Unlike the Wall Street bankers who ran the economy into the ground twenty years ago and then put a gun to the head of the American economy in order to extort a bailout from the Treasury — none of whom ever went to prison or even lost their jobs — I’m no master economist.
I did attend Atlanta public school, after all.
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I did read The Wealth of Nations and believed I had grasped the basic principles of the free market, but it probably went right over my head — but not over Jeff Bezos’.
Nonetheless, non-expertise aside, when I hear “free market,” what I don’t envision — and, again, this could be due to my own ignorance about how the “free market” works, as envisioned by the Koch brothers and the Chamber of Commerce — are backroom deals between multinational corporations to squeeze just a few more drops of blood out of the dying middle class.
Revelations from a recently filed California lawsuit, relayed via the L.A. Times (emphasis added):
Amazon wanted to sell Levi’s Easy Khaki Classic pants for $29.99, but Walmart had lowered the price, and the giant online retailer had matched it at $25.47 to $26.99.
But Amazon wasn’t happy. It subsequently contacted Levi Strauss, asking the San Francisco apparel company to convince Walmart to raise its price, according to a document filed Monday in a price-fixing case brought against Amazon by California Atty. Gen. Rob Bonta.
Not only did Walmart raise its price, but a Levi Strauss employee also emailed Amazon, “I’m really hoping we can show this as a proof case so we can resolve issues going forward,” according to the filing.
The exchange over the pricing of the khaki pants is just one example of about a dozen cited in the document, filed in support of a preliminary injunction Bonta is seeking against Amazon to stop alleged price fixing.
Related: U.S. Corporate Profit Margins Surge to All-Time Apex
The Walmart collusion scheme was just one of three alleged tactics Amazon used to milk more out of its customers.
In each, you can see the giant putting to work the enormous leverage it enjoys as an indispensable retail outlet — without which vendors would suffer sales losses too great to bear — in order to coerce its vendors and/or competitors to raise their prices.
Continuing:
The exchange between Amazon and Levi Strauss was cited as one of three methods the online retailer has used to fix and raise prices.
The alleged Levi Strauss scheme outlined in the document involved getting around price-matching pledges that result in a “downward pressure on price” by either Amazon or the competitor agreeing, through the common vendor, to raise the price or make the product temporarily unavailable so that the price can increase.
In another alleged scheme, Amazon raised prices on price-matched items and asked its vendors to have competitors raise their prices. In one instance, the lawsuit alleges, Amazon raised the prices on more than 10 pet treats sold on Chewy Pet Food & Supplies, a publicly traded rival retailer.
Chewy did not immediately respond to a request for comment.
The third alleged scheme involved a vendor, at Amazon’s request, taking away products from a competing retailer that sold them for far less than Amazon. The lawsuit cites four products a furniture vendor agreed to stop providing to an undisclosed competitor because of its low prices.
“If the problematic retail[er] does not fix by the end of the week, we will discontinue [these products] from your problematic competition to ensure that Amazon can return to a healthy state with these items,” the vendor emailed Amazon, according to the filing.
Each of these maneuvers would seem to be profoundly anti-competitive and violative of the basic principles that make a free market economy work — for the consumer and for the marketer that isn’t the monopoly power.
Yet corporations with the right connections get away with this stuff over and over and over.
Take a look at this Statista chart tracking corporate profit by year, which I believe illustrates the same kind of phenomenon.
Is it a coincidence that the largest spike in the graph occurs between 2020 and 2021, or is it another instance of corporations using their market power and political connections to fortify their own profits at the expense of rivals and consumers?
What was happening in 2020?
During COVID, various jurisdictions forcibly closed smaller businesses under the auspices of Public Health™, many of them family-owned and many of them never to reopen, while allowing giants like Amazon and Walmart to continue operating uninterrupted.
Walmart and Amazon were “essentially retailers” that were, like the George Floyd riots the authorities allowed to proceed, ostensibly immune from COVID spread; your local mom-and-pop, on the other hand, were vectors of disease and therefore got crushed under the boot of the state.Where is Teddy Roosevelt with that big stick?
