Amazon vs. The French Courts and Outcries over Italian Aspirin. The Reality of Rent Seeking
This combines two entries I made at Freedom Democrats :
From The NY Times , we learn that French courts have ruled that Amazon.com may no longer offer free shipping of its sales in France or face heavy fines starting in 2008 if it fails to charge shipping.
According to the article, this regulatory ruling is far from the first. AlaPage.com faced a similar ruling for "illegal pricing" including free shipping.
Retail sales, according to the article, are tightly regulated in France.
Other restrictions apply to books retailers must not offer discounts of more than 5 percent on the publisher's recommended price. Many independent booksellers choose to offer this discount in the form of a loyalty bonus based on previous purchases. Larger booksellers simply slash the sticker price of books.
But the free delivery offered by Amazon exceeded the legal limit in the case of cheaper books, the union charged.
The union said it was pleased with the court's ruling, which would help protect vulnerable small bookshops from predatory pricing practices.
Needless to say, I do not agree with the ruling. It strikes me as very short-sighted, medieval and "guild-like". Typical rent-seeking via protectionism.
Hat tip to Arnold Kling at Econlog for the story, who says:
A court in France ruled that free delivery of books was illegal. Obviously, this is an example of consumer-hostile regulation.
Oui, Oui
Of course, I'd be lying if I said this didn't happen here. Rent-seeking and complex government interventionism go hand in hand.
Next door in Italy, things aren't much different:
Hat tip to Alex Tabarrok at Marginal Revolution for an interesting, yet depressing article about Italian political economy. As a first generation Italian-American with lots of family still in Italy, this kind of stuff really angers me. BTW, The previous post on France also has a similar effect as she is close to my heart having spent a considerable amount of time there.
In fact, I was just reading a damning article about Italy's growing lack of competitiveness at Cato's French site . Italy's economic freedom is severely lagging compared to other more liberalized modern economies in Europe in seven key areas. A lack of price flexibility and heavy spending to prop up the public sector at the expense of private initiative are key reasons. The resulting economic problems are met with frustration by rankled Italians who then seek more govt. intervention to fix the problem. And so goes the vicious cycle of bad solutions chasing bad outcomes from previous bad solutions.
From a NY times article linked at the MR post:
[In Italy] small proposals bring protesters to the streets, one hurdle to making changes as protected interests seek to preserve themselves. Pharmacists shut their doors this year when the government threatened to allow supermarkets to sell aspirin. The cost for just 20 aspirin tablets at a pharmacy is $5.75.
too bad more people here don't view Ag subsidies in much the same way. I also thought of my state of PA where liquor is only sold in state stores and beer cannot be bought in supermarkets.
Says Alex:
We may snicker when we think that Italians couldn't buy aspirin at the supermarket but our prescription-only system isn't much better.
All this makes think of another debate topic. It's an idea I first read about in Bryan Caplan's Myth of the Rational Voter and then in Free to Choose by Milton Friedman (which I'm sure was the original source). It involves an "Economic Bill of Rights".
I'll look for the quote as I do have the text handy but it says roughly that Congress shall make no law interfering with the voluntary exchange of good and services and agreements therein. Basically it says that the state can interfere in voluntary exchange and affect wages, prices and distribution. He proposed a constitutional amendment. This eliminate a myriad of proposed laws and special interest lobbying as Congress would be forbidden from making such laws. We need only imagine how terrible laws we'd have if the Bill of Rights did not stop interested parties from imposing certain laws on the rest of us. God knows they've tried many many times. Just imagine the mess of laws we;d have in the wake in these original legal infringements. The Economic Bill of Rights would be the same.
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Comments :
And you can prove this ?
What reason do we have to believe this is ultimately bad for consumers?
Yes obviously they don;t get free shipping, but there's a lot more to it than that. For instance let's say the french did allow Amazon to ship for free within their borders while keeping the usual rules for their native industries. The result? French money leaving France heading for Seattle Washington and the dessication of the local book industry.
And that's good for the French, how?
I know, I know, you'll say "but the french should drop the regulation of their native industries too." Okay fine. Same deal. Why? Because Amazon is an enormous company that ala Walmart (on a smaller scale) can easily put small book sellers out of business while still siphoning money away from local communities. It's a two-fer.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Come on, Tlaloc,
How does a law that needlessly makes goods more expensive to the consumer for no other reason than to shield a guild of retailers from needing to adapt and innovate be seen any other way?
Why are you defending a short sighted and narrow minded mechantilistic and myopic view of business activity?
And speaking of merchantilism, "French money leaving France going to Seattle...." isn't very relevant and is does not speak to the benefit of consumers getting the best value through free choice...regardless of where the product comes from. What matters is voluntary exchange between individuals where both are better off. I'm better off buying a good price product that I cannot make as easily or effectively with my time which is better spent doing other things. If I buy my stuff at Store A instead of making it, I'm better off regardless of whether the owner of Store A patronizes my business or employs me.
And yes, the law stinks and should not exist for domestic sellers.
And Amazon is not "siphoning away" money from a local community. If that were true, our highest standard of living would have been when most people did all their manufacturing and consumption is local communities.