It’s easy to blame the demise of small brick-and-mortar shops on the rise of e-commerce, just as it is easy to accuse Amazon of taking unfair advantage of the postal office to boost its bottom line. But despite what critics on both left and right might think, markets in a crony capitalist setting aren’t as black and white.
In order to better understand what’s at stake for both the consumer and the retailer, and in order to know why the USPS is a deterrent and not an enabler of both e-commerce and brick-and-mortar firms, one must look beyond the mainstream media’s talking points.
A Government-Created Mess
It doesn’t take long to find dozens of sources online explaining how Amazon killed small business. However, it isn’t as easy to find sources talking about the more than one million of small businesses that are actually flourishing thanks to Amazon.
By the same token, it’s quite easy to find critics online (and in the White House) saying that Amazon is taking advantage of the USPS, and that our tax dollars are subsidizing Amazon shipments across the country. They often contend that the firm wouldn’t be as successful if it wasn’t for the tax-backed carriers, and urge lawmakers to force the company to pay the difference for using the postal service.
When it comes to the demise of small businesses, many of these critics complain that Amazon created a convenient shopping service that gives consumers nationwide access to products they might not find in their local retailers. That is unfair, they say. However, it isn’t Amazon that is to blame for the rising costs of doing business, but government itself. And when costs are high, small retailers just can’t compete with large firms.
It is government entities, both local and federal, that “fawn over large firms,” Mises Institute’s Ryan McMaken explains, “creating special programs for tax breaks and subsidies” just for them, not for entrepreneurs trying to open up shop.
If small firms and individuals were given the same kind of breaks to start their businesses, they, too, would be creating jobs. Unfortunately, giving corporations like Amazon breaks to produce a “large number of jobs” sounds better than proposing tax breaks that will benefit retailers across the board. Unfortunately, these small firms can only compete with e-commerce giants if government-imposed barriers aren’t in place. And we never hear Amazon critics say that much.
The same goes for the postal service.
The USPS has been in the red for quite some time, struggling to cover billions in fixed costs. But while many say that the problems of the partial government-backed monopoly stem from the agency’s “corporate” mentality, the reality is that the organization fails to respond to market signals. Instead, it ignored the growth of the Internet and decided to expand its presence nationwide. As the number of letters continues to drop, the agency’s costs continue to go up.
Because the postal service has a virtual monopoly over the delivery of letters, it has almost no incentives to control its costs. And while Amazon does use the service, enjoying the low costs of shipment to remote areas in the process, it does so because the government-backed system is there. It is because government has failed to unleash the mail carrying market that consumers and companies like Amazon are stuck. But if freedom were to prevail, the free and open competition of different carriers would lower and not increase the cost of shipping goods across the nation.
It’s time we finally stopped scapegoating Amazon to focus our energy on what can truly change things for the better: freedom.
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