Tag: Amazon

Bridge and Tunnel to Nowhere

 

The other night, a friend asked me who I would vote for in Tuesday’s Special Election to fill out the remainder of Letitia James’ term as Public Advocate, I answered plainly: I don’t know. I’ve had a day to think about it and to read up on many of the seventeen candidates, and I can now give a more informed answer: I don’t know.

Public Advocate is the minister-without-portfolio office created by the City of New York to replace the elected position of City Council President once it had been declared unconstitutional. The PA has no official duties, which is fortunate because the office has no executive power. It can investigate but can’t issue subpoenas or hold hearings. It is an office that is mostly about being a foil to the mayor. Historically, the office has been a stepping-stone for young pols, who seek the searchlights of the City.

The PA’s megaphone and $3.6 million budget galvanize ambitious people. Seventeen heat-seeking prodigies (15 Democrats and 2 Republicans) have stepped forward for this one-off vote. The Democrats are fighting for the ambience of Alexandria Ocasio-Cortez’s bright sunlight. They agree in varying but insignificant ways on the two leading issues of the day: Diversity and Amazon, as the embodiment of all income inequality issues. The better-known Republican has been the only supporter of the now-scuttled Amazon deal. This may boost him above the mostly-partisan affair; aside from political rhetoric, many New Yorkers considered Amazon’s selection of Long Island City to be good for New York. For good or ill, Amazon has been a linchpin for his pitch.

New York is a city engulfed by end-stage capitalism, having fully gentrified two of five boroughs already. Progressives have good reason to fear the introduction of a new corporate predator to the already-unbalanced New York Eco-System, More corporate jobs, more displacement of long-time residents and the dismantling of residential communities. The crux of the Democratic argument is that rather than suck up $3 billion in tax subsidies, Amazon should have been willing to pay for its place in the New York firmament.

The law of supply and demand is sometimes suspended in New York politics. Over the past 50 years, New York has lost its position as the center of the corporate and financial universe. It is a notoriously expensive and challenging place to live and work. This is one reason that so many corporations removed headquarters from Manhattan. It was astonishing that Amazon selected New York at all. Naturally, tax subsidies sweetened the pot.

Amazon had pledged 25,000 corporate jobs, the kind that creates the demand for new housing stock, services, good schools, etc. This is a boon to a city whose economy is closely tied to finance, real estate and tourism. The return of corporate jobs is a good thing but for the fact that those who provide services to the new enclaves are being priced out of the places where they now live and arguably would work. Many working people already have long and largely unpleasant commutes. A good transit system would help, but our crack lawmakers don’t have a clue about that. New York needs the jobs and the revenues but it also needs to figure out a way to make life available and affordable within the city precincts.

I’ve searched in vain for a candidate who articulates even an acknowledgment of the complexity; never mind the solution. Retail politicians advance on the quality of rhetoric. They depend upon others to develop new ideas. Judging by the discourse, New York’s think tanks are at drought levels. Its public advocate candidates have nothing new or interesting to offer. Under the circumstances, I Don’t Know is a ringing endorsement.

Amazon’s Right on Target

In his effort to become the only merchant left in the world, Jeff Bezos is now planning to acquire Target. What a surprise.  Bezos not so quietly has assembled pieces that enlarge Amazon’s sales and distribution system.  Assembling is not the right word, though.  More like the Anaconda indigenous to the namesake river – I say, River – Amazon is swallowing companies whole.  If you think it’s an accident that in 1994 he named his startup after the world’s longest river, think again.  Bezos has created the biggest stream of commerce ever assembled, and he is not done. It will make the Silk Road look like a two-lane blacktop.

Investors might have been surprised when Amazon picked off Whole Foods in June. Afterwards, the acquisition made sense.  Whole Foods had assembled a blue-ribbon inventory of store locations; for which it was paying top rents and charging the top prices needed to pay said rent.  Amazon is perhaps the only company whose supply deals, distribution and marketing could create the efficiencies and volumes to make good on Whole Foods’ costs.

Just the other day, some friends were sounding the death knell for Target.  The Minnesota-based retail giant had effectively pulled down premium department stores on clothes and grocery chains with competitive food prices. But Target is in trouble now; has been for a couple of years. Target’s first big problem was that it outgrew its supply chain, hampering sales growth.  The shelves, once expelling goods at customers like projectiles , were merely groaning and bursting at the seams. 

After Target got back on its feet, it felt Amazon’s breath on its neck and Wal-Mart squeezing in from the side.  Target began to falter. Its e-commerce division, rebounding from the 2013 credit card breach, was being dwarfed by Amazon. Wal-Mart, a head to head competitor, is viewed as a cheaper alternative to Target, even if that is not the case across all product categories.  However, Wal-Mart pulled ahead decisively in its online business. In fact, Wal-Mart supposedly was clogging up Amazon’s rear view mirror.  

Once the limping Target became separated from the herd, it was time for Amazon to pounce.  In October Target was a rival; in November it was prey.  Target will be Amazon’s brick-and-mortar general retail arm to go with the Whole Foods grocery appendage.  Home Depot, anyone?  You can almost feel the stock accelerating and pulling away from Wal-Mart till they are out of sight.

So. Another Johnny Rocco moment. More, Bezos?  You want more? Will you ever have enough?  No, I don’t suppose he will.  However, this market consolidation doesn’t create jobs.  At best it’s job-neutral. At worst, there will be redundancies in the management system.  Prices?  Consolidation doesn’t help prices; efficiencies should. But if Amazon pulls down Wal-Mart too, it will have no effective competition.  Once there is no competition, there is no pressure on prices.

The net net of this deal is that jobs don’t increase on higher sales volume and the consumer dollar, shrinking through inflation predicted in several core sectors for 2018, won’t stretch as far with the new behemoth.  In the current environment, only media companies are vulnerable to antitrust claims by the government.  Amazon’s acquisition might not even pass muster as anti-competitive for purposes of the the antitrust law.  It sure feels like Amazon will be the General Store on Main Street in Everyplace, USA.

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