Friday, June 7, 2013

European Backlash Against Amazon (part 2)

I ended my previous post European Backlash Against Amazon, by saying the following about French - and possibly British - governments'  attempts to stop Amazon from "destroying" local brick & mortar stores through supposed abuse of their power:

"My sympathy goes to the brick & mortar stores, but my free market instinct doesn't see the solution in French or British government support. If Amazon is breaking any laws, it needs to be stopped from doing so. If Amazon is abusing its power, that too should be addressed. But short of that, every smart bookseller or entrepreneur needs to come up with innovative responses to the attacks from the online retailers: maybe if one of them finds a sustainable model, others can follow suit."

I just found a few comments by well-regarded pur-sang free-market blogger, Mish Shedlock. This is what he says in his June 4 post 'France Considers Ban on Free Shipping by Amazon, a 'Destroyer of Bookshops"; Prepare for Economic Collapse in Europe. '

" It's easy to spot the problem. France does not need and cannot afford a culture minister whose obvious goal is to stop the spread of technology and preserve culture as she sees fit. But France is France. So when does this fool announce a tax on Kindle or campaign to bring back the horse and buggy?

and he continues

(French) Government spending is already 56% of GDP. Hollande has threatened to take over steel, auto makers, and other industries to preserve jobs. Every month, France becomes less and less competitive. It is no wonder French unemployment soared. And unemployment will continue to rise...."

In his June 6 post 'Personal Arrogance; Preserving Culture vs. Common Sense; Email from France' Shedlock comments on an email he received from Slavador in France, who states:

"My ability to go to a local bookstore owned by a neighbor with my family is something I see as even more important than the global campaign to efficiently concentrate the wealth in the top 3%."

Shedlock tears this argument to pieces by responding:

"The first flaw is the implied presumption that saving inefficient "mom and pop" operations is of economic benefit.Here is the reality: Paying too much for goods and services is economically foolish, especially for those who can least afford it.

and then,

"I can accept that Slavador might wish to overpay for books because he likes bookstores. However, I cannot accept the view of "culture-preserving" bureaucrats to cram their beliefs down the throats of everyone else.  If people support the view of Slavador they would not shop at Amazon or Walmart, they would pay more and shop at "mom and pop" stores.  But people don't. And that is why "mom and pop" stores are failing. So... along come socialists and arrogant fools who insist they know best how to spend other people's money."

I believe that Shedlock is taking here an economic argument to the extreme, namely that inefficiency should not be rewarded no matter what. While it may be true that most people rather pay lower prices and buy at Wal-Mart  or Amazon for that matter, but if every single transaction in society is only measured by its price without taking into account the quality of the transaction or the environment where it's taking place, we'll be ending in a grim version of a Sci-Fi movie, full with soulless big box stores in the middle of nowhere, where people shop like zombies rather than spending time in a pleasant small local store enjoying their shopping and a conversation with a local shopkeeper.

I agree with Shedlock that (the French) government should not be the first to initiate a defense against big companies. The small companies themselves should innovate and convince their customers that they offer value. In an article on Alternet, Mom and Pop Stores Take on Wal-Mart, the negatives of Wal-Mart for the local economies are being highlighted, and there are quite few. There is a call for a capitalist alternative, 'economic development rooted in local ownership and import substitution." How successful this is in the U.S. remains to be seen, but it seems that the smaller guys in France and the U.K. by and large can't seem to compete with Amazon nor are they coming up with new sustainable business models for running their business. So, then the choice becomes a stark one: efficiency wins at all costs or the French government steps in against the tides of "progress." There should be a more innovative way of solving this problem, shouldn't there?

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