Is Amazon destroying what made Whole Foods special to its legions of fans? From John McNellis at wolfstreet.com:
“Amazon’s plunge into the $800 billion US grocery industry posed an existential threat to rivals”: CNN, August 2018. So let’s see.
A couple questions remained in the wake of Whole Foods’ announcement last week that it was dropping prices on over five hundred items by twenty percent. Is this Amazon’s long-awaited spring offensive or is the grocer playing defense, treading water, simply trying to keep its market share? Stretched over a broader canvas: Is Amazon truly the existential threat to the grocery business the click-baiters would have you believe?
Before we get to existentialism, let’s consider a smaller question. Was it really a price reduction at all? Maybe not. The New York Times sent a couple reporters to shop their local Whole Foods for a basket of identical items before and after the ballyhooed price reduction. The total post price-cut savings was five cents on a fifty-five dollar purchase. The paper also used a Morgan Stanley study to report that Whole Foods prices are fifteen percent higher than those at a typical supermarket.
Even the kale and quinoa crowd can add, eventually. To keep paying a fifteen percent premium, they need to feel special about themselves and their supermarket. They need to know that their market is buying sustainably, doing business with the little guy, choosing only pesticide-free truck farm vegetables, wild salmon that have never seen a hatchery—let alone a fish farm—and so on.
The hypocrisy is obvious. From Glenn Greenwald at theintercept.com:
THE NATIONAL ENQUIRER HAS engaged in behavior so lowly and unscrupulous that it created a seemingly impossible storyline: the world’s richest billionaire and a notorious labor abuser, Amazon CEO Jeff Bezos, as a sympathetic victim.
On Thursday, Bezos published emails in which the Enquirer’s parent company explicitly threatened to publish intimate photographs of Bezos and his mistress, which were apparently exchanged between the two through their iPhones, unless Bezos agreed to a series of demands involving silence about the company’s conduct.
In a perfect world, none of the sexually salacious material the Enquirer was threatening to release would be incriminating or embarrassing to Bezos: it involves consensual sex between adults that is the business of nobody other than those involved and their spouses. But that’s not the world in which we live: few news events generate moralizing interest like sex scandals, especially among the media.
The prospect of naked selfies of Bezos would obviously generate intense media coverage and all sorts of adolescent giggling and sanctimonious judgments. The Enquirer’s reports of Bezos’ adulterous affair seemed to have already played at least a significant role, if not the primary one, in the recent announcement of Bezos’ divorce from his wife of 25 years.
Beyond the prurient interest in sex scandals, this case entails genuinely newsworthy questions because of its political context. The National Enquirer was so actively devoted to Donald Trump’s election that the chairman of its parent company admitted to helping make hush payments to kill stories of Trump’s affairs, and received immunity for his cooperation in the criminal case of Trump lawyer Michael Cohen, while Bezos, as the owner of the steadfastly anti-Trump Washington Post, is viewed by Trump as a political enemy.
Between them, Big Tech and the government could dish up surveillance Orwell couldn’t dream of. From David Samuels at wired.com:
WHEN HE OFFERED to arrange a swifter mode of transportation, she declined. When he asked why, she explained that she “needed the steps” on her Fitbit to sign in to her social media accounts. If she fell below the right number of steps, it would lower her health and fitness rating, which is part of her social rating, which is monitored by the government. A low social rating could prevent her from working or traveling abroad.
China’s social rating system, which was announced by the ruling Communist Party in 2014, will soon be a fact of lifefor many more Chinese.
By 2020, if the Party’s plan holds, every footstep, keystroke, like, dislike, social media contact, and posting tracked by the state will affect one’s social rating.
Personal “creditworthiness” or “trustworthiness” points will be used to reward and punish individuals and companies by granting or denying them access to public services like health care, travel, and employment, according to a plan released last year by the municipal government of Beijing. High-scoring individuals will find themselves in a “green channel,” where they can more easily access social opportunities, while those who take actions that are disapproved of by the state will be “unable to move a step.”
Posted in Business, Civil Liberties, Government, Intelligence, Law, Media, Morality, Politics, Privacy, Surveillance, Technology, Uncategorized
Tagged Amazon, Facebook, Google
There are a lot of hope-and-dream companies sucking up tons of money but generating no profits, with no prospect of doing so in the foreseeable future. The profitless prosperity sector is headed for trouble. From Adventures in Capitalism at adventuresincapitalism.com:
Near the culmination of all great stock market bubbles, at least one of that cycle’s supposed luminaries suffers an epic collapse because of fraud. As a result, fresh capital is restricted from that sector when it is needed most, leading to further crisis and a winnowing out of the sector as competitors cannot raise additional capital. Remember; suckers are always willing to finance bad businesses, but fraud means you immediately sell. It is this fear of endemic fraud tarnishing a whole sector, not economics, that finally ends a bubble.
Following Enron; capital was restricted from pipelines and energy trading. The collapses of WorldCom and Qwest led to a slow-down in fiber-optic buildouts. After the collapses of Ivar Kreuger and Samuel Insull, there was a multi-decade decline in conglomerates and holding companies. Following the collapse of Lehman Brothers, there was a multi-year dearth in underwriting archaic structured products and I’m sure the collapse of Madoff led to a decline in Ponzi investing. There are always second order effects in the sectors where these companies were previously shining lights—along with a lot of carnage. As a rule; if the biggest players were cheating a lot, even the honest guys were cheating a little. With Tesla (TSLAQ – USA) beginning its death rattle it’s worth considering what will happen to the rest of the Profitless Prosperity Sector.
The so-called FANGMAN stocks are having a rough go of it recently. From Wolf Richter at wolfstreet.com:
It gets costly when the entire market depends on a handful of over-hyped mega-caps.
For the beginning of Thanksgiving week, it was a little messy today in the stock market, with the Nasdaq dropping 3% to 7,028. It’s down 13.6% from its peak at the end of August. But it’s still up 1.8% year-to-date, so nothing serious has happened yet, just some of the gains this year have turned out to be head-fakes.
Folks who went through the wholesale Nasdaq destruction of 2000-2002 will just smile mildly because that’s when the Nasdaq, as the dotcom bubble imploded, lost 78%. Given our Everything Bubble is even bigger and crazier, the Nasdaq’s current sell-off barely registers on my own Richter scale, so to speak.
The Dow fell 1.6%, is down just 7.2% from its peak, and for the year is clinging to a 1.2% gain.
And the S&P 500 dropped 1.7% today and is down 8.5% from the peak. It too remains, if by the thinnest margin, in the green for the year.
Amazon probably extracted enough from New York taxpayers to offset the costs of putting its second headquarters on Long Island. From Tyler Durden at zerohedge.com:
New York taxpayers will shell out $61,000 for each of the 25,000 jobs to be created over the next 15 years from Amazon’s new split-model HQ2 plan. This works out to nearly double the $32,000 in tax incentives that Virginia residents will shoulder for the same number of jobs, according to Bloomberg.
In the long run, the public expense, along with the number of jobs created, would likely be even higher in Long Island City – as New York Governor Andrew Cuomo said the state and city will spend as much as $3 billion to secure as many as 40,000 jobs in what he described at a Tuesday press conference as “the largest economic development initiative that has ever been done by the city or the state.”
Not everyone is happy with New York’s current plan to offer performance-based direct incentives of $1.525 billion and a cash grant of $325 million based on the square footage of buildings Amazon occupies over the next 10 years.
Jeff Bezos wants Amazon to be the Pentagon’s go-to supplier. From Jason C. Ditz at theamericanconservative.com:
While employees at Google and Microsoft are wary of collaborating with the military, Amazon revels in it.
Speaking at the Wired 25th anniversary last month month, Amazon CEO Jeff Bezos announced that his company will continue to accept Pentagon contracts. That includes a very controversial cloud-computing contract that Google and Microsoft have already backed out of due to vocal employee opposition to working with the U.S. military.
Amazon was long considered the front-runner for this contract, but Bezos’s rationale for taking it goes well beyond its being low-hanging fruit. He’s argued that the government’s job is to “make the right decision, even when it’s unpopular,” and that large tech companies should support those decisions irrespective of politics.