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If Only Matt Stoller Understood Anything About Amazon

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Matt Stoller wants us all to know that Amazon is this ghastly monopoly that must be broken up, brought under political control, summat, because, you know, it’s ghastly.

At which point we should apply the Gell Mann Amnesia test. Is there some part of the analysis that we really, really, already know about so that if we can see what he’s done there we can make assumptions about the rest of the analysis?

Ah, yes:

Amazon’s origin story reflects the reality that the corporation is a creature of policy and politics. Bezos located Amazon in Seattle to take advantage of a sales tax loophole that gave his bookseller a competitive advantage over brick-and-mortar rivals. At the time online sellers didn’t have to pay sales taxes except in the state where they were located, and Washington was a relatively small state. Many of its initial customers eagerly sought this tax break.

No. Retailers do not pay sales taxes. Retailers charge sales taxes. So, we know that Stoller hasn’t the slightest clue about one of his contentions. That will – OK, should – colour our estimations of his other claims.

Amazon grew at a time when conservative economists had undermined antitrust law, by focusing antitrust enforcers and judges not on market power, but on efficiency as measured by lower short-term consumer price.

Sorta depends upon what we consider “short term” to be really. The development of the economy is a never ending series of short terms, clearly. Perhaps what matters is how long that string lasts for. On the subject of consumer benefit:

At times, when things are not going the way they should, explanations are sought, and the Japanese central bank has now found one.

Quoting a study, the bank said during its last meeting that e-commerce companies like Amazon are the reason behind the lack of adequate inflation, as they led to price wars and the comparability of prices. As a consequence, prices rose more slowly than at other times — and even slower than what economic theories suggest.

According to the bank, Amazon and its peers have pushed down inflation by about 0.1 to 0.2 percent.

That’s an annual number so, over the decades that’s about, say, 2 to 4% without compounding. That is, all us consumers are about 4% better off simply because of the existence of Amazon. Yea, even if we don’t buy from it – it’s existence means everyone else has to temper their prices.

Which is a pretty big benefit really. Call it $800 billion a year by now for American consumers. And, you know, why wouldn’t we want a definition of antitrust – even if it is a conservative one – that allowed that to be done to us?

Which brings us to what Stoller is really complaining about. Amazon is indeed a centre of economic power. But it’s not under the control of Matt Stoller and his mates. Which is why he wants it subsumed into politics where he and his friends might gain some power over it.

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6 COMMENTS

  1. And what would they do with that power? Lower prices? But their prices are already so low they are forcing the entire economy to increased efficiency. Raise prices? Hey voters! Vote for me to make your lives more expensive! Force them to sell products they don’t already sell? But isn’t Amazon’s line that they sell everything from A to Z. And Amazon is more and more a marketplace not a retailer, so if you want spangled widgets, if there is a market for spangled widgets, there will be a spangled widget monger on Amazon.

  2. So between Amazon and Wall Mart more has been done for the average American in 20-25 years than the US federal government in the past 150 years, financially.

  3. Make your mind up Tim, is it 1-2% reduction of inflation or 2-4%. You have different figures in consecutive articles. It makes you as big a tool as the people you criticise. Fix it and take more care; we are not Guardian readers.

  4. Just curious, but was Bezos from Seattle or Washington state? Perhaps that’s why he set up shop there? Also note that in the beginning most of his customers avoided sales taxes but had to pay shipping costs. So, it seems he wasn’t going to succeed by avoiding the 4-8% sales tax but by filling a desire, convenience primarily.

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