IT is a fallacy that has existed ever since the rise of commercial economies. France’s culture minister Aurélie Filippetti repeated it again yesterday, blaming Amazon for wiping out small independent bookshops. The truth, of course, is that it is consumers, not the big firms, that are wiping out small stores. They are the ones who are voluntarily choosing to shop with Amazon, encouraged by its good prices, massive choice, modern technology, convenience and customer service. In a free market, consumers have the power, not the companies; even the biggest firm can be wiped out if consumers shift their allegiances. This has happened time and again; Amazon itself has given the mighty Tesco a bloody nose in the white goods and consumer electronics market, for example – or more precisely, many buyers have shifted their allegiances, just as they previously dumped BlackBerries and Nokias for iPhones and Samsungs.
That said, the French government seems to dislike consumers just as much as it hates big, successful US firms. It may ban Amazon’s prime service in France – a useful subscription deal which allows consumers unlimited free postage in return for a modest annual fee. Clearly, those folk evil enough to choose not to line the pockets of smaller French firms deserve to be penalised and to have to pay more for their books. It’s crazy, anti-poor, anti-normal people nonsense, a direct subsidy from consumers to a tiny group of privileged, protected producers.
French socialists are hardly known for their economic literacy, however, nor for their common sense. Bizarrely, Filippetti claims that “everyone has had enough of Amazon”, not realising the absurdity of her comment. If true, it would mean that nobody was purchasing goods from the online giant any more, so the “problem” would go away of its own volition.
Less unusually, the minister claims (with not a shred of evidence) that the firm first cut prices, then wiped out rivals, then hiked prices again once it had achieved “quasi-monopoly” status. The reason I’m not surprised by this is that French socialists tend to believe such behaviour to be axiomatic – they still believe in a proto-Marxist model of the economy.
I grew up in France. Whenever I despair of British politics, and of the coalition’s lack of courage and vision, I spend a little time reading up on the French situation, which is always infinitely worse. President Francois Hollande is truly wrecking his country. The French government recently blocked Yahoo from buying a French internet firm, in another blatant display of protectionism; it makes little sense for anybody to seek to invest in the country.
Foreign direct investment into France fell by 13 per cent last year; but French FDI into the UK surged by 87 per cent, according to Ernst & Young, as capital fled high taxes, class war rhetoric, strikes and red tape. French high-earners are moving to London, Singapore, Dubai, the US or even Brussels. Britain is very far from perfect – but France is so much worse.
STOP FIDDLING WITH RBS
The last thing RBS now needs is to be broken up. Instead, it should be privatised as soon as the markets allow, with the government distributing as many shares in the bank to the public as possible. The best way to begin to repair relations between banks and the public is to make sure that as many people as possible are given a stake in their successful recovery. It’s time for a return to the popular capitalism and mass privatisations of the 1980s and 1990s.
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