Its happening again. A firm grows from a darling, often mentioned glowingly in the media, that benefits consumers into a large corporation that is harming employees and communities, etc. If you want a lower standard of living, stagnant economy, no new jobs, and no new products then have the government try to fix the problem. It will stifle the dynamism a prosperous society needs.
Some critics call low pricing ‘predatory pricing’, supposedly to conjure scary images of a ravenous wild animal looking for its next prey.
Take this article by a writer who trades for a living.
New firms often use low prices to build market share and to get their products into more hands. They burn through investor’s cash, pay their employees with some cash and either shares of stock or products or some other way to save the cash for investing in business growth. Amazon never changed course.
People made a similar case against Walmart years ago when it was taking market share from other retailers: its harming other retailers, killing jobs, putting mom-and-pop shops out of business, etc.
Well guess what? Now Walmart is competing against Amazon and other brick-and-mortar retailers and other e-commerce sites. No government action against Walmart was needed. Indeed, it would have been harmful to consumers, its suppliers, and its employees.
The people who work at Walmart and now Amazon are doing something extraordinarily well. They have a successful strategy and business model and are executing. Don’t get in the way. Its up to others to figure out how to leap-frog over them in the marketplace. Other business models and strategies will emerge even though we cannot foresee what that will be. In fact, that success only becomes known after the fact because the growth of the firm will make the news. It will have survived the initial response by Amazon, Walmart and other competitors.
Yet we benefit from their low prices. It makes our family budgets go farther. The employees of the firms harmed by these super successful firms need to turn inward to management to demand they get their act together, or welcome outside investors to maybe buy the firm and install new management with new ideas. Its new ideas, new management, new/outside capital, new strategy, new business model that leads to dynamic growth.
Now, if Amazon is using the government to enact specific laws that benefit it, like, say, Net Neutrality, then that law or regulation should be eliminated.
If you want to help these firms, stop encouraging politicians and regulators to take sides and trying to solve this problem. Its not a solve-able problem and government is a poor mechanism to solve problems.
UPDATE: Amazon May Be the Next Tech Giant Muscling Into Health Care. That’s what American health care needs. Smart, successful people in the private sector to figure out how to improve a highly government-controlled industry.