People will purchase from Walmart.com for 5 cents cheaper.
Also, the person in charge owns equity that when multiplied by the most recent share sale price equals a valuation that might be the biggest number in the world for a publicly traded company. But that isn’t the same as money, and if it were to be liquidated, the share price would not be worth nearly as much, which it partly is because Bezos owns much of it.
The problem is he has all those shares instead of the people responsible for producing that wealth. Wealth is fine in the abstract, but not when he has so much while the people who enable it suffer for the inability to fund basic needs.
The value of those shares is partially derived from Bezos having those shares. The purchasers of outstanding shares are predicting Bezos’ interest in furthering Amazon’s business interest will result in some probability of success in gaining market share.
And if you were to increase the supply of Bezos’ shares and sell them all in the open market, then the price would probably drop because the supply of shares for sale is greatly increasing, and because Bezos may not have the same motivations.
You seem to be operating on the assumption that I don't know how stock valuations work. I promise I do. My argument was moral, not economic.
I don't actually care about Amazon's stock value. I care that Amazon does not pay its workers enough to have a reasonable standard of living. If it's to be a bridge job to something better, the argument usually made for why retail/fast food pays poorly, they should make enough to actually do that.
> If it's to be a bridge job to something better, the argument usually made for why retail/fast food pays poorly, they should make enough to actually do that
The reason retail/fast food pay poorly is because there’s a lot of supply for people willing to do retail/fast food compared to the demand. And also because people aren’t going to pay $50 for some French fries, at that point they would start making food themselves, but that’s the same as “insufficient demand to pay someone enough that it would cause $50 French fries”.
I don’t see the purpose of a moral argument when it’s a fact retail businesses earn low single digit profit margins. Walmart can’t pay more even if it wanted to, they would have to raise their prices and then people shop at Target. It looks like it makes a lot of money, but to doesn’t split over all of its employees, and same with every other large retail operation. There’s a couple large ones serving the upper middle class market like Costco and Apple and Nordstrom and Trader Joe’s that might pay a little more, but they are unique and it wouldn’t scale for the whole population.
Here’s another example. Two people buy some land, and build two different hotels. Person A pays labor near to as low as people are willing to accept, and Person B pays more. Let’s say person A pays $15 per hour and person B pays $25 per hour. 10 years later, it’s renovation time. Person A has saved more money for renovations so they can make their hotel nicer than person B. Now, customers will prefer to pay person A more than person B, and they will be able to earn more revenue.
Now person A has more capital to purchase land. They can get bigger loans because their operating income is higher, afford to pay for more land in a more prime location, and build a new hotel. They can expand and take more market share from person B. You can see where the is is going.
Therefore, I don’t see the purpose of discussing the moral imperative for a single business to pay a material amount above market price. Consumers will, by and large, not reward the morally correct businesses. They might pay a $60 premium to Costco, but that’s about it.
The solution to this problem is society-wide regulation, not a reversion back to corporate slavery. We worked hard for the worker protections we have, and we're at risk of losing them (see: "gig workers").
But the reverse doesn't work for the suppliers (which it should if the world was organised as you say it is). Retailers who are theoretically in competition regularly band together to force suppliers to accept lower prices. Most recently this played out in both the UK and Australian dairy markets, where supermarket chains collaborated to force the dairy farm prices down. Dairy producers were unable to negotiate better contracts with different supermarkets paying more.
So the supermarkets could easily also collaborate to maintain minimum prices on retail goods, and pay their staff more, etc. It suits them to cry "but competition!", but the competition is optional.
Why would the supermarkets not want to maintain minimum prices if they could? Net income is usually a percentage of revenue, so if supermarkets could force prices higher, why wouldn’t they?
I don’t know the specifics of the dairy situation you are referring to, but all the information from financial reports I’ve read indicate that retail businesses don’t have much pricing power. Hence why you don’t get rich buying stock in grocery stores, but rather high margin businesses like tech companies.
In the UK there are more players, but the game is essentially the same.
Price-fixing by colluding with the competition is illegal in both countries, but regulation is effectively powerless. The supermarkets are both politically connected, and in a position to cause voters pain.
There are many more grocery options in the US. Walmart does have some pricing power, but not much since it’s in the single digit percentage range at most, and it results in low single digit profit margins.
Meaning if Walmart tried to use their pricing “power” to increase prices more than a couple percent and earn more net income, shoppers would go elsewhere.
This story seems silly. Person A is not going to put all those savings into the renovations -- they'll pay the builders the lowest amount to get the job done too. Person B will also have enough savings to do a good quality renovation.
But what you've described is that it's not a fiscal imperative. That's why it is a moral imperative - it's the right thing to do for your employees.
Mind you, the Henry Fords of the world would say your business does better when everyone pays their employees more because they can afford more hotel trips, and the results of Ford raising his wages shows a very different result from what you've described.
The point is the person spending less on labor will have more to purchase more desirable land with, or build new hotels, or renovate with better materials. And most importantly, they will get to borrow much more since $100k extra in profit means $500k+ in borrowing capacity more than the business that spent it on payroll.
Henry Ford wasn’t making a commodity product at the time he offered those wages. Since then, automakers have dropped pay and payroll, see the myriad economically depressed towns where’s work moved to Mexico or southern states.
I understand capitalism, but I appreciate the effort. Someone reading might not understand the basics.
Jeff Bezos finds $1 billion every year to pour into Blue Origin. He said in an interview that he couldn't think of anything to do with his money other than rockets. I assume this is from his scheduled stock sales, but it's liquid nonetheless and Amazon's stock price survives.
1 billion a year split over his ~650k employees is about $1500 a year. This would be a life-changing amount for a lot of those employees. I made big changes on less and set the stage for even more. Amazon has so captured the market that most of it would come back to him anyway, but it ensures some of it flows through the bottom. And it would get people off his ass about it. Win-win.
That $1B into Blue Origin is also paying other people. I also think very few people in the US would be able to make life changing decisions with $1,500, but that’s conjecture and neither here nor there.
The point is the solution is legislation affecting all businesses. It’s a waste of resources to focus on individual businesses.
Also, I’m not sure which market Amazon has captured. A quick search shows share of online retail revenue at 25% to 35%, and only 6% of all retail. If Amazon ceased operations today, it would be trivial to switch to Walmart/Target/Bestbuy/Costco/Alibaba/eBay/Home Depot/Lowes. Shipping times might suffer for a little bit while the logistics get reallocated, but there’s no moat around Amazon’s retail website or warehouses.
> I also think very few people in the US would be able to make life changing decisions with $1,500, but that’s conjecture and neither here nor there.
Americans have just received $1200-$2400 in coronavirus stimulus checks, and so we can look at the outcomes and see if it changed their lives. As it happened, it mostly went to reduce debt and into savings. Helpful, but not life changing.
I can pretty much stake my life on a substantial part of the outcome of that being “why did he only do $1BB?! He’s the world’s richest man (that we can count anyway); he could have easily doubled that and given all his employees an extra $3000!”
Also, the person in charge owns equity that when multiplied by the most recent share sale price equals a valuation that might be the biggest number in the world for a publicly traded company. But that isn’t the same as money, and if it were to be liquidated, the share price would not be worth nearly as much, which it partly is because Bezos owns much of it.