The success of Walmart has provoked attacks from liberals for some time, despite the benefits that Walmart provides to consumers, and now liberals are turning their attention to Amazon’s success. For example, in a recent article in The New Republic, editor Franklin Foer labels Amazon a “monopolist” that has left a “trail of destruction” in the economy and he demands nothing less than a “radical plan” to stop the company (see here).
According to Foer, Amazon, Walmart, and Google are representatives of a new “golden age of monopoly,” an age where monopolists prefer to lower prices (gasp!) rather than raise them like the big, evil corporations of the past. Although he refers to predatory pricing without offering a shred of evidence against Amazon, Foer focuses more on what he claims is Amazon’s ability to squeeze its suppliers for lower prices.
A single or dominant buyer in a market is called monopsony, not monopoly, and Foer really means to say that Amazon is a monopsonist. His fear of a single buyer, however, apparently doesn’t apply to the federal government, which is one of this nation’s largest single buyers through its financing of Medicare and Medicaid. It is more likely that government central planning would lead to greater destruction by squeezing suppliers than would private firms, but never mind.
Foer criticizes Amazon’s pricing dispute with book publishers and, gee whiz, it happens that Foer himself is an author of several books. In 1913, the progressive historian Charles Beard wrote a controversial book arguing that the economic interest of America’s founders influenced their votes at the constitutional convention. Following Beard’s lead, we might conclude that Foer’s animosity toward Amazon is fueled by his own economic interest.
Most people would agree that the American economy today is not the same as that of the late nineteenth century, but not Foer. He claims that we have been “thrust back 100 years” when antitrust enforcement was not up to the task of controlling the corporations. Only after decades of experiments did the Great Depression and FDR provide clarity about antitrust, when the Roosevelt administration filed a number of complaints against a few “big-time” players.
Foer sees these antitrust actions as a triumph and implies that monopolistic practices of big corporations caused the Great Depression. Of course, most economists suspect that government mismanagement of the money supply and subsequent protectionist policies caused and perpetuated the Great Depression. But liberals see government as society’s savior and liberal ideology prohibits any admission of government’s role in economic decline.
Foer demands a new round of experimentation to deal with what he calls the “new reality of monopoly,” but gives few details of any plan, radical or otherwise. Evidently, one idea from liberals is for the government to strip Amazon of the power to set prices. Yeah, that sounds about right: take away the entrepreneurial aspect of what Amazon does and turn the company into nothing more than a pipeline from supplier to consumer. Stagnation and higher prices, a classic liberal combination.