The Politics of Big Tech and Regional Inequality

On Alec MacGillis’ book Fulfillment and the need for inclusive nationalism

ProPublica journalist and fellow Baltimore resident, Alec MacGillis, has written a superb book on the nature of regional inequality exemplified by the rise of Amazon and experienced by a host of Americans facing economic and social dislocation in its wake. The unique structure and writing style of Fulfillment turns the book into an intriguing blend of personal drama, social history, economics, and political geography—like Thorstein Veblen, John Kenneth Galbraith, and The Wire mashed up into a great Frontline series.

As a first-rate journalist, MacGillis dives into all the shady and non-transparent local deals used to woo Amazon’s data and packaging services, and later examines various municipal and national efforts to rein in the tech giant. But he also gets at the complicated politics of public views and reactions to the rise of Amazon in a sophisticated manner. 

In a time of massive distrust of major institutions in society—the government, the media, other corporations, political parties—Amazon represents basic competence and good service to many Americans. Hop online and you can find just about anything you need at Amazon—easily ordered, and returned. Why go to some overpriced, stuffy mall to buy stuff when you can stream your favorite show on Prime and wait for the next-day delivery to show up at your doorstep? You can’t get many other companies to even return a call or offer you a refund. You can’t sign up for health care on the government exchange that easily, and poor people and the unemployed certainly can’t access services they need in such a smooth manner. It’s not hard to see why Amazon, despite being a colossus, is viewed favorably by more than 9 in 10 Americans. The company provides material goods and services in a manner that many Americans have come to like and expect.

But what happens to a country and its social fabric when this model of commerce takes over everything, eliminating local manufacturing, regional supply chains, small business retail, and the solid middle-class jobs they create? 

According to MacGillis, you get “winner take all” cities like Seattle, San Francisco, and Washington, D.C. with fat salaries and cultural amenities for the well-heeled, and “left-behind” places like Nelsonville, Baltimore, and St. Louis with diminishing tax bases, crappy jobs, chronic poverty, and no real economic mobility.

In the winner cities, you also get a huge set of new problems from “hyper prosperity” including the elimination of the middle class, crazy housing prices, and glaring displays of wealth coupled with lots of homelessness, crime, and drug problems. In the left-behind cities you also get the elimination of the middle class and the crime and drug problems, but the housing is cheaper if you’re lucky enough to have a good paying job in the first place.

Efforts to confront this inequality head-on have produced comically ridiculous efforts with no teeth. In 2018, the socialist-leaning city council of Seattle tried to slap a modest head tax on its biggest corporate citizen to fund affordable housing, only to tuck its tail and repeal the effort after Amazon threatened to end construction of new projects and launched a successful counterattack on the futility of Seattle’s anti-homelessness campaigns to date. 

Early Amazon investor turned progressive activist, Nick Hanauer, describes to MacGillis the politics of this hyper prosperous metropolis that simultaneously despises and protects Amazon and other tech giants:

The head tax created just this crazy civil war in the city that all of us observed. Every one of us has friends who are otherwise good, rational, progressive people who just go off the rails about this…Everybody here has benefitted mightily, but they just cannot connect the fact that the things they are doing are creating the problem they hate. Everybody’s been bitching about the traffic and nobody can afford a place to live, but then it’s ‘Amazon is going to leave, ohmigod what are we going to do?’ People are easy to bully.

It’s no better in the left-behind places where closed-door “economic development” groups and county governments draw up lavish tax subsidies for businesses like Amazon hoping to bring something in—anything—to reverse the economic declines associated with America’s deindustrialization. Meanwhile, the federal government manages to spin out countless reports and hearings on tech concentration but produces precious little tangible action to break up market concentration or rebuild America’s domestic manufacturing and distribution network. And recent efforts to unionize Amazon workers in Alabama failed miserably as employees wondered what the union had to offer beyond the wages and benefits on offer from the company.

Maybe the tides will shift and people will start to turn against the concentrated wealth and power of companies like Amazon. But at this stage, it’s hard to avoid the futility of contemporary politics in reversing the trends outlined in Fulfillment. Rich cities with progressive voters can’t rein in Amazon and spread the wealth to more people. Left-behind cities with more moderate and conservative voters can’t rein in Amazon and spread opportunities to more people. 

What can be done practically? Oddly, one plan that deserves more serious consideration comes from one of America’s richest people, Michael Bloomberg. His presidential campaign burned money for about 300 votes but his central policy pitch on reversing regional inequality was solid:

Mr. Bloomberg’s plan to reverse those trends would lean heavily on efforts to improve education and skills training for Americans across the country, along with “billions of dollars” in federal spending on research and development, and on infrastructure projects like rural broadband development. It would create “business resource centers” to help entrepreneurs gain access to capital to start businesses, and it would steer more money to community colleges and apprenticeship programs. 

Mr. Bloomberg also said he would raise the federal minimum wage to $15 an hour from $7.25 and expand the earned-income tax credit, which raises the take-home pay of low-income workers. He said he would give all workers, including those in the gig economy, the right to organize labor unions and bargain collectively, and he said he would end noncompete agreements for low- and middle-income workers. Such agreements, which restrict worker movement, have been criticized as preventing employees from obtaining raises.

Inclusive nationalism that focuses federal action on reversing regional inequalities by building up the sources and sectors of good jobs in America’s left-behind regions—while tackling low-wage employment—may offer the best political path forward for helping more Americans, breaking up concentrated wealth, and making us more competitive with China. 

Woke corporatism hasn’t worked. Left populism hasn’t worked. Ass-kissing of the Amazons of the world hasn’t worked. Maybe we need to invest more in people and business opportunities in all places, and build the country we want rather than wait for some huge company to do it for us.