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Why Amazon Wants To Pay Sales Tax
Maximum Prophet writes "A while ago, Amazon caved on paying individual states sales taxes. Now we know why. Amazon is setting up same-day delivery warehouses everywhere. They will put most normal retailers out of business." If that's a bet, I'll take it.
This all seems strangely familiar to me. Would be interesting if Amazon could pull it off, though.
Driving to brick-and-mortar stores is an expensive time-waster. The more online choices I have the better.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
Still, if brick and mortar specialize then can still do well for themselves. Just give up the bulk order stuff Amazon handles in volume.
Sucks, if they threaten your meal ticket, but this whole trend has been going on since Sears & Roebucks sent out their first catatlog.
A feeling of having made the same mistake before: Deja Foobar
Local retailers (and apparently Walmart, too) were the leading forces in pushing such legislature through in many states. They obviously (and rightfully) fear that Amazon could completely destroy them. This legislation, they thought, would force Amazon to compete with them on an even playing field. Except the playing field was never even to begin with. Even if you force them to abide by the x% sales tax rule, they still completely dominate you in terms of convenience, selection, sheer operations efficiency and economies of scale. Only Walmart could really hold a candle to them. This is going to blow up in the brick-and-mortar retailers' faces and they'll have nobody to blame but themselves for their downfall.
I have a prime membership with them. main app on my phone is the Amazon store and code scanner, go into Wal Mart see an item touch and play with it. if i like it then i check how much on Amazon and then buy it, it is then at my home with in 2days (1day on most things). My wife is disabled and can not drive, so Amazon has been a wonderful thing for us and our kid.
First manufacturing was destroyed, and the economy is still barely adjusting. Now retail is being threatened. Whats left for 300 million people to do? Interesting times indeed.
You could. Walmart has free shipping. Even to Alaska.
That's completely insane - they are undercutting local businesses by 20 - 40%. Don't know how long they're going to keep this up but watching it is entertaining.
Faster! Faster! Faster would be better!
Yeah, let's let Amazon get a monopoly so they can jack up prices. Or do you morons actually think they'll keep their prices so low after running out of business the alternatives?
You seem to think that once a business gets to the top of their space and starts acting stupid no one knocks them off. You seem oblivious that Sears used to be the retail giant with stores everywhere that couldn't be topped.
As long as Amazon is doing it better then I am all for them expanding.
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If there is a king of efficiency and lost cost in distribution and retail sales, it is Wal-Mart. You don't think they are just going to sit there and do nothing while Amazon moves in, do you?
Necron69
Wouldn't Amazon have to maintain a gigantic inventory across all these so-called "same day delivery warehouses" in order to make it work? Wouldn't that cost huge amounts of cash? More to the point, wouldn't there be a huge tax liability from all that inventory?
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I wouldn't. Amazon as a system of getting goods makes sense, and if done right would cut down on gas consumption with everyone driving to the store separately. I happen to live in Seattle and have used AmazonFresh (grocery delivery) and have automatic monthly diaper delivery with AmazonMom and it's awesome. I look forward to a future where I don't need to drive anywhere to do my shopping, and can spend that time out hiking and having fun with my kid. Only thing that might be cool is an Amazon "try it" store where you can go check something out before getting it. Just drop the stuff off with my hose robot and it'll unpack, stock things in the fridge and elsewhere, and recycle the packaging, or better yet start using re-usable packaging and I'll just give it back in the AmazonFresh bins.
On the topic of local distribution centers, I'm sure that this will not be a full selection of Amazon products available for same day deliver, just a selection of the most popular items, which will still be nice to get faster.
The concept of having people go to their local Best Buy to "try" out a product, then going home and ordering it online, only to receive it from a local warehouse is kindof humorous.
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I don't think so. The added costs of the warehouses everywhere, and the employees to staff them, will add a huge cost increase to their bottom line. They'll also have to carry much more inventory, since they'll have to keep the product in stock at each of these warehouses. This will likely result in more inventory write-downs. This is a move that opens a huge door for other online retailers, allowing them to step into the role Amazon is vacating.
Interesting. WalMart just opened its first grocery store on the east side of Puget Sound where Amazon's grocery delivery operations is located. Turn-about-fair-play.
I'm a sucker for going to farmers markets, picking out produce which was harvested yesterday and usually picked when it's ripe, not a month ago when it was still "green". For canned or frozen goods something like delivery could make sense (though I'm usually pretty erratic in my schedule for delivery) but I still get a lot of those things at Trader Joe's because Joe's suppliers use far less chemicals in the making of their products (I really don't like looking at something like a burrito, which should be beans, cheese, flour, oil and water, but reads like The Brothers Karamazov.)
Course, it' doesn't rain 11 months out of the year where I live, either, so I don't mind being out and about and hitting farmers stands on the way home from work, like some manic pinball.
Amazon's strength was books, then consumer eletronics, then food, then eveything else. While they have free delivery (for over $25 spent on most items) there's a certain amount of waiting and if the item is DOA (like one cracked DVD I received) you have to exercise some patience. Meanwhile good ol' brick and mortar lets you have the goodies in your hot little hands now and often work out better on returns.
A feeling of having made the same mistake before: Deja Foobar
Its not all lost though. Its definitely a net negative (I would assume), but a LOT of retailers only exist because of online now. I work for an online-only retailer, and while we do have our own website that accounts for 95%++ of our sales, we do sell products on the amazon market and that does increase our sales quite a bit. A lot of small time shops sell ONLY on the amazon marketplace.
And there needs to be people to ship those things (Fedex and UPS aren't complaining about the increase in online shopping, thats for sure), staff those warehouses... And Amazon itself is expanding a fair bit. They just opened an engineer office in Cambridge, MA, just this year, and the average salary of a developer there is quite high.
So a lot of places closes, but a few new businesses popup to take their places. Not nearly enough, for sure, but its not a TOTAL loss.
I think your post is shortsighted. While it may be convenient in the short term, the price we may have to pay for a single company providing pretty much all consumer goods may be outrageously expensive in the long term for society. By killing the small business, Amazon is not helping the economy, but actually bankrupting small shops for its own profit. Low prices today are not always a good long term strategy, because when there is no more competition, there are no more price restrictions, and we are stuck with a gigantic company that controls the market. Remember what happens when Walmart sets shop in a small town. Protect your local economy. Do your part to help the small guys - they will be your Plan B when the big company decides to screw you over.
Perhaps what we need is for people to get back in the business of producing. Our family business maximizes vertical integration and just-in-time manufacturing to make it so we control our process, product and profits. We do work with retailers and they take about a 50% cut. To make it we have to make sure that we keep as much as possible of that other 50%. Unlike many businesses, our family actually does the work. We farm. We turn sunlight into food.
"You seem oblivious that Sears used to be the retail giant with stores everywhere that couldn't be topped."
Not to mention Montgomery Ward, who owned the mailorder space before the Internet. They still exist in name, but no one cares.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
I fail to see how destroying competition by undercutting local shops is a good thing for the local economy in the long term. By the time you figure out what is going on, they will own the market, and the small shops will be long gone. You will have no option but to deal with a single merchant. Good luck with that. Be smart. Help the small guys, even if they are a bit more expensive. That will keep things in relative check.
Oh the joys of free market economics and capitalism. Good luck protecting the little guy. It won't help one little bit.
How many people shop at Amazon BECAUSE there is no tax?
I can tell you that I have shopped there for years because they have a good selection, good enough prices, fast shipping and good customer service. I do almost all of my online shopping with Amazon, which makes it easy to calculate the use tax I've been tacking on to my state filings since the late 90s, since that has always been a legal requirement in the states that I have lived in.
I think Amazon is alright some times but they're not perfect. Just recently I ordered some car parts and the parts they sent were some off-brand made in China crap instead of the name brand high quality parts that I paid for.
My one beef with Amazon is that you have to be careful about who is actually selling and fulfilling the orders. If it isn't Amazon itself, I usually steer clear.
I fail to see how destroying competition by undercutting local shops is a good thing for the local economy in the long term.
In order to meet a Same Day Delivery promise Amazon will have to be LOCAL. So there went your major point. Poof.
Workers walk out of one failing business model which requires customers to come to them, and walk into a better business model which puts the "shelves" right there in people's homes (on the computer or their phone), and offers same day delivery.
You seem to have a lot in common with THESE people. They didn't prevail either.
Don't try to convince us you have never shopped on line.
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So as a result of Amazon caving to my state on the tax thing, I pay 8% more for my purchases, but might eventually get them a day faster. Not being the impatient and impulsive sort, I liked the old system a lot better.
This could however make other online retailers a lot more attractive. If I want to buy, say, an iPad, the cost is the same from any merchant thanks to price-fixing. So I could buy it locally for instant gratification, or online to save the tax. Before Amazon was my go-to for online purchases, being the fastest of the tax-free options. Now, however, I would go to a competitor with no physical presence in the state in order to save good money for waiting a couple extra days.
And the merchant class, who used to get by owning small shops, will cease to exists. All those people will work at Wal-mart for $8/hour.
Wal-mart's low prices exist not because they have a vastly more efficient distribution system as commonly thought but rather because they have vastly more efficient systems for negotiating deals, driving down labour costs, leveraging the artificially low Chinese yuan and squeezing the profit from the supply chain.
There is nothing stopping another company from developing a more efficient business model and distribution system than Amazon or Walmart, particularly if they started jacking up their prices. It would certainly be bad if one of them was the only game in town but I don't see that happening (at least for long) outside of them getting some sweetheart deal with the government that actually blocks competition from forming. That scenario can, and has, happened but it is due to flaws in governments, not free market economics and capitalism.
it is worth pointing out that Amazon will start COLLECTING sales tax not PAYING sales tax. The consumer is the one who will PAY the tax.
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Amazon as a system of getting goods makes sense, and if done right would cut down on gas consumption with everyone driving to the store separately. I happen to live in Seattle and have used AmazonFresh (grocery delivery) and have automatic monthly diaper delivery with AmazonMom and it's awesome. I look forward to a future where I don't need to drive anywhere to do my shopping, and can spend that time out hiking and having fun with my kid.
Exactly. A hundred thousand shoppers driving around to multiple stores in rush hour traffic to by the same old stuff, or bar scan that tin can with your cell phone before you throw it in the recycle so that another one will appear magically on your doorstep.
Probably the "Store" still gets to exist, but it serves a different purpose. "Try it" centers. Where you can see new things before you commit to buying it blind. But once you found your favorite brand of canned beans, you probably won't need to revisit that isle again for many months.
Pike Place Market isn't going anywhere, and neither is the Farmer's market. But 95% of the goods that come thru the door could just as well be picked for me, packed for me, and delivered. Employs lots of pickers, lots of packers, and lots of delivery people, but saves me the trip and the aggravation.
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Seattle has great farmers' markets, so he has no excuse. If you want fresh produce to be delivered, get a CSA. Many places (like Seattle) can have fresh produce delivered to your door weekly. The money also goes more directly to the farmers producing it.
By minimising choice you end up with fewer low paid jobs. Even if it turns out to be the same amount of jobs they'll be lowered paid. It's not a good thing. Given the US' history of bending over for corporations too leaving everything to dry up and only having, for example, Wal-Mart and Amazon, as your only choice will not be a good thing. Anyone who can't see that in the long term that killing off choice is a bad thing is nuts. It's not just about doing things the old way. I like online shopping but why not have the same level of competition but online rather than deciding it's better to just go with the two companies that do questionable things and treat their employees like low paid shit.
In fact, eliminating jobs while providing the same or better service is considered to be a top priority of economics in general. The less labor it takes to provide service X means the less cost it takes, as long as there's competition it means lower prices for consumers.
So Economic Theory 1, Actual Economy 0. Awesome.
Without jobs, who cares how low consumer prices drop for whatever reason, and who cares whether it's Amazon, Walmart, or the corner mini-mart owning online markets? No jobs mean no demand, which means no growth, which means no jobs, which means no demand. Rinse, lather repeat.
Note to Randroids: We got into this mess by lack of government regulation, not because of it. Don't believe me? Go ask Phil Gramm, or better yet, Phil Gramm's wife.
Meanwhile good ol' brick and mortar lets you have the goodies in your hot little hands now and often work out better on returns.
Which also means a lot of the money made (or all of it, if it's a locally-owned business) stays in the local economy, which can mean families, schools, and your community in general benefit. Sales tax paid online goes into a state's general coffer and stays there, whereas part of the money collected locally, whether it's from a national/international chain or a local mom-and-pop store, goes back to the county/municipality where it was collected originally.
Help the small guys, even if they are a bit more expensive
Easier said than done. I am on a grad student's salary, and saving a few dollars here or there really does matter sometimes. I suspect that a lot of people are in my position -- even people who are paid more, but who have to feed their children etc. When the little guys are "a bit more expensive," they are going to see less business, and it is not just that people are being cheap or greedy.
I also happen to live in a town that has done plenty of things to promote small, local businesses -- our downtown area has only a handful of corporate chains, and as I understand it, they had to fight pretty hard to get permits. Maybe some towns are in a bind and really cannot do the sorts of things that are necessary to keep local businesses alive, or maybe the people running those towns just lack backbone.
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I think you mean mean workers walk out of one failing business model and are replaced by computers and robots in a better business model.
The luddite's were not wrong, they were just overly optimistic. or haven't you noticed that the middle class is vanishing?
No one has a right to their *own* opinion. They have a right to the TRUTH.
I love how the Americans always blame their government rather than the obvious flaws in their economic system
There are far more players in the every day needs business than Wal-Mart and Amazon.
This is an easy business to get into for those stores already located in your community.
An internet connection, some software, some minimum wage stock pickers, and delivery vans.
Amazon on the other hand has to build warehouses very close to every market, stock them, and then add An internet connection, some software, some minimum wage stock pickers, and delivery vans.
See the difference?
Amazon is at a severe disadvantage here. Yet you see very few Grocery store chains jumping in to add this type of convenience. Why not? They already have the expensive part in hand. They have the store in every little town!!!!
Your insistence that every worker have a high paying job is precisely why there is so much unemployment in the US today. If high school kids or college students or out of work CPAs can earn a few bucks doing this work, where is the down side of that.
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There is pretty much no way to do it right enough to cut down on gas delivery.
Because you will always have some reason to go out driving and normally you would of picked up stuff at the same time, and instead you have huge gas guzzling delivery trucks making special tricks to your house.
You seem to think that truck is coming to my house directly from Amazon. If it makes long, intelligently thought out routes and starts full, it can easily consume FAR less gas than you would anyway.
I don't always have a reason to go out driving. Usually my reason is to buy something.
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I'm not sure how you can believe your economic death spiral philosophy. It doesn't make any logical sense. How does your version of an economy get started in the first place? How did we get to here from a hunter gatherer society? Did some magic being create jobs which created growth which created jobs which created demand? Of course not.
The way an economy grows is simple. People first have to consume less than they produce. This is savings. Then they can spend time and energy building capital goods which increase productive. More productivity means destroying existing jobs and cheaper goods. This frees up labor for working where they can add the most value. This process continues and we get richer and more comfortable as we have to work less for things.
Think about an isolated hunter gatherer society. They spend all of their time trying to survive. They have to either ration food or spend extra time hunting to get enough food for them to have the time to plant crops or raise animals. Both these things require a lot of effort at first to build the tools and work the land. But after they get it done they can feed themselves using fewer people. Now some people can think about what else to do like build furniture or boats or something else they never could have done if they had to hunt.
I love Jesus, except for his foreign policy.
When your failing economic thesis is your main religion, you won't stop until complete collapse. Partial ones, like the recent banking crisis will just be taken out of the hides of little people and the system will continue to grind on.
USSR is already down. USA seems hell bent to follow.
If I remember my dot.com history correctly it was the picking and packing aspect of the business that killed on-line grocery WebVan.
Kiva Systems was founded by a former WebVan exec. He saw that Webvan was very popular with customers, but they couldn't deliver the service at a low enough cost. If they could eliminate the people...
Webvan's real problem was botched expansion. They had 3% market share in 30 cities, when they needed 30% market share in 3 cities. Too much truck mileage per shipment.
Safeway does grocery delivery now, but not very well. They just use order pickers picking from retail store shelves. So their systems don't really know what's in stock. Most orders thus lack some items ordered. A more automated system knows what's in stock, so the customer gets to decide when ordering how to handle out-of-stock conditions. (Ordering a different brand or size or item is an option then. Safeway doesn't do that.)
Delivery uses less energy than shopping. There's some whining about the "thousand mile salad", but moving a 45,000 pound truckload of lettuce a thousand miles uses less energy per head of lettuce than the 5 mile trip in the 2 ton SUV that moves 20 pounds of groceries.
A few more years, and automatic driving will meet up with automated warehouses.
Your post has some serious problems.
For banking, for instance, tellers haven't gone away, and there's no charge to see them. If your bank does charge you, you need to find another bank; there's tons of smaller banks and credit unions that haven't instituted the ridiculous fees the big banks have.
As for cashiers, we only need so many minimum-wage jobs. In many places, before the economy turned to total shit, it was really hard to fill those jobs because there just weren't many people who wanted to work for so little.
For grocery stores, if you think shopping online is going to replace the local supermarket, you're insane and need psychiatric intervention. How are you going to buy ice cream online? Unless they do some really fast delivery, it'll be melted. How are you going to buy produce online? Just hope they pick something that isn't squashed? What do you do when they give you apples with giant bruises on them? Send them back? Finally, I don't know about you, but buying things online can be a bit of a chore, between slow websites and poorly-written websites. If I know exactly what I'm looking for, buying online is great. It's especially good when you're buying a manufactured product that's exactly the same, no matter where you buy it (the LG flat-screen TV model ABCDE is exactly the same whether I buy it from Amazon or Best Buy). This doesn't work with food; it varies a lot, especially produce. Seeing a stock photo on a website is no substitute for seeing it first-hand, knocking on it (for melons), etc. It's not uncommon to walk into a supermarket intending to buy some fruit, and while they have them in stock, they're all crap (usually picked too early and shipped from far away). How are you going to see that online? You're not. And what if you want to browse an aisle full of some type of food? I can browse much faster by walking and looking at shelves than by messing around with some website.
Grocery shopping online isn't a new concept. Netgrocer tried it ten years or more ago, and it never took off, unlike Amazon and Newegg.
Online shopping definitely has its advantages, and works extremely well for certain goods. Electronics are a prime example here; you get the exact same thing as at the local store, and you get better information online, since the local pimply-faced teenager doesn't know anything about what he's selling. Groceries are at the opposite end of the spectrum.
Finally, one thing people will never do online is go to restaurants. There's plenty of low-wage jobs there for all the cashiers that lost their jobs.
What a blind fool you are.
This process has been going on for generations. Just go upstairs out of your basement and ask your mom.
She remembers the little grocery stores on the corner edged out by the big chains. She remembers one shoe store in town, now long shuttered by the 3 or 4 stores in town.
And the product variety and quality has improved dramatically every step of the way. That corner store usually and no more than 4 round steaks to choose from. Not an entire meat counter full of various sizes. They had poor quality fruit, when it was in season. Not a fruit section with fruit from all over the world all year around.
Oh, and hey, they had flys.
That kind of variety and quality doesn't come from mom and pop stores. It comes from big corporations.
But hey its a free country. You want those filthy little corner stores with limited selection, just drive 100 miles across the Mexican border. They still have them there. And the Flys too. No selection, very few products to sell. Go further down in central America, South America, Peru, Ecuador, Argentina and it gets worse still.
The one thing you notice when you return to the US/Canada after traveling overseas is the Grocery Stores. My god the quality, the prices, the variety, the freshness, the helpful staff.
Don't talk to me about self harming cheerleaders. You don't have the first clue how good you have it.
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I'm afraid I don't see how online merchants have killed my choice of products. In my not so limited experience, the exact opposite is true. Most local stores have almost no product selection. This trend of reduced product selection was in place long before Amazon existed or Wal-Mart appeared in my local area. The selection of products in almost every category has skyrocketed with online shopping. I'm sorry for the local merchant who goes out of business as a result, but, as a consumer, I see this massive selection as a very good thing.
Even with the reduced selection, I don't see grocery stores disappearing any time soon. Same day delivery is not the same as the 20 minutes it takes to run to the local store and pick up the items needed for tonight's dinner.
Your experience may vary, but I go into my bank branch at least once a month. I will admit they don't have nearly as many tellers as they once did, but there's seldom a wait of more than a couple minutes -- considerably less than it used to be before ATMs and direct deposit -- they don't charge me to talk to a teller and the service is always top notch.
the invisible hand will correct. You'll shop some where else when the prices go up, right? And you'll work somewhere else when there's only one employer left, right? Or you'll just go work for yourself. I'm sure the banks will loan you the capital, or that Amazon will pay you enough in Salary to save the capital, right?
Or the Government could step in and break up the Monopoly. Wait, strike that. that's socialism.
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I'll explain our current situation. After y2k and 9/11 those in power were scared we were going into recession. They were right we were. It is to be expected when you are facing an unknown threat. The correct course would have been for people to reduce debt and start saving to prepare for the worse. This naturally shifts production from long term capital goods to near term consumer goods. But the Federal Reserve wouldn't allow it. They pumped out the money like no tomorrow. This sends a false signal that people are thinking long term and it's time to build capacity. When businesses calculate if a long term project it worthwhile a major factor is what is the interest rate and expected inflation. At first both rates are low. Hence the housing boom and outsourcing to ramp up capacity. Now eventually prices rise due to all of this new money floating around chasing the same amount of resources Oil, Gold, Housing, ect. As prices rise all of those inflation numbers that people used in their calculations eat away the justification for increasing capacity. Then you get the crash as all of this projects are abandoned and the misallocation of resources and labor are exposed. The only solution is to let it work itself out. The market had a signal for a long time that more houses were needed because people were paying record amounts for them. If the easy credit wasn't there it would have been a good signal. But as it turns out all of the labor and material put into housing was a waste. Now you have to let the price of houses crash to where the market will support. All of those people that were employed by housing construction have to find new productive lines of work.
Let me know if this is making sense and I'll keep writing.
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after a long while, i've come to agree. small stores that are worth going to for whatever reason (friendliness; reliability; or even just an interesting gimmick) tend to make it, though not always. the reason so few do, is that they really have nothing going for them.
on the other hand, i went to an art and art supply store and after i complained about the price of his poster hooks, he showed me the books; he was paying more, wholesale, than wal*mart was charging retail. that was an amazing insight into economies of scale. he still made it by reputation and selling a diverse array of weird stuff (e.g. tubs of dmso; essential oils; and vintage softcore pornography).
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But that fails in practice. You want the most efficiency possible. Keeping a bunch of inefficient people in business makes everyone poorer. What exactly do you have against the public that you want to make them poorer by making prices higher?
The unspoken argument is that once all the little shops are gone, the big boys will raise prices. But that doesn't seem to happen in practice. All the little guys around here and in my hometown were wiped out ages ago, but Walmart continues to offer better prices than they ever did.
People have ordered merchandise out of a catalog from Sears Roebuck & Co., Montgomery Ward, etc. since long before the internet. Amazon is doing nothing new. The internet is just a convenient way to publish a catalog and take orders automatically.
It always happens the same way. A big retailer gets established, gains some monopoly power, and starts selling anything and everything. Then it starts discontinuing the lower-volume, less profitable items, and raising the prices on the remaining items, because this seems logical to management. Then their customers start looking for and finding deals elsewhere, simply because they can't find what they were looking for where they used to shop, and they find out the prices where they used to shop aren't that great anyways.
Yes, I know Amazon came up with the "long tail." But it never lasts, because in the end retailers are always infuriated by those customers who for some reason or another happen to be looking for something that is outside the realm of high-volume high-profit mass-marketed consumer products that all big retailers like to specialize in.
It's not for my lack of understanding why it doesn't make sense. It doesn't make sense because your argument is based on a very subjective and factually inaccurate view of recent history. One of the tenets of Keynesian economics that is sound is not to adopt austerity measures in the face of recession or depression. The time for austerity is when the economy is strong, and there are the tax receipts and free-flow of capital to pay down the debt assumed to spend your way out of a recession (and that's the only way out of a recession; it's what Clinton did to get us out of the recession of 1990-94, and then used the late 90's boom to pay down debt and balance the budget). The reason we've gone into double-dip now is because of this misplaced (and frankly mind-boggling) belief that after a decade of deficit spending while consistently reducing income, we can some how entice those who hold a record amount of capital back into spending by not priming the pump through government incentives. When the private sector is not spending, and people are out of work and not spending, who else is going to spend? The economy we've built is dependent upon consistent expansion and growth. When you have neither, you have nothing. This is not complicated math here. The fact there there seems to be a large segment of the population willingly suspending disbelief about conservative economic initiatives and principles is clear indication why we're going down in flames. If you're a student of history, you can why we are where we are now because a Republican-controlled congress made the same kind of demands on FDR, and if it weren't for the eventual wartime debt and spending, would have plunged us into a second great depression. Yet when you have a propaganda machine pumping out misinformation about what is really happening in the market place, it's going to remain this way until it either collapses or people finally question why we've built a corporate welfare state that pays to ensure it's participants can continue to game the system.
Explain to me using your logical model of economics why it made good economic sense for Barclays to manipulate LIBOR?
I would rather wait a week than pay the 10% sales tax I have to endure in my state.
Once they start charging sales tax, bye bye amazon for me.
Your doing good so far. So what is the root problem? The Fed and its fake money. It creates economic distortions in every conceivable way. Then when things f*ck up, people think the problem is not enough government control. Well, the Fed and its fake money are fundamentally a centrally planned market for money. That is fundamentally total government control over the economy. Yes I know the Fed is "private"--but in reality it is private the same way "public/private partnerships" are private--they aren't and wouldn't exist if it wasn't for a political decision, so they are really quasi-government enterprises. So there is no way at all to create a free market with its inherently stabilizing negative feedback loops that leftists cannot comprehend or insist on denying, out of this mess. It is destined to unravel into unstable distortions.
But the 99% always believe the problem IS the (non-existent) free market, and that we need more government interventions, because that is what they were programmed to think in...government school.
Everything is as it is meant to be.
They also get good tax breaks from local governments who naively think they're going to attract jobs and thus a larger tax base. Or else if the local government doesn't play ball then Walmart builds the store just outside their jurisdiction (counties generally tax less than cities in most places). Walmart stores are always build large, they never start small and then expand if business picks up. They already know business will pick up as soon as the competition goes bankrupt. So they're willing to build the stores at a loss, even offering to pay for all city infrastructure improvements. This is not a free market.
Historically monopolies have formed and thrived when governments did not stop them. The free market forces do not prevent monopolies from forming.
So why doesn't he buy his hooks at Walmart?
One MEGA corporation displaces hundreds medium- and large sized ones.
Small stores that are worth it do survive, the sad problem is: most aren't. Hardware stores as an example. 10 years ago the local hardware store had all sorts of crazy hardware and small tools in stock, and people who could help you find it. Now we have a Lowes, I've grown to despise them, and the local hardware store seems to be doing just fine. Although for me, too many wasted trips with neither having what I need: I plan ahead when possible and order everything online (generally from amazon). Its not about the price, its about the wasted time, and compromising for the item they happen to carry, not the item I want. Will the Lowes and local guy suffer? Maybe, but they're not really competing for whatever reason. Want to compete against Amazon on choice and availability? Do what auto parts stores can do- look up and order just about anything, with most things just a couple hours away via courier. Anyway- I'm not crying for anyone in this game, the internet has brought more of everything, and best of all I don't have to depend on Amazon- they're the top of the heap today, but they falter and someone else can knock them out.
Why can't local farmers use Amazon to sell their produce online, picked that morning, delivered that afternoon?
A fool throws a stone into a well and a thousand sages can not remove it.
For grocery stores, if you think shopping online is going to replace the local supermarket, you're insane and need psychiatric intervention. How are you going to buy ice cream online? Unless they do some really fast delivery, it'll be melted.
How far from your local grocery store is ice cream made that they sell?
For that matter, how long do you camp out at the local grocery store waiting for it to arrive so you can speed it home and eat it all before it melts?
This is analogous to taking the bus. No, it does not use more gas, because they make a lot of deliveries on a single route.
The often cited buggy whip people went out of business as a result of innovation in products. Wal-mart hasn't produced any new products. That's my point. Wal-mart's success stems from innovations in labour management, negotiating with suppliers and contractors, leveraging off shore manufacturing and artificially depressed currencies.
They create innovations like this: http://www.huffingtonpost.com/2012/06/06/walmart-outsourcing-depresses-wages_n_1573885.html
Yes, it is innovative to find a way to lower your distribution center hourly wage from $8/hour to $5/hour but not something I would compare to the invention of the Model T.
Think about an isolated hunter gatherer society. They spend all of their time trying to survive.
Huh? Modern (e.g. 1950s) hunter-gatherers, living in lands unsuitable for agriculture, spent around 20 hours per week gathering food. How else would they have had time to develop art, culture & language while colonizing the globe? Agriculture was a huge step down, requiring ~100 hours a week until very recently. Quality of life suffered dramatically, but farming supports far greater populations, so it became dominate through military might (and drunkenness). Here, and here are some interesting articles on the topic.
...to Best Buy.
But not Radio Shack...somehow they always survive.
Radio Shack is the cockroach of the retail world.
They will put most normal retailers out of business.
What's your definition of "normal"? If you only shop at big-box stores that compete solely on price and provide little or no customer service then yeah, shopping as you know it is dead. And good riddance.
But there are lots of retail businesses for which customer service counts a lot more than price or convenience. Here's an independent bookstore that's doing well despite being in a declining business in an economically depressed area. Why buy books here when you can order anything online, usually for less? Because sometimes it's fun to go into a space staffed by people who love books and just browse their well-curated collection.
(I often wonder if Borders might not have survived if they'd stuck with their original browser-oriented business model instead of only stocking books that were easy to move. Once price and popularity became their total business model, they had no hope of competing with Amazon.)
Another example: I recently bought a vacuum cleaner. Having wasted a lot of time shopping for vacuums both online and in department stores, only to end up with expensive, overmarketed ("doesn't lose suction!) crap that conked out after a year or so, I decided to give a small specialty chain a try. Some woman in a shop apron asked me about my needs and my budget and showed me a simple machine that was just the ticket. She took it apart and showed me how it worked (always a good sales technique when selling to a technogeek) and walked me through procedures for replacing the bag and the fan belt. An easy sale for both of us.
Of course, the first thing I did when I got home was look for the same model online. I would have been OK with having paid a little extra for the local expertise — but as it turned out the model I bought similar competitors were all hard to find online and actually a little more expensive.
The role of brick and mortar stores is shrinking, but there will always be things they know how to do better.
Severe economic booms and busts have existed almost nonstop since the fed was created in 1913. They inflated to get us into WWI. Then they kept it up. Ever hear of the roaring 20's? That was the inflation of the bubble which has to inevitable burst which was the depression. WWII only got us out of the depression if you consider sending millions of unemployed men overseas to fight and die a good way to cure unemployment. If you look at the people in the US during the war they were still living like they were in the depression. Everything was rationed and it was horrible. The economy didn't get better until after the war ended and millions of soldiers were fired by the military.
The 90's boom was similar. The cold war ended and Clinton rightfully gut the military since we didn't need to fight the soviets. That released lots of labor to work on things people actually want. But in addition Greenspan inflated like crazy. We had this thing called the dot com bubble which is where all of the malinvestment went in the 90's and burst in 2000.
As for Barclays and the rest of the bankers should be tried and put in prison as far as I'm concerned. Fiat money, fractional reseve banking, FDIC, and legal tender laws are tools the bankers use to suck the wealth out of the producers in society.
I love Jesus, except for his foreign policy.
We already see the situation in electronics, where people go to a local shop, check out what they need and then... order from amazon. This will happen to groceries eventually as well. And that will kill your choice of products, your ability to choose where to spend your money and eventually your ability to actually visit a local store.
kill choice? like the internet killed choice in electronics? and books? and pornography?
how many pairs of boxer shorts should you own?
From the Wikipedia article you linked to:
"The Luddites were a social movement of 19th-century English textile artisans who protested ... replaced ... with less-skilled, low-wage labour, leaving them without work and changing their way of life (See "Dickens, Charles" for what life without work was like in 19th Century England)
Battles between Luddites and the military occurred at Burton's Mill in Middleton, and at Westhoughton Mill, both in Lancashire. It was rumoured at the time that agents provocateurs employed by the magistrates were involved in provoking the attacks. (Sound familiar?) ...and the present action had to be seen in the context of the hardships suffered by the working class during the Napoleonic Wars.
"Machine breaking" (industrial sabotage) was subsequently made a capital crime (Breaking a loom meriting a death sentence?!) by the Frame Breaking Act, 52 Geo. 3, c. 16[9] and the Malicious Damage Act of 1812, 52 Geo. 3, c. 130[10] – legislation which was opposed by Lord Byron, one of the few prominent defenders of the Luddites – and 17 men were executed after an 1813 trial in York. Many others were transported as prisoners to Australia. At one time, there were more British soldiers fighting the Luddites than Napoleon I on the Iberian Peninsula.
Hmm, a social movement protesting societal changes which left many to starve in the streets. This movement was met with ridiculously Draconian responses including executions and exile to Australia, and repressed with the use of more military troops against their own civilian population than were devoted to stopping Napoleon. The Draconian legal responses seem to have been specifically drafted to please wealthy company owners.
You know, I think you've got it exactly right. I think the Luddites have a lot to teach us about the times we live in.
He put his boots up on the table and made a face. "The sig," he smirked. "You can waste your life in search of the sig."
And the product variety and quality has improved dramatically every step of the way. That corner store usually and no more than 4 round steaks to choose from. Not an entire meat counter full of various sizes. They had poor quality fruit, when it was in season. Not a fruit section with fruit from all over the world all year around.
Oh, and hey, they had flys.
That kind of variety and quality doesn't come from mom and pop stores. It comes from big corporations.
But hey its a free country. You want those filthy little corner stores with limited selection, just drive 100 miles across the Mexican border. They still have them there. And the Flys too. No selection, very few products to sell. Go further down in central America, South America, Peru, Ecuador, Argentina and it gets worse still.
I don't have any experience with Central/South America, but I've spent a fair bit of time in Asia. And I'll agree with you regarding the ever-present flies, but not on any other point. The diversity of the small vendors was outstanding; while each individual vendor might have a tiny selection, there were literally hundreds of them in a market, each jostling for a niche (and somehow, my grandmother knew exactly who to go to, for the best quality stuff at any given time).
If you walked in with set ideas about what you wanted to buy at that moment, then yes -- you might not be able to find that exact thing if it was was out of season. In the street markets, if you were willing to be flexible, you'd find unusual heirloom varieties of things that might be grown only in a single village (but might have been grown there for centuries), or you'd find entire species of fruits and vegetables you never even knew existed. That's for stuff you can eat -- if you wanted gadgets and electronics, it was just as good, as long as you were near a major city (most of it's produced there now, anyway). If you knew where to look, you could find vendors in a little stall in the corner somewhere that could do custom-modded laptops builds for you right there, on the spot (and slap on an emblem for whatever brand you wanted it to "be").
In comparison, the quality of fruits of vegetables you can get in the typical US suburban supermarket is really sad. Americans do not consume enough vegetables compared to the folks over there, and I can understand why. Everything has been bred to look shiny and hygienic and perfect -- but you don't taste with just your eyes. A lot of people don't understand how much has been lost because they've never had a decent example to compare against what they're getting. And, once you discount the dozen brands of each item, the true amount of variety is really small -- for instance, all our vegetables seem to be based around maybe two dozen species that have sufficient scales of production and distribution to make them economical. Over there, it's hundreds.
If you've never had a good experience with a street market, maybe you haven't been to a healthy, vibrant one. Time's running out though -- and I can understand why. It takes time and expertise to shop in that kind of environment, and your legs get a strenuous workout in the process (maybe the change is part of why asians are getting fatter now). And yes, there's noise and flies and dirt everywhere, and the little vendors don't have the economy of scale big operations can offer. As a result, in some places the multinationals big-box stores are gradually pushing the street markets out of business (they hang on for a while, but in their declining years it can be pretty sad. Maybe that's the kind of market you've seen?)
-- Eventually, the price of labor will drop below the subsistence wage level and people will fail to subsist (i.e. they will die). This will reduce the supply of labor, until the system returns to equilibrium.
This is true, but it is highly undesirable. People generally don't give up life willingly when they realize they are unneeded. They turn to crime, taking the fruits of the labor of the needed or even worse they turn actively against the 'needed' population in either terrorism or outright war. War is a terribly inefficient method of reducing population because it tends to kill more then the 'unneeded' and it destroys a lot of the resources and capital that could be used in more useful human endeavors.
Japanese came up with grocery shopping while in the subway - you get your phone out and scan the barcodes for what you want to buy and they deliver your goods some time later at home. (The products are large pictures on the subway wall). Of course, this doesn't solve the problem that you mention, i.e. checking the state of fruit and so on.
ics
For grocery stores, if you think shopping online is going to replace the local supermarket, you're insane and need psychiatric intervention. How are you going to buy ice cream online? Unless they do some really fast delivery, it'll be melted.
I don't know about where you live, but all of the major supermarkets in the UK provide local delivery, including Asda (Walmart). And, yes, you can order icecream and it works fine. They ship everything in vans that have a freezer compartment and the frozen items arrive significantly colder than if you'd taken them home in a car. I've done pretty much all of my supermarket shopping online for the last 5 years or so, and I know a lot of other people who do as well. The delivery charges are as low as £3, which may be slightly more expensive than driving to the shop and back, but it isn't if you value your time: you can do the entire shop online in less time than it takes most people to get to the supermarket.
I am TheRaven on Soylent News
I think rather than GM or any of the other ghosts you are trying to conjure about modern food production, let us consider the tomato. That round, red, delicious looking, but tasteless, monument to food. It turns out that many years ago, through much cross-breeding (yep, good old cross-breeding), it was found a particular trait could be had with a high frequency. The trait: uniform red color even near the stem. Unfortunately, the genetics were such that it also hosed the taste. The reason was chlorophyll in the tomato. The genetics that got bred out made for lots of the stuff which turned into tasty sugars or caused them to be produced (memory fails a bit here) in the tomato. The tomato when not ripe should be nice deep green, now it is a sickly light green due to the lack of chlorophyll.
This was only recently discovered. And let's observe precisely why this inferior blob of an excuse for a tomato sold better than the one not bred for such uniform red color: the consumer. Turns out the consumer would always buy the blob rather than the real tomato even though he/she could easily taste the difference.
The lesson we observe here: GM and plain pumping for growth are not always the problem, and I very much doubt the former is at all given the studies. And the consumer is about as smart as a sack of wet mice (thank you, Foghorn Leghorn) when it comes to choosing food.
True...to an extent. However, it is always good to have a sense of proportion. Back in the day, when people were first being replaced by machines, there were many other things unmachined which people could still do and hence the total problem was manageable. However, we are reaching the point that just about any job can be machined out of existence. There are fewer places to turn for enough employment. How many jobs that require something a machine cannot do can a society support?
I would argue there are far fewer jobs that cannot be mechanized. And many economists agree and consider this to be one of the prime factors in the current failure of U.S. business to hire, they don't have to. Many spent the downturn mechanizing. And it doesn't even have to be a replacement for a human that machines make available to businesses. Those self-checkout lanes at the supermarket mean less clerks because they've cut out the middle man, you get to do yourself. Phone Hell when calling a business to try and talk to human means that human's job is now being done by you.
The problems do not stop there. Computers and modeling allow us to remove all kinds of slop in just about any system. You can run the system so close to perfection that the least little blip and it tanks (think flash crash). It's easy to code for average behavior, it isn't easy coding for the freak "what if". There's no hysteresis left in many of our systems. And they all get linked together so we can expect bigger clusterf--ks in the future.
your neighborhood UPS or Fedex delivery truck is not refrigerated.
The Schwan truck is refrigerated, but if you're not from a rural area, you might have not seen one. ;-)
True, but that is capitalism in the modern era for you. It is not co-incidence that not only is Amazon automating its warehouses, it is buying up fulfillment robotics specialists like Kiva Systems to make it easier.
Those lower paid jobs you mention will soon be replaced by robots, throughout the world. Of course once robots become mainstream, there will be no reason to outsource to cheaper labour markets. Which could be why Foxconn are choosing to go into the robot building field.
Quite what this will do to society is anyones guess. But anyone with any money to spare would be wise to invest in companies that are riding the wave, rather than trying to hold it back. And anyone who has kids should be pushing them into fields that robots and computers are least likely to penetrate, to give them the best chance of a future.
We live in interesting times.
Sure, you can refrigerate shipments. However, the cost of this is pretty high.
You can ship ice across the Atlantic on a freighter (believe it or not that used to be how it was done, granted in the era of wooden ships). If you do it with an ice cube, you end up with a puddle before you're done hauling anchor. If you do it with a full hold you have fairly minimal losses (maybe 10%).
When shipping cold stuff the surface area to volume matters A LOT, as does relative amount of heat transfer. A cubic inch of styrofoam allows so many calories per hour to go through - whether there is a pint or a ton of ice cream inside. As you scale up the volume goes up faster than surface area. Then factor in other economies of scale.
The bottom line is that if you want to buy a ton of ice cream the shipping cost is pretty minimal compared to manufacturing costs. If you want to ship a pint of ice cream the shipping cost probably exceeds manufacturing cost.
TFA neglects to mention that Amazon is negotiating to receive a cut of the sales tax it collects:
http://articles.latimes.com/2012/may/19/business/la-fi-amazon-sales-taxes-20120520
blindly antisocialist = antisocial
Aside from try to protect their internal supply chain processes as trade secrets, there isn't much Walmart can do to counter this. I suppose that they could try contracts with suppliers to forbid them from doing business with Amazon. I imagine that would result in multiple lawsuits.
Your insistence that every worker have a high paying job is precisely why there is so much unemployment in the US today. If high school kids or college students or out of work CPAs can earn a few bucks doing this work, where is the down side of that.
Out of work CPA's doing stock picking jobs. And you ask where the downside is?
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
Already there have been successful robot waitresses, and as robot costs drop we'll see that last resort low-paid job begin to disappear too.
And truck drivers will probably be out within 20 years, as autonomous vehicles become widely available and accepted. Google has demonstrated them already, as have various university research groups. Nevada has licensed them. The military wants them. I want them--when I'm no longer able to drive safely, or when I'd rather read a book while going somewhere, I want an autonomous car.
So we face a much more serious problem as a society: there are not going to be nearly enough jobs. But we need consumers, everyone needs money. How will people get money, and health insurance, if there are no jobs for them?
Stop progress to preserve jobs? That's going to seem like make-work, not very satisfying.
Expand welfare?
The only writer I'm aware of who has seriously dealt with this issue is James Albus, a roboticist, who wrote "People's Capitalism". It's an unfortunate choice of title, kind of turns people off, but a good thoughtful book.
His basic idea is to acknowledge the common ownership of our system and infrastructure by giving everyone a literal share in it, like a grand mutual fund, when they turn 18. The shares generate dividends, and the fund promotes progress in technology, giving everyone a vested interest in making things better. He estimated that about 20 years after starting this system, the dividends would amount to enough to survive on and by combining two or more people one could live reasonably.
He also figures this income would enable marginal creative enterprises, like "hobby" leatherwork, so people could spend time doing things they enjoy but mostly supported by their investment in this fund.
The virtue is it's living like the rich do now, off investment income. There's no welfare stigma associated with that.
Seems to me we need to start thinking seriously about some such solution to the oncoming joblessness problem.
How are you going to buy ice cream online?
Yes, how would you do that?
~Anguirel (lit. Living Star-Iron)
QA: The art of telling someone that their baby is ugly without getting punched.
All of the grocery stores in my area are putting the full court press on delivery for free. I have four of them within a 5 mile radius that will pick and order and bring it to me.
I already get most of my vegetables from an organic delivery service. Most of my meat comes from a local farm that grass feeds them and also delivers.
Whats interesting is that these guys all deliver at night, when there is no traffic, no heat, and the food can sit in a box or thin cooler on my doorstep for a few hours until I wake up and get it. The grocery guys deliver in under an hour.
So while I don't see Amazon selling a lot of fresh food, I think turning groceries into a delivery service just might happen.