PASADENA, CALIFORNIA - JANUARY 10: (L-R) Executive producer Raney Aronson-Rath, producer James ... [+]
Updated on May 11, with a response from Amazon.
Why do empires rise and fall? Some suggest that empires become vulnerable when they are at their peak. Their overconfidence leads them to start costly wars that eventually cause domestic economic and political crises. This is the crux of Paul Kennedy's "imperial overstretch" theory.
Jeff Bezos' Amazon empire may be moving in that direction. At the peak of its financial glory, Amazon is getting into political conflicts with environmental, labor, and human rights groups. While its business model caters to the tech-savvy generation, it also collides with their liberal values. Ironically, a company that sees the technological and consumption trends better than anyone is not spotting the emerging political storm.
Imperial Overstretch
In The Rise and Fall of Great Empires, Paul Kennedy outlined the idea of "imperial overstretch." Empires get into costly military adventures that eventually bankrupt them. In a magnificent biography of Napoleon, Andrew Roberts describes how Napoleon's invasion of Russia in 1812 ultimately caused his downfall. America's 2003 Iraq war and Russia's 1979 invasion of Afghanistan also reflect imperial overstretch.
Why do empires make bad choices? After all, they must have done something right to accumulate such power. The problem is that power can lead to overconfidence. They believe that overwhelming force can overcome opposition.
Sometimes this strategy succeeds. But at other times, the use of excessive force can consolidate scattered opposition. When concessions can resolve a conflict, some empires wage war. Is Jeff Bezos' empire not recognizing the political storm that the firing of the climate and corona whistleblowers is causing?
Amazon's Handling of Climate and Coronavirus Issues
Amazon has been criticized for its climate policies. Recognizing this political reality, in September 2019, Bezos announced the Climate Pledge. Further, in February 2020, he declared that he would establish a $10 billion Earth Fund.
However, some of Amazon's employees are skeptical of such announcements. They have (informally) organized under the banner Amazon Employees for Climate Justice (AECJ) to demand Amazon walks the climate talk, for example, by not selling its cloud services to fossil fuel firms. They wrote an open letter to Bezos asking him to support a shareholder resolution on climate change. And they organized a walkout during the September 2019 Climate Strike.
In January 2020, Amazon warned employees against speaking to the media without getting prior permission. In April 2020, Amazon fired AECJ leaders Emily Cunningham and Maren Costa.
AECJ has publicly spoken against Amazon's less-than-stellar record in protecting its warehouse employees against Coronavirus infection. In particular, AECJ criticized the firing of Christian Smalls, a worker in Amazon's Staten Island warehouse. Amazon has also fired Bashir Mohamed, who raised similar safety issues regarding a facility in Minnesota.
(Subsequent to the publication of our commentary, we received the following statement from John Tagle, Senior PR Manager at Amazon: "We support every employee’s right to criticize their employer’s working conditions, but that does not come with blanket immunity against any and all internal policies. We terminated these employees for repeatedly violating internal policies.")
To be fair, Amazon has instituted policies to protect its employees. It has increased their pay by $2 an hour, and it is allowing two weeks of paid leave for the quarantined employees.
But clearly, this is not enough. Early this week, Amazon's Vice President, Tim Bray, resigned. In his blog, he wrote: "Firing whistleblowers isn't just a side-effect of macroeconomic forces, nor is it intrinsic to the function of free markets. It's evidence of a vein of toxicity running through the company culture. I choose neither to serve nor drink that poison."
Amazon's Political Problems Could Accelerate
Attorney General Letitia James of New York is looking into the firing of Mr. Small. Several Senators, New York's Mayor de Blasio, and major unions have criticized Amazon.
Amazon might ride out of this political storm. After all, it is among the few companies that are hiring! Its share price is going through the roof. The corona lockdown might permanently change consumer buying habits in favor of online shopping.
But moments of peak power can seduce leaders into making bad decisions. Amazon is depleting its reservoir of goodwill. It is using a sledgehammer of firing whistleblowers when reasonable accommodation could have addressed their concerns.
One might argue that Bezos is not a politician who needs to win a popularity contest. He is a business genius, and this is what should count. Fair points, but his actions have political implications. Indeed, Amazon understands this. After all, it announced the Climate Pledge a day before the Climate Strike, where its employees were to stage a walkout. This is why Amazon's recent firing of whistleblowers is puzzling. Just imagine how Bezos could have changed Amazon's public image had he invited these employees in for a discussion!
Amazon understands consumer needs probably better than any other company. But it is failing to appreciate stakeholder expectations about climate protection and fair treatment of employees. By its actions against whistleblowers, Amazon is becoming the poster child of corporate America's problems rooted in placing profits over people and the environment. Although it is accumulating profits, it is also accumulating distrust and political opposition. In the process, it is compromising its social license to operate. This does not bode well for its long-term prospects.
