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Keeping prices low is a great thing. I wish Walmart and Amazon every success in that endeavor. Abusing a monopoly is when you increase prices because you can.

Keeping prices low is a great thing. I wish Walmart and Amazon every success in that endeavor. Abusing a monopoly is when you increase prices because you can. Offering lower prices is the opposite. If you can’t compete, then you’re in the wrong business.

akdor1154 3y ago
> Keeping prices low is a great thing. To a first approximation, yes, but this also forces things like small farmers and retailers being unprofitable, and all the societal changes that come with that, and of course then the tendency for consolidation and the inherent risk of more monopolisation from that. Free market is great when it's full and noisy and no-one is large enough to control or manipulate it, the aim should be to keep it in this state (because then keeping prices low falls out naturally without terrible second order effects)
- arrozconcosas 3y ago
  Free markets also should allow winners and losers. Walmart wasn’t always big. It was a winner though.
  - isykt 3y ago
    You can have winners and losers and also quantify the non-capital externalities in order to account for them.
- roenxi 3y ago
  > ...this also forces things like small farmers and retailers being unprofitable... Nobody is "forced" to be unprofitable. If a business is unprofitable it can shut down. You're putting half the no-win argument - when Amazon makes a big profit people complain they are too powerful. When they don't make a big profit, this is an argument that they've squeezed the supply chain too much. There is a tiny line here that is theoretically acceptable, and I doubt either side of the no-win argument agrees where it is. And this isn't what is driving the consolidation, the monopolisation is probably being driven by credit. Big players get much sweeter deals when dipping into the pool of printed money. If credit was not the driving force then it'd be much less common to see big conglomerates and small nimble players would have an easier time. Like how in housing credit booms tends to put smaller buyers in a worse position because they only end up living in about the same house as they already would have managed anyway but they have to sign away more of their life to get it.
  - toss1 3y ago
    >>Nobody is "forced" to be unprofitable. If a business is unprofitable it can shut down. Check out the state of chicken farming, where chicken producers corral farmers take on huge amounts of debt to grow bigger to meet their requirements, then squeeze them hard, to the point of bankruptcy. The only winning move is to not play, but that means not selling to the buyers who control the market so likely losing the family farm. It's become just a matter of whether you lose it this year, or after a few years of churning under the producer's debt load. There are numerous ways that a large monopoly can abuse their position of power such that the only real choice for smaller players is to play along in a losing game.
  - Swenrekcah 3y ago
    I’ve said it before and I’ll say it again: Progressively increasing asset taxes are the way. Make it more expensive to control a lot of resources to counteract the natural monopoly effect that comes from controlling large amounts of resources.
- satvikpendem 3y ago
  Isn't zero profit the point of a fully efficient economic model? Profits are excess money after costs by definition so in such a system you'd want profits to tend to zero.
Swenrekcah 3y ago
If the prices are low because the quality of products is low, the treatment of workers is shit and any other negative environmental externalities are ignored, then low prices are actually a bad thing leading to artificially inflated demand. I’m not saying any or all of this applies to Walmart or Amazon necessarily, but it’s not an unambiguous good to lower prices when it is not supported by all the reality around it.
- HDThoreaun 3y ago
  > prices are low because the quality of products is low I don't see how this is a bad thing. If people want to buy cheap low quality products they should be able to.
  - Swenrekcah 3y ago
    I’ve had this discussion before but essentially it’s that nobody (very few) really want to buy low quality products. They do if that is the only thing they can afford because of other shortcomings of society. Edit: Found the previous discussion https://news.ycombinator.com/item?id=36630612 https://news.ycombinator.com/item?id=36630612
    - HDThoreaun 3y ago
      I'm not sure I understand. Resources are inherently limited. It would be nice if everyone could have whatever they want, but that's not reality. Until then people should be allowed to sacrifice quality in some of the things they consume to raise the quality of others.
      - Swenrekcah 3y ago
        Yes of course. I was probably not very clear about it but I’m more talking about very low quality, almost single use items.
  - salawat 3y ago
    Define quality more accurately than the poster you're replying to. Their definition of quality included goods produced while accounting for externalities, and non-abusive/exploitative workforce treatment. It is not okay for a manufactured product built on the backs of slave/child labor/conflict to be sold in a market. There's a reason Conflict diamonds are verboten. There's a reason why it should be a big deal when a large industrial actor is found to be using these things as part of their production chain. We cannot allow those that would sacrifice other's humanity to participate in our economy. Once you accept them, you've set the bar everyone else will quickly clamber to meet.
derbOac 3y ago
I think the OP was saying they abuse their monopsony power, that being a monopoly puts them in a monopsony position which they then abuse to maintain their monopoly. The traditional endpoint-consumer-facing side of the market is just one part of the transaction web.
satao 3y ago
Thats quite a naive view. What do you think happens after they kill all the competitors? Do you think they keep their prices low?
pif 3y ago
> Keeping prices low is a great thing In absolute terms, no, it isn't! Think "race to the bottom". Coupled with the proper checks, low prices can be great.
JohnFen 3y ago
> Keeping prices low is a great thing. I wish Walmart and Amazon every success in that endeavor. I don't. Our collective fetish to reduce prices to an absolute minimum has had nothing but terrible effects on pretty much everything. It has increased poverty, it has decreased product quality, it has reduced the vibrancy and competitiveness of our economy, it has encouraged the worst aspects of our society. And it hasn't made anything better for anybody. It's nothing but a collective self-destructive race to the bottom.
- unmole 3y ago
  > It has increased poverty Talk is cheap. Show me the maths.

akdor1154 3y ago

> Keeping prices low is a great thing. To a first approximation, yes, but this also forces things like small farmers and retailers being unprofitable, and all the societal changes that come with that, and of course then the tendency for consolidation and the inherent risk of more monopolisation from that. Free market is great when it's full and noisy and no-one is large enough to control or manipulate it, the aim should be to keep it in this state (because then keeping prices low falls out naturally without terrible second order effects)

arrozconcosas 3y ago
Free markets also should allow winners and losers. Walmart wasn’t always big. It was a winner though.
- isykt 3y ago
  You can have winners and losers and also quantify the non-capital externalities in order to account for them.
roenxi 3y ago
> ...this also forces things like small farmers and retailers being unprofitable... Nobody is "forced" to be unprofitable. If a business is unprofitable it can shut down. You're putting half the no-win argument - when Amazon makes a big profit people complain they are too powerful. When they don't make a big profit, this is an argument that they've squeezed the supply chain too much. There is a tiny line here that is theoretically acceptable, and I doubt either side of the no-win argument agrees where it is. And this isn't what is driving the consolidation, the monopolisation is probably being driven by credit. Big players get much sweeter deals when dipping into the pool of printed money. If credit was not the driving force then it'd be much less common to see big conglomerates and small nimble players would have an easier time. Like how in housing credit booms tends to put smaller buyers in a worse position because they only end up living in about the same house as they already would have managed anyway but they have to sign away more of their life to get it.
- toss1 3y ago
  >>Nobody is "forced" to be unprofitable. If a business is unprofitable it can shut down. Check out the state of chicken farming, where chicken producers corral farmers take on huge amounts of debt to grow bigger to meet their requirements, then squeeze them hard, to the point of bankruptcy. The only winning move is to not play, but that means not selling to the buyers who control the market so likely losing the family farm. It's become just a matter of whether you lose it this year, or after a few years of churning under the producer's debt load. There are numerous ways that a large monopoly can abuse their position of power such that the only real choice for smaller players is to play along in a losing game.
- Swenrekcah 3y ago
  I’ve said it before and I’ll say it again: Progressively increasing asset taxes are the way. Make it more expensive to control a lot of resources to counteract the natural monopoly effect that comes from controlling large amounts of resources.
satvikpendem 3y ago
Isn't zero profit the point of a fully efficient economic model? Profits are excess money after costs by definition so in such a system you'd want profits to tend to zero.

Swenrekcah 3y ago

If the prices are low because the quality of products is low, the treatment of workers is shit and any other negative environmental externalities are ignored, then low prices are actually a bad thing leading to artificially inflated demand. I’m not saying any or all of this applies to Walmart or Amazon necessarily, but it’s not an unambiguous good to lower prices when it is not supported by all the reality around it.

HDThoreaun 3y ago
> prices are low because the quality of products is low I don't see how this is a bad thing. If people want to buy cheap low quality products they should be able to.
- Swenrekcah 3y ago
  I’ve had this discussion before but essentially it’s that nobody (very few) really want to buy low quality products. They do if that is the only thing they can afford because of other shortcomings of society. Edit: Found the previous discussion https://news.ycombinator.com/item?id=36630612 https://news.ycombinator.com/item?id=36630612
  - HDThoreaun 3y ago
    I'm not sure I understand. Resources are inherently limited. It would be nice if everyone could have whatever they want, but that's not reality. Until then people should be allowed to sacrifice quality in some of the things they consume to raise the quality of others.
    - Swenrekcah 3y ago
      Yes of course. I was probably not very clear about it but I’m more talking about very low quality, almost single use items.
- salawat 3y ago
  Define quality more accurately than the poster you're replying to. Their definition of quality included goods produced while accounting for externalities, and non-abusive/exploitative workforce treatment. It is not okay for a manufactured product built on the backs of slave/child labor/conflict to be sold in a market. There's a reason Conflict diamonds are verboten. There's a reason why it should be a big deal when a large industrial actor is found to be using these things as part of their production chain. We cannot allow those that would sacrifice other's humanity to participate in our economy. Once you accept them, you've set the bar everyone else will quickly clamber to meet.

derbOac 3y ago

I think the OP was saying they abuse their monopsony power, that being a monopoly puts them in a monopsony position which they then abuse to maintain their monopoly. The traditional endpoint-consumer-facing side of the market is just one part of the transaction web.

satao 3y ago

Thats quite a naive view. What do you think happens after they kill all the competitors? Do you think they keep their prices low?

pif 3y ago

> Keeping prices low is a great thing In absolute terms, no, it isn't! Think "race to the bottom". Coupled with the proper checks, low prices can be great.

JohnFen 3y ago

> Keeping prices low is a great thing. I wish Walmart and Amazon every success in that endeavor. I don't. Our collective fetish to reduce prices to an absolute minimum has had nothing but terrible effects on pretty much everything. It has increased poverty, it has decreased product quality, it has reduced the vibrancy and competitiveness of our economy, it has encouraged the worst aspects of our society. And it hasn't made anything better for anybody. It's nothing but a collective self-destructive race to the bottom.

unmole 3y ago
> It has increased poverty Talk is cheap. Show me the maths.