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?
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.