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Frustrated with excellent service, overnight delivery at no additional cost, free videos, among other things, Brook Masters, Companies editor at the Financial Times, goes on the attack against Amazon!?

3/13/2016

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Hooked on a feeling that Amazon is too addictive by far

"Amazon is taking over my life. Books were the gateway drug, of course, but I got really hooked by the Prime subscription service, with free overnight delivery on everything from moth spray to snow boots.

When they boosted Prime’s price but threw in free video services, I was sceptical of streaming and the kids said Netflix had a better catalogue. But I still wanted the free delivery, so we kept on paying the higher price.

Now, the kids have basically given up live television in favour of Prime’s old shows. As they predicted, we ran through the free movies quite quickly, but the rental process is so convenient. So we are paying Amazon still more money to rent premium videos.

I haven’t even tried the new UK grocery delivery service yet. But, if my current service is late one more time, I just might have to."

Quelle horreur! Low prices on everyday products, no additional cost shipping, excellent one time service, free stuff like videos with easy peasy premium video rentals, and grocery delivery too. What's not to whinge about? Except everything. 

SideBar: [Brook, give each kid a monthly video allowance of $X, you make up the number. Then let them know if they would like to watch more, they can get a job, or even perform services around the house. Offer a reasonable schedule of payments for services, and, well, parent. It really is not that difficult, and it's fun watching the little emperors find out what the real world is like.]

So, what's the actual complaint? That is a bit squishy, but this seems to be part of it. "[Amazon] already does a lot of “last mile” local deliveries itself and, this week, the group announced it had leased 20 Boeing 767 jets as it takes even more of the shipping process in-house. Last week, Amazon also unveiled its latest attempt to rule the connected home. Essentially, Amazon is attempting to hook customers with one service and then become the hub for a broader array of offerings."

Yeah, apparently Brook has the vapors because Amazon has "discovered" that all kinds of services for the homeowner are absolute crap, and has decided to focus on improving those services by an order of magnitude. Jesus H. Tap-dancing Christ, it is the 21st century, there is no reason to put up with 19th century services levels, and quality. But apparently Brook pines for the quality, and service of the long wait for the crappy product.

"Now, there is nothing wrong with having a huge share of a market, especially, as in Amazon’s case, if the company offers good service and reasonable prices for consumers. But competition issues arise when companies abuse their position to disadvantage customers, suppliers or competitors."

So, is this an indirect allegation of another complaint? Or is this just nonspecific whinging? Brook, it is best to be specific, otherwise we do not know what you are thinking. 

Hold on, Brook has an example, "Back in the 1990s, Microsoft got into all sorts of trouble for doing just that. US and EU regulators alleged that the technology group had abused the dominance of its Windows operating system to crush rival web browsers and media players. The US case eventually settled on terms seen as favourable to Microsoft. But the EU fined the company €860m." 

Huh? Her example is Microsoft 1990s? Look, this is a whinging worry about The M word, you know, monopoly. And Brook's example shows why it is not a worry, and never was. Microsoft was leviathan back in the 1990s. Desktop computers reigned supreme, and the only alternative was the costly laptop. But June 29, 2007 changed everything, with the introduction of the iPhone. Microsoft has been unable to break into the operating system market for smart phones, tablets, and the like. The result? The Death of the PC Has Not Been Greatly Exaggerated

And if Microsoft is not careful, the death of Microsoft. Euro government tried to fix a problem in the 1990s, but couldn't because government is not capable of addressing these issues. Apple fixed the problem in one day. Microsoft was never a monopoly, and the European actions against Microsoft in the 1990s had nothing to do with consumers, or value to consumers, it had to do with supporting Microsoft competitors who where not capable of competing in the market. It was nothing more than support for dying, zombie companies favored by government.

In the free market, there are vanishingly few monopolies, and those exist only because they provide such excellent services, and prices that no competition can beat. If you do not believe this name 5 monopolies, which are not created, and/or supported by legislation, or other government actions. The cable company, the phone company, don't qualify, they are creatures of government creation, not monopoly arising from the free markets themselves.

Not only are there only vanishingly few monopolies in the free market, even the largest corporations come, and go, regularly winking in and out of existence. Remember the US's largest retailer? No, not Walmart, The Great Atlantic & Pacific Tea Company. Go read the history, I am old enough to remember the A&P, and my grandmother shopping there. Remember Pan Am Airline? Hughes Air West? How about American Motors, Brown Shoe, Studebaker, Collins Radio, Detroit Steel, Zenith Electronics, and National Sugar Refining? These were Fortune 500 companies in 1955, but not in 2014. Ok, I don't know about Pan Am, and Hughes Air West, but the rest were. 

"Comparing the Fortune 500 companies in 1955 to the Fortune 500 in 2014, there are only 61 companies that appear in both lists. In other words, only 12.2% of the Fortune 500 companies in 1955 were still on the list 59 years later in 2014, and almost 88% of the companies from 1955 have either gone bankrupt, merged, or still exist but have fallen from the top Fortune 500 companies (ranked by total revenues). Most of the companies on the list in 1955 are unrecognizable, forgotten companies today (e.g. Armstrong Rubber, Cone Mills, Hines Lumber, Pacific Vegetable Oil, and Riegel Textile)." Fortune 500 firms in 1955 vs. 2014; 88% are gone, and we’re all better off because of that dynamic ‘creative destruction’

Brook who is the Companies editor over at the Financial Times does not see to understand this dynamic. Perhaps she understands it but presumes it only operative in the past? I don't know. But this process continues apace, and I would suspect that the future will be at least as harsh as the past with the creative destruction of corporations which initially provide a valuable service but which later fail to do so. 

The difference between Brook and Maddog is immense. I believe that what Amazon is doing is the minimum acceptable here in the 21st century. We are, after all, at the End of History. We know what works, politically - republican democracy, economically - free markets with capital formation features, and religion - reformed (Protestant Reformation) religions. Why we would accept 19th or even 20th century standards from our corporations is beyond comprehension. Buy the best products you can at the very best prices you can, do not care about the nationality of the company, or any of the weird local only shopping. These schemes are unwittingly falling into a trap that they will perpetuate low quality products, with high cost, and poor energy, and pollution allocations. 

Buy the best, and force the rest to either make the shift to the 21st century, or go bankrupt. Happy shopping!
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