Amazon would pose a very unique challenge, I think, for our Libertarian friends to answer who would hold them to account for the main type of abusive practices they practice.

Amazon rose as a general retailer (books and a few other items) that competed, as all companies do for customers with a general market place where other companies could sell their wares also.

But as the Internet became the preeminent sales channel and as Amazon built a massive distribution system to compliment it they have used their massive data accumulation to watch what products sell well on their sites and if that Product fits Amazon's strategic direction they just often start sourcing it and selling it themselves directly in a way the other retailers cannot compete. They are basically using some other retailers as their research tools and then stealing their business.


Since the customer is not hurt, and often benefits (with cheaper prices) I am curious how our Libertarian friends would see an Amazon held to account in Libertarian world?

Ah, so you are not for the free market. Consumers make Amazon, not Amazon. When folks like you start holding yourself accountable, then maybe Amazon would not be as big, but that kind of goes against your OP where you were complaining about high prices for goods and services, blaming that on the evil corporations, by the way Amazon's net profit margin is 3.6%. It means they are not keeping 96.4% of the money they earn. You are making the same excuse as people do when railing against Wal-Mart when they were the big bad wolf. The issue is, consumer demands cheap prices. I'm not sure how you think retail works, virtual or brick and mortar, without scaled distribution, i.e. consumer demand for cheap goods. The market demands that efficiency. Are you saying this efficiency is evil? When was the last time you went and paid 25% mark up for a product due to that retailer not having the economies of scale? I digress, the money you save on the goods is how you afford that iphone in your pocket.

I am not for making things cartoonishly simplistic and then pretending they can operate that way. I recognize these systems are complex and cannot be characterized with buzz words.


So while I am for 'freer markets' and understand the correlation between 'freer markets' and wealth building for citizens and society, I can also recognize that what libertarians refer to as 'free markets' would immediate bring a whole new area of perils to the very same citizens.

Agreed.
No this is the type cartoonish simplification I speak about above.

For instance, answer me this. What is different in Libertopia as opposed to today with regards to how the 'citizen' or 'consumer' to hold Amazon to account? Take government out for a moment and just address what I ask.

I've identified a problem with Amazon's practices above with regards to how they 'compete'.

How does that get addressed or solved in Libertopia?

@itshotinvegas, I would really be curious to have you walk me through this so I will really endeavor to not make it personal or insulting going forward if you are willing to make the attempt to do the deep dive explanation.

No intelligent person advocates for an entirely free market. We know anarchy does not work, which is a market devoid of regulation. We know total control does not work, either. Some have called this fascism, which would be correct and conflates that with "right wing", which is bizarre. Fascism is not left, or right, at least the way it's used. Maybe authoritarian is more apt, but it's still weird to associate that to the right, when it comes to economics. The idea is that people control markets. Markets exist either way. Essentially, lefties want more government control over the markets, with the government being a de facto voice/force for people. Righties want the government to have less control over the markets, and let consumer behavior determine winners and losers, i.e. the peoples voice. Make no mistake about it, though, any system you have, there will be winners and losers, as determined by the market. Many economist think there is more winners than losers with capitalism than any other system. You don't like Amazon, dont shop there, but people do because they get value. You are entirely free to pass that value up, I don't know why you need the government to stop you from doing it. BTW, Apple is way worse than Amazon, when it comes to anti-competitive behavior.


With that said, Amazon is not doing anything unethical. It's not stealing anything. What people forget is, 99% of wealth is created by offering a product/service at a price people can afford, and that people demand. In other words, provide value to the consumer. To be successful in retail, you need constantly improving economies of scale, or better than your competitors. Unless you are operating a niche, high margin store. Amazon used Sam Walton's playbook. This removed a middle man, the retailers who were leveraging Amazon's POS system, i.e. website. This was a cost to consumers. However, by removing those small business retailers, it made things cheaper for consumers, because Amazon brings scale. That means Amazon is able to lower their cost basis, which mean lower prices, which is what keeps them ahead of their competitors. If they just pocketed the change, they'd quickly be overtaken by someone who pass the cost savings on to the consumer. These large scale retailers operate on volume, not margins. Wal-Mart, Amazon, etc etc operate at a 3-4% net profit margin, it's baked in. The resellers increase cost for the consumers, not Amazon. Consumers are going to go to the place that eliminate that additional cost, in most cases, again Apple is a outlier here. They charge a premium for reselling cell phones (or more apt, cell phone parts).

There are losers. Small business retailers are affected. Is removing them, on a whole, bad for the economy? No. Those retailers were not providing value to anyone. They would not exist, except for Amazon's POS, i.e. website, which generates the traffic. Also, there are competitors, from the mobile app store you have...to Wal-Mart, to any other big box retailer. For the most part, these folks were not producing anything (check out drop shipping, same concept). The ones who are producing something, and not reselling stuff, will continue to do so.

This brings us to libertopia. From what I understand, this would mean a more fragmented retail system. While it could work, you will get more corruption, i.e. black market activity. This because the prices on goods will increase due to not these resellers you seem to want to keep in business not having the scale, then FexEx, Ebay, etc, becomes the winner.

In my mind, there is nothing to hold Amazon to account for, unless you want to pay higher prices for goods and services you purchase online, or rather pay cheaper prices on a black market equivalent of Amazon. Amazon is not a monopoly, by far. So, you'd have to a bit more clear on what type of regulation you would want to impose to stop this behavior you find bad, however I've laid out the consequences, generally. At that point the government is protecting resellers, and is no longer controlled by demand.

Plenty if not all grocery chains do the same with private labeling. I get what you're saying but 'branding' has always been about differentiating the quality of one brand from another or the generic and 'innovation' has always been about capturing the advantages of first to market.

OK. I don't disagree with a lot of the bigger concepts here. I consider myself a small c Conservative, meaning limited government involvement in key NEED areas only.

So I will comment on a few points adn chop out the rest.

I have argued with hardcore libertarians who are not otherwise dumb who argue for entirely free market. Every interaction by voluntary exchange with no gov't whatsoever.



Agreed unless you extend that to the parties who tend to say they are Left or Right in gov't. Righties (gov't) want as much control as anyone else.


I would like to see what you are referring to specifically that is anti-competitive from Apple.

Specifically when it comes to Amazon, they House all the buying and selling Data of every product that sells on their platform. They look at the data of any top sellers and if strategically the products that top seller has fit Amazons expansion goals they have been known to just get and offer their own competitor for that product and drive the prior seller out of business with cheaper pricing.

You may say 'the consumer wins and ultimately has the choice' which they do, but what about that retailer? That other company? They basically do all the R&D and spend to prove the market out. Amazon has such near monopolistic power on the Internet that many have little choice but to use. And all you can do, if successful is HOPE Amazon never steals your product list and competes against you.

To me that is very monopolistic abusive power.

As you say citizens or customers are not inclined to 'check' Amazons power and in fact would support it by giving Amazon increased sales.

Do you see now problem 'down the road' with this type of behaviour?

Amazon has been promoting its own products at the bottom of competitors’ listings

KEY POINTS

- The new feature shows links to Amazon’s own private-label brands inside rival listings.
- Amazon is aggressively pushing for the growth of its private label brands, which is estimated to generate $7.5 billion in sales this year.
- Its tactics raise questions around how Amazon uses its marketplace sales data to potentially gain an unfair advantage over other sellers.

--------

Amazon Sellers Say The Tech Giant Is Crushing Them With Competitive Pricing


...as Amazon sells competing products at significantly lower prices and expands its private-label brands, some of the site’s third-party sellers say the retail giant is squeezing them out...

...Merchants told BuzzFeed News they fear that the Seattle-based company uses its marketplace to test sales of new items, and then it sells similar or identical items at a lower price than third-party sellers could offer.

One seller told BuzzFeed News that he saw his sales of an iPhone cable dip when Amazon started selling its own AmazonBasics version. The cable sold at a few dollars under his listing price, and Amazon’s product, unlike his own, has racked up dozens of complaints from shoppers who say the cable has overheated or started smoking. Yet it’s listed as a “#1 Best Seller” in lightning cables on the site...

The examples given in the OP of crony capitalism aren't really examples of crony capitalism. They are just examples of capitalism.

This is interesting. You're arguing that competition doesn't lower prices, economy of scale does.

You're also implying that the POS is just as valuable as the product itself. Whoever controls the pos controls the market. Which you claim creates wealth.

LOL. Capitalism really is all living off of another poor sucker's labor isn't it ?

False.

neither of those situations would continue to exist without the gov't blocking the market to other entrants.

Canadian generic pharmaceuticals already trickle across the US border and many more would at cheaper price points if the gov't did not block them. Same for the text books.

Maybe I'll start a thread on Crony Socialism.

You could.

I don't think the average socialist would argue that government policies can be used for the benefit of the select few though. They'd likely see that as something that needs to be prevented.

The average American who's been bred to worship a mythical free market mostly doesn't even understand how he's being duped. And if he does ask he's told how complicated economics is and he should just trust that capitalism is the best. Because....reasons.

You can discuss that here.

I've already indicated upthread that Socialism and Communism are MORE prone to this abuse due to less layers of check and balance to corrupt.

if by indicated you actually meant completely pulled out of your ass then ok good

Apple only produces one thing, really, that's an OS. The rest is just repacked components. In order to get that OS, you have to buy the repackaged components, and become reliant on their ecosystem. Everything about the iphone/mac/etc is produced by someone else, with exception of the OS. They use ARM based chips, and seem to be still using QUALCOM modems, some cases intell, and I think Samsung displays.

The OS has not really changed substantially over the years.

They have significant market share within in the US. They are never first to market with improved technology, nor are they ever the best, and most of the time lag behind one-two years. But consumers are married to that ecosystem. Consumers willingly pay Apple a premium.

This market share they have gives them leverage with cell phone companies (little known fact, providers take a loss on Apples, (and to be fair, Samsung flagship models), and app developers. Apple trains their CSR/tech support to refer most issues to the provider, despite having a somewhat closed warranty system (i.e. most of the time you have to go through Apple to get the device replaced). Most customers will blame the carrier for the phone going wrong, becasue that's where they buy them. For instance, if a provider comes out with a technology that will improve the service, Apple won't put it on the phone for one-two years (an example of this is HPUE, and Sprint). If you want to attract customers in the cell phone market, you have to offer discounts on iphones, and you have to market a phone that does not perform as well as a cheaper phone. In this way, this makes cell service remain expensive, because providers have to recoup that cost to be profitable. Providers need the iphone, because of demand for them.


If you want to capture a customer within the app market, you have to go through the Apple Ap Store, and pay Apple 30% of sales to do it. This cuts makes apps and the services more expensive. More importantly, though, this siffles innovation. That 30% probably prevents some apps from being developed that would otherwise be beneficial to many people.

Google does not have this problem, even though you can buy a Google phone, there is competition between phones with Android. Googles fees for app development are much cheaper, and while they still get a decent percentage of sales, Google is not charging the consumer a premium for accessing their marketplace.

The tl;dr is, Apple has a monopoly on devices using their OS.


Okay, but who is winning? Amazon, because they are increasing their revenue, but who else? Consumers. Also, your product is not unique if the only determining factor is price. That's the point, consumers benefit the most, as the loss of the person who was offering a product that was not able to differentiate itself from a generic alternative. I buy Coca Cola for a reason, as opposed to Sam's Cola. It taste better, and that's where the value to me comes from paying a little more. Again, you are worried about the shopkeeper, but what is the shopkeeper producing of value? Obviously nothing, since it can be copied and sold for cheaper. The shopkeeper exploited inefficiencies to make a profit on their product. Once that inefficiency is corrected, they need to find something else to sell. Their profit was entirely based on someone not producing the product at scale, not because they offered great value.

Again, you are not offering a unique product if can be copied so easily, and frankly you are stupid if you have such a product and you don't think you will get competitor. This is well understood in TV infomercial type products. You are looking for the first to market cash, with the understanding that it will soon be commoditized. That's if there is no IP.

I'm sorry, but how does introducing a competing product mean monopolistic?

Companies like Amazon and Wal-Mart remove inefficiencies in high scale product distribution, and they compete against each other, as do Best Buy, and other retailers. Again, if you've built a product that's easily copied, and you can't differentiate your product from, you are not offering any value, other than price, and that's where Wal-Mart and Amazon compete.

This is why Apple is able to do what it does. People think Apple provides this great product, that's different from it's competitors. Apple does not have a problem selling it's products, in a market with a lots of competitors, and an easily replicated product. You are buying the logo when it comes to Apple. Coca Cola does just fine with Sam's Cola sitting right next to it, both offer a value proposition. One is cheap cola, and one is good taste. If you are going to introduce a product and your only redeemable feature is price, you better be willing to compete with Wal-Mart, Cost-Co, Target, Amazon, etc etc, that why you need to sell a unique product, not a widget that can be reproduced.

The same can be said for a new company bringing a better mousetrap to market, sending the old manufacturer of mousetraps to the rail.

This is an example of a system that would incentivise innovation because the product that provided the innovation is the one seeing the rewards. That is very different from the specific situation being described with regards to Amazon.

The problem stems from the fact that Amazon is both the producer and the supplier, while also controlling the means by which consumers discover the product. At that point it doesn't matter whether or not the copy-cat product is as good as the initial product, Amazon is in the position to promote their version, likely with a significant cost difference, and drive the original product out of the market. At that point there is nothing to stop them increasing the price again because there is no longer any competition and the result for the consumer is an inferior product at the same price; with the longer term consequence being reduced innovation due to the limitation this puts on potential rewards.

My view is that there are three areas in which free markets result in undesirable outcomes:

The first is this monopolistic effect, where a company becomes so large that it can essentially bully any competitor out of the marketplace, which ends up completely scuppering the whole advantage that a free market is supposed to provide (i.e. market competition improving the situation for consumers).

The second is markets that concern "essential" products. This applies to pretty much anything with inelastic demand and a relatively high barrier to enter the market but the most obvious example in the US is healthcare.

Healthcare is an especially apt example because it also falls into the third category, which is products that have a different value to society than they do to any individual provider/supplier. These are cases where the most valuable outcome for society as a whole is not analogous to, and potentially not even positively correlated with, the most valuable outcome for the providers of a product.

An argument for Libertarianism: No such thing as Crony Libertarianism.

Libertarians are practically the only political party that couldnt wield their political power for personal gain. (Since their political power would be negligible.)

What is to prevent the producer from creating their own website to sell their product and/or finding another aggregator site on which to sell their product? How is this different than a brand name food retailer paying for shelf space on a large grocery chain's shelf, only to later be undercut by the store brand of the same product?

If there is enough profit potential, there will be incentive for a competitor to overcome the barriers to entry and provide a better good/service, a similar good/service at a better price, etc.

There are such things as natural monopolies as well.

Yet we see such things as electricity often handled efficiently by the private sector, while some governments can't provide clean/safe drinking water.

Who determines what its value to society is though? This is not usually objective, hence the need for individuals to decide value through their aggregate choices. The provider's only economic incentive is profit. If they provide a poor service, they won't get many return customers, and if they provide an overpriced service, they won't get many customers in the first place. One big problem with healthcare and education is government's involvement and subsidization of such, which creates inefficiencies and artificially high costs.

No, the incident where two people were charged different prices for the same service was caused by an insurance company and hospital taking advantage of an opaque pricing system. It has nothing to do with the government blocking competition.

The case with the textbooks is publishers using price discrimination to increase profits and others taking advantage of the arbitrage opportunity created from it. Nothing about it is illegal or regulated.

Cheap Canadian drugs is a completely different situation. Drugs are cheaper in Canada because the government regulates their prices and the US does not. It isn't the free market creating lower prices in Canada. If the US wants cheaper drugs they can just regulate their prices like Canada does.

The nature of a physical store is worlds apart from the online marketplace. In the case of a physical store the product will still be available and visible to people who are shopping, whereas an online marketplace can very easily make it difficult to find competitor's products. As for creating their own website/using a different aggregator the issue is again one of visibility. With the exception of niche products with small markets consumers will always start at the place where they are most likely to find what they want. The chance of successfully competing in this way with an existing monopoly is ridiculously slim without having huge amounts of resources available to advertise/promote your product (and even then it's still incredibly hard to break into a market with an existing monopoly, e.g. the complete failure of Google+ to get into Facebook's market).

I don't think any major economy has a completely free market for the provision of any natural monopoly. Electricity providers in the US for example are heavily regulated by the government and the actual transmission network is run by non-profits who are legally obliged to provide indiscriminate access for private companies. I'm not claiming that these industries can't have private companies involved, just that it an area where a completely free market with no government involvement would simply never work.

It's true that the value to society is often not measurable objectively but there is no reason that the value decided by the free market has to be in any way correlated to the true societal value either.

Talking specifically about the US healthcare system again, the reason it is such a mess is because the driver of the private sector is completely separate to the driver of the public sector. Specifically, the profit motivation for private companies means that they are incentivised to prioritise coverage for healthier people because they are able to make a profit while being competitive on price, whereas providing coverage for less healthy people (e.g. those with pre-existing conditions) quickly becomes unprofitable because the costs would be more than people are willing/able to pay.

In an completely free market the result of all of this would be that people who are unable to afford coverage due to some combination of illness/wealth simply wouldn't get healthcare. The reason this doesn't happen is because society at large doesn't think we should be allowing people to die because they can't afford treatment (and this is point that I would argue is true from both altruistic and purely economic perspectives). The problem in the US arises from this because the private sector ends up covering all those who it is cheap to cover and therefore by definition the government ends up covering those who will have higher costs.

The mix of public and private results in a very profitable situation for the private sector, an incredibly expensive situation for the public sector, and a superficially good situation for consumers that actually ends up being more expensive than necessary due to the taxes required to pay for the public sector provisions.

So yeah, the government being involved is part of the reason for healthcare being horrendously inefficient in the US, but the actual underlying cause is the fact that society is (quite rightly) unwilling to accept the inevitable outcome of a totally free/private healthcare market. When you compare the only two viable options (which is essentially US vs the rest of the developed world) it's pretty clear that having a system that is (essentially) regulated/provided solely by the public sector is vastly the more efficient of the two.

Wherever it came from I was still correct.

Socialism and communism which both take controls of the means of production and industry in general are far more vulnerable to Cronyism or 'control by a few for the benefit of the few', due to less layers of checks and balances to corrupt.

In our system, sure gov't and business CAN collude and that is called Crony capitalism, but its not automatic and not every industry and such colluding is open to scrutiny. In communism and socialism they don't need to collude. They are already one and the same. that does not mean it has to be corrupt (my 'perfect people' example), but it does mean less steps to corrupt it.

No one needs use Apple. I never have. Not personally and not in any of my businesses.

Competitively strong as they are, they are not vital.

Just like MS, they have a strong position but you can work around them if you want.

Amazon is vital for many small retailers. Not quite monopoly vital but many small retailers simply cannot find any market now if not on Amazon. You really have little option if you create a new 'widget' to sell other than the Amazon marketplace if you want to move beyond local sales.


I get the feeling you are just being stubborn on your point here as you really are missing the point.

Yes Amazon can beat almost anyone on price as they get the profits in distribution and other areas as well and not just price. But I am not just pointing to that unfair advantage.

Building a product skew THAT SELLS, often takes time and upfront investment. Marketing, etc. Lots of sunk money. Not every product makes it. Most in fact don't.

Amazon gets to sit back, and see what products are gaining success, take all of that companies metrics and data going thru their platform and then launch competitive products at cheaper prices.

Not just because they can under cut price but also because they have none of the prior legacy development and marketing costs. that is hugely predatory.

And you saying 'ya but the customer benefits' is not a counter point.

And almost all consumer good type products can be copied. Few if any have patent protection and those that do, can often be worked around. Again that is not the point and companies are not dumb for having products that can be copied as that is almost all of them.

Again, the point here is that the prior barrier to entry was the amount of sunk cost, marketing, brand recognition, etc for a new guy to compete.

Sure even you can copy anyone product and launch but you would have to spend a sh*t load of money doing your market research, branding, etc to compete with my ESTABLISHED product.

Amazon does not have to do that. They just launch Amazon 'XYZ' new product. Make sure it ranks first in your searches on their site, and they have YOUR data to know exactly what to do, where to target and how. They know what is working via your trial and error.

Actually the customers don't benefit in the long run.
What you're describing takes the incentive to innovate out of the process.

I do enjoy listening to guys who argue that government is bad but private sector monopolies are good. Government would deliver everything cheaper but you'd have very little innovation and politics would influence business decisions even more than they do now.

But if all you care about is cheap you should want the government to own everything. They'd have all the economies of scale and vertical control that you could ask for.


Also, afaict, cheap for the consumer doesn't always = the most value.
My mechanic is always bitching about the inferior parts he gets from China. And they're all that's available. So, yeah. Cheap is cheap. Good is good.