How Amazon Survives the State

0 Posted by - July 3, 2012 - Career & Business, Economics, Money

TheTaxingGameSpinner How Amazon Survives the StateHere’s a snapshot from the American landscape of convoluted crony capitalism: starting this September, if a man in Los Angeles buys a book from Amazon.com, the local sales tax he pays could go to the city of San Bernardino, which will then give 80 percent of the tax money back to Amazon itself.

Such roundabout arrangements of redistributive robbery are in fact an unavoidable consequence of the doctrine Mises called “interventionism.” Nowadays, it is more often called “economic development,” but it still means the same thing: government manipulations with the stated goal of improving on the free market.

And a huge amount of everyday market activity now consists of finding ways to survive and circumvent the state.

Last year, Amazon and the California government struggled over whether or not the company would be forced to collect sales taxes from Californian customers. Amazon eventually struck a deal with California: the state would hold off on collecting the taxes until September 2012, and the company would, in a nod to the state’s plans for “economic development,” place two warehouses there and thus create a few thousand jobs.

In a truly free market, Amazon would place warehouses wherever it expected to best please consumers: somewhere with cheap land and labor so that prices could remain low, but still close to consumers’ homes so that delivery could be fast.

CONTINUED at the Ludwig von Mises Institute. Written by Mike Reid.

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