Imagine a benefactor, almost a Santa Claus, who provides millions of dollars worth of goods each day to millions of customers. The goods are more bountiful, cheaper, and easier to purchase from his store than any single retail establishment of the past, even the vaunted shopping malls and department stores, like Macy’s, which once called itself the “largest store in the world.”
This store is so big that it sells nearly anything you can imagine from every part of the world. You do not even need to leave your couch to make the purchase, which takes you just a few seconds on your computer. And it is delivered to your door at a price that is cheaper than nearly everywhere else.
If someone could do all this for you, would you call him a benefactor or a malefactor worthy of a hideous death?
Of course, I am referring to Jeff Bezos and his company, Amazon.
To some protestors, Bezos is the epitome of evil and deserves to die — putatively in effigy — for the crime of making money. Lots of it. The occasion of the placement of the guillotine in front of Jeff Bezos’ home was the milestone he achieved of becoming the world’s wealthiest man, with a net worth now exceeding $200 billion.
This viewpoint is economically ignorant and morally hideous. Let’s discuss the economics first.
Trade Benefits Both Parties; The Riches of Entrepreneurs Are Measures of Their Beneficence
The root of riches in a free, capitalistic society is trade, lots of it. Whenever you trade for something you want, both parties gain. You profit and the person you are trading with profits. If I trade my apple for your pear, we are both better off, because you prefer the apple over the pear, and I prefer the pear to the apple. Now imagine the thousands of trades you make every year in your own life, and the millions of trades that underlie the production of the goods you buy. Trade is the engine of prosperity.
We can measure the gains from this trade using measures such as Gross Domestic Product (GDP) or, even better, GDP per capita. The latter measures the economic value of goods that, on average, each of us enjoys in our lives. GDP per capita has soared in every country where people are free to produce and trade, to the extent they are free to do so.
The key to getting wealthy in a capitalistic society is to produce something so valuable that millions of people want to trade for it. This is the source of all great historical fortunes.
Henry Ford made millions because he pioneered a mass production method for making automobiles cheaper than ever before. Originally, a car was an expensive, bespoke, rich man’s toy made by hand in small shops. But the efficiently mass-produced Model T’s were so cheap that millions of middle income Americans could afford them. And by selling so many cars, Henry Ford became rich.
We can multiply these examples to encompass all the products that we enjoy in our lives. Behind nearly every one of them is a fortune earned by the entrepreneur who created the product. Ray Kroc at McDonald’s multiplied a cheaper, more efficient way to make burgers and french fries in thousands of locations and the result was “Billions served,” thus making Kroc and McDonald’s a fortune.
In the tech era, we have Bill Gates who said that his goal was, “A computer on every desk, and in every home, running Microsoft software.” He achieved that and as a result became the wealthiest man in the world.
I have visited Amazon’s fulfillment centers. It is something that I recommend to each of you. The tours are free and they are wonderful. The fulfillment centers are marvels of logistical efficiency. Trucks bring in goods from all corners of the world at one end. Then they are repackaged into customers’ orders and flow out the other end in a parade of trucks (and soon, delivery drones).
The technologies these factories employ are marvels of the best in computer science and engineering. Miles of conveyor belts whiz packages in all directions at high speeds. Computers instantly label and route packages to their destinations. Robots and human workers pick the goods and assemble them into packages.
I cannot adequately convey the marvel of Amazon’s fulfillment centers. The only way to truly appreciate them is to visit them.
Or, better yet, simply order a package while lounging on your sofa and then think about what steps were required to bring it to you.
Jeff Bezos Has the Right to His Life and Trade
Does Jeff Bezos have a right to his life, liberty, and the pursuit of his happiness?
Does he lose these rights because he has a greater ability than you or I to create value that others are willing to pay for?
Should we reward or punish such a man?
It is remarkable that one of the most productive and beneficial entrepreneurs is the one slated for the placement of the hideous and threatening guillotine on his front lawn. And, although not quite as hideous, political candidates want to effectively confiscate the business that he created with prohibitive “wealth taxes” as high as 60% and punitive income taxes.
The author Ayn Rand addressed this issue when she speculated that the ancient caveman who brought fire to mankind was probably burned at the stake with the fire that he created.
I wonder, did the makers of that guillotine order the parts for it from Amazon? Do they even understand the irony of their position? Or are they like the villain in Ayn Rand’s novel, Atlas Shrugged, who nihilistically and self-destructively seeks to destroy his benefactor?
Raymond C. Niles is a Senior Fellow of the American Institute for Economic Research. He holds a PhD in Economics from George Mason University and an MBA in Finance & Economics from the Leonard N. Stern School of Business at New York University. Prior to embarking on his academic career, Niles worked for more than 15 years on Wall Street as a senior equity research analyst at Citigroup, Schroders, and Goldman Sachs, and as managing partner of a hedge fund investing in energy securities. Niles has published a book chapter and numerous articles in scholarly and popular publications.