[Endama]

I feel that America is in the midst of a new gilded age; instead of Standard Oil, we have Amazon.

Like the late 1920s, we saw losses in purchasing power of the average American, the collection of wealth among the top 1%, and disruption of our civic spaces as a result. I think the thing that many Americans aren't aware of was just how violent that time in US history was[1].

The US economy isn't just about how comfortable the average US citizen is, it is also a measure of how much cushion there is in our society between us being frustrated looking at a job board and being angry and armed in the streets. The teachers strikes in Oklahoma, Florida, and W. Virginia are showing the rise of Unions (much like in the gilded age as well). Protest and civic engagement must be our response, we should take signs like the wealth of Bezos as a cautionary tale, rather than something to simply marvel at.

[1]https://en.wikipedia.org/wiki/Ludlow_Massacre

[1]https://en.wikipedia.org/wiki/Battle_of_Matewan

[1]https://en.wikipedia.org/wiki/1920_Alabama_coal_strike

[1]https://en.wikipedia.org/wiki/Battle_of_Blair_Mountain

[aphextron]

Except we actually had a functioning federal government during the last gilded age, so we ended up with things like the Sherman Antitrust Act, and eventually the New Deal.

I doubt we'll be so lucky this time around. Things are about to get absolutely brutal for the 90%.

[sidlls]

"About to?" It already is brutal for the bottom half. And the 90th percentile is too low: people in that range are paupers by comparison even to the top 5. I think the 95th to the 99th percentile is the region to look at. There are some seriously deluded individuals in that group who think they won't be on the outside with the rest of us when the top pull the gates closed behind them.

[Fricken]

America is a nation of temporarily inconvenienced millionaires. This disconnect between expectations and reality is one of it's biggest problems. You can visit any number of poorer nations where being poor does is not a punishment, it not equate to a difficult or miserable life, because society, it's services and it's infrastructure are all built to accomodate people of modest means. In America is designed for you to have a McMansion with a two car garage, and if you can't meet the bottom line you either go into debt to pretend you're meeting it or you're cast to the fringes where you struggle just to survive in a world that is not designed to accomodate People of modest means.

[baybal2]

I capture the essence of the matter perfectly in that last sentence.

[jelgt2011]

The (disputed) John Steinbeck quote you might be referring to: "Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires"

[gutnor]

If it take income in the UK as an example.

• 50th percentile is 21900,

• 90th is "only" 50600,

• 95th is 70400, that's the salary required for the 220K average UK house.

• 96th is 78800

• 97th is 91300

• 98th is 11000

• 99th is 159000, that's the salary required for the 500K average London house.

It really only takes off from 97th percents. Wealth diagram is probably going to look like that too.

[gytdev]

You mean per year? Also I think you miss one zero in the 9th. Can You please also provide a source?

[gutnor]

That is indeed per year in GBP. That is published by the UK Government directly: https://www.gov.uk/government/statistics/percentile-points-f...

I noticed that I used an older version, so the number have increased a little. The trend is the same though, with

50th: 23200

90th: 53100

95th: 75000

and taking off after that.

[amorousf00p]

You are right about one thing: If you are not in the 1% being 95%-99% is being out in the cold. Debt being a cold bed fellow.

[DoreenMichele]

If only it were merely a cold bed fellow. It's downright vampiric.

[olfactory]

Today we have a military industrial complex supported by both parties and our most vital student loans (championed by our "left" party) come with no bankruptcy protection.

We do have a very strong Federal government, but it's designed to funnel money to various interest groups.

By making compute infrastructure affordable and by making consumer review data available for all products, Bezos is a champion of the little guy. He hasn't gotten rich through government crony capitalism or fraud, he's done the simplest stuff better than anyone else could. He let's people buy products that are reviewed thoroughly by other customers, he has a reasonable return policy, etc. This benefits consumers AND honest merchants selling through the platform.

AWS has made it way cheaper to start and scale many kinds of tech startups, and paved the way for firms like Heroku and DigitalOcean, and the entire vps ecosystem.

Bezos is a master of infrastructure execution. This is extremely rare, as we can see from the fate of Jet and Azure. Year after year the genius of his business tradeoff decisions and strategies become more clear. This is why he's wealthy. What we need are more people with that kind of vision and ability to see the big picture and solve real, unsexy problems.

Before AWS I had dealt with Dell as a part of several startups. The sales people were shady and they tried to milk every penny out of the customer for semi-proprietary hardware that was expensive to support. People flocked to AWS to escape the kind of predation and mediocrity championed by Dell.

Most readers of HN have the technical ability to have started AWS but (if they were of age at the time) did not see the opportunity and the path to execution. Bezos did. Let's give him some credit. I think he's one of the most remarkable visionaries of our age.

[thex10]

I have no rebuttal here, but I'm curious what your thoughts are regarding Bezos's well-documented mistreatment of workers. Why would he do that?

[prolikewh0a]

>By making compute infrastructure affordable and by making consumer review data available for all products, Bezos is a champion of the little guy. He hasn't gotten rich through government crony capitalism or fraud, he's done the simplest stuff better than anyone else could. He let's people buy products that are reviewed thoroughly by other customers, he has a reasonable return policy, etc. This benefits consumers AND honest merchants selling through the platform.

He didn't do this, his workers did. How many of his workers are making minimum wage, with no health insurance or health insurance they can't afford deductibles for? How many of his warehouses don't have air conditioning? How many people working for Amazon are forced to pee in bottles, pushed beyond their limits?

He's not sitting there shipping all packages, not sitting there soldering amazon echo's, his workers are.

$150 billion shouldn't exist for Bezos and Bezos alone, as the wealth should be spread around the company to the workers who actually do the work. We likely wouldn't be this situation of extreme inequality if this was the case. It's disgusting selfishness that is allowed by our current system.

[kickopotomus]

Not saying that I disagree with the sentiment of your comment but Bezos does not have $150B. I would be surprised if he had any more than a few million in cash/liquid assets. His worth is tightly coupled to the value of Amazon stock that he owns. A lot of workers do benefit from their stock increase through granted stock options.

All that said. Amazon needs to take a long hard look at how they manage their warehouses and fulfillment centers when it comes to workers rights and common decency.

[resters]

How many of the workers chose to work there instead of some other, inferior option? How many are proud of what they accomplished? How many went on to found other successful startups like Instacart?

selfishness is allowed? Is it possible to disallow a core human trait?

[pedromsilvapt]

Yes. Envy is a core human trait as well. Some people envy their neighbor's car. Stealing it is still forbidden by law.

Likewise, disallowing envy (or selfishness) by itself is not possible, but making illegal the actions that result from those feelings can (and sometimes should) be outlawed.

[nickthemagicman]

Completely agree. Bezos is great. This is not so much an attack on Bezos as it is an attack on a system that let's 30 single individuals amass more wealth than the bottom 3 billion.

[Shivetya]

except the mass majority of the bottom three billion live where governments do respect property rights. private wealth only exists where that is true, otherwise all wealth would be concentrated in the hands of politicians as it is in many places; well that and their very select friends most of which they installed over state resources.

[nickthemagicman]

I mean poverty is poverty even in America.

50% of Americans can't come.up with 500 bucks in case of emergency.

[jeffreyrogers]

If you have a checking account you probably have more liquid assets than the bottom 3 billion.

[resters]

Exactly. I'm apparently in the top 0.5% and it always feels like money is tight. Anyone who must work for a living is in a sense poor.

[pedromsilvapt]

3 billion combined? Because that's what the parent comment was implying. Your point hardly seems like a fair comparison.

[jeffreyrogers]

The bottom 3 billion probably has zero net worth: no property, no assets. So my point was a fair comparison.

[nickthemagicman]

Yeah but you can still be living in the same relative poverty as they are.

[Synaesthesia]

That came about due to pressure from mass civil action, just like every positive change in society.

[pitaj]

You mean the same New Deal that likely extended the length of the Great Depression by a significant multiple?

[nickthemagicman]

This goes against every ounce of history I've been taught.

[nostromo]

The New Deal has never not been controversial, from proposal to present day. I imagine its effects will be argued about until the heat death of the universe.

https://en.wikipedia.org/wiki/New_Deal#Historiography_and_ev...

[Camillo]

The parent post should not be downvoted. It's perfectly possible that the effect of the New Deal is controversial (or even dubious) amongst historians and that most schools teach it as a resounding success. In that case, it's interesting to hear both what historians think and what people are actually taught.

[skookumchuck]

Nearly all histories of the Great Depression are agenda driven, rather than an honest attempt at fact finding.

Most paint it as a failure of capitalism, the rest as a direct result of government manipulation of the banking system, trade disruption caused by Smoot-Hawley, and huge tax increases.

[paulddraper]

Virtually all credible historians agree that the New Deal itself was largely ineffective in solving the Great Depression. It started in 1933 with unemployment rate of 25%. Half a decade and many millions of dollars later, unemployment was 19%. [1] The Great Depression ended only when Europe went to war in 1939 and financed the American economy.

Depending on who you ask, the New Deal was either ineffective because it was fundamentally flawed, or ineffective because it wasn't big enough and didn't raise enough debt. [2]

Basically, "economic science" as usual...

[1] https://www.u-s-history.com/pages/h1528.html

[2] https://en.wikipedia.org/wiki/New_Deal#Recovery_2

[tomjakubowski]

By your own source, a majority (51%) of "economic historians" working in economics departments and a strong majority (74%) of "economic historians" working in history departments disagree outright with the statement: "Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression."

It seems unlikely that some huge portion (say, > 90%) of those historians further believe that New Deal policies had no or little positive effect on the Great Depression. Are the "credible historians" just the ones who happen to agree with you on this topic?

[paulddraper]

I've never read any modern historian to say that the New Deal effectively fixed the Great Depression.

So yes, I believe that most of those 51% and 74% believe the effect was nonexistant or small. Typically, something like "if FDR had spent as much on the New Deal as he did during the War, it would have ended the Depression". [1] (I.e., it was too little, as in my previous comment.)

I welcome any references to historians claiming the New Deal largely fixed the Great Depression. (Or really, any option from a historian more positive than the quoted article.)

Or...you know, just silently downvote this comment :)

[1] https://www.thebalance.com/the-great-depression-of-1929-3306...

[e12e]

> It started in 1933 with unemployment rate of 25%. Half a decade and many millions of dollars later, unemployment was 19%.

Absolute numbers are important, but the rate of change more so. Were unemployment raising to 25% or already going down? It's the difference between those 19% being a meager improvement and staving off absolute disaster.

[nradov]

While the New Deal may have lengthened the Great Depression (impossible to prove one way or the other), it was a net win by preventing a violent socialist revolution. Those uprisings occurred in other countries. It really could have happened here.

[MikeHolman]

That's assuming a socialist revolution is unequivocally bad. The world would be so incredibly different, it's impossible to say that it would be worse.

[nradov]

A socialist revolution during the Great Depression would have left the USA temporarily too weakened and divided to help the Allies defeat the Axis powers in WWII. That would have been unequivocally bad for the entire world.

[Symmetry]

You can't just sum up the huge variety of programs that was the New Deal like that. Yes, the National Industrial Recovery Act (NIRA) probably did halt the existing recovery but it was a recovery that FDR had started by reversing the hard money policies of his predecessors. And you can certainly argue all day about whether stuff like FDIC was a net improvement if you want to but that didn't really affect the length of the Great Depression.

We actually have a pretty good idea of what worked and what didn't during the Great Depression and mainstream economic historians[1] seem to have reached a rough consensus.

In school, though, we teach the Great Depression through the lens of political history. So for that purpose it doesn't matter what was really causing it, just what people at the time thought was causing it.

[1] I'm excluding Marxists, Austrians, MMTers, etc here.

[RugnirViking]

Don't tease us! We aren't all familliar with economic theory - what is the consensus on what worked during the great depression?

[Symmetry]

Really I'd recommend reading chapter 1 of The Wages of Destruction. The book is really on the economics of WWII but it summarizes the modern consensus on the Great Depression as a starting point and since it fits everything into one chapter ends up being very readable. Mostly it was contagious deflation mediated by the gold standard with gold hording causing deflation causing more hoarding. Countries on the silver standard like China were essentially unaffected. Countries that went off the gold standard early like the UK or Japan recovered early. The Wikipedia article is mostly a history of how economists' understanding of the Great Depression has changed over the decades rather than a description of where it stands now but it works pretty well.

https://en.wikipedia.org/wiki/Great_Depression#Mainstream_ex...

EDIT: A while ago Krugman had a very good piece trying to explain how deflation can cause problems. Different sorts of economists often disagree about whether its interest rates or aggregate quantities or expectation traps or whatever that's the most important aspect of tight or loose money but they all agree that these things are real and meaningful and generally explain depressions. http://www.slate.com/articles/business/the_dismal_science/19...

[namlem]

Our government was barely functional from the end of the Civil War until Teddy Roosevelt's presidency.

[FussyZeus]

Or the 1%. Something Rich people tend to forget is that the system of law and order we have now prevents armed uprising of the lower classes, which has a history of cropping up during very hard economic times.

Not advocating, and I doubt I'd be one of them holding a pitchfork, but it is something to keep in mind.

[irrational]

Back in the day, most people grew up working on a farm/ranch/etc. and actually knew how to use a pitchfork. I'm trying to imagine today's obese generation trying to physically overthrow the government and can't help thinking that it wouldn't go so well.

[TheAceOfHearts]

Most Americans have guns. The police has better weapons, but it would be a war of attrition, and I doubt most police would want to go on killing sprees against their fellow countrymen.

Although I doubt it'd reach the point of massive insurrection. That would require a total loss of trust in the government, and I think we're still far from that.

[code_duck]

How old is the average American gun owner? Are they physically fit?

Merely owning guns is different than possessing the physical ability and training in weapons and tactics to use them effectively, especially versus military or paramilitary forces (National Guard and Border Patrol is a much more likely initial pro-government force than police). Not only are they equipped and trained with the same weapons civilians may have, they also have automatic weapons, nightvision, grenades, armored vehicles, helicopters, tear gas, sonic weapons, fire trucks, and a lot more.

[Rescis]

Keep in mind that the very modern, very well funded, and very well equipped US military has been fighting a bunch of dudes with rifles and IED's for the past several dozen years without conclusive victories or signs of the resistance slowing.

That US military is also neither attacking its own citizens it has filial and friendly ties with, nor attacking people who look and talk like it.

Modern armor and missiles don't accomplish much when the enemies main goal is to just live as they want to (instead of conquer territory or resources).

[AtlasBarfed]

Open rebellion in the US would tank its credit rating and foreign investment, which is the only thing keeping it afloat.

No sane country would lend us money to wage war on our own people/economic infrastructure.

And mass insurrection would disrupt the supply chain. Nothing is warehoused these days, so the country would fall apart.

Maybe I'm a pessimist. Maybe I should start digging my shelter.

[FussyZeus]

In every instance throughout history, the $weapon wielded by the peasant has been vastly inferior to the one wielded by the noble's army, guards, etc. In fact one could argue that the peasantry has never been less outgunned that they are currently, when previous uprisings made do with sticks and rocks, and the heads of the wealthy still rolled in the end.

The fact is that the select few protect themselves with rolls of the sons and daughters of the masses. Sure, plenty of them will turn their weapons on their fellow countrymen for a paycheck, but how many? And for how long?

And especially once those bullets start flying, how useful is the money being paid to those guards? How long before they have all the money they could ever want and no one will sell them food?

In our hyper-connected world, we lose people jobs when they crack a racist joke on twitter. How hard will it be to find the 1%'s executioners?

[lev99]

An attempt to overthrow the government is handled by the military, not the police. The military has more guns, better supply lines, and better discipline than police forces.

[prolikewh0a]

It would be terrible to see the military killing its own citizens in defense of a corrupt government that doesn't work for those citizens.

[paulie_a]

Most Americans don't have guns. Gun owners are a minority with a very loud voice.

[e12e]

One in three households or thereabouts. It's certainly not "most" - but not sure "vocal minority" is accurate either?

https://www.washingtonpost.com/news/wonk/wp/2016/06/29/ameri...

[pazimzadeh]

30% of Americans have guns http://www.pewsocialtrends.org/2017/06/22/the-demographics-o...

[Infernal]

I wonder how much of the privately owned land area of the US is owned by Americans who own guns?

[scarecrowbob]

To be fair, the cops are fatter, too.

On a more serious note, a population is only peacefully policed at the enjoyment of the people. The critical mass of insurrection beyond which a population can no longer be policed is low. In my lifetime I have seen riots in LA, Baltimore, and Ferguson, to name just three. And those were of minority populations. If the entitled "obese" hegemonic population were part of the insurrection, it might be more difficult to put them down.

[Maybestring]

I'm not sure why you think a mob of fat people won't be able to over power people. A fat man can torch a mansion as well as a skinny man.

[wott]

It depends on whether or not the mansion is located on the top of a hill.

[soared]

An overthrow would look entirely different today. The masses wouldn't carry pitchforks, they'd use computers. (I don't know how, but assuming people today wouldn't use computers is definitely wrong)

[smhost]

We have to cripple the datacenters, which tend to be hard to move.

[gremlinsinc]

if I were to overthrow the government, I'm assuming many peers would be involved too, probably Anonymous, a lot of the tech community, etc.. (if it was down party lines, or even 99% vs 1%...

Assuming the revolting army was full of tech geeks, the best we could hope for is a drone/robotic army that uses technology. Because jocks most of us are not. LOL.

[irrational]

I have to assume that the government has the ability to shutdown the Internet at will. Perhaps even the ability to physically destroy the networks at key locations at will. They certainly have the ability to take the electric grid offline at will which would render most technology moot within a short period of time unless you have solar panels and battery backup.

[RugnirViking]

Physical violence isn't the only way that the working class can seriously disrupt the normal functioning of society.

[jorblumesea]

This is part of the reason why the country is so divided. It's a great tactic to prevent the masses from organized. Give the left and the right something to hate (each other) and steal the economic gains for yourself.

[gremlinsinc]

Sadly this is true.. I'd love to see Progressive politicians jump ship to Republican, pick up a few emotional issues like anti-abortion (though secretly pro-choice), and be pro-gun (though still a believer in regulating which guns are allowed on the market).

Basically troll the party in red states, some might actually get elected on a platform similar to Bernie but tweaked to appeal to right wingers, and then we can work from left/right to pull the masses to a center that's more progressive less corporatist.

[tmpz22]

Except nowadays even small local police departments have tanks and swat teams.

[untog]

Small local police departments are also staffed by the 90%, though.

I find it difficult to imagine an uprising against the 1% in America any time soon, but if it did happen I can absolutely imagine the police siding against the 1%.

[suresk]

At this point in America, pretty much everyone who has weapons and authority to use force is pretty ideologically aligned with the 1%. There is a pretty strong narrative in that group that all of these problems that many would ascribe to poor income equality are actually caused by immigrants, welfare recipients, and government.

I think the chance of the police or military siding against the 1% is incredibly small.

[coliveira]

Police forces are ideologically selected to protect the 1%. In extreme cases what you say is possible, but I wouldn't hold my breath.

[refurb]

Considering the top 1% is ~$450K per year per household, I'd wager plenty of folks on HN are in the top 1% if they are a two income household.

[lev99]

The top 1% of income is very different than the top 1% in wealth.

[grosjona]

From my experience, police officers generally don't like rich people. Also, I don't think that members of the police force or the military are as obedient or loyal as they used to be in the past.

[joncrane]

They don't like "rich assholes" but they are very authoritarian and respect and obey "power."

[gremlinsinc]

If the 1% decided to lobby for police salaries > 400k per year, would the police be more obedient? If revolution was coming, you better believe pay for police would rise, and they'd definitely protect their own interests.

[cafard]

You might want to look up the history of for example the Republic Steel Strike in Chicago in the 1930s.

[dredmorbius]

Studs Terkel on that:

https://s3.amazonaws.com/wfmt-studs-terkel/published/22485.m...

[gremlinsinc]

Except, if it looked like it was coming to that, guess who just got a major pay raise : Police... Now Police is the highest paid field in America...and they'll do anything the 1% tell them to.

[dragonwriter]

> Except nowadays even small local police departments have tanks and swat teams.

Successful uprisings by the masses against the elites almost always involve substantial fractions of the military, police, and other security services defecting, either abandoning their gear or taking it with them and turning it against the elites.

Until we get robots replacing guys with guns, that's going to be a recurring failure mode for narrow elite rule.

[CM30]

When you get robots replacing guys with guns, then you've got a whole second set of problems to deal with them. Namely, cybersecurity goes from being annoying to being potentially lethal.

[dragonwriter]

Which, if you think about it, is a slight recasting of the same failure mode: formal control of the instruments of force can become detached from actual control.

[dghughes]

Anytime US police are shown on TV it's staggering to see how many are of them are obese. How can these police officers function in their jobs being so large? There must be yearly fitness tests to weed out people like that. Surely someone 6 feet tall 300 or 400 pounds can barely walk let alone run after someone.

[dragonwriter]

US Police on TV look more obese (and in a top-heavy way) than they are because department policy very often includes wearing a bulletproof vest under their uniform shirt.

[slededit]

People on TV are the ones that are later in their career. A police sergeant is more of a middle manager and is often not out in the field. Fitness tests ensure new officers are not overweight.

[toasterlovin]

FWIW, strength is way more important for policing and combat than being thin. Obese people who move around on a daily basis are usually quite strong. They have to be.

[dplgk]

But which side will they be on?

[prolikewh0a]

Protecting the private property of the state & corporations. Standing rock is a great example.

[LarryDarrell]

They'll never get that far. Even when desperate the 90% are easily divided against each other.

Disease, war, some other ecological disaster... a divided and very unequal nation cannot respond to these stresses. This is what ultimately balances things, it's a shame that so many many lives will have to be destroyed in the future because we are too timid to fix the problem now.

[nickthemagicman]

It's interesting there's theories that say it took the black plague to wipe out half of Europe and end the riches domination of the poor, end the dark ages, and ultimately start the enlightenment.

[cowmoo728]

https://news.stanford.edu/2017/01/24/stanford-historian-unco...

[agumonkey]

It's true that logistically there's always more poor than rich. That said, rich are only one plane ticket away from peace of mind. Surely their money is already distributed digitally so ..

[CryptoPunk]

The New Deal was responsible for stretching the Depression out for several additional years. It was one of the most economically ignorant and harmful interventions in US history.

Food was actually destroyed during the New Deal to create artificial scarcity in agricultural produce:

https://livinghistoryfarm.org/farminginthe30s/crops_17.html

This destruction of agricultural stock was based on the idea that the problem in the economy was low nominal prices, when that was merely the symptom of the contraction in the money supply as a result of widespread defaults and an erosion in lending.

The low nominal prices were a natural reaction to the reduced money supply, that enabled consumption levels to remain at their pre-crash levels. With their efforts to increase nominal prices by creating artificial scarcity, all the New Deal officials did was reduce economic output, and with it, consumption levels, resulting in lower quality of life.

[paulddraper]

> functioning federal government

> New Deal

The New Deal is the arguably the worst economic policy in US history. It turned the Great Recession into the Great Depression [1] [2] and has been an economic anchor on the US ever since [3] [4] [5]

That it has popularly been given credit for the WWII-era economy is doctoring history. That it still further has become the epitome of good economic policy is unbelievable.

[1] http://newsroom.ucla.edu/releases/FDR-s-Policies-Prolonged-D...

[2] https://mises.org/library/how-fdr-made-depression-worse

[3] https://www.forbes.com/sites/kellyphillipserb/2018/06/05/tru...

[4] https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

[5] https://www.forbes.com/2009/02/11/new-deal-stimulus-opinions...

[nostromo]

I think Bezos is a bad argument for us being in a new guilded age.

When you look at Rockefeller, Carnegie, Ford, and perhaps even Gates, they had near total control over some aspect of the American Economy. And they used that control to make incredible profits.

Amazon is trying to do the same, but they haven't done so yet. Their retail business is not wildly profitable (if at all). They haven't monopolized online retail (and may never be able to do so).

Amazon may be the next Walmart, but they're not the next Standard Oil. And the market has priced in huge expectations that Amazon will eventually have to meet, or investor exuberance will wane.

[save_ferris]

> When you look at Rockefeller, Carnegie, Ford, and perhaps even Gates, they had near total control over some aspect of the American Economy

According to TechCrunch[1], Amazon controls 49% of the entire e-commerce market, and 5% of the entire retail market overall. They're also in a position to jockey for even more market share as retail continues to move online.

Amazon is in the perfect position to completely own e-commerce, so it's quite possible that we're just early in making our comparison.

[1] https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-...

[stickfigure]

49% could be the high-water mark; we don't know yet. If Amazon doesn't get a grip on the counterfeit product problem, sales could plummet. The switching cost to a new retailer is low.

[mistermann]

> 49% could be the high-water mark; we don't know yet

As could have been 25, 26, 32, 35, 37, etc

If you were a betting man, would you bet 49% is a high water mark?

[sushid]

But Amazon's war chest is near infite. Jet had half a billion in funding but was barely making a dent (while bleeding money) against Amazon and its unprofitable for anyone else pricing. Amazon barely makes a profit with their streamlined system so how can anyone compete with that.

And we've seen what they can do when a competitor emerges like diapers.com. They bury them in the ground Walmart of the 90s style.

[zeusk]

> Amazon is trying to do the same, but they haven't done so yet. They are not wildly profitable (if at all). They haven't monopolized online retail (and may never be able to do so).

Please tell me you're being sarcastic.

They're hiding profits and just plowing all the revenue back into the business while undercutting both competitors and their own employees.

[nostromo]

I'm ex-Amazon and no, I'm not being sarcastic.

It's an open question if Amazon will ever be able to raise prices and reap those promised profits without losing marketshare to the many players that would love to take them down.

Right now I view Amazon as a very profitable web hosting company and a retail non-profit.

Google and Microsoft, for comparison, were both much faster to get to monopoly-level marketshare. Amazon, at 24 years old, still isn't there.

[CamTin]

But a Monopoly on "stuff" and "moving stuff around" is a much more valuable Monopoly (pretty much by definition) than one in "eyeballs to advertise stuff to". Ultimately, the majority of Google's and Facebooks profits are from the advertisement of retail, services, and digital goods, which Amazon is trying (and doing very well) to monopolize. Sure, it may be harder to get there but the rewards are much better if you do.

Would you rather be Pullitzer (advertising magnate) or Vanderbilt (transportation)? I'll take the latter every time from a pure $$$ standpoint. Bezos is actually trying to be both.

[01100011]

Please explain how Amazon will gain a monopoly on stuff and moving stuff around.

I stopped buying shit from Amazon and haven't had a problem finding things elsewhere. Yeah, I pay 1% more... big deal. Fuck those guys.

[fesoliveira]

You are in a minority when it comes to that. Most people still go to Amazon (me included) because it is far easier to find what you want there for a lower or at least more fair price. Convenience is what dictates this kind of stuff, and Amazon, work practices apart, is know to deliver stuff really fast and cheaper than most, being the most convenient choice the same way Google is the most convenient choice when it comes to web searches.

[kickopotomus]

That's what they have been focusing on for the last few years. A lot of the money they have reinvested has gone towards physical infrastructure (data centers, fulfillment centers, courier vehicles). Not only are they gaining a monopoly in moving physical goods from A to B but also information through AWS. You may not use their services but an increasing number of people are using them regularly.

[trocadero]

Amazon (probably) makes about as much money from advertising as they do from their retail operations. When the margins for advertising is ~50% and retail is ~5% a little bit of ad revenue can go farther than a lot of retail revenue.

Of course that analysis ignores that the retail business is what allows Amazon to have an advertising business. But the GP is largely accurate. Amazon is most well known for their retail but it's not really what makes them the money. AWS is their cash cow and advertising is becoming their second.

[sjg007]

Transportation is going to be uberized. And in the worst case you just ship USPS.

[CamTin]

I wonder if the USPS would or has considered running an FBA competitor (ship your items in bulk to a USPS facility, pay for the space, and then to have them packed and shipped via an API). Even operating at a loss, it might make sense from a tax receipt perspective if it spurs economic activity far enough above the subsidy.

[delecti]

> will ever be able to raise prices and reap those promised profits

That's mischaracterizing the situation. They're not unprofitable because they're charging less than they could, they're unprofitable because they pour their profits immediately back into growing other business avenues. If Amazon spent a quarter or two slowing/halting the development of new business ventures they'd immediately be profitable. If they spent a year doing that and also trimming prior unsuccessful ventures they'd be quite profitable.

[justicezyx]

Control is more valuable

[ajmurmann]

It makes no sense for Amazon to turn a profit. They invest everything back into growth. This way the stock keeps going up, Bezos and co sell their stock and pay long term capital gains tax instead of income tax. This way Bezos can get a better tax rate than his secretary.

[TangoTrotFox]

At Amazon's scale you cannot simply turn tens of billions of dollars into economically meaningful growth. If you could, and expect proportional increase in valuation, then nearly every company would be doing the exact same thing. Take for instance Apple. They are netting some $48 billion a year with much more than that on hand. They clearly desperately want to move beyond just the iPhone and have been trying all sorts of ideas, but nothing is really sticking. And so they've been left to resort to spending literally hundreds of billions of dollars on share buybacks to try to increase the stock price that way. If they could just invest their profits into growth and expect proportional benefit, that's precisely what they would be doing!

[ajmurmann]

The bulk of Amazon's "investments" are leaving profits on the table and thus undercutting competitors and in essence buying market share.

[TangoTrotFox]

"Undercutting competitors" and "buying market share" is literally what defines competition. And this is phenomenally good both for the consumer and for the companies that are able to slim themselves down enough to succeed.

Comcast, for instance, isn't really a monopoly. There are numerous other big players in that industry. But the thing is that instead of "undercutting competitors" and "buying market share" the competitors all agree to cooperate and split up the market. The result is when you buy something from Amazon, you're hitting quite close to the wholesale cost of that item. And when you pay your high speed internet bill to Comcast, what you're paying is some large multiple of the real cost of service.

[imtringued]

If they have no use for their money they should give it back to the shareholders who then invest it into companies that actually need it.

[Denzel]

That's sort of what a stock buyback is. Think about it.

[mrb]

«They are not wildly profitable (if at all).»

Often repeated, but wrong. Their financials might show almost no net income (just $3B) but that's just because they choose to reinvest every dollar of gross profits into themselves to grow.

Just look at their income statement: in 2017 they invested $23B into "R&D". These are profits they could have just taken.

Obviously, reinvesting in themselves has been a fantastic choice. That's how they were able to grow their revenues ~10× over the last 10 years ($20B to $180B)...

As long as reinvesting works so well, you will keep seeing a "meager" net income of $3B yearly.

[baybal2]

You can expect that these RnD expenses just being regular opex. Classic dotcom era trick

[mrb]

Highly doubtful. You don't even have to trust the word of their financial auditors to get convinced. Just knowing that AMZN's growth over the last 10+ years was entirely self-funded is clear evidence they have cash laying around to reinvest into the company.

[sjg007]

I wonder if the irs would crack down on this.

[mudil]

I agree. In terms of market dominance, Google is a far bigger monopoly. It dominates search, ads, and internet overall.

[dan-robertson]

I wouldn’t say google dominates the internet overall. They may dominate your internet as the way into most of the internet for you is google (or some other search provider). For a large number of people, especially in the developing world, Facebook is the internet. But perhaps such people mostly access the internet with android phones and so have sort-of-google phones and perhaps use google maps and google play store and such.

[csomar]

> I feel that America is in the midst of a new gilded age; instead of Standard Oil, we have Amazon.

Except that Standard Oil probably had real oil (asset) and Amazon now has an inflated valuation based on potential future earnings.

Apple to Oranges in my opinion.

> The US economy isn't just about how comfortable the average US citizen is

If people are comfortable, they'll accept whatever. Look at the middle-easter countries (Dubai, Qatar, Kuwait). Look at the American people pre-2008 crisis.

The people of America are being squeezed by relentless financial predators (like banks), expensive wars that they have to fight and support (or maybe not but they are paying the price), globalization, expensive bureaucracy, etc...

[bumholio]

>Standard Oil probably had real oil (asset) and Amazon now has an inflated valuation based on potential future earnings. Apple to Oranges

Amazon has a dominant market position in online sales. It's not a natural resource but it a position that affords it strong economies of scale and, eventually, monopoly rents, just like those earned by Microsoft, Facebook or Google in their markets.

Network effects are the oil of our age.

[vlunkr]

Are average Americans losing purchasing power? This is a real question, I don't know where to look that up.

[fullshark]

Goods are cheaper, Rent + College Education + Healthcare is much more expensive.

[prolikewh0a]

Everything you really don't need is cheaper, everything you do need (rent, groceries, education) is much more expensive while wages haven't increased since the 90's.

[mistermann]

And inflation is completely within the desirable range, as it always is, regardless of any real world price changes.

On a positive note, it is encouraging to see a much broader of diversity of opinion on certain topics lately, where one year ago many of the comments in this thread would have been heavily downvoted. I believe there is a genuine change of sentiment underway even among the well paid tech classes.

[lixtra]

I agree that certified education got more expensive. Education price in general got much cheaper with the Information Age. Just look at the body of knowledge that is available to everyone through scihub but also through legal venues. With enough of drive you can pick up a lot of knowledge for free.

If you’re smart you can self-educate yourself in many areas to a better level than 80% of the ivy-league alumni. What you don’t get is: - certificates with prestige - network - extrinsic motivation

[speedplane]

You're minimizing the value of "certificates with prestige". The reason they are valued is that they are a very quick and easy indicator of ability, even if they are only moderately accurate. It's incredibly difficult to judge the ability of someone who is self-taught, you have to dig into their self-study plan and prior projects. If you need to evaluate and sort 10 candidates in 2 hours, you don't have time for that type of research.

With the internet what it is, there ought to be a way to make this evaluation process less labor intensive.

[RugnirViking]

And not only that, it's crazy how much the simple act of going to a university and surrounding yourself with other university educated people contributes to raised wages. For example, I have met a factory worker who through the internet have read a ton and learned several topics to a high level in his free time and he is undoubtably driven but there are so many behvioural and cultural reasons why people would pass over him in an instant.

[speedplane]

This is a common argument, but not sure I buy it. Sure, going to university helps a person identify established business and social norms, but so does working and interacting in society.

Anti social folks who don’t go to college will very likely still be anti-social if they do.

The main benefit of a standardized certificate is that it helps people evaluating your skills do so more easily. There’s no question that a smart hard-working self-taught super-social person will have a harder time than a less skilled person who has a respected institutions stamp of approval.

[alecco]

Just for the sake of argument:

Rent can be fixed by moving. A lot of people move out of California and NY for a better life. Companies will follow.

College and education are being disrupted. Hopefully online courses and independent certification can fix the problem soon.

Healthcare is expensive because people in US are obese and unhealthy. And there is a lot more treatment for previously untreated problems but at a very high price. Go walk around a hospital to see where your insurance money is spent.

[vlunkr]

I mostly agree with you until the healthcare part. It's more about regulation problems than actual health care. https://www.investopedia.com/articles/personal-finance/08061...

[carusooneliner]

Some explanation why it's so, courtesy this obituary of William Baumol: https://www.wsj.com/articles/baumol-diagnosed-the-disease-of... (paywall)

An excerpt from the article:

"Dr. Baumol’s insight in the 1960s was that costs inevitably rise fastest for things that are difficult to automate, including medical care, garbage collection and the live performance of a Mozart string quartet.

It came to him in the middle of the night.

“It was 4 in the morning,” he recalled in an oral history. “I suddenly woke up and said I know why those costs are going up! I got up, wrote down a few notes, and went to sleep again.” His theory became known as Baumol’s Cost Disease."

[jdc]

If you check CPI and income by percentile over time you get a pretty good idea.

[_bxg1]

The silver lining of this interpretation is that it implies our current trajectory to be cyclical, and not exponential. We may have to re-learn some lessons the hard way in the meantime, though.

[skookumchuck]

Cyclical, no. It's an exponential system in the long term, and chaotic in the short term.

[eezurr]

It may be ten years until the next Gilded Age.

https://en.wikipedia.org/wiki/Strauss–Howe_generational_theo...

[howard941]

Even though teachers are woefully underpaid here like most other state workers other than those who write laws or live in the governor's mansion there hasn't been a teachers strike in Florida for some time. See, for ex., http://news.wfsu.org/post/its-been-50-years-florida-teachers...

[throwaway37585]

> losses in purchasing power of the average American

Do you have data to back that up?

[JumpCrisscross]

> America is in the midst of a new gilded age

Why not golden instead of gilded? Per capita incomes are at an all time high, in real terms, and growing; violent crime per capita a historical low; and life expectancy high, though it could be higher. We are on the verge of tremendous technological advances in propulsion, AI, biology and energy. And more people are educated enough to wonder at those advancements than ever before.

[EasyTiger_]

Life expectancy has actually begun falling: https://edition.cnn.com/2017/12/21/health/us-life-expectancy...

[alecco]

Thank obesity.

[NeoBasilisk]

Do you really not understand how per capita income is not a meaningful statistic in a situation where income inequality is extremely high?

[JumpCrisscross]

> Do you really not understand how per capita income is not a meaningful statistic in a situation where income inequality is extremely high?

Real median household income in the United States is up 20% from 1984. At 0.5% a year, that's less than it could be. But it's still objectively better than it was then, and much better than it was after WWI. Life today is better--for most Americans--than it was at virtually any time in the past.