Amazon – The World’s Worst Monopolist

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If all the economists were laid end to end, they would still not reach a conclusion. – George Bernard Shaw

As a card-carrying economist, I resemble that conclusion. But there may be one major exception to Shaw’s rule. Virtually every economist in the world believes that monopolies are not good.

In nearly all cases, they drive other firms out of business, raise prices as high as the market will bear, and are no longer spurred to operate efficiently. What’s not to hate?

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Just a few days ago, when my trusty lap-top finally died on me, I was forced to buy a new one. But it came with Microsoft Word 11. Take it or leave it. I had little choice, so I bought it.

As you may now, Microsoft Corp (NASDAQ:MSFT) – which is a quasi-monopolist – delights in shoving Word 11 down as many unwilling throats as it possibly can, even though it’s clearly a severe downgrade from Word 10. I knew I would regret my decision.

I won’t bore you with my subsequent temper tantrums, but suffice it to say that only my utmost restraint prevented me from pounding the screen with my fists. Right then, if I had to choose the world’s worst monopolist, the honors would have surely gone to Microsoft.

Amazon's Monopoly

And so, while I still fervently pray for Bill Gates and his minions to rot in Hell, I am forced to concede that there’s at least one other company that is even more worthy of the title of “The World’s Worst Monopolist.”

I’ll give you three guesses. Oh, you needed just one? Then let me play mind-reader and guess that you picked Amazon.com, Inc. (NASDAQ:AMZN).

I’m not nearly as mad at Amazon as I am at Microsoft, but perhaps the economist in me encourages some measure of objectivity. We have been trained to let the facts lead us to the truth.

During the years of the pandemic, Amazon truly enjoyed its finest hour, delivering needed food, medicine, and tens of thousands of other goods right to people’s doors. Imagine how things would have been without this service.

Having given the devil his due, let’s move along to the current economic impact of the company – and then to what it plans to do in coming years.

An online bookseller, the company opened for business in 1994, selling new and used books. It did not turn a profit until 2001. But over this period, sales were growing quite rapidly.

How did they survive. Well, maybe by employing the logic of the tongue-in-cheek observation that what they lost in sales, they more than made up for in quantity. What actually was happening was that investors kept buying the stock in the hopes that the company would eventually make a profit, and the stock price would shoot up.

As things worked out, that is exactly what happened. Of course, by that time Amazon was not just selling books. Or food. Or clothing. Their game plan was to eventually sell almost everything to everybody.

 

Please think about how the company treats its employees, keeping nearly all of them under constant surveillance, punishing any rule infraction – small or great – and terminating anyone urging unionization. Working conditions are beginning to sound a lot like 1984.

It’s especially significant that Amazon is progressively taking possession of book publishing in the United States. Not only does it now account for half of all retail book sales, but for two-thirds of online sales. Very soon it will become nearly impossible to get a book published that is as critical as I am being in this article.

The company runs an interesting business within a business selling new and used books. They don’t bother to advertise any of the books they sell. Instead, they charge authors and their publishers to advertise on Amazon.

Suppose you buy a used book on Amazon. You send your payment to Amazon, and a few days later your book arrives from some guy out in Nebraska. So, the company takes its cut, while the book’s seller does the rest.

If Amazon is permitted to continue on its course, within just a few years, it will not only be our biggest and most evil monopoly, but it will control most of our nation’s monopoly.