Thu, Aug

Borders, Bankruptcy and Bad Economics

ALPERN AT LARGE - For those unfamiliar with the declaration bankruptcy and liquidation of Borders Bookstores, there will now be one less chain of bookstores that once graced our malls both locally and nationally as once did B. Dalton and Waldenbooks (which Borders had supplanted in a previous generation).


For those unfamiliar with the ongoing battle between Amazon.com and the state of California over Amazon’s unwillingness to collect California state taxes (link), the issue over the taxing of online sales will likely not be going away anytime soon.

For those unfamiliar with the ongoing high unemployment and underemployment that plagues our city, county, state and country, the debate as to how this all ties together will be one likely to generate more not less debate as presidential and congressional elections loom larger in 2012.

Count me in as someone who does not want to live in a world without libraries and bookstores, and as someone who daily accesses the Internet for news and literature but who still daily reads books and newspapers.  I’m guessing that successful entrepreneurs today appreciate the need for both good Internet access and hand-held literature, because the need for literacy almost always can be achieved by books and newspapers as well as a Kindle or an iPad.

In other words, our greatest Internet and other innovative entrepreneurs, still recognize that the human brain values the medium that only a newspaper or book can offer.  Amazon might have put Borders out of business (just as Borders and Barnes and Noble put B. Dalton and Waldenbooks out of business), but Amazon is still selling tangible books as well as music and a host of other consumer needs that involve our hands as well as our brains.

The economy might be evolving, but our brains are still locked into our bodies, and therefore a healthy brain relies on a healthy body to support it.  Part of that involves the hand-eye-brain coordination that only a book or newspaper can offer.

The greatest crime in the ongoing debate as to what is putting Borders out of business is not what is being discussed (Borders consumers paid sales taxes but Amazon consumers aren’t) but what is NOT being discussed enough:

Did anyone—ANYONE—over the last twenty years think about lowering sales taxes and/or corporate taxes for “brick and mortar” stores like Borders to balance the playing field between online and non-online businesses?

Unfortunately, that sort of discussion is relegated to the “corporate tyrants deserve more taxes, not less” sound bites and arguments that fly in the face of our growing unemployment problem.  After all, Amazon and other online businesses can employ people in other countries but “brick and mortar” companies like Borders have to employ people right here at home—so what could we do to make bookstore and other sales so cheap that online companies would have real competition?

As it stands, consumers could skim and read Borders books for free, then buy them online at Amazon for a cheaper cost then they could at that Borders bookstore.  Arguably, there are other reasons why Borders may have lost its competitive touch, but the analogy to online versus traditional store sales (and the employment that goes with the latter) is still relevant.

Maybe Amazon and other online retailers should be expected to “pay their fair share of taxes”, but the issues swirling around the cost-effectiveness of what our taxes pay for, the corporate taxes our businesses pay compared to other countries worldwide, and the best ways to raise revenue for governmental priorities are only going to get bigger.

And for those who smell evil Republican tax-dodgers at work when these issues are raised, perhaps they would do well to research how former President Bill Clinton and President Obama have both mentioned the need for America to be more competitive with respect to corporate taxes, and perhaps they would do well to observe how Mayor Villaraigosa, Governor Brown and others have worked with Hollywood and related employers to create sweetheart deals to keep jobs right here.

In other words, the role of employers might need to shift in our ever-changing global (a.k.a., COMPETITIVE) economy to one who is expected to not pay corporate taxes so much as to pay for health care, retirement benefits and the like because that relieves stress on federal and state governments to pay for exploding and unsustainable health and welfare costs…and because it increases employment.

We’ll need to consider increasing federal and state personal income taxes to employees of ALL income brackets in order to pay for government services, which allows ALL Americans to have some skin in the game with respect to how our taxes get spent—unlike our current situation, which is too reliant on wealthy taxpayers and therefore forces our politicians to cater too much to the rich at the expense of everyone else.

So rather than pruning the tree (corporate taxes), we’ll need to prune the fruit of the tree (employees’ and their employers’ incomes) to feed the needs of our government…while holding an ever-increasing spotlight to how our taxes get spent.

And for those who STILL seethe and get heartburn just thinking about the evil rich?  Well, I assure you that the evil rich who once ran a vibrant business called Borders won’t bother you for too much longer.

But the employees who once had a livelihood through being employed by Borders might see things a little differently.

(Ken Alpern is a former Boardmember of the Mar Vista Community Council (MVCC), previously co-chaired its Planning and Outreach Committees, and currently co-chairs its MVCC Transportation/Infrastructure Committee.  He is co-chair of the CD11 Transportation Advisory Committee and chairs the nonprofit Transit Coalition, and can be reached at [email protected]    The views expressed in this article are solely those of Mr. Alpern.)   -cw

Tags: Borders, Amazon, books, California, state taxes, Internet, economy, entrepreneurs

Vol 9 Issue 58
Pub: July 22, 2011