I can’t help but admire the way Amazon has Seattle firmly by the balls. Back in May, the City Council unanimously approved a per-employee tax on large employers to help fund affordable housing and homeless shelters. After Amazon halted construction on its new 17-story tower and threatened to take its jobs elsewhere, council members folded like a cheap tent encampment and repealed the tax. Ain’t nobody gonna tell Amazon what to do.
Wait… It’s supposed to be the government that bullies local businesses, not the other way around! As stationary bandits, they extort tax dollars from subjects under threat of violence. As greedy, profit-maximizing bandits, they maintain a monopoly on theft and keep other bandits at bay. As clever, forward-thinking bandits, they provide public goods and law and order to encourage future taxable income.
Agricultural societies benefit from the protection of a stationary bandit. Industrial economies do too. We tend not to find capital-intensive operations in undeveloped slums – with no one to monopolize theft, roving bandits compete to loot and plunder. Such is anarchy.
But stationary bandits require stationary subjects. If an aircraft manufacturer takes issue with local tax rates, it can’t just pack up and move its facilities to Mexico. I mean, it can, and many US companies did, but the capital outlay limits the credibility of the threat. An information-based company like Amazon, on the other hand, can drop a lease and move to Bangalore before the next City Council meeting.
The switching costs are lower.
Information technologists are no longer subjects to be governed, but customers in voluntary exchange. And a dissatisfied customer will happily take their business elsewhere. As we speak, there are twenty major cities bending over with bids to host Amazon’s next HQ. Chicago even offered to let Amazon keep $1.32 billion of the income taxes paid by its workers each year. The mayor might as well step down and install Amazon as the new autocrat.
So here we are in the utopia described in The Sovereign Individual, where jurisdictions compete to provide protection to paying customers. I daresay it sort of sucks.
(If we were having this conversation on Twitter, here is where people would chime in and blame capitalism.)
The best way to deter bandits is to make the target look as unrewarding as possible. When the Roman emperor Julian embarked on a campaign against the Sassanid Empire, the Persians burned their crops, chased the livestock away, and deserted the villages. The citizens would rather live in a wasteland than submit to Roman rule. With nothing to conquer and no provisions to steal, the Romans had no choice but to retreat.
As the coastal cities turn themselves into third world slums, I wonder if that’s been the plan all along. Seattle, San Francisco, Los Angeles, NYC — they may be shitholes, but at least they’re our shitholes.