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Why do we give Amazon subsidies but not small businesses, who altogether provide over 50% of the jobs in America? The reason, as I understand it, is because Ama

by alehul 8y ago

Why do we give Amazon subsidies but not small businesses, who altogether provide over 50% of the jobs in America? The reason, as I understand it, is because Amazon as a single corporate entity provides far more jobs and holds more power. Following that: Wouldn't the small businesses, due to our anti-trust regulations, actually be considered a cartel if they tried to negotiate as a group and gain the same tax advantages that Amazon has? So, with that in mind, don't we have some very arbitrary laws? If I could buy up a few small businesses and negotiate with them as pawns, but without a common owner, it's anti-trust behavior? Maybe I'm misunderstanding this; IANAL, but would love to hear someone's opinion. Though game theory would likely prevent their continued cooperation, it seems quite unfair for small businesses that are unable, even in theory, to collectively negotiate on the same scale as Amazon.

arrosenberg 8y ago
Also not a lawyer, but cartel behavior usually refers to price-fixing and other anti-competitive behavior. Small businesses banding together the way you described would just be lobbying and already happens frequently. Amazon should be investigated for anti-competitive practices, and their ability to negotiate this kind of a circus is certainly an indication of that. The problem has been two-fold - 1. The Sherman act is over 100 years old and was written to target 19th century trusts like Standard Oil and the railroads. These need to be updated to reflect new types of models of trusts and conglomeration (and accumulation of power) that have developed. 2. Enforcement - the SEC and FTC are largely toothless and everyone knows it. If you are a company that can afford a team of lawyers, its unlikely you will be penalized in a way that actually hurts.
- asr 8y ago
  The SEC does not enforce the antitrust laws. Do you mean the DOJ? If you are going to take unsubstantiated potshots at government agencies you would sound more credible if you at least picked the right agencies. * * * On the substantive question here, I agree that small businesses already band together to lobby the government for special treatment. It's not an antitrust violation to ask the government for things, even if you couldn't get together and do those things directly: https://en.wikipedia.org/wiki/Noerr%E2%80%93Pennington_doctrine https://en.wikipedia.org/wiki/Noerr%E2%80%93Pennington_doctr....
tyre 8y ago
An additional consideration: small businesses have a very high failure rate. Something like 25% of small businesses fail every year. Entrepreneurship is important for job creation and very much does help cities, but large corporate jobs are generally more stable and pay better.
candybar 8y ago
Generally speaking businesses that actually bring outside money into an area tend to be large businesses. There are obviously exceptions but small businesses usually rely on capturing economic activity that would have occurred anyway in the area. Amazon in NYC brings significant outside revenue from all over the US and in some cases the world into NYC. Most small businesses in NYC don't do this - they are mostly competing against another for the consumer that would've happened locally anyhow. Looking globally, even large businesses are just competing against one another in the same way but for any give municipality, there are benefits to being home to large corporations that are able to bring revenue from outside into the local economy.
snowwrestler 8y ago
Small businesses receive a number of subsidies in the form of tax breaks and exemptions based on size. For example Section 179 allows small businesses to deduct capital expenses below a certain amount instead of depreciating them, and Obamacare exempts business with less than 50 employees from providing health care. Federal regulatory flexibility and paperwork reduction laws release small businesses from a lot of expensive compliance work that a big company like Amazon has to do. Any individual small business obviously doesn’t transact enough dollars to get the personal attention that Amazon does. But small businesses do come together to lobby for these things via chambers of commerce, trade associations, coalitions, regional development authorities, etc. And they tend to be pretty successful since small business is popular with both parties.

by alehul 8y ago

arrosenberg 8y ago

Also not a lawyer, but cartel behavior usually refers to price-fixing and other anti-competitive behavior. Small businesses banding together the way you described would just be lobbying and already happens frequently. Amazon should be investigated for anti-competitive practices, and their ability to negotiate this kind of a circus is certainly an indication of that. The problem has been two-fold - 1. The Sherman act is over 100 years old and was written to target 19th century trusts like Standard Oil and the railroads. These need to be updated to reflect new types of models of trusts and conglomeration (and accumulation of power) that have developed. 2. Enforcement - the SEC and FTC are largely toothless and everyone knows it. If you are a company that can afford a team of lawyers, its unlikely you will be penalized in a way that actually hurts.

asr 8y ago
The SEC does not enforce the antitrust laws. Do you mean the DOJ? If you are going to take unsubstantiated potshots at government agencies you would sound more credible if you at least picked the right agencies. * * * On the substantive question here, I agree that small businesses already band together to lobby the government for special treatment. It's not an antitrust violation to ask the government for things, even if you couldn't get together and do those things directly: https://en.wikipedia.org/wiki/Noerr%E2%80%93Pennington_doctrine https://en.wikipedia.org/wiki/Noerr%E2%80%93Pennington_doctr....

tyre 8y ago

An additional consideration: small businesses have a very high failure rate. Something like 25% of small businesses fail every year. Entrepreneurship is important for job creation and very much does help cities, but large corporate jobs are generally more stable and pay better.

candybar 8y ago

Generally speaking businesses that actually bring outside money into an area tend to be large businesses. There are obviously exceptions but small businesses usually rely on capturing economic activity that would have occurred anyway in the area. Amazon in NYC brings significant outside revenue from all over the US and in some cases the world into NYC. Most small businesses in NYC don't do this - they are mostly competing against another for the consumer that would've happened locally anyhow. Looking globally, even large businesses are just competing against one another in the same way but for any give municipality, there are benefits to being home to large corporations that are able to bring revenue from outside into the local economy.

snowwrestler 8y ago

Small businesses receive a number of subsidies in the form of tax breaks and exemptions based on size. For example Section 179 allows small businesses to deduct capital expenses below a certain amount instead of depreciating them, and Obamacare exempts business with less than 50 employees from providing health care. Federal regulatory flexibility and paperwork reduction laws release small businesses from a lot of expensive compliance work that a big company like Amazon has to do. Any individual small business obviously doesn’t transact enough dollars to get the personal attention that Amazon does. But small businesses do come together to lobby for these things via chambers of commerce, trade associations, coalitions, regional development authorities, etc. And they tend to be pretty successful since small business is popular with both parties.