My father and mother were frugal — not an unusual trait for people who had weathered the Depression of the 1930s. Their rural neighbors were the same. Frugality and conservation were essential survival traits. One fellow of my era observed, “These people have such a feel for money that they can drive over a dime and tell whether it was heads or tails every time.”
But the desire to preserve wealth was only part of it. Also endemic in the rural Minnesota psyche was a strong belief in healthy and appropriate competition. When I asked my father why he never bought cars made by General Motors, he replied, “The cars are all right, but they already make half the cars, and I’m not sure it is good for the country.”
So we made do with Hudsons, Nashes, Packards, and an occasional Ford — which worked out fine.
Perhaps the same reflections should be made of the sources of our information today. Are they becoming so concentrated that it may not be good for the country?
From 1999 to 2012, U.S. newspaper advertising revenue has declined 64 percent. We now have about half the number of daily newspapers we had in 1987. True, we have the Internet, which is of prime value. But is the information presented on the Internet rooted in the time-consuming investigative reporting that we need to remain informed citizens?
Then there are books. Nearly half of books sold in the United States are sold online. The number of U.S. bookstores has also declined by 40 percent since 1994.
Nowhere is the change of availability in what we read more apparent than with Amazon.com. Online retailers already account for nearly 45 percent of all books sold in the United States with Amazon being by far the largest supplier with, according to CNN MoneyTech, an ever-tightening “grip on the entire book-publishing chain.”
Yet Amazon appears to be aiming for market dominance rather than profitability. Amazon lost $18 million during the first half of 2014 and the net profit rate for all of 2013 was less than four-tenths of 1 percent of its revenue. In 2012, the company lost $39 million.
One wonders how Amazon would look financially if the firm were to collect sales taxes on all transactions.
Researchers at Ohio State University recently studied how the required collection of sales taxes on online purchases would affect Amazon’s profitability. Significantly, was their conclusion. Sales would decline nearly 10 percent on smaller purchases and more than 20 percent on purchases exceeding $300.
The question of whether it is legal and proper for companies to engage in predatory pricing and price discrimination to drive out competitors has long been left to judicial bodies dating back to the Sherman Antitrust Act of 1890, the Robinson-Patman Act of 1936, and in other cases. Unfortunately, enforcement officials have pursued these situations with only anemic vigor in recent years. But it is not impossible that there will be renewed interest as the distribution of printed and published material becomes more and more concentrated.
The question we should ask as citizens is, ‘‘Where will this all end?’’ Market share increases seem to cause stock prices to go up — even when not much money is being made. According to Morgan Stanley, Amazon’s price-earnings ratio is 840 vs. an average of 19 for all stocks in the S&P 500. Clearly, escalated stock values have provided disposable wealth to founders that can also be used to establish an even broader media footprint, such as Amazon CEO Jeff Bezos personally purchasing the Washington Post newspaper.
After a span of many decades, I have finally concluded that there was some wisdom in my father’s caveat. We should be cautious of the ultimate ramifications of our spending. Aristotle once said, “Nothing enters the mind but through the senses.” Perhaps we should give some thought regarding the source of what is entering our mind and who determines it.
In the meantime, I appreciate the role that newspapers and independent publishers have played in providing the information we need to function as citizens. Perhaps the abbreviated sound-bite method of conveying news and information is somehow connected to the extensive uninformed and unproductive political bickering we see currently.