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Why the Consumer Wins When Walmart and Amazon Battle Over Prices

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Walmart and Amazon have surely benefited from government protectionism, but the economy is still free enough to promote competition which ends up benefiting consumers.

Back in 2011 Walmart invested in pricing tools, realizing that Amazon was doing better. Amazon has algorithms which search the internet for the lowest prices, and then set their products to that price. Generally even when the lowest price is for wholesale ($10 for a pack of ten) Amazon will set their price that low even for a single pack of the product ($1 for a pack).

In 2012, the battle between Amazon and Walmart raged over a video game around Christmastime. The price was set around $50 for each retailer, but as a few cents here and there we dropped from the price to gain a tiny edge over competitors, the price of the video game eventually dropped as low as $15.

So that means people were not being overcharged for a game, and it means the companies were not making “obscene” profits on the product. The market corrected the negative aspects of business that would not have been corrected if there was a true monopoly.

Now, the war of prices is a seasoned game of strategy which brings suppliers into the mix. Both Walmart and Amazon reportedly hound product supply companies to lower their prices in order to better compete.

Sometimes, Walmart even encourages suppliers to reorganize their companies so that they can still turn a profit while charging Walmart less. Another tactic employed is to threaten to make their own products which would directly compete with the supplier’s.

Amazon seems to keep their suppliers guessing, using a tactic that The 48 Laws of Power suggests to make sure your opponents cannot entirely gauge your real intentions.

Amazon will even pull products which do not have a large enough profit margin in an attempt to get the price lowered from the suppliers.

Another Amazon tactic is to prohibit some brands from buying ads within the site for a product that Amazon can’t make profitable on a standalone basis. Like paying for prominent placement in a store, a brand can buy ads within Amazon to promote their products. Blocking these ads is another way of burying a product.

“They are playing Jekyll and Hyde,” said an executive at a large grocery goods manufacturer. “At times, it’s all about growth; at times, it’s all about profitability. They keep switching back and forth.”

Everyone loves to complain about Walmart’s profits. Well Amazon accomplished what documentaries, protests, and boycott could not. Walmart’s profits fell 18% last quarter, demonstrating that economic incentives are necessary for change.

Of course there are plenty of other issues; if it is all about price, what about quality? And even if the prices are lower for consumers, what about the workers of these companies, will they suffer?

But the competition among prices proves an economic lesson that will apply to all these scenarios. In the same way that Amazon and Walmart had to lower prices to compete, they will also be forced to compete to attract employees, or to have the best quality products.

Even if Walmart and Amazon are the main players currently, they are still not the only players: there is Target, Overstock, and plenty of other brick and mortar and online retailers. Is it hard for other to compete? Sure, but certainly not impossible, and as Walmart and Amazon are weakened by their fight against each other, third parties will be able to slip in to offer something that neither company does offer.

The Wish App is one example, where you can get crazy good deals if you don’t mind waiting.

The Dollar Shave Club is another example; direct to consumer websites offering products could be on the rise, especially if people tire of dealing with giant retailers.

But the real point is that competition among companies is a good thing for consumers, because it drives costs down. That is what consumers are currently focused on, but consumers could just as easily bring quality up, or improve employee treatment if that were something they felt strongly about.

When businesses react to their customers, they become a reflection of the people. In a sense, Walmart and Amazon offer a democracy where not only do you get to vote with your dollar on how they operate, you can also remove your support entirely by going to a competitor.

Something to Think About

Imagine if government had to compete in this same way, dropping the prices they charge people for their services. And imagine if you could switch back and forth between governments without changing your location. What if government services were simply competitive products delivered by businesses which could attract customers within the same territory, with overlapping jurisdiction?

War would break out! No, it wouldn’t. Pricing wars would, just like now. War is expensive, and only possible in a system where governments plunder their people to fund their violence. No government working on a business model could afford war, and they would do everything possible to avoid violent conflict.

But protection from neighboring warlords would still be an available service, and the government companies vying for your business would compete to deliver what you need, for the lowest cost, just as Walmart and Amazon currently do.

However evil you think corporations are, they are only a product of the governments who protect them, and the people who patronize them. The benefits of competition in the market can be seen even through the government’s smoke and strings. Remove the government from the equation, and consumer choice will only increase.


3 Crucial Battles in the War of Big Tech

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Click each headline to read the full article.

1. Google Plays Favorites and Arbitrarily Bans Content From Results

Google used to base its search algorithms on what the user wanted to see. Now they are starting to interject their own ideas about what people should see. In April Google announced

that they would be taking measures to punish “low quality content” such as misleading information, offensive results, hoaxes and conspiracy theories.

They are joining the war on “fake news.” That means they are glad participants in helping the government and media serve up propaganda to the people. But could this sell out backfire, and leave room for industry disruption?

2. Facebook Has Learned “The Art of War” from China

Zuckerberg is really gung ho to get his product accepted by the Chinese government. Facebook went so far as to create a censorship tool for the authoritarian nation. Along the way, Zuckerberg has picked up some tips about controlling his subjects. Facebook wants a monopoly on social media and the people’s data. What better partner than a human-rights-violating communist regime?

3. The Big Four Battle it Out for Control Over Your Time and Data

I guess the silver lining is that competition gives us some choice. But the turf is starting to be diced up between Google, Facebook, Amazon, and Apple. Each company is buying up smaller rivals and trying to edge in on their big data competitors.  They are the first comers, the gods of the digital age. But even gods have fallen…

Warning: One of These Monopolies is Going to Control You

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Why are governments so interested in breaking up monopolies? To protect the biggest monopoly of all, the government.

The American people are skilled mental gymnasts. They can totally agree that monopolies in the private sector are bad. But monopolies on defense, law enforcement, courts, education, roads, and so on are perfectly fine, even necessary!

This comes down to the myth of the process. People have been convinced that since companies are motivated by profit, they are untrustworthy. Governments are allegedly altruistic, working in the best interests of the people. In reality, the people in government take their profits in power.

We pay businesses voluntarily and use their services if we like them. We are taxed whether we like it or not when it comes to government. Yet everyone goes crazy over alleged private monopolies, and doesn’t bat an eye at the worst coercive monopoly of all!

Democracy is the buzzword meant to convince us that governments are not truly monopolies. After all, we get to participate! We choose the leaders, and they represent us.

An opinion piece in the New York Times by Jonathan Taplin is titled, Is It Time to Break Up Google?

He says:

We are going to have to decide fairly soon whether Google, Facebook and Amazon are the kinds of natural monopolies that need to be regulated, or whether we allow the status quo to continue, pretending that unfettered monoliths don’t inflict damage on our privacy and democracy.

He assumes democracy is something worth protecting. At the same time, he ignores the damage that can occur from unfettered monoliths like government. You know, the type of government who has the arbitrary power to break up companies.

“We” are going to decide whether a business should be allowed to exist. Democracy is mob rule, so “we” can simply destroy a business by force. Nevermind that we could actually peacefully stop Google’s monopoly by not using Google!

The fact that this question is being asked seriously proves how much worse government monopolies are than economic monopolies.

Governments have such a vast monopoly on the “legitimate” use of force, that they can openly discuss whether or not they will violently destroy a business. I say violently because ultimately all their power is exercised through actual violence, or the threat of violence.

Just look at how the government used anti-trust laws to break up “monopolies” in the past.

In an attempt to follow antitrust laws, General Electric charged the same prices as its smaller competitors. GE and about 25 other electric companies were taken to court in 1961 for this “conspiracy to set prices.”

The truth was the companies competed for the lowest prices. But the government just couldn’t understand how this would lead to identical prices. It must be a conspiracy, they thought.

Turns out a government agency had legally fixed these prices during WWII. When that government agency was ended after the war these companies continued to engage in the same activity, unsuccessfully.

But regardless of their failure to set and abide by prices within the industry, now it was illegal just to attempt to set prices. Legal when the government did it, illegal when an industry did the same. Businessmen got jail time, and one killed himself on the way to prison.

Ironically, the prices and profits of the companies were lower during the times of “collusion” than during the previous period. This supports the fact that prices were set low by competition, not collusion.

(Some of this information came from Ayn Rand’s collection of articles, Capitalism: The Unkown Ideal.)

This also shows that the electrical industry was not truly a monopoly. Nor is, for example, Amazon.

Amazon and Walmart regularly compete with each other on prices. A few years ago, a $50 video game quickly fell to $13 when the companies went back and forth taking cents off their online price.

The Big Dogs Change

Taplin seems to miss the lesson from the very first sentence of his article.

In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: Microsoft. Exxon Mobil, General Electric, Citigroup and Shell Oil are out and Apple, Alphabet (the parent company of Google), Amazon and Facebook have taken their place.

So then what’s the big deal? In the marketplace, the top dogs are always changing. They compete with each other. And each one has an interest in taking a bit of the other’s market share. That is the case with Amazon and Walmart.

The truth is, the government wants to bust monopolies in order to protect its own. Google has more influence over what you see than the FCC. Facebook knows more about you than the NSA. Amazon would be delivering goods to your doorstep by drone if the government wasn’t stopping them.

Amazon is also introducing a program that allows deliveries inside the home. They are doing this by providing the equipment to monitor your front door from their headquarters, and unlock it remotely. Sounds creepy for sure. But the real story is what this service could become.

The police only come after a crime is committed, and they are not great at solving it. Imagine if Amazon handled your home’s personal security? They would finally be offering a viable alternative to publicly funded protection. They would be threatening the government’s monopoly by competing.

I can choose not to use Google, Facebook, and Amazon. Each has 88%, 77%, and 74% market shares respectively. Yes, that is a lot, but there are still alternatives. I’m not saying it would be easy or convenient to completely divorce yourself from these companies. But you could do it without landing in a jail cell.

So yes, these companies are gigantic monoliths. You might say they are almost starting to resemble governments. Competitive governments. Governments that have to earn their market share. Governments that have to serve the customer, and entice them to use their services.

They may think they are untouchable by market pressures for now, but just look who was on top of the industry in 2006: not them.

And don’t take this as a wholesale endorsement of these companies business practices. I have criticized Facebook and Zuckerberg plenty in the past. That doesn’t mean the government has the right to break up his company.

Google can be very manipulative, and is joining the fight against “fake news.” This means they will censor whatever they want, including content on Youtube. Their current 88% market share sounds pretty insurmountable. But as soon as their algorithms stop delivering what the consumer wants, someone from the other 12% will step up and fill the void.

The only problem is when these companies collude with the biggest monopoly of all–government–to protect their market share by force.

Then they can use the government’s monopoly on force to bludgeon their competition to death or get special legal advantages.

That is what Peter Thiel is doing by donating hundreds of thousands of dollars to any state Attorney Generals who open anti-trust investigations into Google. This supposed libertarian is using the government as a tool to undermine the market.

And perhaps one reason is Thiel’s own technology company called Palantir. Palantir is named after the crystal ball used by the evil Lord Sauron in Tolkien’s classic Lord of the Rings Trilogy. Through this ball, the evil ruler can see all that goes on in Middle Earth.

It is a fitting name for a company that specializes in big data analysis technology. Even more fitting is that they sell this technology to the U.S. government and law enforcement. It is the ultimate software in spying, conglomerating every piece of data available, analyzing social connections, buying habits, and travel patterns of anyone in the U.S. government’s crosshairs.

It seems Thiel is working on behalf of the biggest monopoly out there in order to destroy through force his data competitors at Google and Facebook.

Who Cares About Democracy?

Taplin thinks Google, Facebook, and Amazon are undermining democracy. Well, democracy sucks. It is mob rule. It is a false choice between the colluding Republicans and Democrats.

It is time to break up the only true monopoly in the United States, the federal government. There are 50 subsidiary states ready to compete with each other for business, rather than being cajoled into servitude by the feds.

How Amazon and Google Smart Speaker Competition Reveals The Future of Government

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I wouldn’t invite the Amazon Echo or the Google Home into my home.

These smart speakers listen to everything that happens around them. Ostensibly this is to make shopping, playing music, and finding information easy. But the internet of things presents way too many risks to our privacy.

Internet-connected technologies are already used to incriminate their owners in court. And that is the main thing which scares me. Self-driving cars, smart watches, and smart homes controlled entirely from your phone sound really cool and convenient. But I don’t want the government to have that kind of knowledge about me. I might feel differently if I knew the info wasn’t going anywhere beyond Google or Amazon headquarters.

An Industry in Need of a Shake-Up

Government is an industry. Much like other industries, it can be upset by upstart competitors. But governments have monopoly status in given territories for their services. They don’t allow competition, and they enforce this ban on competitors by using their monopoly on “legitimate” force.

Never the less some small countries now offer incentives to organize your affairs under their government. Usually, this requires physically moving. But places like Estonia, with their e-resident program, have hinted that location-based government might not remain the standard. It is the 21st century, after all, and the internet has transformed many industries. It is only a matter of time until the government meets its reckoning.

Countries like Estonia will help move these innovations in governance along. So will countries like Georgia which now uses the blockchain to store property records. And even upstart new countries like Somaliland, barely recognized internationally, have teamed up with private developers to host special economic zones that hope to become the next Dubai.

But established governments are not the only ones offering competition to traditional government. Tech giants are poised to become decentralized governments of sorts. And the best part is that purchasing their services would not require moving to a new legal jurisdiction.

So how do I get from an in-home device which assists with shopping and playing music, to a provider of vast government services?

The Market for Government Services

The government continues to expand by convincing everyone that they can get government services while someone else pays for them. But what if consumers had to shop for the services they wanted?

Think about it. What do people really want a government for? A lifeline. We want to be able to call 911 and be whisked off to safety. We want police to respond to an immediate threat. It’s about having some sort of safety net in case something goes wrong.

With the Amazon Echo and Google Home, they can one-up 911 any day. They are always listening. If something happens, they know. And they can immediately get you assistance.

Except that they are still trying to work around regulatory rules which prohibit them from connecting you to 911. Apple’s Siri can connect you to 911 on devices that can make and receive phone calls. The Echo can currently only call other Echo devices.

Without government regulations in the way, smart speakers would be better than Life Alert for the elderly afraid of falling. They don’t need to be within reach to use. They are also better than a phone for calling 911 during a medical emergency, or even a home invasion.

In fact, soon, you won’t even have to direct the devices to make the call. Siri will soon sense from your fingertip when to call 911. Smart speakers will hear break-ins or recognize the sounds of domestic abuse. Your body will tell smartwatches when to call for help.

Just the Beginning…

The obvious problem with all this is government abuse of the data. But another problem is that these devices are still connecting you to government dominated emergency services.

Response from police differs greatly between municipalities. And once you get into solving crimes, things get even worse. According to the FBI, only about 65% of murders, and a mere 40% of reported rapes see someone arrested for the crime.

But if you signed up for Amazon’s inside delivery service, they have a camera on your front entranceway, and the ability to lock and unlock your doors. If someone breaks in, they know immediately.

The same goes for smart speakers, smart watches, and any other technology on the internet of things. They can recognize crimes in real time, without the user having to act.

And let’s throw Facebook into the mix. When it comes to security, they know who is stalking you before anyone else.

Speaking of Facebook, their first major investor, Peter Theil, developed a technology called Palantir. This aggregates practically all the data in existence to understand complex social connections, and behavior patterns. The tech can help users perform hundreds of hours of police work in minutes.

But what good is all this technology if the police don’t show up when called, and don’t don’t solve the crime when they do show up?

That is where Amazon has a headstart on infrastructure. They already have a network of delivery for packages. They are connected to customers not just virtually but physically. They want to deliver packages by drones from motherships (or nearby trucks). They have regional distribution centers.

It would not be very hard to implement emergency response teams in select locations. Add a security agent to the shipping team, and package delivery could double as patrols.

When it comes to solving crimes, use Palantir.

Google has some interesting infrastructure as well. They were the first to introduce self-driving cars in order to take street view pictures of practically everywhere in the United States and most parts of the world. Imagine hiring Google to patrol your neighborhood. On Google Earth, you can make out individual people in their backyards. Imagine how much more Google can see…

Now to be sure, all this technology is creepy. But most people have invited into their own lives. It wasn’t forced on us by an authoritarian government. My main concern is that the government will use it against people.

But what about in a world where governments know that they have to compete to provide people services?

Surely Amazon and Google compete with certain things, their smart speakers being a prime example. But they also have very different business models. Each may dabble in the other’s territory, and each is surely always looking for the next market to enter.

But does either one think they can ever entirely eradicate their competition? Of course not.

Governments have never been able to eradicate competition either, though they have tried violently. The only reason they can use violence in competition is because they have dominated the security sector for so long. They monopolize the “legitimate” use of force.

And still, some people have always managed to find their way to a friendlier jurisdiction.

Competing government where people don’t have to flee their homes means governments have very little leeway to oppress. Competition alone is a powerful check on power. “Siri, cancel my Google Government subscription. Alexa, sign me up for Amazon prime government.”

We have long called government employees public servants. And that is the idea of government, to serve us. They should be providing for the people, not living at their expense.

Private governance is the culmination of the American dream of independence. For most of history government have been rulers and dictators. We now have the chance to have a government that truly serves.

You Can Learn a Lot from John Mackey, CEO of Whole Foods

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Have you seen the media freaking out over Amazon buying Whole Foods?

The photos you may have seen of empty Whole Foods shelves were taken during this past season’s hurricanes when customers bought up supplies at a fast pace in case of emergency. It had nothing to do with the Amazon deal.

It is all fake news according to Whole Foods CEO John Mackey.

The truth is that Amazon and Whole Foods are very much in love. That’s the image Mackey chose to portray this past weekend during his two talks at Liberty Con in Washington DC. Mackey gave an interview at a dinner on Saturday night and the keynote speech on Sunday morning.

During the interview, he described the magic he felt when the Amazon and Whole Foods teams met for the first time to discuss their “marriage.” In any partnership, Mackey says each side should benefit, and that is what is happening.

“You know when you fall in love you have what I call ‘the conversation.’ You stay up all night and talk; and it’s like oh my god, it’s amazing, she’s the one. That’s how we experienced Amazon the first time we met them. We were finishing each others’ sentences before the first meeting was over.”

Customers need not worry about Amazon changing the culture of Whole Foods. Mackey says the best thing Whole Foods will get from Amazon is the customer centric attitude and cheaper prices. And Whole Foods might just insert a little wholesome natural vibe into Amazon’s business.

Mackey spoke about exciting things to come for the merger but said he couldn’t reveal those at this time. “You know how they say I could tell you but I’d have to kill you? Well, this is I could tell you, but Amazon would kill me.”

After the dinner, I asked John why he thought the media was casting the Whole Foods buyout as a controversy. He thinks it is the same old desire to create drama. Just a regular business transaction is not as exciting as a big scary company taking over a natural food store.

But he doesn’t think that is the same reason Amazon is so often cast as a bad guy in the media. That, he thinks, has more to do with Jeff Bezos being the richest man on Earth and possibly in history. That puts a target on his back.

And that might also explain why Trump bloviates about Amazon as well. Mackey criticized Trump for the recently announced tariffs on imported steel and aluminum. Mackey said this doesn’t make sense from an economics perspective.

But that is something he wouldn’t have understood before starting his business.

A Bunch of Hippies Selling Vegetable

At his talk on Sunday morning, Mackey shared his backstory about the beginning of Whole Foods. A young man in the 70’s, Mackey was the typical hippie. He dropped out of college to hitchhike across the country with a friend. Then he lived in co-op houses with other hippies, where he came up with the idea of starting a natural foods store.

And that is when his socialist hippie friends started calling him Darth Vader. How selfish of him to earn a profit while providing people with clean healthy food!

Yet he had to pay rent, source the vegetables, keep the lights on, and deal with everything else required to run a business. He didn’t even have a proper living space, choosing instead to convert the attic office into a bedroom every night. He says he probably broke health codes by using the industrial dishwasher to shower.

And he still wasn’t making much money. The first store was all natural to the point where Mackey couldn’t even exclusively shop there. They didn’t sell sugar, alcohol, or many processed foods.

When he merged with another natural food store, they started selling liquor, and some foods with sugar. That is what customers wanted, and what needed to happen in order to turn a profit.

But Mackey doesn’t think profits are the purpose of a company. Although a company cannot exist without profits, it is also true people cannot exist without breathing. But it does not follow that breathing is the purpose of existence. It is just something necessary to continue living.

Businesses ultimately only exist if they are serving the customer.

You have to go where the market is. That is how Whole Foods became the stomping ground of yuppies in California during the 80’s.

One early prospective investor declined to invest because he said Whole Foods just seemed like hippies selling food to other hippies, and that would never be a large enough market. He missed out.

Mackey came to the libertarian philosophy through serving others. Everyone benefits. Everyone gets richer.

And if you listen to Mackey, you shouldn’t be worried about big companies like Amazon taking over fan favorites like Whole Foods. Whole Foods only grew through mergers and partnerships in the first place. They acquired single owner health food stores in order to expand.

In voluntary relationships, every party can gain. It is not a zero-sum game, they can create more wealth together.

No one was coerced into buying or selling Whole Foods. Customers don’t have to shop there, workers don’t have to work there, and activist shareholders never had to buy or hold their stock.

Of course, as a business owner, Mackey is no stranger to others trying to insert themselves unwanted where they don’t belong. He was surpised when the merger was approved by the US government so quickly. It is unfortunate that the government has this power at all.

Mackey even stayed strong through a year and half of union protests outside his store, when the unions tried to coerce Whole Foods into unionizing its workers. But the Whole Food workers didn’t even want to unionize! They were fine the way they were and frankly didn’t want to pay union dues. Mackey and his workers won, despite the union leader’s thuggish promise that he would get what he wanted.

One other piece of wisdom John Mackey shared is especially important for anyone who wants to be successful.

On her deathbed, Mackey’s mother was disappointed in him. He had so much potential, she said, and he had become a simple grocer! She tried to make him promise that he would go back to college, and make something of his life.

Mackey would not make that promise. It didn’t feel right to him, and it was his life to live. That was the only way he was going to reach his full potential.

So in an attempt to appease his mother, he told her didn’t have to go back to school. He would be so successful that someday he would be awarded an honorary degree, he said.

Mackey received an Honorary Doctorate of commercial sciences from Bently in 2008 when he delivered their commencement address.

Why the Consumer Wins When Walmart and Amazon Battle Over Prices

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Walmart and Amazon have surely benefited from government protectionism, but the economy is still free enough to promote competition which ends up benefiting consumers.

Back in 2011 Walmart invested in pricing tools, realizing that Amazon was doing better. Amazon has algorithms which search the internet for the lowest prices, and then set their products to that price. Generally even when the lowest price is for wholesale ($10 for a pack of ten) Amazon will set their price that low even for a single pack of the product ($1 for a pack).

In 2012, the battle between Amazon and Walmart raged over a video game around Christmastime. The price was set around $50 for each retailer, but as a few cents here and there we dropped from the price to gain a tiny edge over competitors, the price of the video game eventually dropped as low as $15.

So that means people were not being overcharged for a game, and it means the companies were not making “obscene” profits on the product. The market corrected the negative aspects of business that would not have been corrected if there was a true monopoly.

Now, the war of prices is a seasoned game of strategy which brings suppliers into the mix. Both Walmart and Amazon reportedly hound product supply companies to lower their prices in order to better compete.

Sometimes, Walmart even encourages suppliers to reorganize their companies so that they can still turn a profit while charging Walmart less. Another tactic employed is to threaten to make their own products which would directly compete with the supplier’s.

Amazon seems to keep their suppliers guessing, using a tactic that The 48 Laws of Power suggests to make sure your opponents cannot entirely gauge your real intentions.

Amazon will even pull products which do not have a large enough profit margin in an attempt to get the price lowered from the suppliers.

Another Amazon tactic is to prohibit some brands from buying ads within the site for a product that Amazon can’t make profitable on a standalone basis. Like paying for prominent placement in a store, a brand can buy ads within Amazon to promote their products. Blocking these ads is another way of burying a product.

“They are playing Jekyll and Hyde,” said an executive at a large grocery goods manufacturer. “At times, it’s all about growth; at times, it’s all about profitability. They keep switching back and forth.”

Everyone loves to complain about Walmart’s profits. Well Amazon accomplished what documentaries, protests, and boycott could not. Walmart’s profits fell 18% last quarter, demonstrating that economic incentives are necessary for change.

Of course there are plenty of other issues; if it is all about price, what about quality? And even if the prices are lower for consumers, what about the workers of these companies, will they suffer?

But the competition among prices proves an economic lesson that will apply to all these scenarios. In the same way that Amazon and Walmart had to lower prices to compete, they will also be forced to compete to attract employees, or to have the best quality products.

Even if Walmart and Amazon are the main players currently, they are still not the only players: there is Target, Overstock, and plenty of other brick and mortar and online retailers. Is it hard for other to compete? Sure, but certainly not impossible, and as Walmart and Amazon are weakened by their fight against each other, third parties will be able to slip in to offer something that neither company does offer.

The Wish App is one example, where you can get crazy good deals if you don’t mind waiting.

The Dollar Shave Club is another example; direct to consumer websites offering products could be on the rise, especially if people tire of dealing with giant retailers.

But the real point is that competition among companies is a good thing for consumers, because it drives costs down. That is what consumers are currently focused on, but consumers could just as easily bring quality up, or improve employee treatment if that were something they felt strongly about.

When businesses react to their customers, they become a reflection of the people. In a sense, Walmart and Amazon offer a democracy where not only do you get to vote with your dollar on how they operate, you can also remove your support entirely by going to a competitor.

Something to Think About

Imagine if government had to compete in this same way, dropping the prices they charge people for their services. And imagine if you could switch back and forth between governments without changing your location. What if government services were simply competitive products delivered by businesses which could attract customers within the same territory, with overlapping jurisdiction?

War would break out! No, it wouldn’t. Pricing wars would, just like now. War is expensive, and only possible in a system where governments plunder their people to fund their violence. No government working on a business model could afford war, and they would do everything possible to avoid violent conflict.

But protection from neighboring warlords would still be an available service, and the government companies vying for your business would compete to deliver what you need, for the lowest cost, just as Walmart and Amazon currently do.

However evil you think corporations are, they are only a product of the governments who protect them, and the people who patronize them. The benefits of competition in the market can be seen even through the government’s smoke and strings. Remove the government from the equation, and consumer choice will only increase.

3 Crucial Battles in the War of Big Tech

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Click each headline to read the full article.

1. Google Plays Favorites and Arbitrarily Bans Content From Results

Google used to base its search algorithms on what the user wanted to see. Now they are starting to interject their own ideas about what people should see. In April Google announced

that they would be taking measures to punish “low quality content” such as misleading information, offensive results, hoaxes and conspiracy theories.

They are joining the war on “fake news.” That means they are glad participants in helping the government and media serve up propaganda to the people. But could this sell out backfire, and leave room for industry disruption?

2. Facebook Has Learned “The Art of War” from China

Zuckerberg is really gung ho to get his product accepted by the Chinese government. Facebook went so far as to create a censorship tool for the authoritarian nation. Along the way, Zuckerberg has picked up some tips about controlling his subjects. Facebook wants a monopoly on social media and the people’s data. What better partner than a human-rights-violating communist regime?

3. The Big Four Battle it Out for Control Over Your Time and Data

I guess the silver lining is that competition gives us some choice. But the turf is starting to be diced up between Google, Facebook, Amazon, and Apple. Each company is buying up smaller rivals and trying to edge in on their big data competitors.  They are the first comers, the gods of the digital age. But even gods have fallen…

Warning: One of These Monopolies is Going to Control You

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Why are governments so interested in breaking up monopolies? To protect the biggest monopoly of all, the government.

The American people are skilled mental gymnasts. They can totally agree that monopolies in the private sector are bad. But monopolies on defense, law enforcement, courts, education, roads, and so on are perfectly fine, even necessary!

This comes down to the myth of the process. People have been convinced that since companies are motivated by profit, they are untrustworthy. Governments are allegedly altruistic, working in the best interests of the people. In reality, the people in government take their profits in power.

We pay businesses voluntarily and use their services if we like them. We are taxed whether we like it or not when it comes to government. Yet everyone goes crazy over alleged private monopolies, and doesn’t bat an eye at the worst coercive monopoly of all!

Democracy is the buzzword meant to convince us that governments are not truly monopolies. After all, we get to participate! We choose the leaders, and they represent us.

An opinion piece in the New York Times by Jonathan Taplin is titled, Is It Time to Break Up Google?

He says:

We are going to have to decide fairly soon whether Google, Facebook and Amazon are the kinds of natural monopolies that need to be regulated, or whether we allow the status quo to continue, pretending that unfettered monoliths don’t inflict damage on our privacy and democracy.

He assumes democracy is something worth protecting. At the same time, he ignores the damage that can occur from unfettered monoliths like government. You know, the type of government who has the arbitrary power to break up companies.

“We” are going to decide whether a business should be allowed to exist. Democracy is mob rule, so “we” can simply destroy a business by force. Nevermind that we could actually peacefully stop Google’s monopoly by not using Google!

The fact that this question is being asked seriously proves how much worse government monopolies are than economic monopolies.

Governments have such a vast monopoly on the “legitimate” use of force, that they can openly discuss whether or not they will violently destroy a business. I say violently because ultimately all their power is exercised through actual violence, or the threat of violence.

Just look at how the government used anti-trust laws to break up “monopolies” in the past.

In an attempt to follow antitrust laws, General Electric charged the same prices as its smaller competitors. GE and about 25 other electric companies were taken to court in 1961 for this “conspiracy to set prices.”

The truth was the companies competed for the lowest prices. But the government just couldn’t understand how this would lead to identical prices. It must be a conspiracy, they thought.

Turns out a government agency had legally fixed these prices during WWII. When that government agency was ended after the war these companies continued to engage in the same activity, unsuccessfully.

But regardless of their failure to set and abide by prices within the industry, now it was illegal just to attempt to set prices. Legal when the government did it, illegal when an industry did the same. Businessmen got jail time, and one killed himself on the way to prison.

Ironically, the prices and profits of the companies were lower during the times of “collusion” than during the previous period. This supports the fact that prices were set low by competition, not collusion.

(Some of this information came from Ayn Rand’s collection of articles, Capitalism: The Unkown Ideal.)

This also shows that the electrical industry was not truly a monopoly. Nor is, for example, Amazon.

Amazon and Walmart regularly compete with each other on prices. A few years ago, a $50 video game quickly fell to $13 when the companies went back and forth taking cents off their online price.

The Big Dogs Change

Taplin seems to miss the lesson from the very first sentence of his article.

In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: Microsoft. Exxon Mobil, General Electric, Citigroup and Shell Oil are out and Apple, Alphabet (the parent company of Google), Amazon and Facebook have taken their place.

So then what’s the big deal? In the marketplace, the top dogs are always changing. They compete with each other. And each one has an interest in taking a bit of the other’s market share. That is the case with Amazon and Walmart.

The truth is, the government wants to bust monopolies in order to protect its own. Google has more influence over what you see than the FCC. Facebook knows more about you than the NSA. Amazon would be delivering goods to your doorstep by drone if the government wasn’t stopping them.

Amazon is also introducing a program that allows deliveries inside the home. They are doing this by providing the equipment to monitor your front door from their headquarters, and unlock it remotely. Sounds creepy for sure. But the real story is what this service could become.

The police only come after a crime is committed, and they are not great at solving it. Imagine if Amazon handled your home’s personal security? They would finally be offering a viable alternative to publicly funded protection. They would be threatening the government’s monopoly by competing.

I can choose not to use Google, Facebook, and Amazon. Each has 88%, 77%, and 74% market shares respectively. Yes, that is a lot, but there are still alternatives. I’m not saying it would be easy or convenient to completely divorce yourself from these companies. But you could do it without landing in a jail cell.

So yes, these companies are gigantic monoliths. You might say they are almost starting to resemble governments. Competitive governments. Governments that have to earn their market share. Governments that have to serve the customer, and entice them to use their services.

They may think they are untouchable by market pressures for now, but just look who was on top of the industry in 2006: not them.

And don’t take this as a wholesale endorsement of these companies business practices. I have criticized Facebook and Zuckerberg plenty in the past. That doesn’t mean the government has the right to break up his company.

Google can be very manipulative, and is joining the fight against “fake news.” This means they will censor whatever they want, including content on Youtube. Their current 88% market share sounds pretty insurmountable. But as soon as their algorithms stop delivering what the consumer wants, someone from the other 12% will step up and fill the void.

The only problem is when these companies collude with the biggest monopoly of all–government–to protect their market share by force.

Then they can use the government’s monopoly on force to bludgeon their competition to death or get special legal advantages.

That is what Peter Thiel is doing by donating hundreds of thousands of dollars to any state Attorney Generals who open anti-trust investigations into Google. This supposed libertarian is using the government as a tool to undermine the market.

And perhaps one reason is Thiel’s own technology company called Palantir. Palantir is named after the crystal ball used by the evil Lord Sauron in Tolkien’s classic Lord of the Rings Trilogy. Through this ball, the evil ruler can see all that goes on in Middle Earth.

It is a fitting name for a company that specializes in big data analysis technology. Even more fitting is that they sell this technology to the U.S. government and law enforcement. It is the ultimate software in spying, conglomerating every piece of data available, analyzing social connections, buying habits, and travel patterns of anyone in the U.S. government’s crosshairs.

It seems Thiel is working on behalf of the biggest monopoly out there in order to destroy through force his data competitors at Google and Facebook.

Who Cares About Democracy?

Taplin thinks Google, Facebook, and Amazon are undermining democracy. Well, democracy sucks. It is mob rule. It is a false choice between the colluding Republicans and Democrats.

It is time to break up the only true monopoly in the United States, the federal government. There are 50 subsidiary states ready to compete with each other for business, rather than being cajoled into servitude by the feds.


How Amazon and Google Smart Speaker Competition Reveals The Future of Government

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I wouldn’t invite the Amazon Echo or the Google Home into my home.

These smart speakers listen to everything that happens around them. Ostensibly this is to make shopping, playing music, and finding information easy. But the internet of things presents way too many risks to our privacy.

Internet-connected technologies are already used to incriminate their owners in court. And that is the main thing which scares me. Self-driving cars, smart watches, and smart homes controlled entirely from your phone sound really cool and convenient. But I don’t want the government to have that kind of knowledge about me. I might feel differently if I knew the info wasn’t going anywhere beyond Google or Amazon headquarters.

An Industry in Need of a Shake-Up

Government is an industry. Much like other industries, it can be upset by upstart competitors. But governments have monopoly status in given territories for their services. They don’t allow competition, and they enforce this ban on competitors by using their monopoly on “legitimate” force.

Never the less some small countries now offer incentives to organize your affairs under their government. Usually, this requires physically moving. But places like Estonia, with their e-resident program, have hinted that location-based government might not remain the standard. It is the 21st century, after all, and the internet has transformed many industries. It is only a matter of time until the government meets its reckoning.

Countries like Estonia will help move these innovations in governance along. So will countries like Georgia which now uses the blockchain to store property records. And even upstart new countries like Somaliland, barely recognized internationally, have teamed up with private developers to host special economic zones that hope to become the next Dubai.

But established governments are not the only ones offering competition to traditional government. Tech giants are poised to become decentralized governments of sorts. And the best part is that purchasing their services would not require moving to a new legal jurisdiction.

So how do I get from an in-home device which assists with shopping and playing music, to a provider of vast government services?

The Market for Government Services

The government continues to expand by convincing everyone that they can get government services while someone else pays for them. But what if consumers had to shop for the services they wanted?

Think about it. What do people really want a government for? A lifeline. We want to be able to call 911 and be whisked off to safety. We want police to respond to an immediate threat. It’s about having some sort of safety net in case something goes wrong.

With the Amazon Echo and Google Home, they can one-up 911 any day. They are always listening. If something happens, they know. And they can immediately get you assistance.

Except that they are still trying to work around regulatory rules which prohibit them from connecting you to 911. Apple’s Siri can connect you to 911 on devices that can make and receive phone calls. The Echo can currently only call other Echo devices.

Without government regulations in the way, smart speakers would be better than Life Alert for the elderly afraid of falling. They don’t need to be within reach to use. They are also better than a phone for calling 911 during a medical emergency, or even a home invasion.

In fact, soon, you won’t even have to direct the devices to make the call. Siri will soon sense from your fingertip when to call 911. Smart speakers will hear break-ins or recognize the sounds of domestic abuse. Your body will tell smartwatches when to call for help.

Just the Beginning…

The obvious problem with all this is government abuse of the data. But another problem is that these devices are still connecting you to government dominated emergency services.

Response from police differs greatly between municipalities. And once you get into solving crimes, things get even worse. According to the FBI, only about 65% of murders, and a mere 40% of reported rapes see someone arrested for the crime.

But if you signed up for Amazon’s inside delivery service, they have a camera on your front entranceway, and the ability to lock and unlock your doors. If someone breaks in, they know immediately.

The same goes for smart speakers, smart watches, and any other technology on the internet of things. They can recognize crimes in real time, without the user having to act.

And let’s throw Facebook into the mix. When it comes to security, they know who is stalking you before anyone else.

Speaking of Facebook, their first major investor, Peter Theil, developed a technology called Palantir. This aggregates practically all the data in existence to understand complex social connections, and behavior patterns. The tech can help users perform hundreds of hours of police work in minutes.

But what good is all this technology if the police don’t show up when called, and don’t don’t solve the crime when they do show up?

That is where Amazon has a headstart on infrastructure. They already have a network of delivery for packages. They are connected to customers not just virtually but physically. They want to deliver packages by drones from motherships (or nearby trucks). They have regional distribution centers.

It would not be very hard to implement emergency response teams in select locations. Add a security agent to the shipping team, and package delivery could double as patrols.

When it comes to solving crimes, use Palantir.

Google has some interesting infrastructure as well. They were the first to introduce self-driving cars in order to take street view pictures of practically everywhere in the United States and most parts of the world. Imagine hiring Google to patrol your neighborhood. On Google Earth, you can make out individual people in their backyards. Imagine how much more Google can see…

Now to be sure, all this technology is creepy. But most people have invited into their own lives. It wasn’t forced on us by an authoritarian government. My main concern is that the government will use it against people.

But what about in a world where governments know that they have to compete to provide people services?

Surely Amazon and Google compete with certain things, their smart speakers being a prime example. But they also have very different business models. Each may dabble in the other’s territory, and each is surely always looking for the next market to enter.

But does either one think they can ever entirely eradicate their competition? Of course not.

Governments have never been able to eradicate competition either, though they have tried violently. The only reason they can use violence in competition is because they have dominated the security sector for so long. They monopolize the “legitimate” use of force.

And still, some people have always managed to find their way to a friendlier jurisdiction.

Competing government where people don’t have to flee their homes means governments have very little leeway to oppress. Competition alone is a powerful check on power. “Siri, cancel my Google Government subscription. Alexa, sign me up for Amazon prime government.”

We have long called government employees public servants. And that is the idea of government, to serve us. They should be providing for the people, not living at their expense.

Private governance is the culmination of the American dream of independence. For most of history government have been rulers and dictators. We now have the chance to have a government that truly serves.

You Can Learn a Lot from John Mackey, CEO of Whole Foods

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Have you seen the media freaking out over Amazon buying Whole Foods?

The photos you may have seen of empty Whole Foods shelves were taken during this past season’s hurricanes when customers bought up supplies at a fast pace in case of emergency. It had nothing to do with the Amazon deal.

It is all fake news according to Whole Foods CEO John Mackey.

The truth is that Amazon and Whole Foods are very much in love. That’s the image Mackey chose to portray this past weekend during his two talks at Liberty Con in Washington DC. Mackey gave an interview at a dinner on Saturday night and the keynote speech on Sunday morning.

During the interview, he described the magic he felt when the Amazon and Whole Foods teams met for the first time to discuss their “marriage.” In any partnership, Mackey says each side should benefit, and that is what is happening.

“You know when you fall in love you have what I call ‘the conversation.’ You stay up all night and talk; and it’s like oh my god, it’s amazing, she’s the one. That’s how we experienced Amazon the first time we met them. We were finishing each others’ sentences before the first meeting was over.”

Customers need not worry about Amazon changing the culture of Whole Foods. Mackey says the best thing Whole Foods will get from Amazon is the customer centric attitude and cheaper prices. And Whole Foods might just insert a little wholesome natural vibe into Amazon’s business.

Mackey spoke about exciting things to come for the merger but said he couldn’t reveal those at this time. “You know how they say I could tell you but I’d have to kill you? Well, this is I could tell you, but Amazon would kill me.”

After the dinner, I asked John why he thought the media was casting the Whole Foods buyout as a controversy. He thinks it is the same old desire to create drama. Just a regular business transaction is not as exciting as a big scary company taking over a natural food store.

But he doesn’t think that is the same reason Amazon is so often cast as a bad guy in the media. That, he thinks, has more to do with Jeff Bezos being the richest man on Earth and possibly in history. That puts a target on his back.

And that might also explain why Trump bloviates about Amazon as well. Mackey criticized Trump for the recently announced tariffs on imported steel and aluminum. Mackey said this doesn’t make sense from an economics perspective.

But that is something he wouldn’t have understood before starting his business.

A Bunch of Hippies Selling Vegetable

At his talk on Sunday morning, Mackey shared his backstory about the beginning of Whole Foods. A young man in the 70’s, Mackey was the typical hippie. He dropped out of college to hitchhike across the country with a friend. Then he lived in co-op houses with other hippies, where he came up with the idea of starting a natural foods store.

And that is when his socialist hippie friends started calling him Darth Vader. How selfish of him to earn a profit while providing people with clean healthy food!

Yet he had to pay rent, source the vegetables, keep the lights on, and deal with everything else required to run a business. He didn’t even have a proper living space, choosing instead to convert the attic office into a bedroom every night. He says he probably broke health codes by using the industrial dishwasher to shower.

And he still wasn’t making much money. The first store was all natural to the point where Mackey couldn’t even exclusively shop there. They didn’t sell sugar, alcohol, or many processed foods.

When he merged with another natural food store, they started selling liquor, and some foods with sugar. That is what customers wanted, and what needed to happen in order to turn a profit.

But Mackey doesn’t think profits are the purpose of a company. Although a company cannot exist without profits, it is also true people cannot exist without breathing. But it does not follow that breathing is the purpose of existence. It is just something necessary to continue living.

Businesses ultimately only exist if they are serving the customer.

You have to go where the market is. That is how Whole Foods became the stomping ground of yuppies in California during the 80’s.

One early prospective investor declined to invest because he said Whole Foods just seemed like hippies selling food to other hippies, and that would never be a large enough market. He missed out.

Mackey came to the libertarian philosophy through serving others. Everyone benefits. Everyone gets richer.

And if you listen to Mackey, you shouldn’t be worried about big companies like Amazon taking over fan favorites like Whole Foods. Whole Foods only grew through mergers and partnerships in the first place. They acquired single owner health food stores in order to expand.

In voluntary relationships, every party can gain. It is not a zero-sum game, they can create more wealth together.

No one was coerced into buying or selling Whole Foods. Customers don’t have to shop there, workers don’t have to work there, and activist shareholders never had to buy or hold their stock.

Of course, as a business owner, Mackey is no stranger to others trying to insert themselves unwanted where they don’t belong. He was surpised when the merger was approved by the US government so quickly. It is unfortunate that the government has this power at all.

Mackey even stayed strong through a year and half of union protests outside his store, when the unions tried to coerce Whole Foods into unionizing its workers. But the Whole Food workers didn’t even want to unionize! They were fine the way they were and frankly didn’t want to pay union dues. Mackey and his workers won, despite the union leader’s thuggish promise that he would get what he wanted.

One other piece of wisdom John Mackey shared is especially important for anyone who wants to be successful.

On her deathbed, Mackey’s mother was disappointed in him. He had so much potential, she said, and he had become a simple grocer! She tried to make him promise that he would go back to college, and make something of his life.

Mackey would not make that promise. It didn’t feel right to him, and it was his life to live. That was the only way he was going to reach his full potential.

So in an attempt to appease his mother, he told her didn’t have to go back to school. He would be so successful that someday he would be awarded an honorary degree, he said.

Mackey received an Honorary Doctorate of commercial sciences from Bently in 2008 when he delivered their commencement address.

Imagine Being Personally Targeted by a Senator’s Law

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I don’t need to tell you how powerful the United States government is.

So imagine if you saw a piece of legislation with your name on it.

And I’m not talking about that kind of law named after a victim, or in your honor.

I mean opening up the news and seeing that the Stop Joe Jarvis Act was introduced in Congress?

That sounds like the largest government on earth personally threatening an innocent person.

And that is exactly what Senator Bernie Sanders did last week.

Wednesday, Sanders introduced a bill to Congress called the Stop Bad Employers by Zeroing Out Subsidies Act, or Stop BEZOS Act.

He is, of course, referring to Jeff Bezos, the owner of Amazon, and richest man in the world.

And what has Bezos done to draw the ire of the Democratic Socialist from Vermont?

He created jobs for poor people.

“The Stop Bezos Act gives large employers a choice: pay workers a living wage or pay for the public assistance programs low wage workers are forced to rely upon,” the text of the legislation reads.

Don’t you love the choices government gives you?

As usual, it is no choice at all. If this passes, it will raise the cost of hiring employees.

The Stop BEZOS Act forces large companies to cover the costs of any employees on welfare.

If an employee receives federal assistance or any kind, the company will be taxed for the full cost of that assistance. So if a worker gets a total of $6,000 a year in federal welfare like SNAP (food stamps), companies will be taxed an extra $6,000 to cover the cost. Companies will owe the tax for each employee on welfare.

Stop Bezos! Stop Success… Stop Hiring…

So Bezos must be stopped because he employs people.

He is catching hate for employing people most in need of jobs.

One way to solve this issue is to NOT hire anyone in poverty. Welfare recipients need not apply.

Of course, the legislation also bans asking prospective employees about their public assistance status…

So looks like robots are the next best option. Better invest heavily in automation, since you will be punished for providing jobs to poor people.

Or will employers use other clues to avoid hiring people who might be on welfare? I’m sure it wouldn’t be hard to find an algorithm that could give companies the stats on what observable characteristics in job applicants are most likely to signal poverty.

So even if Bernie had the best intentions, this law would just be yet another barrier to employment for the least skilled workers.

That is the same with a high minimum wage. It causes companies to hire fewer low skilled workers, so people never get the opportunity to train, gain skills, and work their way up to better positions, or better jobs with other companies.

Why hire someone worth $10 an hour if you have to pay $15 an hour? Just get someone whose skills create $15/hour of profit for your company, even if they won’t necessarily be using all those skills for the position.

Great job Bernie. You are causing more discrimination against low skilled poor laborers.

But even if this bill did produce the desired effect, it is a fascist authoritarian overreach of power.

It says that because Amazon has created over half a million jobs, they now owe those employees more. If Amazon had created 0 jobs, no one would be whining. But because of the enormous positive impact on the economy which Amazon has had, it is being targeted and punished.

Some have sold this as a bid to end corporate welfare to Amazon.

But this is not corporate welfare. The money is not going to Amazon. It is going to Amazon employees.

Amazon responded to Bernie Sanders’ criticism in a blog post.

Senator Sanders continues to spread misleading statements about pay and benefits. Amazon is proud to have created over 130,000 new jobs last year alone. In the U.S., the average hourly wage for a full-time associate in our fulfillment centers, including cash, stock, and incentive bonuses, is over $15/hour before overtime…

Amazon provides employees with a comprehensive benefit package including health insurance, disability insurance, retirement savings plans, and company stock. The company also offers up to 20 weeks of paid leave and innovative benefits such as LeaveShare and RampBack, which give new parents flexibility with their growing families. With LeaveShare, employees share their Amazon paid leave with their spouse or domestic partner if their employer does not offer paid leave. RampBack gives new moms additional control over the pace at which they return to work. Just as with Amazon’s health care plan, these benefits are egalitarian – they are the same for fulfillment center and customer service employees as they are for Amazon’s most senior executives…

While Senator Sanders plays politics and makes misleading accusations, we are expending real money and effort upskilling people with our Career Choice program. Career Choice is an innovative benefit that pre-pays 95 percent of tuition, fees and textbooks (up to $12,000) for courses related to in-demand fields, regardless of whether they’re related to skills for jobs at Amazon or not. We have over 16,000 employees who have participated in Career Choice.

It really just boggles the mind. Amazon offers a job in exchange for work. If both sides agree, why should Amazon suddenly be forced to pay more?

They offer at least a market rate to workers. And then they go above and beyond what is required with extra benefits and flexibility.

Amazon cannot control the various other factors that might put someone in poverty.

Most of those factors include government manipulating the economy, just like Bernie Sanders is trying to do with this legislation.

Of course, there are things about Amazon that I don’t like. Here’s the criticism Jeff Bezos actually deserves.


Imagine Being Personally Targeted by a Senator’s Law was first posted on September 8, 2018 at 4:19 pm.
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Here’s The Criticism Jeff Bezos and Amazon Actually Deserve…

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Jeff Bezos

People like Bernie Sanders attack the rich for being successful.

Yesterday we talked about legislation Bernie Sanders introduced last week. Called the Stop BEZOS Act, it specifically targeted Jeff Bezos, the founder, and CEO of Amazon, and richest person in the world.

If it passes, the legislation will tax large corporations 100% of the dollar value of any welfare any of their employees get from the federal government. It is basically a disincentive to hire poor people. Plus it nudges companies to automate with robots to avoid liability and other costs of human workers.

Jeff Bezos should not be criticized for being successful, making a lot of money, and providing half a million jobs of all skill levels.

But the endless anti-free-market whining of Democratic Socialists drowns out the valid criticism of Jeff Bezos.

I agree with portions of a letter sent to Jeff Bezos on behalf of 100 of his employees.

They are against certain government contracts Amazon fulfills.

The employees raised concerns over the facial recognition software called Rekognition, developed by Amazon. Amazon sells the software to law enforcement and federal policing agencies.

But facial recognition software is basically an unwarranted unreasonable search. You shouldn’t have to reveal your identity to the government without being suspected of a crime. And with this software, just going out into public means the government will defacto search you, and be able to track your whereabouts.

In the letter, employees also spoke out against Amazon providing services to Peter Thiel’s company Palantir.

Palantir offers predictive policing tools. It analyzes vast amounts of data in order to map complex social connections and behavior patterns.

Palantir is almost like Minority Report… the police might know you are going to commit a crime before you do…

The technology is named after the crystal balls used by the dark lord Sauron and evil wizard Saruman to spy on middle earth in Tolkien’s Lord of the Rings.

The letter reads:

Dear Jeff,

We are troubled by the recent report from the ACLU exposing our company’s practice of selling AWS Rekognition, a powerful facial recognition technology, to police departments and government agencies. We don’t have to wait to find out how these technologies will be used. We already know that in the midst of historic militarization of police, renewed targeting of Black activists, and the growth of a federal deportation force currently engaged in human rights abuses — this will be another powerful tool for the surveillance state, and ultimately serve to harm the most marginalized…

We call on you to:

  • Stop selling facial recognition services to law enforcement
  • Stop providing infrastructure to Palantir and any other Amazon partners who enable ICE.
  • Implement strong transparency and accountability measures, that include enumerating which law enforcement agencies and companies supporting law enforcement agencies are using Amazon services, and how.

Unfortunately, it doesn’t stop there.

Amazon also contracts with the CIA, bringing in at least $600 million per year. They provide web services for high-security state secrets to the CIA and other U.S. spy agencies.

Plus, Jeff Bezos owns the Washington Post.

So the CIA pays Amazon $600 million per year. Jeff Bezos is the founder and CEO of Amazon. And Jeff Bezos is the sole owner of the Washington Post.

Does that sound like a conflict of interest to you?

It is also interesting to note that the Washington Post has long been associated with the CIA. Project Mockingbird was a CIA operation which paid American journalists to publish certain information and bury other facts, depending on the interests of the CIA.

After creation of the CIA in 1947, it enjoyed direct collaboration with many U.S. news organizations. But the agency faced a major challenge in October 1977, when — soon after leaving the Washington Post — famed Watergate reporter Carl Bernstein provided an extensive expose in Rolling Stone.

Citing CIA documents, Bernstein wrote that during the previous 25 years “more than 400 American journalists… have secretly carried out assignments for the Central Intelligence Agency.” He added: “The history of the CIA’s involvement with the American press continues to be shrouded by an official policy of obfuscation and deception.”

Amazon and Jeff Bezos should be held accountable for providing oppressive tools to the government.

But they should not be criticized and punished for success, as Bernie Sanders’ Stop BEZOS Act would do.

Then again if Bezos wants to make money from government contracts, maybe taking care of his employees from cradle to grave just comes with the territory.

That money came from taxes. And taxes are markedly different than free market revenue. “Customers” do not have direct control over how their tax dollars are spent. But apart from the government contracts, I could otherwise entirely remove my funding of Amazon in an instant by refusing to do business with it.

With government sources of funding, Amazon gift cards resembling a currency, and delivery “patrols” in your area, Amazon is looking more and more like a government…

But that is a subject we will tackle next week.


Here’s The Criticism Jeff Bezos and Amazon Actually Deserve… was first posted on September 9, 2018 at 6:17 pm.
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The Real Reason the Government Won’t Hold Big Tech Accountable

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technology in your hand

The villagers are marching with their torches and pitchforks. Big tech companies are in trouble.

The government is coming to regulate them.

Someone leaked a draft of an executive order from President Trump. It calls on various agencies to use all current laws to look into possible anticompetitive practices by Facebook and Google.

In fact, the EU already fined Google $5 billion in July for “abusing the market dominance of Android.” And now they’ve set their sights on how Amazon uses customer and seller data.

Elizabeth Warren wants to force Amazon to choose between providing a platform for sellers and selling goods. Echoing European Union regulators, she says Amazon has an unfair advantage by competing against the same sellers it collects information from on its platform.

Governments use antitrust laws to break up businesses that resemble monopolies. The government can call just about anything an “anticompetitive” practice. The Sherman Antitrust Act of 1890 gives the US government sweeping powers to regulate almost any business behavior.

And there’s plenty to choose from:

  • Google gets the vast majority of search engine users.
  • Facebook is the go-to social media website.
  • Together, Google ads and Facebook ads capture 90% of new advertising spending. They get 71% of all ad dollars in Europe.
  • The left says Facebook’s lax data policies helped win Trump the election. The right claims Facebook targets conservatives for censorship.
  • Google favors it’s own results, and censors certain news.
  • Amazon collects almost half of all online retail sales in the US.

But much of the criticism misses the mark.

A Bloomberg article called Tech Giants Spend $80 Billion to Make Sure No One Else Can Compete, offers a perfect example of misplaced criticism:

How can a company hope to compete with Google’s driverless cars when it spends $20 billion a year to ensure it has the best laser-guided sensors and computer chips?

Wait… so Google ensures it’s self-driving cars have the best laser guided sensors and computer chips that money can buy. And that is a bad thing?

Would it be better if the technology was poorly made, but other, inferior companies with worse technology could compete? Sure maybe the death rate for the first fleet of driver-less vehicles is huge, but at least smaller companies could compete!

The alternative is that Google spends all the money developing the best technology. And then other companies copy them.

If Google has a patent or intellectual property that protects their tech, that means government is enforcing, not stopping, their monopoly.

Another example we’ve discussed is Bernie Sanders’ Stop BEZOS Act. This bill would tax companies to cover the cost of any of there workers who receive welfare. It basically blames successful companies for the circumstances of their workers, regardless of whether those workers are full time, or have skills needed for higher pay.

The government does not address the real problems with Amazon and Bezos, like the $600 million per year CIA contract or surveillance technology sold to law enforcement like Palantir and Rekognition.

We all know Google can track everything we do with their technology. In China, we can see that kind of data put to sinister use. Google helps the Chinese government censor web results. And their data will undoubtedly factor into Chinese citizens’ “Social Credit Scores.”

These are scores assigned by the Chinese government for things like patriotism and civic responsibility. These scores can be affected by online behavior, as well as reviews from neighbors, friends… or enemies. And a bad score means being banned from living in certain places, working certain jobs, and traveling on public transportation.

Facebook has also cozied up to the Chinese government, trying to open up a new market for the platform. They have no problem censoring whatever they need to in order to get the Chinese government on board. And they have indicated their willingness to share data and information with authorities.

It’s not hard to understand why people are calling on the government to take these monoliths down a notch. There are obvious problems with these companies.

But why would the government regulate away its own benefits from the tech companies?

Clearly, China is not going to prohibit Google and Facebook from providing them with incriminating information on citizens.

Is the CIA going to make sure the money they give Bezos doesn’t influence the Washington Post, which Bezos owns?

Are elected officials going to get Facebook out of elections, or are they going to make sure Facebook helps them win the next election?

Is the government going to protect your privacy from Google, when the government is only too happy to subpoena incriminating evidence against you from the search giant?

The government already teamed up with these companies!

And that’s, like, most of the problem!

The government is going to focus on regulating the wrong things.

They are going to punish Amazon for being successful. For hiring poor workers. For providing a platform to sellers, and for selling cheap goods and services.

The government won’t stop Google or Facebook from informing on their users. But they will interfere in free speech by labeling it hate speech. And they’ll probably force the big tech companies to turn over more and more user data without warrants.

And some regulation will benefit the big tech companies.

This is how the government works. They allegedly aim their regulations at the big guys. But somehow all the little guys get caught up in the drag net.

The big companies can afford to deal with regulations, or pay the fines when they break them.

The little no-name tiny competitors cannot.

For example, under European Union rules, platforms can now be fined for what their users post. So Youtube might get a giant fine. But they can afford to pay it.

But suppose a competing video service like Real.Video fails to remove “hateful” content quick enough. The fine could bankrupt the new company.

So the regulation allegedly aimed at Youtube actually takes out the competition, leaving only Youtube.

That’s how they did it with the banks.

The Government Regulates the Banks

“We need to hold banks accountable!” The people clamored. So Congress passed the Dodd-Frank overhaul of the finance sector.

Sovereignman gives a good example of this problem:

DoddFrank limits the amount of debt a bank holding company can take on.

The regulations are supposed to be aimed at the big banks. But this can hurt small banks that need to take on more debt in order to get off the ground.

DoddFrank exempted small bank holding companies from the debt rule. The limit was set at half a billion dollars, and later increased to include banks with $1 billion of total assets.

That might sound like a lot. But Bank of America and JPMorgan Chase, the two largest bank holding companies in America, are worth over $2 trillion each.

There are 124 bank holding companies in the USA with assets totaling more than $10 billion each.

$1 billion is actually a pretty low threshold for exemptions from debt limitations. This gives bigger bank holding companies an advantage over small competitors, who aren’t allowed to take on the amount of debt required to get going…

The problem with DoddFrank is that is kills the little guy. Big banks really don’t care about the rules they have to follow. They will find a way around them. Or sometimes they just break the rules, and pay a fine much smaller than the profit they made breaking the rules.

DoddFrank might mean more hassle for big banks, but it is worth it to them to kill their little competitors.

The little guy can’t afford an army of lawyers to find loopholes and perform corporate sleight of hand. Small banks are therefore more affected by the rules, because if they break them, the fines are ruinous.

In other words, Wells Fargo doesn’t care it it pays a $1 billion fine, as long whatever fraud they got fined for made them more than $1 billion.

And it is the same for big tech.

So let’s not have the fox guard the hen house.

There is an alternative to government regulation.

The market does have the power to regulate the tech giants. And it doesn’t mean completely abandoning and boycotting the platforms.

We’ll get into that tomorrow.


The Real Reason the Government Won’t Hold Big Tech Accountable was first posted on September 26, 2018 at 4:58 pm.
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How to Have Power Over the Big Tech Companies (And Still Use Their Products)

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Governments are coming for the big tech companies.

But governments use big tech’s data too… So obviously they aren’t going to solve the biggest privacy concerns.

This is a problem because the main issue with Amazon, Google, and Facebook is how they interact with governments.

I talked about this yesterday… the real reason the government won’t hold big tech accountable.

We only need to look to China’s dystopian social credit scores to see how Google and Facebook data is used by governments.

And the CIA seems to be pretty happy with their deal with Amazon and Jeff Bezos.

Why would we expect the government to protect our privacy when the government profits from the intrusion into our privacy?

The good news is that we don’t have to rely on the government to protect us against big tech. And we don’t have to abandon these useful technologies either.

Shouldn’t angry customers be enough?

No one forces customers to use Google, Facebook, or Amazon.

And let’s not play games… there ARE other alternatives. None of these big tech firms have a true monopoly. There are other social media websites, there are other browsers and search engines. There are other places to buy and sell online.

So if large portions of their customers are ready to abandon the companies, why should the government need to step in?

The thing is… the angry customers are still using the tech.

They like the tech. The tech is good. The tech helps them. It makes their lives easy. And it is truly the best tech out there.

Customers have no leverage. They aren’t willing to change their behavior, so they want to force the tech giants to change their behavior.

The market can dictate the terms to these companies, but not without leverage.

And if everyone knows that customers aren’t going anywhere, their demands will fall on deaf ears.

In other words, customers’ threats to abandon the platforms cannot be empty.

But the alternatives simply aren’t as good. They aren’t as integrated, easy to use, and feature rich. Or they don’t have a critical mass of users. They just aren’t as convenient.

So people stay for convenience.

And they stay because they expect someone else to solve their problems.

But before I judge too harshly…

As I’ve highlighted, there are legitimate things to be mad about… though usually not the things mainstream politicians complain about.

But I want to be totally honest… I haven’t cut off my support for Google, Facebook, and Amazon.

I still use Google products. This article was written on a Chromebook. Google docs make my life so much easier. And I happen to like my Android too.

I still use Facebook to share my posts, promote businesses, and keep in touch with friends.

I make money from Amazon affiliate links, and I buy plenty from Amazon as well. Amazon services have even helped me publish two novels.

So am I just a hopeless hypocrite? Can’t wait to read the comments…

But no. It would be more hypocritical to continue using the services but support government action to get my way.

I’d be saying, I’m not willing to adjust my behavior, so I want the government to force Facebook, Google, and Amazon to adjust theirs.

These companies give me their terms, and I am free to take them or leave them. And it is wrong to force them to give me everything I want, but not give them what they want.

What they usually want is data. And that customer data makes them money.

The new California privacy law reflects that. It forces tech companies to give the same level of service to people who opt out of data collection. But it allows the companies to charge a fee to users who opt out.

The effects will be similar to the new European laws. They claim to protect privacy, but all they really do is force you to click more “Accept” boxes without bothering to read the policies.

Do the costs of using these services outweigh the benefits?

That is the real question.

I allow Google, Facebook, and Amazon to use my data in exchange for their “free” services. The intrusion into my privacy and the targeted advertisements I am served have not yet become a large enough problem for me personally to abandon the convenience of these platforms.

Not just convenience though, actual economic benefit. I use these tools for work. I could not do the job I do now without at least some services from these companies. These tools save me time. These tools make me money.

But that doesn’t mean I have to throw myself whole-heartedly into the arms of the tech companies.

The market does have the power to regulate.

So do we convince everyone to give up all the convenience and benefit of the best tech in the world?

Good luck. Even if we could convince the masses to abandon the big tech companies, we shouldn’t. The technology helps us! There is a practical reason to use it.

Honestly, as much as I believe in the market, a full-fledged boycott of these companies just won’t work.

The good news is companies react to even small drops in business. Just a 10% drop in profits will jolt a company into action.

And that is why partial boycotts work.

A partial boycott means not entirely abandoning a business. Instead, you use only what you really need from them.

Keep the parts that make your life much easier, and cut out what you don’t need.

For instance, I deleted the Facebook app from my phone. Now I don’t find myself mindlessly scrolling. Facebook can only serve me only a fraction of the ads they could before. And the less I use Facebook, the less data they collect from me.

I absolutely refuse to get an Amazon Alexa or Google Home to spy on me constantly.

And because of recent privacy changes, I might leave behind the Google Chrome browser, despite how convenient it is.

That is another important point. You have to have a line that you won’t let them cross. Decide when too much is too much, and stick with it.

Market principles still apply to a partial boycott.

Say the goal is to remove 10% of business in order to force the company to make the changes that the customers want. If 40% of customers use a service 25% less, the company loses 10% of its business.

So 10% of customers don’t actually have to leave the platforms entirely.

Just having a negative view of the company will nudge users to give less time to the business.

That is basically what I do. I look for alternatives when they are convenient.

But it is also the competitors’ job to make their service a viable alternative.

The anger customers have are dollar signs. This is a potential market for the taking. It is a problem that needs solving.

And whoever does give an alternative will be rewarded by the market.

Comment with your favorite alternatives to Google, Facebook, and Amazon. And tell me if you have abandoned these businesses completely or partially.


How to Have Power Over the Big Tech Companies (And Still Use Their Products) was first posted on September 27, 2018 at 3:58 pm.
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What Sears’ Bankruptcy Says About Amazon’s Future

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Sears was the Amazon of the 1900s.

Sears Roebuck started in 1892 as a mail-order watch catalog. They soon moved into selling almost any consumer goods you could think of in their catalogs.

Imagine being able to shop from the convenience of your own home!

You could order sewing machines, buggies, clothes, and even guns through the mail, and have them delivered to your door.

Of course, brick and mortar physical retail stores were not so happy. Some even went out of business. Sears was cheap, convenient, high quality, and even offered free delivery.

In 1925, Sears opened its first retail store and quickly expanded to physical locations throughout the country.

It soon grew to become the largest retailer in the world.

Does this story sound familiar?

Amazon started in 1994 as an internet book retailer. They soon moved into selling almost any consumer goods you could think of on their website.

They made it so easy to shop from home!

Of course, brick and mortar physical retail stores were not so happy. Some even went out of business. Amazon was cheap, convenient, and sometimes offered free delivery.

Amazon is now moving into physical retail by buying Whole Foods and introducing humanless convenience stores.

Now Sears is on the verge of bankruptcy after 126 years in business. The stock price is down to $0.34 per share, from $9 just over a year ago, from a 2007 peak of $133 per share.

On Monday, Sears has $134 million in loans coming due. The company is expected to file for bankruptcy according to the Wall Street Journal. The plan will likely include shuttering stores and selling off the remaining inventory.

Competition

Walmart came along in 1962 and challenged Sears’ retail supremacy. By 1989, Walmart surpassed Sears as the largest retailer in the country.

And then it was Amazon’s turn to challenge Walmart…

I’m not saying this means Walmart has only 56 years of life left, or that has Amazon will expire in 2120, following the 126-year life cycle of Sears.

I am just pointing out that it is easy to have a distorted view in the present.

Ask anyone in 1955 if they thought Sears would go bankrupt and they would have scoffed. How could such a dominant business ever collapse?

Right now Amazon is dominating. But that doesn’t mean Amazon will always dominate.

Just a few years ago Walmart was on top, and it was hard to imagine a strong competitor rising from nowhere to challenge their number one spot.

Walmart still has higher sales than Amazon. But the overall value of the Amazon company is much higher than Walmart.

The two retail giants are battling for control over online retail, as well as grocery delivery. Walmart is a major grocery retailer, and of course, Amazon just entered the space with its acquisition of Whole Foods.

Competition between the two companies has even led to drastic drops in pricing when the companies get into price slashing wars.

The important point is that Amazon and Walmart do have competition.

They are far from monopolies. And no company is safe in its dominant position forever.

This competition forces companies to become better in some way, or lose business. This can manifest itself in a better customer experience, cheaper products, better products, or even better working conditions for employees.

And there is no telling what other companies will come along to challenge these companies’ dominance.

But history shows there will be challengers to the likes of Sears, Walmart, Amazon, and even behemoths like Google, Facebook, and Apple.

None of them are guaranteed their top spots forever. In fact, history all but guarantees that their time will come too…

As long as the market stays relatively free, these companies cannot become or remain true monopolies.

There is one concern…

When the government gets involved, they screw up this natural, beneficial, free-market competition.

And that is the real threat. That the government will keep something alive despite its market failure.

Wall Street got bailed out after the 2008 financial crisis. The bankers responsible for risky investments and financial manipulation didn’t lose their jobs–they didn’t even lose their bonuses. The taxpayers took the bill, while we wallowed in the mess that Wall Street created.

General Motors was also considered too big to fail. The taxpayers were forced to bail out the failing automaker, losing over $10 billion. Meanwhile, GM still laid off over 20,000 employees.

The government protected the status quo and killed innovation. These industries were due for an upset, for a major competitor to shake them to the core, to clear out the dead wood so that new plants could grow.

Instead, they were propped up with the support of the government, making it harder for better alternatives to emerge.

Luckily, we don’t hear talk of bailing out Sears, even though they have far more employees than GM had–150,000 versus 90,000.

Unfortunately, Amazon already makes some money from the government. They have a CIA contract worth $600 million per year.

Some also say that the US Postal Service–and therefore the US taxpayer–subsidizes Amazon’s business by not charging a market rate for package deliveries. A 2006 law does, however, prohibit the Postal Service from charging below its actual costs to deliver packages.

Regardless, that is one more interesting similarity to note between Amazon and Sears.

The Rural Free Delivery Act of 1896 was a huge help to Sears’ mail-order business. The law expanded package delivery to more rural areas of the United States. Previously, these people had to travel quite some distance to pick up their packages at a Post Office.

So in the end, we shouldn’t worry about the market dominance of any particular company. We should really concern ourselves with being informed consumers.

And that might mean boycotting businesses when the government gives them an unfair advantage.


What Sears’ Bankruptcy Says About Amazon’s Future was first posted on October 12, 2018 at 5:51 pm.
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Some clear thinking about Amazon’s ‘shocking’ tax incentives

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Via Sovereignman.com

Amazon made big headlines yesterday when it announced it was walking away from its plan to build a new headquarters in New York City.

The company was under intense pressure from the media and politicians who were angered that New York City’s local government was giving away too many tax incentives, purportedly worth around $1.5 billion.

(Including the state government, the total tax break was around $2.8 billion.)

People had some ridiculous idea that NYC Mayor Bill de Blasio was going to hand a check for $1.5 billion over to Jeff Bezos, already the richest man in the world.

That’s complete nonsense.

The biggest part of the package was a tax credit that would vary based on how much Amazon paid its employees; it was capped at $1.2 billion over ten years.

Let’s assume it’s the maximum level– that works out to be $120 million per year.

Now, in exchange for that incentive, how much tax would Amazon pay?

There’s been a lot of media attention about the fact that Amazon has hardly paid a dime in federal income tax over the past few years.

In both 2017 and 2018, Amazon’s federal tax bill was precisely $0.00.

But state and local tax laws are different than federal laws. And tax breaks that can reduce a company’s federal bill don’t always apply at the state and local levels.

In 2017, for example, Amazon paid $250 million in state and local tax in Washington, its home state.

New York tax rates are MUCH higher than they are in Washington. In fact, New York City has three different methods of calculating corporate tax, just to make sure that big companies pay up.

So even if Amazon’s New York tax bill were just HALF of what it paid in Washington, then New York City would have been recouping more than 100% of its tax incentive EVERY YEAR.

On top of that, the city would have reaped additional tax revenue from countless other sources.

For example, many of the new Amazon jobs would have gone to people relocating to the city.

Even if just 10% of the 25,000 workers (earning $150,000 per year) would have become residents of New York, the city would have earned another $12 million per year in individual income tax revenue.

Property tax revenue would have been another $20 million per year– JUST on the Amazon campus.

Then there’s the city’s nearly 6% hotel occupancy tax. According to company data, Amazon employees and guests accounted for 330,000 hotel room-nights in the Seattle area in 2017.

At roughly $300 per night for a decent New York City hotel, that would have been nearly $6 million in additional annual tax revenue.

None of this, of course, accounts for the gargantuan, indirect economic activity that would have been generated.

Just think about all the real estate agents who would have earned commissions on sales or rentals. Or the waiters and waitresses who would have earned tips at nearby restaurants. Or the countless small businesses that would have benefited.

25,000 Amazon employees would have brought billions in annual disposable income to the city, resulting in tens of millions of dollars in additional tax revenue.

The company itself estimated that they it generate an average $500 million per year in tax revenue for New York City.

Even if Amazon wildly overestimated, and the real benefit was less than half of that figure, New York City would have still earned more than a 100% return on its tax incentive investment.

(And that doesn’t even count the non-financial benefits from the primary school Amazon would have helped build, the tech incubator they were planning, parks and green spaces, or environmentally friendly construction.)

This is incredible. To put that in context, New York City’s pension funds earned an 8.7% return in Fiscal Year 2018. And they’re practically doing a victory lap for knocking out such stellar results.

Yet while they’re pumped beyond belief to earn 8.7%, they had a chance to earn literally 100% or more with Amazon.

And New York City wouldn’t have even had to put up much money; remember, the vast majority of the incentive plan was a tax CREDIT, i.e. Amazon would have merely paid less in tax each year to the local government.

So in terms of a ‘cash on cash’ return, it was nearly infinite. It’s hard to see this as a bad investment.

Yet somehow Socialism won the day.

Ignorant masses, idiotic reporters, and their devious political heroes banded together to thwart prosperity in an endless Shock and Awe campaign against Amazon until the company finally pulled the plug on New York.

What’s probably more revolting is that these people are actually excited. They think that chasing away a near infinite return on investment is a major victory.

This is the direction that the country is turning.

Your fellow comrades don’t make decisions anymore based on facts. There is no rational analysis. It’s all emotion.

They get fired up because a rich guy might benefit. It doesn’t matter that the Amazon deal would have been a much-needed economic boost. They don’t even bother to think. It’s just straight to Twitter.

The same people are quick to say that New York doesn’t need Amazon… the city is going to be just fine.

Wrong again.

As we’ve discussed before, New York City is in a bad place financially. The pension is underfunded by about $70 billion, and the city government runs a multi-billion dollar budget deficit.

Just a few weeks ago, in fact, city officials announced that tax revenues so far this fiscal year were $500 million below forecasts.

Well isn’t that ironic! New York’s $500 million budget hole is the exact estimate of what Amazon would have contributed each year to the city’s treasury.

Congratulations, comrades. Another victory in your war on prosperity.



Some clear thinking about Amazon’s ‘shocking’ tax incentives was first posted on February 15, 2019 at 5:48 pm.
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