
Amazon and the Unwisdom of the Populist Crowd - raleighm
http://truthonthemarket.com/2018/05/01/amazon-and-the-unwisdom-of-the-populist-crowd/
======
didibus
I think this is all true. The problem lies somewhere else.

Companies like Amazon is what we want. Convenient, re-investing all profit to
improve its services and lower its prices. They deliver beneficial goods and
services to our society.

That's great. The problem is in redistribution of wealth throughout our
society.

As we optimize production and delivery. The inequality of wealth distribution
widens, because less and less crums fall behind for the poor to pick up.

The pie gets bigger, but the portions most people are getting of it keeps
getting smaller.

If it grew faster then the portions shrank, all would be good, but I believe
we're starting to see cases where it doesn't, and some people reaching a point
where they get none of the pie.

And this is not an Amazon's problem, or an economic one. This is a societal
problem we'll have to address.

What if not everyone is needed? What if society can sustain itself with only a
fraction of the population? Who gets chosen to remain, and who gets cut out?

Think of a dinner party. 10 people are invited. They form the party. How many
of them are needed to cook? Not all 10, thats too many cook. It would actually
be less efficient to have them all in the kitchen. So what if two of them
cook? Do they only get to eat? Do they get more of the food? Maybe all 10
guests would have been able to cook, so who's lucky enough to be the chef and
eat?

This is now happening at the scale of our society. But we don't treat each
other like friends at a party. So when we get to cook, we don't share. We
should.

~~~
peacetreefrog
What evidence do you have that portion of the pie is getting smaller for most
people? I do not believe this at all. It's especially not true on a global
scale, where globalization has improved the lives and wealth of millions in
China and India.

~~~
eloff
It is true in the US. There's been a lot published on the subject and it won't
be hard to find. The developing world is another story, but the inequality is
arguably even more extreme. With a much higher percentage of people living in
poverty. Their middle class is mostly growing though, so the picture is
improving.

~~~
peacetreefrog
No, a lot depends on how you look at the data. See these two videos for a good
overview:

[https://www.policyed.org/numbers-game](https://www.policyed.org/numbers-game)

------
awat
I’m not an economist so someone with more insight can weigh-in if I’m speaking
out of turn. My personal concern with Amazon is a similar one I had with Wal-
Mart in that there seems to be a relationship between stagnant wages
acceptance based on access to lower and lower cost goods. This seems to me to
be an unsustainable race to the bottom that benefits large vertically
integrated multinationals no matter how many economic arms they figuratively
break in the process.

That being said I’m not sure if that is a problem that Amazon is actually
creating or just a consequence of wage supression being easier to accept when
technology makes goods cheaper.

~~~
actsasbuffoon
It's a bit of a trade. I'd say it comes down to market efficiency.

We all understand why efficient markets are good. It allows large numbers of
people to affordably access a variety of goods and services. That said, people
rarely discuss the downsides of extremely efficient markets.

In an inefficient market, there are lots of opportunities for someone to step
in and find a way to make money. For instance if shipping and storing goods is
expensive to do in small quantities, and your area doesn't have enough access
to tools, you could exploit that inefficiency and make some money by opening a
hardware store. You would take on the cost of storing, transporting, and
insuring a large quantity of goods, and you'd take advantage of economies of
scale in a way that regular consumers can't. You make money, and your
community is better off, because now they have a place to buy hammers, paint,
and other hardware.

In a highly efficient market, people have already found most of the obvious
opportunities to make money. If shipping is cheap enough and online ordering
is convenient and secure enough, it could make sense for one entity to become
so large and efficient that they dominate all of retail.

It's a lot harder to run a successful hardware store in 2018 than it was in
1978. You need retail space, employees, etc. Meanwhile your competition can
exploit economies of scale in a way that was impossible a few decades ago.

Is this a bad thing? It's hard to say. It gives lots of people cheap access to
goods. It also makes it hard for small players to break into the scene, and
local economies are probably not going to be able to adapt very quickly.

~~~
awat
I agree with a lot of this thanks for the response. What are your feelings on
some kind of regulation around local protections? I know regulations are
generally percieved quite harshly on HN. But in a highly efficient market it
seems like you may at some point no longer have local access to goods. Which
seems like a dangerous recipe if so&so location becomes no longer worth the
cost of shipping goods there but the local stores have already perished.

~~~
actsasbuffoon
I'm in favor of good regulations, but I'm also not a libertarian. I'm a fan of
the Scandinavian approach; well regulated free markets.

That said, I'm relatively new to investment. I've been reading a lot on the
subject for the last few months, but there are people here who know way more
on the subject than I do. It's certainly been highly educational, but it
hasn't done anything to shake my core belief that markets should exist to
serve people, not the other way around.

~~~
awat
Seems logical I definitely agree with the sentiment about markets existing to
serve people.

I’m in a similar place with my research I know enough to know there is a
problem but then again thats the easy part fixing it is the tough bit.

------
awakeasleep
Seems like an effort to dismiss the new antitrust movement's goal of helping
people realize the problem presented by these enormous companies is a
_political problem_ that needs to be analyzed across the many ways society is
affected.

The author doesn't make a very spirited defense of his main point, because he
distorts the neo-Brandeisian analysis of the _effects of Amazon_ on business
and employment into a question of whether the means Amazon used to achieve
those effects are legal.

Modern Anti-trust is looking to see whether new standards should be applied to
anti-competitive behavior, based on how the most powerful companies are
affecting society. They're not trying to litigate whether our current
megacorporations broke any rules to get where they are.

But even conceding that point, let's return to the introductory paragraph,
What does it mean for a company to be Too Big? There are obvious answers, like
how a company that is "too big to fail" holds the government and citizens as
collateral when it gambles.

But what about something that applies to the tech monopolies more directly?
Too Big to Manage. It's an absentee landlord type situation. Facebook allowing
people to sell oxycontin and meddle with the US election comes to mind, but
what about:

1) Good faith usage of Amazon can get you put on restricted traveler lists.
[https://lifehacker.com/your-amazon-order-might-lock-you-
out-...](https://lifehacker.com/your-amazon-order-might-lock-you-out-of-
trusted-travele-1821964978)

2) Amazon facilitates the sale of counterfeit goods, including pet food.
[https://news.ycombinator.com/item?id=16448001](https://news.ycombinator.com/item?id=16448001)

3) It seems to be facilitating money laundering.
[http://fortune.com/2018/02/22/money-laundering-books-
amazon/](http://fortune.com/2018/02/22/money-laundering-books-amazon/)

4) And we've all seen the rest of the articles, about illegal drugs on amazon,
about fake review scams, and more

Those are the points the author should address to counter anti-trust's
uneasiness about amazon

~~~
neuxenian
This was the tipping point for me, actually, when I went through this same
experience about a year ago:

[https://consumerist.com/2013/06/18/amazon-cancels-
my-6000-or...](https://consumerist.com/2013/06/18/amazon-cancels-
my-6000-order-because-it-doesnt-know-how-to-use-a-fax-machine/)

It sounds like a minor bizarre Kafkaesque corporate nightmare, but the whole
experience was so surreal I can't begin to convey it. Amazon demands, out of
the blue, with no explanation, copies of sensitive financial documents to
immediately be sent to strange unknown numbers over _fax_ , or they will shut
your account down. And when you do comply, they assert completely
capriciously, that you have not, without explanation. And then they shut your
account down. The whole thing seems like some obvious scam, except that Amazon
representatives can confirm for you that it is real, even though they
themselves cannot actually communicate with anyone involved.

I mention this here because of the sense of impunity involved. It was so
absurd that any other corporation wouldn't think about doing something like
this because of the obvious consequences that would occur.

I've generally felt positive toward Amazon over my lifetime, but in the last
couple of years I've soured on them, and it's directly related to a large list
of factors that in aggregate suggest Amazon is too large and is abusing its
position.

The article undermines its own arguments by pointing out things like Amazon
represents "less than half of all online commerce," that "(44%) takes place on
its platform." The author is attempting to argue this is not too much, but to
me their argument only proves the point.

I'm not sure what to do about it, but Amazon has become a problem, and they
are abusing their monopoly.

------
makmanalp
> But, just as in 1993 with Walmart, and now with Amazon, the basic fact
> remains that consumer preferences shift.

Tragedy of the commons and undesirable local optima are still a thing. Yes, we
might want cheaper and more convenient shopping and continue to buy stuff from
Amazon, and also still might not want the long term negative effects of Amazon
slowly crushing all competition.

The rest of the article is about whether what Amazon is doing fits an existing
definition of anti-competitive. That's all fine and good, but a larger
question is whether that definition of anti-competitive is the only thing we
should be worrying about. e.g. yes, Amazon forces market conditions to improve
for customers in the short term, but I have zero doubt that once they crush
competitors they'll happily jack up prices.

There's also perhaps an argument that the level of automation and
technological prowess that amazon brings is different from what Walmart had
back in the 90s. There the argument was that walmart is walmart, but local
shops still at least have a premium niche to fill (which, while true, did do
disasters to many local economies which didn't have the clientele for niche
stores). Now perhaps Amazon is good enough that it might even destroy that gap
too.

------
haZard_OS
I think this is a good time to introduce Richard Wolff, my favorite economist.
Here, Wolff makes a few general remarks about Amazon in comparison to
outsourcing to China:

[https://www.rdwolff.com/is_amazon_the_1_threat_to_jobs](https://www.rdwolff.com/is_amazon_the_1_threat_to_jobs)

------
plantain
Search for "Chromecast" on Amazon. How exactly, is that not anticompetitive?

~~~
jonknee
Because they are far from the only store and it's easy to get a Chromecast
wherever you are? You can't buy one at the Apple Store either, but that's
fine.

------
acd
Sherman antitrust act has been used in the past to break up companies which
has been to large for example AT&T and Standard oil.

[https://en.wikipedia.org/wiki/Sherman_Antitrust_Act](https://en.wikipedia.org/wiki/Sherman_Antitrust_Act)

------
zeth___
And here we see capitalist apologists trying to jettison capitalism and move
over into feudalism.

By definition the only time a market can function is when no firm is large
enough to have an impact on prices.

Amazon can. Amazon is too big and needs to be reduced into smaller chunks.

The best solution is a revenue tax for companies. Just how people pay an
income tax and a consumption tax so too should corporations. That the largest
will splinter into thousands of small ones is a feature that will kick start
competition and get us out of the 'too big to fail' economic funk we have been
in for 20 years.

~~~
killbrad
Whose definition says that?

