Ho-fung Hung in Phenomenal World:
Though the lockdown in 2020 threw many workers out of work, the big fiscal stimulus, fueled by government debt and an unprecedentedly large monetary expansion, offered stimulus checks and elevated unemployment benefits to millions of Americans. In 2020, US federal spending grew by 50 percent, making the deficit share of GDP the largest since 1945, and the M2 in the economy grew by 26 percent—the largest annual increase since 1943. Such fiscal and monetary expansion prevented a collapse in consumption. After an initial fall in Spring 2020, US household consumption bounced back and grew by more than 40 percent in the third quarter.
The Amazon syndrome
The boost in consumption made online retail merchants among the biggest beneficiaries of the fiscal and monetary stimulus. Amazon, one of the largest and most profitable companies in the world, saw its profits surge during the pandemic. Revenues and net profits growth for Amazon were 38 and 84 percent respectively for 2020. Simultaneously, Amazon workers got an average pay raise of only 6 percent, including bonuses and extra hazard pay. This disparity indexes exactly how the benefits of the monetary and fiscal expansion are distributed between capital and labor. Given the defeats of unionization drives in Amazon warehouses, we can expect this disparity to persist or get worse.
Amazon’s business is not just a question of capital and labor, but also of international political economy. Measured in gross merchandise value, 40 percent of sales in Amazon are directly from Chinese vendors. During the pandemic of 2020, 75 percent of new sellers on Amazon were from China. Amazon has aggressively recruited Chinese vendors to sell items to its customers directly, despite the concern that this practice elevated the percentage of mislabeled, faked, and unsafe products sold on the platform.
It is not an accident that amidst the pandemic, the US trade deficit in general and the deficit with China reached a historic high, trade war notwithstanding. Amazon is not the only retailer that expanded its sourcing from China during the pandemic.
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