Marc Andreessen Annotates Paul Krugman's Amazon Op-Ed
tech.genius.com
tech.genius.com
For complex subjects, this is a great example of why single-author critiques are best, so you can follow a single person's train of thought and their logical conclusions (or errors).
This particular debate strikes me as pretty juvenile in both directions - by Krugman, and his critics. Marc gets "closest to the pin" for me when he says "if Amazon was a monopoly, it would be raising prices." Of course, that's not to say any big company can't overplay its leverage in "supplier negotiations" and this is surely something worth discussing. Marc is also right that the judgment here is a lot more nuanced than standard oil owning 60% of the market.
Going a little deeper on the Hachette dust-up, it's really interesting that the chattering classes never took much of an axe to Amazon's reputation until it tread on their turf - book publishing! All the waylaid mom-and-pop stores were just hicks who had it coming. Protecting the fat advances paid to big name authors - that is sacrosanct - part of the rewards that go with public life these days, and part of the corruption IMHO.
I will end with Glazer's beginning - "Krugman nearly always gets it right...but this is very wrong." I find that this Amazon critique is easier to contextualize if you shift that understanding - Krugman is frequently wrong about many things, and this Amazon article fits neatly with that overall trend.
That's not really what he says, he said that if they raised prices, Krugman would take that as evidence of monopoly behavior as well. Monopolies don't always raise prices; sometimes they keep them quite low.
More importantly, if the theory is: "Amazon/Microsoft/ETC is trying to underprice and drive its competition out of business, and not just doing good business.", then what is the falsifiability test of this theory?
How do you know whether Amazon isn't just the best and cheapest service provider out there?
> Another classic Krugman rhetorical maneuver. According to Paul, keeping prices low is a sign of monopoly power, but of course he’d also say that keeping prices high would also be a sign of monopoly power.
This seems silly. Krugman doesn't say that Amazon's low prices are a sign that they have monopoly power. He's saying that Amazon uses low prices to acquire or maintain ("reinforce") monopoly power ("dominance").
This is less a deconstruction of Krugman's article than it is a self-promotion of Crap Genius.
That doesn't necessarily make them bad - often you can provide useful elaboration or contradict factual assertions - but I think you're right that they do have a petty vibe to them.
> Even as high as DH5 we still sometimes see deliberate dishonesty, as when someone picks out minor points of an argument and refutes those. Sometimes the spirit in which this is done makes it more of a sophisticated form of ad hominem than actual refutation. For example, correcting someone's grammar, or harping on minor mistakes in names or numbers. Unless the opposing argument actually depends on such things, the only purpose of correcting them is to discredit one's opponent.
It's really easy to end up doing this when replying inline.
> Another classic Krugman rhetorical maneuver. According to Paul, keeping prices low is a sign of monopoly power, but of course he’d also say that keeping prices high would also be a sign of monopoly power.
Yeah its both. You can be a monopoly by having ridiculously high or low prices, mainly its really low then really high and if you think Amazon wouldnt raise everything by 100$ if it could, you're just wrong.
> It will startle every single business owner and CEO in the world to learn that negotiating with suppliers is now a business tactic that is “out of line”.
No negotiating is smart. Strong arming is wrong. Amazon is strong arming people not negotiating. They are playing the game where if you don't agree with what they are doing they are taking their toys and leaving. This causes economic harm to the company because of Amazon's volume to the point where the publishers have to use Amazon's terms which is monopolistic power.
If a company doesn't give me the raise I want, I accept an offer from a company that does give me the raise I want: "Taking my toys and going home"
If you say "Well, I don't agree with you, however, I'm going home and leaving my toys here for you to play with" then you'll probably end up at home without any toys.
Taking your toys and going home is your BATNA. Hachette has a shitty BATNA and is hence losing the negotiation, because they don't have any toys Amazon wants, and hence Amazon doesn't care they are going to go home and whine to daddy Krugman that little Jeffery isn't sharing his toys.
It's 2014, taking words from a text file from some author, putting them into a PDF isn't some kind of miracle that warrants 90% of the cost of the book.
There's a real argument to be made about the efficiency of monopoly, particularly where a destructive pattern of competitive behavior had been the norm previously. Rockefeller made that argument, albeit unsuccessfully at the time, but I don't think it is any less compelling for that.
Even if you allow that Amazon is a monopoly, competition is not intrinsically good. Competition is generally good where it improved the options and prices available for the consumer. That wasn't really the case with big publishing companies before.
I stopped reading right there.