View Full Version : Politicians Are Rushing to Ink Cronyist Deal with Amazon

03-15-2018, 01:31 PM
Politicians Are Rushing to Ink Cronyist Deal with Amazon
(https://mises.org/wire/politicians-are-rushing-ink-cronyist-deal-amazon)By Brian Balfour - March 15, 2018

The massive tax breaks, privileges, and subsidies being offered to Amazon by state and local governments across North America for their second headquarters (HQ2) has taken crony capitalism to dizzying heights.

Mark Muro, senior fellow at the Brookings Institution said such offers “speak(s) to the urgency in a lot of places to position themselves in the advanced economy. This looks like a fast way to accelerate one’s entry into the industries of the future.”

Such blatant cronyism, however, is not characteristic of futuristic industries in an ‘advanced economy.’ Rather, as described by Mises, it is more emblematic of a “precapitalistic” economy, in which a few powerful elite controlled the means of production.

In the era of history before capitalism, Mises explains in his book Money, Method and Market Process, the few men of means in society took advantage of their status by obtaining land and acquiring serfs and servants to do their bidding. The means of production of that age (mainly land and manual labor) were thus controlled by a small powerful group of privileged elites. Meanwhile, the masses toiled in virtual servitude according to the demands of an empowered few.

Fast forward in time to the age of the market economy, and the tables were turned. Consumers (the masses) became masters of the means of production. As noted by Mises, “In the market, economic power is vested in the consumers. They ultimately determine, by their buying or abstention from buying, what should be produced, by whom and how, of what quality and in what quantity.”
When the state steps in to dispense favors such as tax breaks or subsidies to only a relative few businesses, however, the playing field becomes uneven and the elites gain influence over the distribution and use of the means of production at the expense of consumers.

Under this scenario of targeted “economic incentives,” a company can gain an advantage over its competitors courtesy of political privilege. Such advantages will help determine which businesses succeed or fail in the marketplace; and therefore influence who owns a greater share of the state’s means of production and how they are used.

Benefiting from this system, of course, are those businesses with the appropriate political clout receiving the political favoritism, along with the politicians eager to record public relations victories by claiming they are “creating jobs” as they dispense their political favors.

Consumers, on the other hand, are left with fewer choices and less sway over determining who controls the economy’s scarce resources and to what purposes they are applied.

In other words, power is shifted away from the masses and back to the elite class of government officials and the politically connected.

Mises’s words warn us that crony capitalism turns back the clock to a time when an elite few ruled supreme over the powerless many.
More: https://mises.org/wire/politicians-are-rushing-ink-cronyist-deal-amazon

03-15-2018, 07:42 PM
Related thread, but not the exact same thing...

Amazon Doesn’t Just Want to Dominate the Market—It Wants to Become the Market

The best business to be in is the business of government, where one company can pass laws that prohibit competition while exempting itself.

03-15-2018, 07:46 PM

MARCH 13, 2018


Microsoft withdrew a bid protest that allows U.S. Transportation Command to begin migrating data to Amazon’s secret cloud region.

For the first time, the Defense Department will begin moving classified data and applications to Amazon Web Services’ Secret Region—the same cloud environment developed for the CIA and intelligence community several years ago.

U.S. Transportation Command—the part of the department responsible for moving troops and equipment around the globe—announced its intent to make use of AWS’ Classified Secret Commercial Cloud Services in December after the company expanded its capabilities and availability to non-intelligence agencies.

The Defense Department’s sole-source decision—a contract awarded without a full and open competition—was protested by Microsoft, which itself offers a variety of cloud services to the federal government. The company withdrew its protest March 8, allowing TRANSCOM to begin migrating data to the AWS Secret Region. In a statement to Nextgov, Microsoft said it withdrew its protest “because the issues involved were resolved” to the company’s satisfaction.

Microsoft and AWS are considered two of the front-runners for a different cloud contract, the Defense Department’s Joint Enterprise Defense Infrastructure. JEDI would supply the whole Defense Department with cloud infrastructure around the world at all levels of classification, including warfighters in remote areas, Defense officials explained at a recent industry day. Market analysts say such a contract could be worth as much as $10 billion over 10 years.

But while those companies position themselves to bid on that contract sometime later this year, TRANSCOM’s use of AWS’ Secret Region is an important immediate development in the battle for cloud supremacy across the government.

TRANSCOM is designated as the “pathfinder,” a model for other Defense agencies that want to migrate to a classified commercial cloud computing environment, according to its sole-source justification. If its early efforts prove successful, other Defense agencies are likely to follow suit, which could mean big business for AWS. The Defense Department spends about $40 billion annually on information technology.

TRANSCOM’s sole-source justification indicates AWS is the only game in town for classified commercial cloud services. While a few commercial cloud companies can host the Defense Department’s sensitive unclassified data, it appears only AWS can host classified data that otherwise travels through a system of computers managed by the Defense and State departments called the Secret Internet Protocol Router Network, or SIPRNet.

“Amazon is currently the only cloud provider with CS2S clearance,” the justification states. “Without AWS, [TRANSCOM] cannot migrate its SIPR applications into a commercial cloud environment.”