Don't bite the hand that feeds you...

I read an interesting article in this a.m.'s paper about a conglomerate of loosely organized non-profit groups who have gotten together with one goal in mind: Fight Amazon.

This coalition, named Athena, is comprised of about 3 dozen small groups, most with a single attack area like digital surveillance, antitrust and warehouse working conditions.

Athena was part of the fight to force Amazon to pay a minimum of $15 per hour to its workers nationwide. They also were part of the anti-Amazon movement that forced Amazon to cancel its plan to put a headquarters facility in New York.

A quote from the article: "Every day, ships, trucks, trains and airplanes bring an estimated 21,500 diesel truckloads of merchandise to 21 Amazon warehouses in the four-county region".

They're talking about the Southern California where they say more than half of Amazon workers live in substandard housing. And for every $1 in wages they receive 24 cents in public assistance.

According to Google, "In 2018, the American multinational e-commerce company, headquartered in Seattle, Washington, employed 647,500 full- and part-time employees. Amazon is the leading e-commerce retailer in the United States with around 178 billion U.S. dollars in 2017 net revenues."

Now to me that seems like they're biting the hand that feeds them. I wonder how many of those 647,500 people would be on welfare or would be homeless if they didn't work for Amazon.

I may be prejudiced toward Amazon and will admit that we have had an Amazon Prime account for several years. While we're not likely the biggest buyer of Amazon products, we have done most of our Christmas shopping through Amazon. No more fighting the crowds for this boy.

What say you, is Athena biting the very hand that feeds over half million employees?

Mike, Amazon isn't a complete scrooge. It bought the big Christmas star from Macy's when they moved out of downtown Seattle. Amazon has rehabbed the star and it will be on the corner of the former Bon Marche building where it's been since I was a kid...and that's a long time. Good on Amazon for that.

Ken E. said:

Mike, Amazon isn't a complete scrooge. It bought the big Christmas star from Macy's when they moved out of downtown Seattle. Amazon has rehabbed the star and it will be on the corner of the former Bon Marche building where it's been since I was a kid...and that's a long time. Good on Amazon for that.

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I worked at the Seattle Bon Marche in the 70's and 80's.

That star we put up every year at the Seattle store was very large and fragile. It was old at that time (created in the 50's) and required around 100 hours of labor to repair all the broken wires and bulbs before it was ready to be installed. It was lowered from the roof with winches.

I'm happy that Amazon is resurrecting it. Amazon and the owner of the building will spend $500,000 to restore the star.

Back in the 70's it was forbidden by management to decorate the store for Christmas until Thanksgiving was over. Unlike today, where stores decorate for Christmas after Halloween. All the display people, management and key employees would show up at the store at 9:00 pm on Thanksgiving eve to put up Holiday decorations.

The maintenance people put the star up on Thanksgiving eve too and had to endure, rain, freezing and wind. It took all night to mount the star. And usually, broken wires and bulbs had to be repaired after the star was displayed.

When shoppers arrived at the normal 9 am opening time on the day after Thanksgiving, the store was fully decorated to get shoppers into the holiday buying mood. We did'nt open at midnight or on Thanksgiving like most stores do now.

Those were the good old days of retailing!

I'd like to offer my opinion on Amazon and how they treat their employees, but I'm pretty sure they're monitoring everything I say, text and email over my smartphone. (Only half kidding).

Ted

I asked Alexa if this was true - she said absolutely not, Amazon is awesome and we should use it more.

I believe my girlfriend!

I don't agree with Athena's approach.

However, I do fear the impact of Amazon and a few other entities. I think we need to return to effective use of our anti-Monopoly laws and/or enhance them to deal with the digital age. I think anytime a company gains too much control it can have serious impact on other businesses and eventually on the consumer.

I think we badly need a return to net neutrality. We now have multiple television options but most people only have one option for high speed internet and that is being used against them.

As to Amazon, I think they're into too much. Here are some of their major businesses. They sell product they own online. They have others who sell through them. They operate a huge hosting and computer entity. Add to that their drive to do their own shipping. They're adding retail and into the grocery business and now the pharmacy business. I feel there should be a forced divestiture. This wouldn't harm or eliminate jobs, but would just split them into many entities. Historically, the first example that comes to my mind is Ma Bell. At that time one company controlled all the long distance, the lines, and local service and that was considered too much.

I feel similar should be done with Alphabet. Google now has total dominance of web browsers, search engines, advertising, smart phone systems, and then toss You Tube and more into it. I think the multiple businesses should be split.

We can go back in history. If allowed to go unchecked, Coca-Cola would have had the entire soft drink business. Regulation is what gave others a chance and evened the playing field.

I come from a time when I worked for a company that had a very significant percentage of business of certain product lines. We were always prepared for acquisitions as we had ten days to file and show it was not monopolistic or anti-competition. Had these rules not existed we would have made the moves to have 80% or more of those products.

Allowing any one person or any one company to have too much power is ultimately contrary to a good business environment and will reduce choices consumers have.

I'm not saying Amazon is bad or evil, just simply out of control.

Now, Athena takes a bit too much credit. The NY move was stopped for many reasons, but the primary reason wasn't political opposition or anything of that sort, but the realization on the part of Amazon that it was a stupid move and couldn't work well for them. It was always ill advised. They have raised wages simply because the market required them to if they wanted to hire as many people as they need to work in what is not a pleasant environment. They're also doing what they can to avoid a strong company wide union. That's one reason all the Amazon trucks running around are private contractors.

Amazon as a retail business treats their employees better than most large brick and mortar stores. And they pay their employees a higher wage than employees that work at Target, Wal Mart, Macy's and other non commission retail stores.

Retail has always been a tough competetive business that asks a lot from their employees. Long hours, night shifts, work on weekends, low pay etc.

"What say you, is Athena biting the very hand that feeds over half million employees?"


Sounds like the same folks that detest Wallmart, even tho Wallmart saves about $2,500 for each customer.

I find it odd that the same folks, people I know and respect, who once touted "free enterprise," hated any government regulation and denounced unions, are now decrying Amazon's successful business tactics, demanding regulation and complaining about worker treatment and benefits.

I can't help but wonder if it's because they've changed their values, or if it's purely political.

Finally a post with a subject on which I have some knowledge. Antitrust laws are in place to protect competition, not competitors. Our country's corporate legal history is full of monopolists who did great things for the advancement of humans - Carnegie and US Steel, Rockereller and Standard Oil, Xerox, and more recently, Gates and Microsoft. Each of these folks did great things for all of us (museums, charities etc), but were nevertheless hit with antitrust complaints not because they did anything wrong, but rather they leveraged one business line to keep others from getting into another business (antitrust is good for companies - that's why so many business people fall into the trap, and so many lawyers miss it when advising clients). Using Xerox as an example, they faced antitrust issues because they tied copier maintenance contracts to the obligation to buy paper from them (e.g., you don't buy paper from us, then no maintenance from us on your Xerox machine). Once each of these companies were subject to antitrust review, competitors flourished and so did advances. So big tech is probably due for a little antitrust review.

I wonder if we would have had Yahoo and Google if MS had't been forced to untangle Explorer!

I have no doubt Google wouldn't have made it without some help from antitrust laws - maybe even Apple. Aside from price fixing agreements or agreements not to compete, illegal tying is probably one of the most insidious antitrust violations (where the seller has power in one product and ties the purchase of that product to something else ("tied product") that the seller is trying to sell but is competitively available). The problem is that everyone in the "tied product" business suffers and competitors in this business disappear - that's when the tying company then raises prices above market for the tied product.

Mark, great write-up, thanks.

While I don't move in the same circles as the Carnegies and Rockefellers, I can grasp the concept of tied products just by looking over at my ink jet printer.

You can pick these things up for like $50 or less, but when you go to buy ink, bend over! We all understand that this is just about as close to outright theft as it gets, and why it should be illegal. In fact, I always wondered why it wasn't. Probably not worth anyone's time to challenge it.

I think a lot of people misunderstand free markets. Market forces are the cornerstone of our economy, and something we should always encourage. But "free" markets simply mean no-one is inhibiting competition. Not that there are no regulations. Without some rules, it's not a marketplace at all. Once there's a level playing field, where anyone can compete, the best ideas, products and efficiencies will naturally win out.

Where capitalism breaks down is where there are no regulations. If one producer is allowed to, say, put lead in their food products, or dump their hazardous waste in their neighbor's back yard, or take resources which belong to the public without paying, or bully competitors, they have an unfair advantage. At that point you no longer have a free market, and no longer have the benefits of competition.

That mean old Amazon...


In this morning's paper was a small article that said Amazon is going to hire 200,000 people for the holiday season, double what they did last year.


It also said that Amazon said it has promoted about 19,000 workers who packed and shipped orders to manager or supervisor roles.


Mean old Amazon.


But that also is a strong signal that our economy is still robust and Amazon (and Target and others) expect that buyer demand for goods will more than offset the increased labor costs.

GFC said:

That mean old Amazon...


In this morning's paper was a small article that said Amazon is going to hire 200,000 people for the holiday season, double what they did last year.


It also said that Amazon said it has promoted about 19,000 workers who packed and shipped orders to manager or supervisor roles.


Mean old Amazon.


But that also is a strong signal that our economy is still robust and Amazon (and Target and others) expect that buyer demand for goods will more than offset the increased labor costs.

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Do understand that what you're reading are largely press releases from Amazon. In fairness, they are neither all good nor all bad. The seasonal employees have always existed, just at Amazon now rather than elsewhere. Yes, they've promoted many to supervisors but those aren't as wonderful promotions as one might imagine. Still Amazon employees a lot of people and for that they merit some respect.

It's as Mark P so well expressed. Too much of a good thing can become bad for other businesses and for the consumer. All those companies he referenced were extremely well run and provided excellent products and services. I'll go back to Xerox for a moment. They had excellent copiers and provided good service. They could even make a strong argument as to leasing rather than selling. It was a technology oriented product and they felt if they weren't servicing them all and turned them over to others by selling them, then it would harm their reputation as some wouldn't be kept in top condition.

Had Xerox been only a little wiser, they would have owned the PC market as well, but they failed to grasp that opportunity. Regardless when they were forced to start selling copiers and split manufacturing from financing and leasing, the market opened up. Xerox still dominated it but with people like 3M and Canon entering, it changed. Then came their next big mistake. They didn't believe color would ever be successful and didn't see Canon as a threat at all. So, they didn't sell color copiers until that market was owned by others. Mark asks would we have had Google without regulation of Microsoft. I'd ask, would we have had color copiers without regulation of Xerox and certainly not as quickly as we did.

On a simpler basis, what would soft drinks cost today had Coca-Cola not been regulated and allowed to dominate that market?

Strong companies are good but as they build they gain dominance. Dominant companies become predatory.

I'll mention one more example. Most of you likely have or do wear jeans. Were it not for the government regulating Levi Strauss, they would cost double or more what they do today. Levi dictated what price a retailer could charge. Levi's retail pricing was "keystone" or twice wholesale providing a 50% margin. Those with backgrounds other than apparel decided they could operate jeans stores on 33% margins. That meant instead of charging $19-20, they would charge $13.99 and they won the court battle allowing that. Also, Levi was requiring the purchase of shirts to get jeans and that was disallowed. Now, Levi was the target of the regulation but other Jeans manufacturers did the same and once Levi's practices were found illegal, the entire industry changed. Today, jeans are on sale for $15 to $35, depending on brand and model. Those prices would be $60 were it not for government intervention and all clothing would be more expensive as well as all soft goods like sheets and towels and basically all consumer products sold to retailers and department stores. Now, I can make the argument that we'd have been better off with more profitable manufacturers and department stores at the expense of the consumer. Will we be better off if Amazon's competition is eliminated and then they can set prices where they wish? I don't think so.

One step beyond dominance is predatory and that's what we need prevented.

That's all well and dandy. But when you have a pharm company who has spent hundreds of millions (if not billions counting failed compounds), to bring a life saving/changing drug to market, how do you price control that?
Do you pass specific regulations limiting capitalism for drug and med device companies with 16 year patent protection? If the drug is unique how do you price control it without implementing socialist style controls?

I've been thinking about the boat industry and market issues as I look at boats - it is interesting to see (as far I can tell) that there is no "Apple or Google" in the boat market - a maker of boats that controls the market like Apple. As of today, Apple has about 48% of the market for cell phones - that's pretty good share, and well deserved I might add. Once a company controls 60-70% of the market for a product, however, monopolistic tendencies or behaviors can some into play. I am not sure I know of a boat maker that controls anything close to 10% of the market for any class of boat including trawlers. Is there a trawler maker that has large market share??

menzies said:

That's all well and dandy. But when you have a pharm company who has spent hundreds of millions (if not billions counting failed compounds), to bring a life saving/changing drug to market, how do you price control that?
Do you pass specific regulations limiting capitalism for drug and med device companies with 16 year patent protection? If the drug is unique how do you price control it without implementing socialist style controls?

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If you call the controls "socialist style controls" then that's fine, but keep one crucial piece of information in mind, that these same new drugs are priced much higher in the U.S. than in every other country in which they are sold. It seems the U.S. consumer is burdened with a very disproportionate part of the research and development costs.

Lipitor is a great example. The first in a group of statins that have saved many lives. However, long after recovery of costs and a reasonable amount to offset unsuccessful research costs, the price was held to an artificial level while their patent was protected. There are ways of addressing this while still encouraging research. The simplest of laws would be one requiring U.S. pricing not to exceed that of other countries. Others would be more complex in establishing formulas for recovery of costs.

Nexium is one drug that shows how pharmaceuticals have taken advantage of situations. First, the release of Nexium was delayed intentionally until the patent on Prilosec was about to expire. Then it was released with the idea of how much better it was even though the tests used were not apples to apples as they compared 20 mg and 40 mg of Nexium to 20 mg of Prilosec. Now, at a time in which Nexium for the US market was manufactured in India, pricing of 40 mg was something like this. US price $360. Canada price $80. Australia price $80. Panama price $60. India price $30. Why? Because they could. A pharmaceutical sued to be able to sell generic in the US but they settled by being given a year exclusive on generics when the patent expired which allowed them at that time to sell generics for far more than normal.

I am not saying at all that you prevent recovery and limit development but drugs are being developed worldwide and those costs disproportionately on the U.S. consumer. The developer of a new medication clearly has a monopoly on it for the duration of the patent. In return for that, their pricing should be subject to scrutiny. Formulas for recover and profit can be developed. The industry merits pricing regulation.

This is really no different than utilities. Even where there are now multiple retailers, there's typically only one wholesaler. They've spent the money on the facilities and they rightfully should recover those costs and a profit on the expenditure. However, if they were allowed to price wholesale electricity without government oversight, they could double or triple their pricing and we'd have no choice but to pay. Instead each state has a Utilities Regulation Commission and manages it, providing them profit, but providing reasonable electric rates.

In my opinion, every monopoly should be regulated. It's not simple to do so. But it is necessary to ultimately protect all others and the consumer.

The company I worked for had decades earlier been found to be trying to build a monopoly on certain products through acquisitions and, it was for that reason, we had to submit data on any acquisition we planned. Had those requirements not existed, we would have bought companies giving us 70-80% of certain product groupings. I would have encouraged those purchases. That would not have been good for anyone but our shareholders. Is it socialism or is it just reasonable limits on the free enterprise system?

I've never understood the debate around products priced higher in the US than in other countries. It is simply a function of what the different markets will bear - be that price elasticity given income levels, or % of GDP a country wants to spend on a product if a one-payer system.

If the US Consumer decides that they will no longer pay for the latest and greatest regardless of the benefits then prices will come down. However our market is one where our expectations is that we get the best regardless of price. Not so in many EU countries, India etc.

Frankly I don't believe drug prices in the US will shift one iota until there is a one-payer system as government purchasing right now is only a fraction of the market and that is all they can legally control.

BandB said:

On a simpler basis, what would soft drinks cost today had Coca-Cola not been regulated and allowed to dominate that market?

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Have you seen the markup on soft drinks? As long as the consumer will pay any amount, there's no pressure to compete on price. I drink water. The free kind, not bottled.

menzies said:

I've never understood the debate around products priced higher in the US than in other countries. It is simply a function of what the different markets will bear - be that price elasticity given income levels, or % of GDP a country wants to spend on a product if a one-payer system.

If the US Consumer decides that they will no longer pay for the latest and greatest regardless of the benefits then prices will come down. However our market is one where our expectations is that we get the best regardless of price. Not so in many EU countries, India etc.

Frankly I don't believe drug prices in the US will shift one iota until there is a one-payer system as government purchasing right now is only a fraction of the market and that is all they can legally control.

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The problem is it's not up to the consumer to decide.

There's so much money being made, at every level of the pharma and insurance industries, that these industries simply buy off all our politicians.

As long as we keep squabbling over hot-button non-issues, instead of the real problems, this won't change. And as long as we remain gullible to the kind of political advertising and partisan punditry that keeps these people in power, we won't see any change.

The problem with a democracy, is we get the government we deserve.

Mark P said:

Finally a post with a subject on which I have some knowledge. Antitrust laws are in place to protect competition, not competitors. Our country's corporate legal history is full of monopolists who did great things for the advancement of humans - Carnegie and US Steel, Rockereller and Standard Oil... Each of these folks did great things for all of us (museums, charities etc)....

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AFTER the fact, they did these charitable things, not before. You gloss over some considerable ills if you want to paint the robber barons in a favorable light. As for modern charitable donations... hmmm... Sackler money for the arts has turned out to be quite a problem, eh?

As for Amazon, they're under-paying and over-working their employees. The "market" let's them do this.

That they're doing so in a manner that's "less worse" than others does not mean they're being anywhere near "better".

menzies said:

I've never understood the debate around products priced higher in the US than in other countries. It is simply a function of what the different markets will bear - be that price elasticity given income levels, or % of GDP a country wants to spend on a product if a one-payer system.

If the US Consumer decides that they will no longer pay for the latest and greatest regardless of the benefits then prices will come down. However our market is one where our expectations is that we get the best regardless of price. Not so in many EU countries, India etc.

Frankly I don't believe drug prices in the US will shift one iota until there is a one-payer system as government purchasing right now is only a fraction of the market and that is all they can legally control.

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What the market will bear really isn't a good way to look at drugs though. In the US, drug manufacturers are allowed to set their own prices which they are not elsewhere. Even in Canada prices are regulated. Even the law setting up Medicare drug coverage prohibits Medicare from negotiating rates.

Also, we grant extended monopolies by first having patents that run 20 years. Then they often run longer as the pharmaceuticals make a slight tweak in the non medication part of it. On top of that, we then have the "pay for delay" settlements they make with generic manufacturers followed by slow approval of generics and for limited generics for a period of time.

There is no free market on drugs. Well, not on legal drugs at least.

IMO Amazon is for folks who are to busy to shop. I can generally find the same product for less money and better shipping charges, but I have to shop the net maybe 5 or 10 minutes. I probable order from Amazon maybe once or twice a year and use caution not to be tricked into the costly Prime yearly shipping fee.
I do notice drop shipments from Amazon at lower cost than Amazon charges, that really makes me wonder why folks don’t shop the best deal.
But being the son of a Mom who lived thru the great depression might be why I try to save money.

BandB said:

What the market will bear really isn't a good way to look at drugs though. In the US, drug manufacturers are allowed to set their own prices which they are not elsewhere. Even in Canada prices are regulated. Even the law setting up Medicare drug coverage prohibits Medicare from negotiating rates.

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That was my point about a one payer system. The payer has the monopoly on purchasing and can negotiate the lowest price. Which is the case in other countries.

In the US the government purchases are only a fraction of the market, the rest are in a free market.

menzies said:

In the US the government purchases are only a fraction of the market, the rest are in a free market.

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And have zero influence on the pricing.

I live in Amazon land and know people who work there.

Most with marketable skills get compensated very, very well.

Their benefits are generous.

Unskilled, same as anywhere else

The majority of employees love working at Amazon.

There are also employees that don't like working there and bad mouth Amazon.

If you look at any company, there are always detractors. Look at Wal-Mart. There are reports of Wal-Mart employees praising the company and citing opportunities for advancement that they did not have at other firms. And there are others that complain about how badly they are treated and the low pay.

If an employee hates working at a company so much, why don't they seek other employment, especially in this low unemployment economy?

Could it be because their lack of skills or poor work habits are keeping these unhappy employees from seeking more desirable, higher paying jobs?

HiDHo said:

IMO Amazon is for folks who are to busy to shop. I can generally find the same product for less money and better shipping charges, but I have to shop the net maybe 5 or 10 minutes. I probable order from Amazon maybe once or twice a year and use caution not to be tricked into the costly Prime yearly shipping fee.
I do notice drop shipments from Amazon at lower cost than Amazon charges, that really makes me wonder why folks don’t shop the best deal.
But being the son of a Mom who lived thru the great depression might be why I try to save money.

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If you're going to shop regularly at Amazon, you have little choice but to join Prime. They intentionally delay the shipping of items ordered on regular terms.

As to ordering from their drop shippers and third parties, you lose all the Amazon protection, returns policy and more and many of those vendors are real problems.

Also, they've tied Prime Now in, Prime Video and Whole Foods. The attempt is to immerse you in Amazon Prime.

Similar strategy to Costco and Sam's with their memberships.

Now, there are the new front ends. Honey, Wikibuy, Rakuten. Oh and let's not overlook that you can get an Amazon Credit Card for 5% off on Prime orders and now a Walmart card giving 5% back on Walmart.com, 2% in store. 2% deals with cards and merchants are normal, 5% a nice trick.

It's like shopping at Bed, Bath and Beyond, you can pay a fee to get 20% off all purchases or you can not pay and collect coupons and do the same. We do it. Yet, I feel so bad for those who don't know and go in and pay full price. I hate the system that different people are getting different prices. Just like airlines where there's a huge range of prices of the passengers on a single plane. Why are we left to our hunting skills to get the best price as opposed to every customer of a business getting the same price?

syjos said:

....................

If you look at any company, there are always detractors. Look at Wal-Mart. There are reports of Wal-Mart employees praising the company and citing opportunities for advancement that they did not have at other firms. And there are others that complain about how badly they are treated and the low pay.

If an employee hates working at a company so much, why don't they seek other employment, especially in this low unemployment economy?

Could it be because their lack of skills or poor work habits are keeping these unhappy employees from seeking more desirable, higher paying jobs?

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My thoughts exactly. This gimme society expects it to be handed to them, then complains when it does not. If you don't like $20 an hour pay, don't work there. But if you accept a job, do it to the best of your ability while you look for better.

I just want to say, this has been a very intelligent, and civil, discussion of some very complex and often politically-charged issues.

If we on this forum can talk about the nuances of these topics without the polarization, misleading and over-simplifying that the partisan talking heads feed us, there may be hope for our society yet.

I posted above that we are Prime members. We use it a lot for free shipping and probably recoup all or most of the membership costs by not having to pay for shipping.


But as Prime members we also get additional free channels on the TV, I can watch free movies on my kindle and there are probably a lot of other benefits that I'm not aware of. Even though I am a true cheapskate I see the value in being a Prime member.


The thing is, we all have the choice of voting with our wallets. If you don't want to be a Prime member, don't. If you don't like shopping on Amazon, don't. We all have choices to make and the choices we make can have a direct bearing on how we enjoy our lives.