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Please help me understand. What "negative externalities" (a euphemism generally reserved for environmental destruction) is the likes of Amazon causing here? You

Please help me understand. What "negative externalities" (a euphemism generally reserved for environmental destruction) is the likes of Amazon causing here? You could say that they increase carbon footprint, but that's generally false because the amount of carbon they create is quite limited for the number of people they employ. If you're talking about worker health, that's already very regulated through the likes of OSHA and similar organizations.

chongli 6y ago
I'm not the GP, but if I had to guess: the negative externalities are reflected in all of the small, traditional retail businesses that have shrunk or failed outright as Amazon has grown to capture their markets. All the people who either owned or worked for those small businesses are now out of work and have to find some other way to earn a living. If they are not able to do so, then society suffers as a result. Similar situations have happened in the past, such as when big grocery store chains drove mom-and-pop general stores out of business. It's the price we pay for efficiency.
- burrows 6y ago
  Are you calling a predictable result of vanilla capitalism, that is, some companies succeeding while others fail, a “negative externality”?
  - heylook 6y ago
    Yes. "An externality is a cost or benefit caused by a producer that is not financially incurred or received by that producer." [0] Dominating a market so thoroughly that your competitors go out of business and must find another line of work creates a cost for society that is not borne by the winner unless they pay for it through taxation. Namely those costs include retraining, possibly monetary assistance, etc, etc. Beyond that, companies like Amazon[1] and Walmart[2] have well-established histories of paying their workers so little that they have to use SNAP to make ends meet. [0] https://www.investopedia.com/terms/e/externality.asp https://www.investopedia.com/terms/e/externality.asp [1] https://www.businessinsider.com/amazon-employees-on-food-stamps-2018-8 https://www.businessinsider.com/amazon-employees-on-food-sta... [2] https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-top-employers-of-medicaid-and-food-stamp-beneficiaries.html https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...
    - burrows 6y ago
      > Dominating a market so thoroughly that your competitors go out of business and must find another line of work creates a cost for society that is not borne by the winner unless they pay for it through taxation. Namely those costs include retraining, possibly monetary assistance, etc, etc. I’m not an economist and I can’t give a formal account of externalities. But, your reasoning, I think, leads to absurdity. For example, if I start a company to sell generic, mass produced pencils for $1000 a piece then no one will buy from my company and it will be forced out of the market and my principal will be lost. Then in your words, my company failed because of “externalities” from my competitors who are selling pencils at the market rate and who then owe me money. > Beyond that, companies like Amazon[1] and Walmart[2] have well-established histories of paying their workers so little that they have to use SNAP to make ends meet. So eliminate SNAP?
  - maest 6y ago
    Maybe vanilla capitalism isn't the way to go then.
    - burrows 6y ago
      Your arguing for an economic system where no producers will fail?
      - maest 6y ago
        I am not, no.
        burrows 6y ago
        Ok, so what policy are you intimating?
- Bakary 6y ago
  Efficiency is a relative term. Let's say a company is good at what it does, but then becomes a monopoly that can dictate unfavorable terms and capture the surplus, was it an efficiency gain on the whole? Let's say companies do very well, but deplete natural resources and lobby against infrastructure projects, did society gain as a result? These questions are naturally difficult to answer but there's at least more to the story than just the inductive reasoning of creative destruction fixing everything. Less efficient actors getting booted out is only a small part of the process as usually the consequences are on the second order range.

chongli 6y ago

I'm not the GP, but if I had to guess: the negative externalities are reflected in all of the small, traditional retail businesses that have shrunk or failed outright as Amazon has grown to capture their markets. All the people who either owned or worked for those small businesses are now out of work and have to find some other way to earn a living. If they are not able to do so, then society suffers as a result. Similar situations have happened in the past, such as when big grocery store chains drove mom-and-pop general stores out of business. It's the price we pay for efficiency.

burrows 6y ago
Are you calling a predictable result of vanilla capitalism, that is, some companies succeeding while others fail, a “negative externality”?
- heylook 6y ago
  Yes. "An externality is a cost or benefit caused by a producer that is not financially incurred or received by that producer." [0] Dominating a market so thoroughly that your competitors go out of business and must find another line of work creates a cost for society that is not borne by the winner unless they pay for it through taxation. Namely those costs include retraining, possibly monetary assistance, etc, etc. Beyond that, companies like Amazon[1] and Walmart[2] have well-established histories of paying their workers so little that they have to use SNAP to make ends meet. [0] https://www.investopedia.com/terms/e/externality.asp https://www.investopedia.com/terms/e/externality.asp [1] https://www.businessinsider.com/amazon-employees-on-food-stamps-2018-8 https://www.businessinsider.com/amazon-employees-on-food-sta... [2] https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-top-employers-of-medicaid-and-food-stamp-beneficiaries.html https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...
  - burrows 6y ago
    > Dominating a market so thoroughly that your competitors go out of business and must find another line of work creates a cost for society that is not borne by the winner unless they pay for it through taxation. Namely those costs include retraining, possibly monetary assistance, etc, etc. I’m not an economist and I can’t give a formal account of externalities. But, your reasoning, I think, leads to absurdity. For example, if I start a company to sell generic, mass produced pencils for $1000 a piece then no one will buy from my company and it will be forced out of the market and my principal will be lost. Then in your words, my company failed because of “externalities” from my competitors who are selling pencils at the market rate and who then owe me money. > Beyond that, companies like Amazon[1] and Walmart[2] have well-established histories of paying their workers so little that they have to use SNAP to make ends meet. So eliminate SNAP?
- maest 6y ago
  Maybe vanilla capitalism isn't the way to go then.
  - burrows 6y ago
    Your arguing for an economic system where no producers will fail?
    - maest 6y ago
      I am not, no.
      - burrows 6y ago
        Ok, so what policy are you intimating?
Bakary 6y ago
Efficiency is a relative term. Let's say a company is good at what it does, but then becomes a monopoly that can dictate unfavorable terms and capture the surplus, was it an efficiency gain on the whole? Let's say companies do very well, but deplete natural resources and lobby against infrastructure projects, did society gain as a result? These questions are naturally difficult to answer but there's at least more to the story than just the inductive reasoning of creative destruction fixing everything. Less efficient actors getting booted out is only a small part of the process as usually the consequences are on the second order range.