Factually! with Adam Conover - How Amazon Reshaped America with Alec MacGillis

Episode Date: March 10, 2021

Journalist and author of "Fulfillment", Alec MacGillis, joins Adam this week to discuss how Amazon’s unprecedented and wide-spread growth has reshaped our economy and society. They cover the economic changes that created a vacuum for Amazon to fill; how economic concentration hurts both "winners" and losers; the lack of community and dignity Amazon jobs create, and why Alec is still hopeful for change. Check out Alec MacGillis’ book FULFILLMENT: Winning & Losing in One-Click America wherever you get your books. Learn more about your ad choices. Visit megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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So if all of that sounds good, if you want a big box of delicious snacks like this for yourself, use the code factually for $15 off your first order at Bokksu.com. That's code factually for $15 off your first order on Bokksu.com. I don't know the way. I don't know what to think. I don't know what to say. Yeah, but that's all right. Yeah, that's okay. I don't know anything. Hello everyone, welcome to Factually, I'm Adam Conover, and let's talk about a company that I think you're familiar with. You might order from it, you might order from it every day, you might order from it even though you don't want to, but you feel like you have no choice. And even if you do avoid it as best you can, I would bet that you end up using this company's services without even realizing it. surfaces without even realizing it. Of course, I am talking about Amazon, but I think you might not realize just how huge of a footprint Amazon actually has in America today. Let's break it down a little bit. What started as a gleam in the eye of a young Bezos who had a simple dream to bend the book publishing industry to his will has grown into a corporate megastructure

that touches every part of American society. Now, you might say, hey, Adam, hold on a second. You're exaggerating. Why, Amazon hasn't even hit 8% of all retail purchases yet. And to that, I would say, hold on a second, hypothetical person, 8%, are you listening to yourself? 8% of all retail purchases in the country is massive, especially when you realize that that includes around 40%

of all online orders, by far the largest of any one company. 112 million people pay for Amazon Prime in the US, almost three.S. households. That's more than the number of households that, I don't know, do most things. Fill in your own statistic. It's an enormous number. And Amazon is way more than a retailer. Its cloud computing service is what most of the internet runs on. So even if you try to avoid Amazon, you still end up using it when you're just watching Netflix. According to a law review article on the company's huge influence, Amazon is now, quote, a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house,

a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. I mean, what the fuck kind of bookstore is this? Now look, I'm not just mad at them for making money. That's not the problem. The real issue is that a disproportionate share of control over all those markets translates into a disproportionate share of power

over our society. Amazon literally has the power to determine how massive parts of American society run. And they abuse this power in all sorts of ways. For instance, because they operate the dominant marketplace for online retail and sell their own goods on that marketplace, they actually compete with the other sellers on their platform. In fact, the company actually takes data from those sellers to develop its own products to compete with them. So Amazon is able to put completely unrelated companies out of business. Again, it's about power. When Amazon is the only game in town, that game ends up rigged. Or to take another example, Amazon is so powerful that it is literally able to bend our

governments to its whims. When Amazon was choosing sites for its new corporate headquarters, it led a contest where cities around the country were asked to compete for the honor of having an Amazon HQ in their backyard. And these cities bent over backwards to offer the company inducements, perks, and massive, massive tax breaks. Some cities even offered to not charge Amazon any payroll taxes whatsoever for years. Think about how perverse this is.

Cities across America felt so needy for Amazon's favor that they were willing to give exorbitant freebies at public expense to one of the largest, most successful companies in world history. I mean, Amazon doesn't need those handouts. The people in those cities did, but they weren't getting it. Bezos was. And all of that success comes at a huge price for Amazon's workers. Amazon is now the second largest employer in the entire United States.

Now, Amazon did commit to a $15 an hour minimum wage a few years ago, but tales of abuses still abound. Whether it's factory workers being treated like robots, drivers forced to choose speed over safety, white collar workers pushed to the brink of emotional collapse, Amazon receiving special favor from OSHA when its safety negligence resulted in the deaths of factory workers or its well-known relentless effort to stifle any hint of a union from popping up at one of its warehouses. Amazon has flooded workers with anti-union propaganda and even strong-armed local officials into changing the pattern of a traffic light to stop union organizers from campaigning. Now, despite all of that, Amazon workers in Bessemer are still engaged in a historic struggle for unionization. I stand in solidarity with them on that. And you know what? I hope you do, too. You can make your own choices. But, you know, why not side with the little guy versus, uh, you know, the literal richest man in the

world. But look, Amazon is not the story of a single evil person who works out his biceps way too much, which by the way, he does. I mean, you don't need to have your polo shirts cut so tight, Jeff, but no, look, it's much bigger than that. It's the story of the fraying fabric of American society. See, Amazon, in reality, has just taken advantage of massive trends in America that have been brewing for decades. The death of antitrust, the shift towards online commerce, de-unionization, and the concentration of all economic activity in just a few metropolitan areas. These trends have allowed Amazon to fill a power vacuum and exert dominance over our entire society. And how we got there is a very complex story,

and no one tells it better than Alec McGillis. He's a reporter for ProPublica, and most recently, he's the author of Fulfillment, Winning and Losing in One-Click America. He's a reporter for ProPublica, and most recently, he's the author of Fulfillment, Winning and Losing in One-Click America. It's an incredible book, and I think you're going to be gobsmacked by this interview. Please welcome Alec McGillis. Alec, thank you so much for being here. Well, thanks for having me, Adam. So you've written a new book called Fulfillment. It's about Amazon in one word, but you tell me what it's about. What do you cover in the book?

This book is really kind of what's, it's about what's happening to us as a country as a whole right now in this moment, where we've had for years now, these growing divides between sort of richer places and poorer places in this country, what I call sort of winner-take-all places and left-behind places. And it's not just about the urban-rural divide, which we've heard so much about, but it's also about cities, the divide between cities, some cities that are just getting richer and richer to the point of becoming almost unlivable, and then a whole bunch of other cities that have really kind of fallen further and further behind. And the way I chose to tell the

story is through Amazon. Amazon is kind of the thread that takes you around the country. It's the frame that I use to look onto our country and what we're becoming. It's not so much about Amazon itself, Amazon the company, but it's really about everything that falls within Amazon's growing shadow. It's about Amazon's America. And it's just been really kind of striking to me that I, of course, started this book several years ago, but that as I was wrapping up the book this past year, that the things I was worried about and things that I saw happening around the country have just, of course, been greatly accelerated and exacerbated during the pandemic. So it's been pretty eerie to watch that happening. Yeah. I mean, there's so much

there I want to unpack. First of all, just the fact you said cities that have become so rich, they've become unlivable is such a stark way to put it. I live in one of those cities. Los Angeles has incredibly high housing prices. But we don't normally think of it that way. Hey, when people get rich, when an area gets rich, that's a good thing. But there's actually like a detriment. Like the richness of some of these areas has worsened the quality of life for people in them. How has Amazon exacerbated this divide? Let's just start simple.

Yes. You know, it's a huge problem. And the cities I chose to focus on, the winner-take-all cities that I chose to focus on the book, I could have chosen any number of cities, right? I focused on Seattle and Washington, D.C. And it just so happens that I actually picked Washington as the second city before Amazon picked it as the home of its second headquarters. So that was sort of serendipitous in that regard. But what you've seen is that we used to have in this country, we've always had cities that were wealthier and poorer, but that divide has grown so much worse, so much larger in the last few decades, just like the divide between wealthy people and poor people has grown larger, just like the income scale has grown larger among individuals, the divide among cities has also grown much

larger. And part of the reason for that is that we've had a concentration in our economy, concentration in certain companies and certain markets. So to put it very bluntly, take, for instance, my industry of the media. My industry has been devastated by the concentration of ad revenue in a couple of companies, mostly Google and Facebook, but also increasingly Amazon. So all this money that used to be spread around the country in ad revenue that used to go to local newspapers, local radio stations, local TV stations, and it was just really kind of, you can kind of picture it kind of spread all around, has a huge share of that business has just kind of been sucked into a couple companies,

the two biggest of which are in the Bay Area. And so one reason that you have this just insane, almost like dystopian levels of wealth and inequality within the Bay Area is what's happened in that media market, the concentration within that market. Then take another industry, retail. So retail used to have, the money in retail, the retail business, again, used to be spread all around the country. And whether in bigger chains, smaller chains, mom and pops, you know, Sears, Walmart, Macy's, the smaller department store chains, all that. And now you have a growing, growing share

of that revenue, that money, that business sucked to this one company that's in Seattle. And so you end up with concentrated industries based in certain places. And those places then have become just wildly wealthy to the point where a city like Seattle that used to be very much sort of a normal city of sort of a middle, very middle-class kind of city, almost kind of, almost kind of a, you know, kind of a rough edge city, you know, sort of really kind of a, you know, it was like, basically it used to be like a natural resource outpost. Basically it was a log.

I used to think it was really funny. The first time I visited Seattle, I was like, I can't believe Frazier was set in Seattle because they, in Frazier, he's like a rich guy. Who's like going to the opera and stuff and you go to Seattle and it was like, I can't believe Frazier was set in Seattle because in Frazier, he's like a rich guy who's like going to the opera and stuff. And you go to Seattle and it's like, yeah, it's as you say, it's like a lot of people in flannels and, you know, driving, driving beat up old cars. It's a small city. It's got coffee. Sure. But it's not like, you know, it's not downtown New York or anything like that. No, no. The first time I went there, I was just, one reason I loved it so much as a city, the first time I went there in like sometime in the, you know, probably around 2004 or five was that you could still have this real sense of it being

this kind of natural resource outpost. You could still picture it as this place where the, you know, the logs that literally would like roll down the hill to the port and be taken off in the ships. That's how it started. It was a place where the timber came down and they took it down to San Francisco to build San Francisco. And you've got the rail right there, the port right there. And it was really kind of rough hewn in that sense. And now it's just been utterly transformed. And in the book, I focus in particular on what's happened to Seattle's historic Black neighborhood, the Central District, which was this amazing neighborhood.

I mean, I think a lot of people outside of Seattle don't even really know just what incredibly thriving and vibrant Black communities Seattle had for decades with incredible music. You know, Jimi Hendrix, all these people came out of Seattle, Seattle music scene, Quincy Jones. And, and now that, that part of town, it's, I mean, the word gentrification doesn't even really begin to describe it. Like just the complete erasure that has happened as, as the, as Seattle's wealth has just become, it's just grown to stratospheric levels. I'm almost picturing what you're describing, where we had these industries that were distributed across the country and extremely local, like local retailers, local newspapers, local TV stations.

And all those dollars floating around get sucked up by one company in a single location. It's almost like damming a river or something like that, where all the water that was flowing to all these other places is now collected in one spot. And what is the result of that? Drought in one place and a flood in another. That like these cities, like you're saying, like Seattle becomes flooded with money.

And that is to the detriment of a lot of things. Like, as you're saying, neighborhoods becoming erased through gentrification. Absolutely. The bottom line is that it's not good for anyone. It's probably good for like one or two people. Right. No, I can think of a few that it's good for. But for places, it's not good for either kind of place to have that kind of a profound imbalance. And it simply is different than what we've ever experienced before. is that for many decades,

sort of the middle of the last century, all the way up to like 1980, there were only a small set of places in this country that were more than 20% above median income. And most cities and places were kind of close to the median there. Like they kind of hugged that median line. You had maybe New York and a couple of other places were above the line. And then maybe the Deep South and Appalachia were

well below the 20% line below. Now you have just a whole swath of the country that are above 20% richer than the norm. And so basically all the coasts, most of the coasts, most of the coastal cities are now above that line, the 20% line, richer line. And then you have enormous swaths of the country that are below 20% poor. So whole swaths of the Midwest, whole swaths of the interior West are now way below the median. And that's, so something's happened there. And so we have this massive gulf between our cities. And you look down to the city level too, back in like in sixties, you look at the cities that were highest per capita income in our country back then. And they included all these cities in the Midwest, all these places like Milwaukee, even Des Moines, Iowa, Rockford, Illinois.

Now, all but one, I believe, all but one of the richest 20 cities in our country are now on the coast. I mean, you've had this complete shift. Is Chicago the other one? I'm just curious. No, no, I believe it's actually Minneapolis. Wow. Yeah. So you've just had this incredible sorting out,

and it's not healthy. Yeah, I mean, that's something that, like, it's a pattern that has, like, slowly become apparent to me throughout my life, you know? Um, when, uh, I don't know when I think about like, when you hear the way people talked about cities in America, you know, the way people talk about Detroit, you read something from, from 50 years ago, written about Detroit and the way it's written about now. And the smaller cities as well. Yeah, it's really, really stark. Bring Amazon into this. How does Amazon contribute to this? And I'm really curious what the effect is on smaller places of Amazon as well, because it's not just about things leaving. It's also about what Amazon is bringing to those places that transforms it, does it not? Absolutely. So I chose Amazon as the frame, the thread for the book, basically for two reasons. One, because it actually has contributed to this problem. It's a cause of it in the way that I've described here, where you have a company that has gotten so

powerful, so dominant, that it actually sucks the money and the wealth from certain places into the cities where it's got its headquarters. But then Amazon also works well as a frame because it's simply everywhere in this country. So it's a way to take you around the country and to sort of show all these different sorts of places that occupy different roles kind of within the Amazon ecosystem. that occupy different roles kind of within the Amazon ecosystem. And Amazon is, it's, there are other dominant companies in our country, such as Google and Facebook, but they're not physically present in the way that Amazon is. Right. There's Amazon fulfillment warehouses all across the country in these smaller cities, but there aren't, no one's going to work at the Google data. I mean, there's Google data centers, but it's not in every county

in the way that Amazon is to a certain extent. Exactly. And so Amazon is just offers a, in that sense, offers a thread around the country that the other companies don't. But it just allows you to look at what, look at what all these places are becoming in that shadow.

You have, in a sense, now a sorting. You have the headquarter cities like Washington and Seattle, where you have, and then also cities like New York that have become effectively kind of headquarter cities for Amazon, even though, you know, HQ2 pulled out of Amazon, pulled out of New York. Yeah. In 2018, you still have now tons of high-paying Amazon jobs going into New York, going to Boston, the engineers, the programmers in those cities. And then you have the warehouse cities. You have cities like Baltimore. Baltimore in the book is one of the two main sort of left behind places. Baltimore and the other one

is various places, parts of Ohio. And you have the warehouse cities that have become the city square that are almost serve in a sense as the kind of the, it's the back office, it's the pantry in a way.

It's the place that has the thousands now, incredibly large numbers of these $15 an hour jobs, as opposed to the programmers who are making $150,000 plus great stock equity in the headquarters towns. And so you have this growing number of warehouse towns where Amazon occupies a completely different sort of role, different sort of presence, where it's really become, in a sense, one of the few growing employers. I focus on Baltimore. I focus on Baltimore. Partly, I live in Baltimore, but also because the city offers one of the starkest examples of here in Baltimore, was once the home of what was the greatest, the largest steel mill in the entire world. It was a Bethlehem steel mill at a spot in Baltimore

called Sparrows Point. It's a peninsula down outside of Baltimore, down along the water. And back in the 60s, that steel mill employed some 30,000 people. It was just an incredible place with a whole company town, five, 6,000 people living there with, with a grid of streets and shops and movie theaters and, um, the whole skyline of, of, um, steel mill, um, all different sorts of mills, all different sorts of mills, all different sorts of furnaces. And now that's all gone. It was completely wiped clean off this peninsula.

And now it is a logistics hub that has two, one now two massive Amazon warehouses. And so you have a place like Baltimore where in exactly the same location where you used to have guys making $35 an hour with really good benefits, doing very challenging, very tough, very dangerous, but also very fulfilling and meaningful work, building things, are now in that exact same spot. You have now thousands of people packing boxes onto conveyor belts for $15 an hour. And so it's that transformation, this transformation of work and what we do within our identity, that to me is really at the core of what's happening in these warehouse towns.

Wow. Let's talk a little bit about what that work is. I mean, you said that the work at Bethlehem Steel, so fulfilling. I assume you think that working in the Amazon factory, not fulfilling. What is the difference between those two kinds of work and what characterizes the kind of work that Amazon has people do in these places? So I was actually able to, it was kind of amazingly serendipitous. I was able to find someone through whom to tell the story of that changing type of work. I found a man who spent several decades working at Beth Steele. And that was his life. That was his livelihood.

That was his identity. And he worked in all these different jobs in the mill. He was incredibly tough work. He had a couple of really serious workplace injuries, but he loved the work. And he stayed with it all the way until the point that Beth Steele basically started going out of business. He then in his 60s went to work at the warehouse,

one of the warehouses that came in, the Amazon warehouses that came into Baltimore. And so he went from making 35 bucks an hour to making 15 bucks an hour. And he just hated the job. He was driving a forklift under incredible pressure to get pallets off of the trucks into the warehouse under incredible time pressure, feeling just this, feeling yourself just always on the clock,

always, the sense that there's this sort of an algorithm that's tracking your performance with, you know, some young supervisor, some 25-year-old logistics guy who's really riding you to get your numbers up. to get your numbers up um barely any time even to take a bathroom break um there's a you know really kind of sad painful poignant moment in the in the book where with this gentleman feels the need finally to to go into the corner you know he doesn't have time to get to the men's room when he has to go into the corner behind his um behind his park his forklift and for some privacy and, and, and no, no sense of any kind of community with the people around you, you know, at, at the steel mill, you'd have, you'd know the guys you worked with, you, you knew, you, you knew them, you knew their cousins, you knew their uncles, knew their fathers. You were part of a community. You would, you know, you'd go have a couple beers with them after work.

Now at the warehouse, it's utterly atomized. You're very likely working completely on your own within the warehouse. You're barely in contact with other people. There's no hope for any kind of solidarity in the form of union organizing. Beth Steel was one reason they had such high wages there was, of course, that it was unionized and steel workers. You don't have that at the warehouse. So it's just this, it's a much more lonely, kind of rudimentary, really almost kind of robotic kind of work that you're being asked to do. And just much less purposeful. There's a reason why those jobs have such extraordinarily high

turnover because they're incredibly just physically wearing and then also just very emotionally wearing and emotionally difficult. Yeah. My God, that's such a stark picture you draw. But I wonder that turnover, is there some way in which Amazon... I also think about Uber. We've talked about them on the show many times and how much Uber's entire business model is to just decrease and take advantage of decreased worker power. And turnover is almost part of the business model that people drive for a little while and then they quit and then new people are, there's always more, right? There's always more people who want to do it. And it seems

that these companies are taking advantage of some sort of underlying lack of opportunity and desperation in the American workforce that, that as you say, I mean, the, uh, it's not as Amazon, it's not as though Amazon is saying like, oh, hey, we got to let these people take bathroom breaks because otherwise they'll leave and we'll never have another worker here. You know, they're like, you're a cog, you can be replaced is the attitude. And what creates that state of affairs? Absolutely. They can completely depend on that kind of constant stream of... Actually, one of the workers I spoke with referred to himself as a refugee. I mean, that he and the other people he saw working at the warehouse, especially this past year during the pandemic recession, that he saw all these kind of refugees washing ashore, washing into the warehouse who were desperate even for these incredibly difficult, draining $15 an hour jobs. Refugees from other forms of work, like their previous employer closed. jobs. Refugees from other forms of work, like their previous employer closed. Exactly. And there's a scene that I sort of end the book with that is just, and I couldn't believe it when I came across this, but I ran into a guy who was outside the recruiting center at one of

the warehouses. And I asked him what kind of work he had done before. He was 33 years old. And he said, oh, this is in Baltimore. He said, oh, I've just been hustling, been just getting by. And I kind of pressed him. I said, no, what have you been doing? And he finally said, okay, you want to talk? I said, yeah, let's talk. He said, all right, let me just tell you that the you want to talk? I said, yeah, let's talk. And he said, all right. Um, let me just tell you that the, uh, the fentanyl drug market in Baltimore has really taken a hit. And, um, because the pandemic, uh, no one is, um, my customers aren't able to, to, to go and, um, steal stuff anymore. The stores are all closed. They, they got no money to, uh, to buy their drugs from me. And it's gotten really hard out there. And, and so I'm, so here I am. And, you know, I used to make 75 K on average on the corner,

and that's all gone now because of the pandemic. So, so I'm going to have to make a change here. And this is going to, this is going to suck and I'm not looking forward to this, but I gotta, I gotta suck it up. All my, all my, all my, he said, all my homeboys are doing the same thing. We're all, we're all, we're all coming over to Amazon and it just really hit me. I mean, this is like, this is basically the wire season six, you know, that the drug dealers,

the drug dealers are going down to Amazon to get a job at the warehouse because everybody's doing it. Everybody's doing it. Even, even the dealers. Well, in the, the state of the American economy, the American workforce, whatever you want to call it, where even, you know, dealing drugs is no longer even lucrative. If you're lucky, it's a middle-class income. I mean, $75,000 is yeah. A middle-class income in America. You're not putting your kid through college for that barely. And, uh, uh, you know, so even that is now a precarious, like being a drug dealer is now the same as working at, you know, uh, working for the auto factory or Bethlehem steel, where it's a, it's a disappearing middle-class income and now you've got to go drive Uber. Holy shit. That's I couldn't believe it. Yeah. wild um i mean what about what about

smaller smaller towns rural areas i mean we've talked big cities we've talked i mean baltimore's not a small city i would say but you know the it's uh not not one of our not one of our most cosmopolitan megaplexes of a city uh what about, you know, like the, you know, the middle of the country? I have a whole, I've actually two whole chapters, basically on the unraveling of, of middle America, small cities and small towns in middle America. And, and one of them focuses on a heartbreaking story of a guy, a family in Dayton, Ohio, just a classic story of a guy, a family in Dayton, Ohio.

Just a classic story of white downward mobility. And this is a guy whose father had a small trucking company in Dayton that served all the auto parts makers in the Dayton area. Dayton was a huge auto parts hub. That all fell apart in the years leading up to the Great Recession. And so the father lost his business. His son probably might have ended up working with him down the line, but instead the father went bankrupt. So the son is left in his early 20s with a whole succession of different low-wage jobs, and finally ends up in the business of being a cardboard maker.

And that's what he does now. He makes cardboard boxes, which is a huge industry now in the Dayton area. Because cities like Dayton have gone from being these great hubs of innovation and manufacturing. Dayton, of course, was the home of the Wright brothers and just all these amazing inventors and innovators from the late 19th century. It was the place that was putting out more patents than anywhere else in the country in the late 19th century. Really kind of the Silicon Valley of its time and really kind of an amazing place.

And now it has become what is essentially a logistics hub. It's a place that packages and moves goods that have been made elsewhere. So there's just all these trucking companies and packaging companies and cardboard making companies. And this guy now works at a cardboard company making the same wage he's made basically his entire young adulthood. He's right now around 12 or 13 bucks an hour.

His family has spent, he's got four kids. They've spent a lot of time in shelters in recent years. He's gone through, his family's had all sorts of really ugly things they've dealt with, including domestic violence. They're clearly linked to the, not excused by, but linked to the economic stress they've been going through. This chapter tells the story of

the really kind of the unraveling of this man's life and of Dayton, Ohio in this kind of age of logistics. And I also have a chapter on an even more sort of rural area, Southeast Ohio, Appalachian Southeast Ohio, where you have just the real kind of grinding rural, rise of grinding rural poverty that we've seen so much of around the country. And Amazon is so aware of how desperate places like that are that when it was building two of its first two warehouses in Ohio, it put one of them on the Columbus Beltway, right at the spot in the Columbus Beltway where the road shoots down to southeast Ohio about an hour away so that all the folks without work down in that part of Ohio could make that hour-long drive up, you know, pretty awful hour-long commute to one of those warehouses because they knew that that would be one of their main workforce sources. The people so desperate for work that they would make that hour drive up to the Columbus area. Now, is that, look, I can imagine how Amazon would present that to the local politicians in the area. We're bringing jobs to the area.

In fact, Amazon has engaged in making different areas have competitions for tax breaks in order to locate, at least very famously, the HQ2 site. Are those, is that area actually deriving a benefit from the location of that warehouse? I mean, it sounds horrible to drive for an hour to work for those low wages and those grinding conditions, but is that better than not? That's absolutely what Amazon, the case that they make, and they were making that very, of course, very aggressively when I was, when I was talking about them about all this, they basically say, look,

we're, we're better than nothing. And that, that is, that is sort of their, their, their main argument. That's honestly, it's not a bad slogan, not a bad slogan overall for Amazon. Like, hey, you could not, you could have nothing or you could order this shit and have it come to your house. Right. But that has become, at least, yes, at some points,

they'll almost come to the point of saying, look, yes, the system we have now, this economic reality that we have is far from ideal. But we're better than nothing. And if it weren't us, it would be someone else. That's basically the other thing they like to point to, that we're just kind of, it just happens to be us.

There was this massive shift in the economy. Someone was going to come in and fill this kind of e-commerce role. And it's us. It could just as well be someone who calls something else. What that seems to overlook is that there are specific things that they have chosen to do, specific ways they've chosen to behave, choices they have made,

not just sort of things in the ecosystem, but the choices they've made that have actually made the problem worse. So choices they've made about how aggressively to pursue tax breaks in the places they move into, which then has the result of kind of immiserating the local infrastructure,

the local tax base, undermining communities. It means the schools and roads and all those things that the people who live there depend on don't see any benefit from Amazon coming there. Absolutely. Some of the sort of grittiest reporting in the book is stuff I was able to get through Freedom Information Requests and other reporting showing just how those deals get made and just how aggressive and also kind of secretive Amazon is in seeking those deals. There's a lot of that in the book.

So you have those tax breaks. those deals. There's a lot of that in the book. So you have those tax breaks. You have all of the ways that Amazon has, in fact, gained its dominant role in competition with other retailers again through choices they've made, choices about how to evade sales taxes for many years, Choices about how to evade sales taxes for many extraordinary, unfathomable dominance within our economy. or high poverty rural Ohio, having that option of that $15 an hour, very difficult warehouse job is quote better than nothing. But there are things they did to get us to the point where we were left with them as the only option. Well, look, I have a lot more questions for you

about how they got to that point and about what it means for us that they have so much power. But we have to take a really quick break. We'll be right back with more Alec McGillis. Okay. We're back with Alec McGillis. So I want to ask you this, Tim Wu in his book, the curse of b Alec McGillis. So I want to ask you this. Tim Wu, in his book, The Curse of Bigness, about monopoly power, one of the things that really stuck with me from that book is that he talks about monopoly power as not just being economically bad,

you know, oh, we have to pay more prices, et cetera, et cetera, but it's essentially undemocratic, that when a single company has so much power over the way the rest of us live our lives, that is bad. It means that they can reshape not just our economy, but our lives themselves and the country in their image. And that's inherently undemocratic. Amazon certainly fits the bill as a company that has that much power. And I'm curious how you've seen them use their power and how that shaped America today.

Tim is absolutely right about this. And it's one reason that I chose to focus much of the book in Washington, D.C. Even before Amazon picked D.C. for HQ2, I knew that I was going to put much of the book there because it's just a very clear regional example of how the company's growing dominance has then translated into a level of political dominance that does verge on becoming a threatening democracy. The extent to which Amazon has taken over our national capital, our federal capital is just incredible. And I don't think we've really grappled with that yet. second richest man in the world bought the newspaper, bought this incredibly, incredibly, this great influential newspaper that, that had played such a role in sort of setting our, our, our national debate, our national conversation. He buys the newspaper. He,

he then, he buys the biggest mansion in town, this incredible sort of double-wide mansion that he bought with the explicit intent of turning it into a kind of a salon where he'd be sort of convening all of the sort of Washington power brokers, Washington influence into this mansion for, you know, for soirees. You have Amazon building up its lobbying operation in the city just exponentially to the point where it's now one of the biggest lobbying shops in Washington. $18 million a year they're spending now on lobbyists. I mean, they're just all over the place. It's, of course, led by Jay Carney, who used to be Barack Obama's press secretary. You have then, on top of that, Amazon becoming incredibly influential within not just, we haven't talked much yet about the cloud, but you have the huge growing Amazon Web Services sector of its business, which now provides so much of its profits. And that cloud business has become incredibly dominant within the federal defense realm. So, so much of our, so much of our, the CIA, so much of the government more broadly

is now run through run through Amazon web services run through their, their cloud. So you have a huge presence in DC just through that. And then finally, now you have HQ2 where you have them putting 25,000 more very high paid, well-paid jobs just across the river in Arlington, which is going to make them by far the biggest non-government employer in the area. And you're going to end up with just this one company

having just this massive presence in our nation's capital. And it's something that normally, to be honest, I would be expecting the local newspaper to write about, just how this one company is taking over their city, but they haven't. Who owns the newspaper? Yeah. My God. And yeah, the amount of influence

that Bezos and Amazon can have just by controlling all of those outlets at once, everything from the newspaper to, yeah, like having the individual people over. Oh, I've been to Jeff's house. Jeff is the best guy. Your nerves were great last year. Yeah, exactly. Or even like just the guy, it's also going to be the guy who's, you know, the other dad on your daughter's soccer team. You know, you chat with him on the sideline and he's some, you know, Amazon, you know, vice president or Amazon programmer guy.

He seems like a nice guy. Like, you know, they're not so bad. We should just, you know, if it comes, if it comes so everywhere, so omnip present that you don't even think to challenge it. They're just the people down the street. But this amount of power, I mean, this is like early 20th century, Robert Barron, Andrew Carnegie, like, you know, massive power residing in one person and one company. Like, it really feels like we're headed back to those days, especially when you look at Amazon

I mean how long before Jeff Bezos you know does what like Andrew Carnegie did like oh I'll put a library in every city to make everybody love me you know what I mean it's like that's a it was a good thing we have a lot of those libraries still

but it was also an exercise of pure power that you know were redounded to his benefit but it also strikes me that you know, were redounded to his benefit. But it also strikes me that, you know, that period in American history when we had those massively powerful economic figures was not a good time for the average American. That was not when we had our most prosperous period as Americans. The time that we had that was, you know, in the 50s and the 60s, like after those companies had been broken up, after we got rid of Standard Oil and et cetera. And that we, you know, we had higher taxes and less consolidation, at least on a broad scale. And so to me, it seems very worrisome that we seem to be backsliding to that previous state. I mean,

talking about, you know, Tim Wu's book, again, the subtitle is The New Gilded Age. Is that what you feel that we're moving into? We're absolutely moving back there. I mean, it's in so many different ways. Even just the way that Amazon has been able to grow so successful and wealthy, you can actually compare it in very specific ways to what, say, Standard Oil or the railroads were able to do back in the Rockefeller days, where they acquired such dominance that you basically had no choice but to ship your goods on their rails, they got their cut.

And there was no way around it. And you had to pay the price they were demanding. You had no other option. It was almost like a tax. They were just kind of collecting. It was a rent that they were collecting, essentially, on all commerce in the country. And that's what you see now with Amazon able to, if you're both in the cloud realm,

you sort of have, in a lot of cases now, you have no choice but to go to one or just a handful of companies for your cloud services. So they're basically kind of taking their cut of that part of this new massive part of our economy, all the stuff that's happening in the cloud. They take it from Netflix. They take it from every company that's built on their servers. Zoom, everything.

And then even more, of course, more starkly, you have it on the retail side, where if you're a third-party merchant now trying to sell your, your goods, you have, you really have, you feel like you have no choice, but to, but to, to sell on Amazon. And, and you, so you're, you're, you're there, um, as a third party merchant, which is now a massive part of their retail sites, well over half of their site now is other people selling their stuff on Amazon. And those sellers are now facing ever, ever higher cuts that Amazon's taking, whether it's just the basic commission, the advertising, they feel forced to do all these different slices that Amazon takes to the point where it's now 25, 30% that a typical merchant is often losing to Amazon. So they're just there as kind of a

gatekeeper collecting their tax on all these different parts of our economy, not unlike what John D. Rockefeller was doing back at the turn of the century. And then the other obvious example that you already mentioned is this philanthropy that we now, you know, yes, we can point to those libraries and those universities that came out of those early, those gilded age plutocrats. And we're now at the point where we are now left kind of hoping for those crumbs to fall from our new plutocrats. And that's what we're kind of left with, hoping that Gates or Bezos or someone else will deign to throw some money toward climate change, as Jeff Bezos just recently did,

or deign to throw some money toward the local housing shortage. I have a whole chapter in the book about the big fight in Seattle over affordable housing. And of course, there's a huge crisis in Seattle with housing prices going through the roof. And there was a big fight there in the last couple of years over whether to, to basically tax Amazon to, to provide more money for, for housing, for, for housing and homelessness services.

And, uh, and Amazon launched an incredibly effective, uh, lobbying fight, political fight, uh, against that,

that, that proposed tax ended up, ended up killing it and, and then turned around and, and threw some crumbs, some philanthropic crumbs toward some housing, local affordable housing funds. And so you think, oh, what's the big deal? They're giving it this way instead of that way. And I have a very good commentary on this in the book from a local activist,

a young woman who just said, this is not the way it's supposed to work. You know, we're, we're society, we're democratic society. We're supposed to decide as a whole, how we're going to decide who, how we're going to decide to, to help people and provide, provide basic services in our city, in our society. It's not supposed to be left just to the whim of this or that guy to throw a couple crumbs when he feels like it. Yeah, and of course, the crumbs that they throw will be crumbs that they can afford,

that are structured the way they want them to, and they'll be biased towards doing things they can put their name on, right? Andrew Carnegie's libraries, they're all called Carnegie libraries, and he's remembered to this day. So that's what Bezos would be incentivized to do rather than to, you know, support a more invisible sort of policy that might result in better outcomes. And certainly there'll be less of it. And it's of a piece with what we've seen, you know, all of these companies do, the gig economy companies with Prop 22, you know, for the first time they're facing regulation and they fight back with that by saying, oh, well, we'll offer this instead. But of course, it's far less. But we can present it as though, oh, we've solved the problem.

We've, you know, added employee benefits when really the employee benefits they've added are paltry compared to the ones that they took away. compared to the ones that they took away. I want to talk a little bit about the third-party sellers, because that is so much part of Amazon. And I now avoid Amazon in my own online shopping, which, by the way, is enormously inconvenient to do. Like, if you try to, there's so many things, if you try to order them, if you try to order them not on Amazon you, uh, you try to order them,

not on Amazon, you quickly find you have nowhere to go. Um, and a lot of times you order something from a third party website and it still shows up at your house in an Amazon box because you didn't even realize the company is using Amazon fulfillment. But when I did use Amazon more regularly, I would start to get a sense that, you know, you'd order something and then the box would come and you'd be like, hold on a second. did this come from like this seems like it came from a weird place this seems like an oddly packaged item and you start to realize that there's a lot of like what what amazon has done to our even our supply chain has become very odd there was a you know report in uh the verge by josh disease i think I'm pronouncing it right, about how entire towns now have like small towns have been consumed by this industry where people basically order goods on Amazon, repackage them, and then resell them on Amazon in a way that like they just sort of become this weird arbitrage like turnaround people with

garages full of packages um you know selling selling things in order to make like a couple nickels profit on it on ebay um and it's this weird sort of pointless labor that's being done this doesn't need to be done it's not improving the product at all it's just you know buying it from here for slightly less and selling it on Amazon for slightly more. Have you seen any of these weird consequences? Absolutely. I mean, I have a whole chapter in the book about this whole realm. I wish I hadn't even tried to explain it. You tell me about it, please. So I have a chapter in the book about the third-party sellers, and I based it in El Paso, and I actually based it in the office supply industry. These companies that are just like the famous company in the office, in Scranton, PA, who sell paper and other office supplies mainly to other businesses, to local schools or law firms or whoever other office supplies to mainly to, you know, to other businesses, to local schools

or law firms or whoever, whoever needs office supplies. And, and, and I found a couple of very colorful, very charismatic office supply dealers in El Paso who have in recent years felt extraordinary pressure to, to, to sell on Amazon. And, and they've been getting pressure from the company and also pressure from some of their local clients, including the El Paso city government and El Paso school districts that were big customers of theirs and are now wanting to buy directly from Amazon instead. Amazon has sort of reached out to them and said, why don't you just buy from us? It's much more convenient.

You know, everything's more convenient on Amazon. And then the city and the school systems went to their local suppliers and said, hey, we'd really rather do this through Amazon. We can still buy from you on Amazon, but let's just do this through Amazon instead. What that, of course, overlooks is that these third-party merchants, these local office suppliers, are going to lose a big cut to Amazon when you have that middleman there. to get into a, I slipped into a pitch session where Amazon, some top Amazon reps

were meeting with El Paso office supply dealers at a convention and making this sell to them, urging them to just kind of give up and join Amazon and do all their selling through the site. And watching how they made that pitch and watching how they kind of withheld the very important point about the cut that they were going to be taking from these local businessmen until the very end. And actually didn't even withhold at the end. They had to be kind of pressed to kind of reveal it.

pressed to to kind of reveal it um and and so i just i take you into this whole world of this this the pressure that these that these that these local suppliers are facing um the conundrum that they're facing where they feel like they have no choice and and then this kind of a poignant moment at the end of this chapter where where i'm talking to the son of one of these suppliers, these local businesses, and he works in the business. He helps, he's a salesman. It's a really friendly Mexican-American family there on the border. And he mentioned just in passing that he's on the side,

he's been getting into just doing selling of his own on amazon just what you described like buying goods uh basically sight unseen and then all sorts of goods just kind of discarded goods surplus goods and then um and then and and then packaging or them or sometimes not not even repackaging it's something you're the the goods you know you know as a seller never even see they just there's kind of moving out there in the ether. And, but you're, you've, you've bought them and then you're going to resell them on Amazon. And it's that whole bizarre realm of, of just stuff moving in boxes into, as, as the verse piece described into some town and somewhere in Montana, you know, and, and, and, and so much of our

economy is, is now that realm. I found another, this happened again. I went once I was in Ohio, outside Dayton at one of the big data centers outside Dayton, you know, where the, where the, outside Columbus, where the, where the cloud lives and those data centers. And I needed to use the restroom. So I went to a, there to a church nearby, like a modern church, evangelical church, windowless church, and I asked to use the restroom there. And she said, sure, go on in. I come out and I start chatting with the nice,

you know, the woman at the desk there about how weird it is having this data center next door. And she mentions, just in passing, that she herself has now gotten into selling goods through Amazon, you know, on the, just the quote fulfillment site where you just, again, goods that she's never even seen. They're just, she bought them somewhere online. She's reselling them online. She gets a cut. She's got some box in a warehouse somewhere, some carol.

That's basically her stuff. And that's just something she's doing on the side. It's just, it's completely bizarre. Yeah. I mean, there was this like story, one of these weird internet stories I saw a month or two ago about someone had found a house for sale on a Zillow or Trulia type site. And it was this massive house. And people were, you know, you could do the walkthrough of the house. And people were baffled by it

because it was like this endless warren of like shelves. Like first there's just like someone's weird little living area, you know, sort of like someone who's sort of sleeping on their pullout couch. And then you go down the hallway and you go down a little bit and suddenly there's boxes and boxes of CDs and random goods and books. And like it goes endlessly, endlessly, endlessly. And what people eventually, some internet sleuths figured out what this was and they figured out it was

somebody had purchased a church and was an old church that no longer had a congregation was living in the front. And then in the back was, uh, you know, selling goods out of it, you know, selling, selling things on Amazon, um, and had made a little airsets like, you know, fulfillment center of their own in which they were selling like Shania Twain CDs. And just like, basically it looked like just flotsam, like anything that passed through their hands that could be sold on Amazon would be. And I looked at it and I was like, holy shit, this is where the stuff I order on Amazon is coming from. Like I know the story about the fulfillment center with the people running around with the robots and they're being timed and stuff.

And that's half of it. But the other half is just this almost invisible network of, I mean, nobody even knew that this guy was doing this, except he tried to, you know, he eventually sold the house on Zillow and we could see pictures, right? But like Amazon probably doesn't even know what the inside of this place looks like. Like this is, and that is such a massive distorting effect

for a company like this to have that there's hundreds of thousands of homes like that across America now, I'm making up the number, for a company like this to have that there's hundreds of thousands of homes like that across America now, I'm making up the number, but a massive number that are full to the brim of weird shit that someone is selling when they used to have a job. Now they're doing this. And that's, have we even, do we even have a cognizance of what this company has done to our society yet? No, and we absolutely do not. And because so much of it is invisible.

I mean, think about it. Like that basement was invisible until we were given a glimpse of it. So much of this is behind closed doors. I mean, that's how I've come to think of this. And it's, of course, gotten so much worse now during the pandemic. But that's everything. You used to go to a store, right? And you would, in some form, interact with someone at the store.

It was somehow a social activity. And I don't want to glamorize, romanticize it. The malls could be pretty bleak, and some of the strip shopping centers could be pretty bleak. But there was still, as I describe in the book in a chapter about this regional department store chain, the Bonton, the chain that grew up out of small town Pennsylvania and spread around to small cities in the Midwest. chain that grew up out of small town Pennsylvania and spread around to small cities in the Midwest. And there's still a social element there. You were out in the world, you were in your town, you were together with other people. They would have, at the Bon Ton, they would have wine receptions for moms to come together when they would have a new line of fashion coming into town. you know, for moms to come together when they would have a new line of fashion coming into town.

There are all these different elements that involve actual interaction with other human beings. And now so much of it is behind closed doors from that basement with the guy with his goods stocked away, just waiting to send off. They get sent off and then they pass through that windowless warehouse and then they're showing up in that box on your front step. And it's all so invisible. And just think about that. Like that's how much less human interaction is involved in that chain than what used to be. And just the adamant station that produces. And now that we're seeing just how unhealthy it is for us all to be shut in with the pandemic,

to lose that social interaction, that basic humanity. Well, we've been heading in that way for quite a while in this new world as it was. This has only made it worse, but we are already heading in that direction. Well, first of all you know i have to thank you for doing the work of a journalist and making the invisible visible right because that is what that is fundamentally what uh what journalists do and i think that's

often lost in our conversation about journalism and the purpose of of news and everything else is to like just make us know, turn events that otherwise no one would see into knowledge so that we can have a conversation about it. What can be done about this? Is that something that you take a position on? I don't take a position on the book in the sense that I don't make an argument in the book. The book is not an argument book. It's not a thesis book. It doesn't have, there's not a, you know, there's not one of implicit airing to it near the book's end that part of the problem here, a big part of the problem, is the

concentration. That part of the reason we have such concentrated wealth and prosperity in certain places to the point where they themselves have become kind of unlivable is that in such an unhealthy imbalance across our country is that we have such concentration within certain markets and certain companies.

And that one way to restore some basic sense of balance across our country would be to break up that concentration. And so the book definitely the book is definitely, definitely makes an implicit case for, for this new, this new push toward a new kind of new push toward, toward competition, toward antitrust, not unlike what we, what we did a century ago. Yeah. I've seen that argument bubble up more and more in our conversation about what's wrong with our economy, with, you know, why is it that the American dream has gone in reverse? And, you know, I've experienced in my own family that, you know, the progression we used to have of, you know, you get a good job and you send your kids to college and, you know, you have a pension and all that. And we are all upwardly mobile has reversed in many ways. And when you look at the

totality of it, the more and more it seems to be about the story of concentration. And to me, the more and more it seems like the number one thing we need to do is start putting in antitrust, starting to look at breaking these companies up. Do you have any hope that, I know this is not your, this is not what the book is about, but we have a new administration in. I don't know what the priorities of the Justice Department are going to be if they're going to be thinking about antitrust enforcement, but do you have any hope that the conversation is moving that direction and maybe we'll see more of that in the future.

I do actually have some hope on this front. Obviously, the resistance is going to be huge. There are just these massive lobbying operations that are made all the more effective, of course, because they have quite a few people from the sort of democratic realm, past democratic administrations, the Obama administration, people who have close ties with people that are now coming into the government. It's something that, you know, that can't be overlooked. It's just how much tech is helped by the fact that it is very much a democratically aligned industry. much a democratically aligned industry. And the sort of complicity of democratic, you know, sort of democratic power brokers in tax rise is a big issue. But there are now more and more people on both sides of the line, of the political spectrum who see this problem. And I think that's one reason that I think it does have a chance is

that this is one of the few areas of policy where there actually is some agreement across the spectrum. And people have different motivations maybe for why they are wary of big tech. They're coming from different places on this, but the fact that they share a general wariness and general sense that something needs to be done to rein in these giants means that there's actually some hope for getting something done, that you might actually be able to build some kind of a coalition on this score. I'm hopeful of that as well. And I think it's one of the big jobs of the next five years in American politics and policy. But, you know, the first step of that is making clear what actually is at stake and what is happening, what these companies are doing across the country.

And thank you for coming here to do that for us. And thank you for spreading that, you know, for telling these stories that otherwise wouldn't be told. The book's called fulfillment. People can get it wherever the hell they get a book. I assume they can get it on Amazon, right? They can, as long as they keep selling it there,

you know, maybe get, you know, get it from your public library and then download it to your Kindle. Perhaps. Alec, thank you so much for being here. I can't thank you enough. This is wonderful.

Thank you, Adam. Well, thank you once again to Alec McGillis for coming on the show. The book, again, is called Fulfillment. If you loved that interview as much as I did, I hope you will tell a friend or family member about the show. That is the thing that helps us out the most here. Just say to someone, hey, I heard this good interview. You should check it out. Take a listen to the podcast. I want to thank our producers, Kimmy Lucas and Sam Roudman, our engineer, Andrew Carson, Andrew WK for our theme song. You can find me online at adamconover.net or at Adam Conover,

wherever you get your social media. And until next week, we'll see you on Factory. Thank you so much for listening. That was a HeadGum Podcast.