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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

by awat 8y ago

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 8y ago
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 8y ago
  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 8y ago
    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 8y ago
      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.
jonknee 8y ago
Amazon seems to have displaced other large low-paying companies than it has mom and pops (who were already gutted by Wal-Mart and the like). In fact Amazon props up tons of really tiny businesses that sell through its platform.

by awat 8y ago

actsasbuffoon 8y ago

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 8y ago
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 8y ago
  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 8y ago
    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.

jonknee 8y ago

Amazon seems to have displaced other large low-paying companies than it has mom and pops (who were already gutted by Wal-Mart and the like). In fact Amazon props up tons of really tiny businesses that sell through its platform.