Amazon.com, Inc. (NASDAQ:AMZN) has turned itself into quite a catch these days. Not only is Amazon stock in high demand, but cities and towns across America are competing for the “privilege” of becoming home to Amazon’s new headquarters, but it may not be such a privilege at all. Of course, if you’re in a decision-making position with the authority to grant tax cuts to Amazon (or any other massive firm), the question you’ll need to ask yourself is what is more important: the workers who live there or just cold, hard cash.
At some point, we’re going to start paying for all this technical disruption that’s been exciting Wall Street and most average Americans. It’s a price few are expecting, but Amazon’s new headquarters is the perfect example of practices occurring now that can cause serious problems in the future.
Amazon promised jobs, but here’s the fine print
Big companies such as Amazon and Tesla have their pick of places to build because lawmakers tend to hand out hefty packages of tax cuts, but who’s going to pay income taxes when everyone has to move away to find a job? It sounds extreme now, but perhaps it will make lawmakers think 10 times before they hand out deep tax cuts based on a promise of jobs that turn out to be only temporary.
There are 238 regions bidding to become home to Amazon’s new headquarters. The tech giant has promised that the facility will bring 50,000 jobs over the next 20 years, which makes it sound like a good thing for citizens, but it’s likely that some of those bids were entered by people who aren’t taking into account automation.
Quantitative futurist Amy Webb explained to Business Insider why Amazon’s new headquarters could become more of a liability than a benefit. The company has been moving toward automation for some time, and one day, its warehouses won’t be staffed by humans. Amazon already uses about 100,000 robots doing jobs that humans once did in its warehouses, adds BI. Although the company isn’t planning a warehouse for the site of its second headquarters, it will be filled with office workers whose jobs may one day be automated.
It was estimated last year that about 30% of jobs in the financial sector will be shifted to artificial intelligence within the next decade, CNN reported, and researchers at Oxford University estimated that almost half of the jobs in the U.S. face a “high risk” of automation within 20 years. Based on the extreme measures and serious incentives being thrown in Amazon’s lap, it sees that most decision-makers aren’t considering whether the jobs promised by the company now will even be delegated to humans 20 years from now.
How much more disruption can we live with?
Webb’s warning resonates with views expressed by INTL FCStone analyst Vincent Deluard in his December report. While Webb warned about what technical disruption could cause for the city that wins Amazon’s new headquarters, Deluard highlighted some of the ill effects we are already seeing from the endless supply of incentives being handed out to big business.
He describes the greatest risk with the technology revolution that’s going on right now as “our ability to live with it, and whether governments side with the luddites or the innovators.” As things stand now, local governments are siding with Amazon without thinking about the long-term cost, and Deluard sees the potential for backlash against technology.
He recounted some instances in history when the populace rose up against innovation of its time, and it seems as if Europe has learned its lesson. Tech companies are heavily regulated in the European Union, and regulators there have been “hating and fining them,” he added, which is ironically the opposite of what is happening in the U.S., where they’re rewarded for their behavior.
“Gone is the naïve Silicon Valley optimism of ‘making the world a better place through technology,'” he wrote. “The FAANGs are seen as job-killing, market-abusing, tax-dodging, and election-manipulating monopolies.”
When will it be too late?
But at least for now, U.S. officials seem intent on siding with the innovators. Wall Street loves them too, not only because new technology is exciting, but also because with automation comes two of investors’ favorite words: “cost savings.” Amazon stock has soared all year, right along with its fellow FAANG constituents (Facebook, Amazon, Apple, Netflix, Google/Alphabet) as investors continue to reward innovation.
However, when few people have jobs that pay enough to live on—let alone shop online for pricey new iPhones—maybe then lawmakers will realize that, as Deluard explained, there’s no limit to human creativity and innovation, but there is a limit to how much we can live with.
Amazon stock trended slightly lower in intraday trading on Wednesday, falling as low as $1,160.27.