Krugman to Amazon: All Your Books Are Belong to Us

With apologies to Zero Wing, Paul Krugman’s attitude toward Amazon may be summed up by the thuggish expression, “All your books are belong to us.”

In his recent op-ed for the New York Times, Krugman alleges that Amazon “has too much power, and it uses that power in ways that hurt America.” The company “is acting as a monopsonist, a dominant buyer with the power to push prices down,” he claims. (According to a Times article Krugman cites, “Amazon controls about a third of the book business.”) Krugman calls for “public [i.e., government] action to curb that power.” Although he does not specify what “action” he has in mind, he mentions the government’s actions toward Standard Oil as a model; government targeted that company under antitrust laws and forced its owners to break up the company.

In essence, Krugman calls on government to treat Amazon as “public” property to be controlled by government rather than as a business whose owners have a moral right to operate it as they see fit and for their own benefit. But Amazon’s owners do have such a moral right, and they have no moral duty to serve some alleged “public” interest.

Krugman’s claim that Amazon “hurts America” is sheer nonsense. Krugman cites a dispute between Amazon and the publishing house Hachette, in which Amazon wanted “a larger cut of the price of Hachette books it sells.” When Hachette resisted, writes Krugman, “Amazon began delaying their delivery, raising their prices, and/or steering customers to other publishers.”

In other words, Krugman’s complaint is that Amazon is “hurting” people by not delivering books to them as quickly as Krugman wishes, by not selling books as cheaply as Krugman wishes, and by offering customers advice that Krugman does not wish Amazon to offer. By “hurting,” Krugman means not helping others in the ways that Krugman deems best.

In response to Amazon selling books to people when they are willing to buy them, Krugman calls on government to actually hurt Amazon—to initiate physical force against its owners—by dictating the terms by which Amazon conducts business—and, if Amazon resists, by sending in armed agents to force Amazon’s owners and employees to comply.

Of course, if the issue were a contract dispute, then government would play a legitimate role in enforcing private contracts. If publishers wish to negotiate terms with Amazon regarding delivery and prices, and if Amazon agrees to those terms, then Amazon should comply with them. But there is no indication that any violation of contract is at issue in this case.

Consider a key fact that Krugman omits. Ironically, the same antitrust laws that Krugman now wishes government to unleash against Amazon previously were used to harm one of Amazon’s competitors, Apple. But the proper solution to the government’s previous violation of the rights of Apple is not to now violate the rights of Amazon too; rather, the solution is for government to stop violating rights altogether, and for Congress to repeal the rights-violating antitrust laws.

Krugman also neglects to mention that sales taxes throttle independent bookselling. For example, for a brief time I sold my book, Values of Harry Potter, directly through my web site. But I quickly learned that complying with Colorado’s sales taxes was a massive headache, so I quit selling the book directly and now sell it only through Amazon. The fact that I now sell my book exclusively through Amazon is not Amazon’s fault; it’s government’s fault. Amazon graciously contracts with me on strictly voluntary terms to mutual benefit. The government, in contrast, effectively pointed a gun at me and said: “Collect sales tax from your customers and send the money to us, or you can’t sell books directly. See?”

In short, Krugman ignores the ways that government throttles voluntary trade, contracts, prices, competition, and so on—all the mechanisms that naturally make markets work in sensible ways—and he looks only to increase government’s violation of individual’s rights for some alleged “greater good.”

Amazon belongs to its owners, not to the government, and not to Paul Krugman. So long as Amazon honors its contracts and refrains from fraud, government’s only proper role in this regard is to leave Amazon alone.


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