the most victims, yet Michel (2016)’s research suggests that the media has successfully distracted us from the severity of these crimes. Their research compared the seriousness of violent street crime and physically harmful white collar crimes and found the violent street crime more serious and were more punitive of the street criminals. It is not uncommon for powerful figures to abuse their authority – what is surprising is that they continuously get away with it.
There are many theories and explanations for why respectable professionals commit white collar crimes. This case study aims to investigate the CEO of Amazon, Jeff Bezos, and the way in which he runs his $1 trillion-dollar business (Streitfield, 2018). Focusing on the way he treats his employees and tax evasion. When exploring crimes of the powerful its seems appropriate to focus on one of ‘The World’s Most Powerful Executives’ and number 5 on ‘The World’s Most Powerful People’ according to Forbes Magazine (Bosilkovski, 2018).
Why is Bezos so powerful?
There is no denying Bezos business acumen is exceptional. What is now the world’s largest online retailer once started out of Bezos garage. Twenty-four years later he has 541,900 employees (Fiegerman, 2018) and in 2017 had an annual revenue of $177.9 billion dollars, an increase of 31% from 2016 (Stanley, 2018). Bezos is 50 times richer than last year and 100 times richer than Donald Trump, but why does money equal power? Forbes magazine identifies 7 types of power; titular, coercive, reward, referent, connection, informational and expert power. During Bezos career, he has demonstrated all 7 types of power (Murphy, M, 2018).
Titular power is the power that comes from a title, in Bezos’s case he is the CEO of Amazon, one of the largest companies in the world. Coercive and reward power is using punishments and rewards to hold power over people. James Bloodworth, author of Hired: six months undercover in low-wage Britain, went undercover to discover the reality of what work Is like for working class men and women at Amazon. Much of this case study will refer to James Bloodworth’s book due to its relevance. Bloodworth reports that when starting your shift at Amazon, you are aggressively ‘briefed’ and perhaps pointed on all the mistakes you had made on your previous shift. A worker receives a point for any mistakes or unprofessionalism, if an employee is pointed six times they will be fired. Six opportunity’s may seem fair to some, but in truth employees are pointed for unwarranted reasons such as; the Amazon bus being late, having children in hospital and being sent home from work due to a car crash. The book continues to address the unjust management of Amazon and exposes that workers have timed toilet breaks. Some employees must walk 15 minutes to the closest toilet and are then questioned on the length of their break. Workers were constantly told to increase their productivity and to stop time wasting, resulting in some employees urinating in bottles to avoid the consequences. I believe this should be recognised as a corporate crime as it should be a worker’s right to have accessible toilets in the work place. A corporate crime is an offense against an employee, investors, consumers, the state and competitors (Braithwaite,1984). This is a perfect example of Amazon using coercive power over their employees. A simple solution that would benefit both the employees and Bezos is installing closer toilets. Although the workers act is unclear on toilet breaks, the majority of companies understand the necessity of breaks. In counter balance, other companies are not the most successful company in the world. Bezos could argue that the secret to a successful company is to create a hierarchy with strict rules and no exceptions.
Bezos acquired his empire through charisma and charm, this is known as referent power – arguably the most important power of them all. The ability to influence another person is an essential skill in business that Bezos exceeds in. Even when exposed Bezos is still able to gain respect of powerful professional individuals, Bezos has a wide range of connections with influential people all over the world such as Jack Ma, the richest man in china and a wide social media following including many celebrities and company CEO’s.
It was clear from a young age that Bezos exceeded academic expectation, even graduating summa cum laude with an electrical engineer’s degree from Princeton. He used his expertise to create his online empire, after all knowledge equals power – this Is known as expert power. Yet, the greatest power Bezos demonstrates in his career is Informational power. By using algorithms and sophisticated technology Amazon can predict what the customer wants next before the customer even knows, keeping Amazon forever relevant. Amazon has contributed to the way modern society functions, creating echo and echo dot, the voice operated technology that assist households with everyday living. It is predicted that in 2019 more than half of American households will have a smart speaker with an increase throughout the years (Morris,2018). Bezos has the perfect combination of all seven types of power, yet it Is no crime to be powerful. This case study will continue to discuss in depth how Bezos has abused his authority and power and exploited the legal system.
Tax evasion
Bezos was invited to Berlin to receive an ‘innovation award’ however many workers disagreed with this decision. Workers from Italy and Poland travelled to Berlin but not to support their CEO but to protest him (Nicola and Delfs, 2018). Hundreds of workers demonstrated against Bezos holding signs that read ‘Make Bezos Pay’ referring to Amazons tax evasion. Jeff Bezos has exploited loop holes in the system, for example Amazons headquarters are in Luxenberg although their largest factories are in America and the company started in America. This legally allows Amazon to pay an insufficient amount of tax to the US government. In my eyes and many others, even Donald Trump’s, Bezos Is breaking the law. Amazon payed virtually no federal tax last year and was critiqued by Trump, yet Trump’s capitalist society has endorsed Amazons tax evasion as he has reduced the corporate tax rate (Pagano and Kovach, 2018).
Bezos has cut taxes corners world-wide, Amazon UK services limited currently has 13 warehouse all over the Uniting Kingdom, employing 27,500 UK workers (Jahshan,2018). In correlation with the American amazon, the UK amazon pre-tax profits rose from £24m to £72m yet the tax bill reduced from £7.2m to £4.6m and further reducing to £1.7m. This Is due to paying employees in shares rather than a taxable wage. This enables Amazon to not pay corporate tax (Warral,2018). This keeps Bezos happy as well as the employees as their shares in Amazon are expected to grow. Another technically legal law Bezos takes advantage of is all sales to Amazon UK is via the overseas company in Luxenberg, thus amazon does not have to publish their tax accounts. Amazon have declared they have paid tax at a 25.5% rate yet we do not know if and where this money was payed. This could suggest £50m of UK state money needs to be accounted for (Murphy, R, 2018).
Social harm, Zemiology and Amazon
Zemiology is the study of social harm such as; harm to the individual, harm to the individual’s social networks and harm to the individual’s community and society. To many, Jeff Bezos is guilty of the latter. Although Amazon is not breaking any laws; my argument is the law needs to change. The government should not tolerate multibillion pound companies abusing the system. Consequently, contributing to the income divide, making the rich richer and the poor poorer (Stohlgren,2003), thus resulting in social harm.
Competitors cannot afford to compete with Amazons low prices, particularly high street shops. One reason being, they pay for prime location whereas Amazon warehouses are in remote locations with significantly cheaper rent. This means Amazon can charge less for their products compared to their competitors. For society to thrive and grow, barriers need to put in place for companies to not take from the state and give virtually nothing back.
Amazon prime has changed the way we shop, one advantage highstreets shops had over online retailers was that shopping was not instant on the internet. However, amazon prime now offers same day delivery. This results in social damage, as Amazon is gaining more and more customers thus high street companies are losing customers. This decreases the amount of tax the high-street companies pay while Bezos is accumulating more money than he knows what to do with – yet he still won’t pay taxes. Without tax payer’s money society would crumble or perhaps some would argue that it is already crumbling. Amazon holds the potential to cause a great deal of social harm therefore I believe Amazon’s tax evasion should be recognised as a corporate crime as it is a crime against the state and a crime against competitors.
Outlining Zemiology and social harm literature
Pioneer, Edwin Sutherland, was the first sociologists to propose a definition of crime that aimed to eliminate class bias (Sutherland, 1983). Sutherland suggest that although white collar crimes cause social harm they are not dealt with in the fair, legal way. He offers and expanded classification of crime that focus on the impact of social harm, thus initiated Zemiology.
Criminologists, Herman and Julia Schwendinger (1970), suggest that crime should be completely redefined. There are many loopholes within the law due to the law being based on rules. If one hasn’t broken a rule one hasn’t broken the law. They argue that the law should consider human rights and moral reasoning. Jeff Bezos has not broken the ‘rules’ but tax evasion could affect citizen’s human’s rights. As amazon is the third richest company in the world (Carr,2018) the amount of taxes they should pay would be a substantial amount of money in the UK alone. This money would have contributed towards health care and educations which are human rights in the UK (Equalityhumanrights.com, 2018). Herman and Julia Schwendinger aim to bring together social justice and criminal justice.
There are many explanations as to why powerful individuals commit white collar crimes and perhaps the most simple but accurate answer is because they can. The law is failing to recognise corporate crimes that could seriously benefit the state, instead they focus on blue collar crimes committed by the working class.