If Amazon.com gives almost nothing to charity, should we care?

Arts, entertainment, and more.
March 6 2009 6:19 PM

The New Scrooge

Are there lemonade stands that devote more to charity than Amazon.com?

(Continued from Page 1)

That question animates the recent but largely unnoticed book Creative Capitalism: A Conversation With Bill Gates, Warren Buffett, and Other Economic Leaders, overseen by Slate's founding editor, Michael Kinsley. Beginning with  Bill Gates' 2008 Davos speech by calling for "creative capitalism"—a loosely defined "hybrid engine" of corporate do-gooderism and entrepreneurial know-how—Kinsley calls on an all-star panel of economists and capitalists to respond.

If Gates expected his fellow captains of industry to sit in a circle and sing "Kumbaya," it's certainly not what he got. What's remarkable about Creative Capitalism is that the best arguments belong to the tightwads—to those who believe, as Warren Buffett bluntly tells Gates in one conversation, "Basically, I don't feel I've got the right to give away the shareholder's money." By the time Richard Posner comes aboard, the question's not whether corporations should be finding new ways of being charitable—it's whether they should engage in any charity.

The problem, contributor and Yale economist John Roemer notes in his tart essay "Just Tax the Rich," is not that corporations don't care enough—it's that we don't. "Repairing the present injustice should not be left to charity (or corporate philanthropy)," he writes, "but instead should be a state mandate."

Yet the most bare-knuckled takedown comes from where you'd least expect it: beardy Berkeley prof and former Secretary of Labor Robert Reich. Corporate charity, Reich charges, is window dressing with a negligible effect on social problems—and it's actually pernicious. "The message that companies are moral beings with social responsibilities diverts public attention from the task of establishing laws and rules in the first place," Reich writes. "Meanwhile, increasingly, the real democratic process is being left to companies and their lobbyists." He's not speaking in hypotheticals, either; Larry Summers, Obama's new chief of the National Economic Council, joins in to point out that the problem behind Fannie Mae and Freddie Mac was that "the illusion that the companies were doing virtuous work made it impossible to build a serious case for regulation."

This is old-school skepticism—Adam Smith voiced the same concern in 1776—though its modern proponents draw on Milton Friedman, who maintained in his seminal 1962 volume Capitalism and Freedom that "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it plays within the rules of the game."

Coldblooded, perhaps, but fair enough: Amazon.com and its shareholders can claim a philosophical purity of purpose and not spend a penny on charity so long they play by the rules. There's just one problem: Amazon.com doesn't much like the rules.

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Amazon.com has spent a decade opposing the enforcement of online taxes so that its noncollection of sales tax creates a powerful pricing incentive over bricks-and-mortar competitors. Why buy a MacBook Air in Boston, after all, when online you'll save nearly 90 bucks in Massachusetts sales tax? But there have long been warnings that consumers just might get ruinously addicted to the tax-free ride Amazon and others appeared to be giving them—and that states might just get, well, ruined.

I say the ride appeared tax-free: In fact, there is tax due on some online sales. Amazon and other online retailers have benefited from the lack of an enforcement mechanism. States have started taking notice, and when New York state recently attempted to fix this situation, Amazon.com took them to court—and got shellacked. The company, Manhattan Supreme Court Justice Eileen Branstein ruled last month, did "not come close" to showing that the state was wrong to demand that these taxes be collected. With millions in desperately needed uncollected revenue from online retailers at stake for the state, Amazon.com hasn't said yet whether it will appeal.

But in the meantime, while states watch their programs for the poor go broke, the uncharitable online giant is quite happy for them to eat cake—for just $28.95 plus $9.95 shipping.

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