Jim Hightower and Amazon

Posted: September 27, 2014 in Capitalism, Economics, Livin' in the USA
Tags: , , , ,

If you didn’t catch it, Alternet recently put up former Texas Agriculture Commissioner Jim Hightower’s article on amazon.com’s predatory policies. It’s easily the most comprehensible piece on the topic we’ve ever seen, and we’d highly recommend it.

Hightower goes into detail on such matters as amazon’s deliberate destruction of competitors through predatory pricing (essentially dumping below-cost products onto the market), its exploitation of its “low-wage, no-benefit, temporary” workforce, it’s use of its dominant position in the bookselling industry to demand ruinous discounts from publishers, and its failure to pay state taxes (putting local retailers at a huge disadvantage).

One thing Hightower doesn’t go into is amazon’s use of books as loss leaders. (You’ve probably read about the disastrous effect this has had on local independent bookstores–which do pay sales taxes–so we’ll only mention this in passing.)

As with all loss leaders, amazon’s steeply discounted books (which account for only 7% of its sales) act as a “gateway drug” to induce customers to buy other higher-priced goods, which are hardly a bargain.  As examples, we’ll cite two goods categories with which we’re quite familiar: musical gear (guitars, amplifiers, etc.) and amateur astronomy gear. Amazon’s prices on these goods are, overall,  not cheap, and you can usually find better, sometimes much better, deals on eBay, at local retailers, or craigslist.

If you have any interest in the effect of amazon on local economies and your pocketbook, do take a look at Hightower's excellent piece.

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