Way back in the olden thymes, when companies were getting on-line to sell stuff, it looked like Amazon picked a strange market to exploit. Buying books on-line was not a great leap forward, but Bezos knew something the rest of us did not. He knew that a business that flattered the beautiful people would have an army of beautiful people promoting it to the rest of us. It was the central insight of Steve Jobs. He was the post-modern P. T. Barnum, selling the glorious future rather than a glimpse of the wolf-boy or the tattooed lady.
Amazon never made money selling books, but before anyone could pay too close attention to that, Bezos moved onto selling other stuff. When that failed to turn a profit, he got into selling music, then it was movies and TV shows. Amazon eventually turned a profit, but the total profit for the firm over its history amounts to what a company like ExxonMobil generates in a good month. Now, Amazon is promising to have drone robots deliver your goods before you even decide to order them. The future will be glorious.
The key for Amazon making it all these years was to keep people focused on everything but their financials. This is not an exception. Faceberg will never have earnings to justify its share price. In fact, it will never have user rates to justify its ad revenue. It’s not unreasonable to think that everything about the business is fraudulent. That should trigger large scale audits and investigations into its business practices, but Facebook is on the side of angels in the cultural revolution, so its all good.
Probably the best example of our carny-barker economy is Tesla. To his credit, Musk has built a real factory that builds real cars. No one is going to say the Tesla is a work of art or even a practical car, but it is a car and the technology is impressive. The trouble is the company does not exist to make cars. It operates as a tax sink, where government subsidies flow into it and some portion of those subsidies turn into payments to the principles in the form of stock repurchases, debt service and compensation.
This only works if people think the venture will either one day turn a profit or the technology that it creates will result in something good down the road. To that end, Musk is regularly out doing his Lyle Lanley act, making all the beautiful people feel righteous by backing his ventures. He’s also telling Wall Street that he will soon be making and selling enough cars to turn a healthy profit, even without massive tax subsidies. The trouble is, that’s probably never happening, at least not with current management.
Tesla CEO Elon Musk said last week the company has run out of space at its Fremont, Calif., plant and is looking to build a second factory.
“There’s no room at Fremont,” Musk said. “It’s bursting at the seams.”
But that statement left plenty of industry watchers scratching their heads.
Tesla’s Fremont plant is the old New United Motor Manufacturing plant, otherwise known as NUMMI. The joint operation between General Motors and Toyota began in 1984 and was intended to help the Japanese automaker learn about doing business in America and teach GM the principles of lean manufacturing.
The plant, 32 miles from Tesla’s headquarters in Palo Alto, is large enough to handle around 500,000 vehicles a year in 5.3 million square feet of office and manufacturing space. Tesla, meanwhile, produces about a fifth of the plant’s capacity.
So what gives? Why is the electric-vehicle manufacturer running out of room?
It’s because in this temple of lean manufacturing, Tesla uses far more workers than NUMMI employed to build far fewer cars. In 1985, its first full year of production, NUMMI had 2,470 employees and produced 64,764 vehicles — about 26 vehicles per worker per year. By 1997, it had 4,844 workers and produced 357,809 vehicles — about 74 vehicles per worker per year.
Tesla, on the other hand, had between 6,000 and 10,000 workers in 2016 and manufactured 83,922 vehicles. That puts its vehicle-per-worker number between 8 and 14, about one-seventh the efficiency of NUMMI at its peak.
What we are seeing with Tesla is pretty much what we saw with Amazon. Tesla is a great show so the tax subsidies will not be shut off. Amazon avoided paying sales taxes for years this way. Rich people think Musk is cool and it is currently hip to have one of his cars as a toy, so there will be no push to cut the apron strings. That means Wall Street investors will stay in the game, even though they have people who know there is zero chance for Tesla to profitably make cars anytime soon.
In fairness, this sort of chicanery is not new. The industrial age saw similar rackets, which is how great public works projects were built. The government turned a blind eye to the cost shifting and corruption, as that seemed like a reasonable price to pay for a bridge or a hydroelectric damn. It was not just corruption. Railroads and power companies trampled on the rights of citizens to build out their networks. Despite all that, the people still got trains, electrification, bridges and roads. People can accept those trade-offs.
Whether or not that will hold in the technological age is debatable. The collapsed retail sector has left retail centers looking like ghost towns. Getting cheap stuff on-line is not exactly a great legacy, compared to rural electrification. On the other hand, maybe battery powered, self-driving cars will be seen as having been worth the massive debt and tax shifting that is so much of the modern economy. And, unlike the robber barons, guys like Bezos, Musk and Zuckerberg put on a good show, so there’s that.
“…NUMMI employed… 74 vehicles per worker per year.
Tesla…vehicle-per-worker number between 8 and 14, about one-seventh the efficiency of NUMMI at its peak…”
I think you may be comparing apples and oranges. Tesla has said that he likes to produce every thing he can in house so he may be making most all the parts for the Tesla in the same factory while GM was building dashboards, engines, transmissions and all other kinds of parts in other factories. You’re not counting them. I bet when you count all of GM’s imported parts workers Tesla will have less workers.
This P.T. Barnum posting is 100% spot on. I will only add that it is the FED induced bubble economies since 1995 that has made the behemoths such as Amazon and Google even possible. The solution is relatively simple. Congress should abolish the so-called “dual mandate” of the FED and limit the role of the FED to the single mandate of maintaining price stability only.
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In the old days when Tesla was only making their sports car, the amount of money they’d make assuming every single cent collected from every single car sold over a year was pure profit, they wouldn’t be able to keep NUMMI’s lights on for a month.
These days that calculation maybe manages to pay rent.
Source: someone who knows how much it costs to keep NUMMI’s lights on per month.
Welcome back, my friends
To the show that never ends.
We’re so glad you could attend!
Come inside! Come inside!
Where the heck does the author of the quoted article get the idea that Fremont and Palo Alto are 32 miles apart? The two cities are right across San Francisco bay via the Dumbarton Bridge, more like 15 miles.
Amazon buys Whole Foods. A perfect example of your commentary!
Good timing. Amazon just bought Whole Foods with $13 Billion in imaginary money.
An excerpt of some of the gory details at Zero Hedge:
“Amazon expects to finance the acquisition with debt.
Amazon enters into commitment letter for 364-day senior unsecured bridge term loan facility in an aggregate principal amount of up to $13.7 billion.
Expects to finance deal with debt financing, which may include senior unsecured notes issued in capital markets transactions, term loans, bridge loans, or any combination thereof, together with cash on hand, co says in a filing.
Goldman Sachs, BofA-Merrill Lynch to lead debt financing.”
Grocery stocks globally are tanking on the news:
http://www.zerohedge.com/news/2017-06-16/amazon-buy-whole-foods
Yep, in this state of flux for the marketing sector there is opportunity for great amount of ”latitude” in the world of commerce. We are still in the gold rush stage of tech. Anything goes and who’s to say they wrong or any different than the ones that built the railroads or any other great undertaking? Amazon et al are buying the market as the Japanese did in the 70s and 80’s they were kings. Once Bezos and friends own the retail sector then the pricing structure will be to their advantage, a simple business plan. A hundred years from now people will build at home much of what they need to their own individual needs by some means of additive manufacturing akin to 3d printing.
I have recently started advertising my solopreneurial venture on Facebook & what I am seeing is giving off a very strong whiff of fraud.
Essentially, Facebook entices me to pay them for advertising with the all-but-assured prospect that X dollars spent will result in Y number of “likes”.
Though Facebook doesn’t say so, I am supposed to believe that these “likes” will in turn translate to people “following” my page and buying my product.
And sure enough, my ad spend does in fact result in “likes”… but there is definitely something a bit “off” about the likers. They aren’t anything close to the kind of people who should be interested in my product, and the profile pages don’t look anything like any pages of real people.
Are they fake pages set up to give the advertisers the “likes” they’ve been promised? I can’t prove anything, but it’s certainly possible.
Friends reining on line businesses tell me that Amazon is the only one that treats them fairly. Google, EBay, and Yelp are horrible.
But Amazon will steal your business with a house brand alternative if you hit the jackpot.
The entire foundation of Western style free market capitalism rests on the principle of two people exchanging money for goods and services which the buyer does not need, using money he borrowed, and which solves a problem he did not know he had. Until they are rocked by a financial hardship, many people never realize that they can live on less than half of what they’re living on today, and live a happier, more contented, more fulfilling life. For all the Zuckerberg’s many flaws, Facebook does for free, instantaneously, what I once had to commit time and energy to put to paper, buy a stamp, go to the photo developer, and then wait a couple of weeks to hear something back. If I heard back at all. Bezo’s may be a government tax whore, but I like Amazon Prime, and internet retail (I use Trunk Club, for example) has vastly improved my happiness with the most unpleasant of experiences in modern life short of air travel: shopping at the mall. Musk’s tax welfare queenerism will probably never make a dent in the market share of the gasoline engine, but it does get the manufacturers figuring out ways to improve hybrids, and it does advance technology forward in interesting ways that are – if nothing else – very fun toys to play with. And let’s face it, toys are fun, I don’t care how old you are.
Those three guys get a lot of media attention because they are media whores, but for every one of them, there are thousands more flying under (or even way over!) the radar at Lockheed, Boeing, Apple, Exxon, Goldman Sachs, you name it. Those other places are just smart enough – well maybe not Apple in this respect – to stay out of the public eye. But we just approved a $100B airplane sale to Iran which benefits Boeing. So, if you’re wondering why the GOP put up a fake fight over that Iran Nuclear Deal, now you know why.
The advantage people have today over the feudalism of the past is that we don’t live in mud huts and plow the field with an ox in order to grow food for the winter, and it’s unlikely we will ever see those days again on this planet short of a war that wipes out 2/3rds of the human race.
Amazon, Facebook, Google, Electric cars…all things that can be replaced by somebody else doing it cheaper. All businesses run on the premise of making as much money as they can before they either get undercut by a competitor or people figure out that whatever it is they’re selling is bullshit anyway, so why buy it.
You know, like Comcast.
Maybe there’s room in American politics for a Sarcasm Party which demands that all commerce be subject to rigged market capitalism. Opportunities for rigging commerce abound. For instance, The Sarcasm Party would advocate for the abolition of subsidies for airlines, aircraft makers, car makers, fossil fuels, and petrochemicals. This rigging would involve abolishing government ownership and government subsidization of airports and controlled access expressways (e.g. the DDE National System of Interstate and Defense Highways). Another target would be the banking industry, which would be rigged, in part, by repealing the Federal Reserve Act and its amendments.
Incorporation with limited liability, artificial personhood, and infinite life span? Gone. Afterwards, all commerce would be rigged by forcing all business owners into the straightjackets of sole proprietorship and unlimited liability partnerships. Owners who want to socialize risks of todays free market system woukd need to purchase insurance on the rigged market from privately owned insurers.
Now here are two ideas for rigging commerce which is certain to get almost everyone in Congress and provincial legislatures hooting hysterically in unison: (1) Abolish all licensing requirements for lawyers. (2) All military contractors must be operated on a strictly nonprofit basis.
The contemporary manual labor market would present unique challenges for the SP, which would need to address min wage laws, licensing barriers to entry into various trades, and the migratory invasion method of suppressing wages near the lower end of the wage range. Widespread anger here could be offset partly by rigging commerce in beer, wine, and liquor such that makers and retailers don’t need licenses to make or sell drugs. The distribution part of the industry has all sorts of shadiness and has experienced much concentration during the past 15 yrs. This could be rigged to eliminate monopsony and other free maket features mandated by government. On the other hand, much anger would be generated among sports fans in the working class by criminalizing even petitions to goverment for subsidies of sports stadiums and arenas. Rigged sports means that all circus acts must be performed in privately owned stadiums financed without tax breaks, cash subsidies, and goverment bond issues.
It’s certain that there are other free markets in need of rigging. For example, I used to work in telecoms business development (at a multinational l.d.carrier) where we loved both to complain about government regulation and to arrange it enthusiastically.
The Sarcasm Party would devote every day of its existence to replacing the most systematcally free and good system of commerce in human history with the most systematically rigged and evil.
“Nonprofit” is a scam. All it means is that the company doesn’t show a profit at the end of the year. That’s easy to fix, just pay everybody 10x more.
Nonprofits are how people get rich while rubbing other people’s noses in sanctimony. “What do you do?” “Oh, I work for a nonprofit providing clean water to displaced cats,” and earn $143,000/yr.
Your buddy Karl Denninger just the other day:
“It was recently pointed out that Amazon among other “high flying” tech stocks is basically a 2-n-20 hedge fund for its higher-level employees. That is, the cash flow of the company has turned from a source of innovation and advancement into a means to funnel billions of dollars to those people via stock-based compensation. That cash flow is supposed to inure to the benefit of all the shareholders but instead is being taken up to a huge degree by a handful of insiders.
This isn’t illegal, but it’s something that the market would normally not allow because it would be met by immediate and severe selling pressure in the shares, destroying the ability to promulgate the scheme. In a hyped “market” however this doesn’t happen because nobody thinks anything “bad” will come from the practice.
Likewise, companies like Tesla and Netflix could not exist as public firms, say much less those with the sort of market caps and stock prices they have. Why? Because neither is able to return any sort of profit at all on a pure operating cash flow basis. Netflix has forward obligations for content that make this impossible at any time in the reasonable future and Tesla has never managed it without ridiculous levels of subsidy on a per-car-sold basis from the government. Both firms exist solely because people believe their respective paradigms can exist forever. This is a demonstrably false belief and has never worked in the history of markets on an indefinite forward basis but today that does not matter as both firms have nice stock prices instead of being zeros.
Then there’s Facebook and Google. Both exist in a legally-tortured alternate reality where selling information on you to people who you never consented to receive it for anything approaching the purpose it’s used constitutes a huge percentage of their ability and reason to exist.”
Tesla? Impressive tech? Au contraire:
“Teslas solution to improving battery life appears startlingly simple” disappointing even!
The magic sauce is simply an array of 7000 off the shelf Panasonic 3400mAh lithium ions cells, which look like slightly larger heavy duty AA batteries. The motor is nothing special as well, it’s a standard three-phase Alternating Current (AC) induction motor, stuff that was patented 100 years ago.
Or in other words, there is no breakthrough new technology, no magic smoke. They get the extra boost from hype and momentum… people want to believe.
Having said that, Elon Musk is still my favorite monorail salesman, a true real life Lyle Lanley!
https://www.youtube.com/watch?v=ZDOI0cq6GZM
what a maroon. someone who has a salesman/conman as a hero!
I don’t get why you people hate Musk so much. The point is he did what he did and no one else would. He made it work. The tax subsidies were not made just for him. The subsidies were for valid public reasons or at least a decent case can be made for them./ If people are throwing money on the ground would you berate them for picking it up?
“It operates as a tax sink, where government subsidies flow into it and some portion of those subsidies turn into payments to the principles in the form of stock repurchases, debt service and compensation.”
John Michael Greer calls these things “subsidy dumpsters.” He uses the same term to describe the nuclear industry.
We visited a few of the robber barons’ old summer mansions in Newport, RI this Christmas. If Zuck ever puts on a show half that good, I’ll be impressed.
A small point. Amazon still doesn’t pay sales taxes, it collects sales taxes.
Excellent point. That’s also why they are now getting huge tax breaks from states. Putting the small retailers out of business saves the states money.
It’s true. I used to collect taxes for the state. It takes just as much time and effort to collect from some small companies as from large.
And the states promptly let redundant state employees go, right?
That would be in sarcasm font if only …
This post reminded me of the “rational actors” concept and it’s associated problems. If consumers rationalize their purchases afterwards for things like shoes and beer based on brand loyalty or image signalling I suspect shareholders do the same thing.
Apple seems to be the one of the big 4 tech companies to buck this trend. Though it’s hard to tell how much exactly the stock price is inflated by.
One way to decode the approach of the inevitable Apple revenue plateau would be to look at ‘insider transactions/sales’ if this information is still published. The insiders will know before anyone else when plan revenue forecasts start being missed or become hard to achieve so that they have to resort to such tried-and-true-yet-questionable measures as ‘channel stuffing’.
Apple has already hit its revenue plateau. Now, for how long are they going to be able to keep their fat margins on iPhones, when no one, including Samsung, has ever made big margins on phones, ever?
The only reason I would pay the current price on Appe would be if they brought Elon Musk into the company. Imagine how much he could hype Apple from here, with the resources Apple has now, compared to what he has done on a relative shoestring at Tesla? Whether his hype would turn into something real, neaningful, and lasting would be interesting to witness, succeed or fail.
Amazon’s electronic “book” was an idea I resisted for maybe five minutes, but living in a place where print books in English aren’t easy to come by, it seemed a good idea to buy one, so seven years ago I did, only to be mistreated by the seller. As a result, of my 19k or so volume digital library, two (not 2k) have been purchased from Amazon. Great gadget! Provides high calibre reading. Raise high the black flag! Long live local foods and 17 year old gasoline powered autos!
Eventually it will become apparent that all of the loans that are being used to fund political ends cannot be paid back, and after confiscation has done all that it can to further kick the can down the road, then a melee will ensue and the survivors will get to start over. May you live in interesting times.
Self-driving cars will eventually be seen as one of the greatest inventions of history. 35,000 people died in car accidents last year. Self-driving cars will eventually lower that number to something like 35 or fewer.
In the end I wouldn’t be surprised if the masses mistakenly think Musk/Tesla were responsible for self-driving cars. He is a hell of a showman.
I suspect the self-driving car ends up like ebooks. They will be adopted in niche markets like retirement villages, where normal cars are banned. I could see taxi services going this route in some metro areas where they ban cars. Otherwise, it is a solution in search of a problem.
Crash warning technology, on the other hand, will be adopted. It is already showing up on high end cars. In a decade, cars will come with electronic safety features to greatly reduce the number of wrecks.
already there. even mass produced cars like mazda have tons of interconnected sensors.
I have lane departure warning on my Acura, and I freaking hate it. The car will actually fight you because it doesn’t understand, and cannot process the fact, that there’s a 4 car accident about to happen, and I need to move RIGHT NOW. The car has more frapping alarms and yellow lights than NASA’s Mission Control Center. It has a built in radar that seems cool, but then you drive it in a snowstorm, and the radar freaks out because of the snow clogged on the antenna, and the entire dashboard lights up like Apollo 13. They have a lot of work to do in order to make these things practical in daily driving.
Self-driving cars won’t fly for another reason: other drivers. Companies are putting self driving cars on the streets where people don’t follow traffic rules at all. They don’t signal. They don’t stop at red lights. They don’t obey the posted speeds. You put a self driving car in that environment, and it’s like Kirk and Mudd blowing up the android’s brain because of too much illogic.
Or when that radar spooks and hits the brakes HARD on an icy, greasy road.
Budweiser is already using driverless trucks slaved to a controller in Colorado.
May Zeta learn hacking, and soon.
That, or just get Sancho hired as the lead driver…
I can’t see where we’ll get self driving cars anytime soon. They have to simulate a human well enough to not cause more accidents than they prevent. Liability will have to be absorbed by the public somehow. The family of the first person killed by a self driving car will have filthy rich lawyers.
It requires massive changes to our system and even way of life. It’s possible just not likely.
The number one job in 38 states is truckdriving.
Occupy, BLM, and Resistance is what you get in a post-industrial economy.
Well, that and the New York Fed.
Golf carts, rented by the hours.
So much cheaper.
Til Felontavius starts stealing them, and Sancho steals the tires. The eternal flaw in Libertarian Greenthink.
e-books?
Vox Day has crunched a lot of numbers around that issue.
And here is another analysis worth a read:
http://observer.com/2017/01/author-earnings-overdrive-amazon-kindle-overdrive-digital-book-world/
” 35,000 people died in car accidents last year”..
…and 59,000 died from suicide.
What has Musk/Zuckerberg/Gates/Bezos done to reduce that number?
I know we are way overdue, but flying cars are just around the corner.
I think for some car junkies, not being able to drive a car would be akin to a meth-head not being able to get a bump.
It amazes me that people will up their autonomy so easily.So you can smoke a blunt and drink a pint of Johnny Walker or look cool to your hipster friends.
Well some of us don’t like being tracked, monitored and our conversations in the car being recorded by Uber or Google. Let those idiots who have facebook or Ipods buy them.
I buy my cars at salvage auctions and fix them and at least I own them unlike the clowns who buy/rent a robo-car.
i see movement towards replacing the mass production of things (remotely) with local production. the mass produced stuff is of poor quality, and in the case of food, toxic. this will keep more money in the local ecvnomy, and start starving the huge companies. makes it harder for the federal govt to mess with things, too.
That’s one area I hope Trump can cut regulations. The government has been a tool of the big chem companies, Monsanto, etc., for GMO’s, pesticides, and all kinds of flagrant abuses including the BLM control of water and other mineral resources. When people can’t collect rain water in their back yard or have their own gardens, then the government is again forcing the public into certain directions for their food supply. The big thing again is limiting competition which is where Bezos is going now with his Whole Foods purchase.
Yeah telsa is a money sink, but launching a rocket, sticking a landing of the used main body on a barge at sea and sucessfully re-supplying the space station and putting up sattelites, now that is flat out incredible, nasa with all it’s amazing capability hasn’t done that. Great design work, simple engine technology scaled up as the rockets get bigger, what a concept.
“nasa with all it’s amazing capability hasn’t done that”
Well, according to top NASA brass, their primary job is either Muslim outreach or climate change study, not spaceflight.
“nasa with all it’s amazing capability hasn’t done that”
they never had to. they had infinite money…
You are mixing apples and oranges my friend. Tesla is not SpaceX. But you are correct that the recovery of rocket bodies by landing them for reuse is quite astounding.
But I think your statement about “simple engine technology” is a bit too simplistic.
It is often observed that shoppers go to the brick and mortar stores to examine the goods then go to Amazon to buy them. Lately I have noticed that I go to Amazon to read the reviews, then go to the producer to make the purchase.
I don’t go to stores for anything these days. I buy almost everything on-line. Food is the exception. Would I do it if I paid the total cost, rather than having some of the costs laid off on others through socialization? Probably, but I’m not sure.
The modern economy is more often than not a system of socializing losses and privatizing gains. While Amazon *appears* to be a cheaper option, it’s just that the costs are hidden from us through things like tax subsidies, currency manipulation, etc.
So, the question as a potential investor has to be, “Are we back in ‘tulip time’* _again_? As in the old classic, Extraordinary Popular Delusions and the Madness of Crowds: https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds
Ah, the warm glow of memory for the ’60’s tech stock bubble, when ‘growth stocks’ first became a thing. The now humorous list of names that were going to take over the economy (Polaroid, D.E.C., Xerox, Motorola, etc., etc.) fill the greedy soul with longing. At least if you were then around the financial world.
The serious point is that excess liquidity has to go somewhere and so an elite-fashionable rational will be found to justify the unique ‘where’ in every era/cycle. Then comes the collapse when everybody figures out at once that the emperor has no clothes. It happened in 1969 IIRC. In the case of my then employer, the _nominal_ share price at the 1969 peak was not regained until 1985. I doubt that the inflation-adjusted 1969 price was ever regained. All of my middle-managers’ stock options expired valueless for 20 years_!
But to point out the arithmetic imbecility^ of supposing double digit revenue (much less profit) growth could continue long enough to justify the multiple was to risk a young career. And, for a while, it looked like the ‘Nifty 50’ growth stock darlings might just pull it off – Just long enough to ruin most of the ‘shorts’ before the collapse. Just like in ’08….
For those tempted to go short, the old maxim bears repeating, ‘The market can stay irrational a lot longer than you can stay solvent.’
* Short for ridiculous valuations that astound the observer. A good signpost that one is on this road is the appearance of articles about how ‘this time it’s different’.
^ At a ‘mere’ 15% CAGR (compound annual growth rate) a respectable Fortune 500 company could expect to own the entire US GDP in a man’s lifetime.
I have always thought that online purchases have a tendency to remove people from each other. Oh sure, its been great for Federal Express, but there is no human interaction involved. By removing human contact, you have acceded to local retail destruction and a soulless automation in daily life. It may be more efficient but is it bette? This is not an old man rant about the good old days. I just think that a social contract has to be maintained by social contact. What used to be a simple process of obtaining information or solving a problem via communication with a person you knew, you are forced to call a automated phone menu, listen to the instructions, try to get to the correct person, then listen to them recite some spiel they are forced to use for everyone, they are invariably ignorant of what should be done and force you on hold for long periods of time, and the outcome is never as quick and amenable as it would have been if you actually had a business relation with the person speaking.
We are isolated from other human beings, divided into us and them, just the way you would have expected if the peaceable assembly of humans had been deemed a threat by the powers that be. I think the phone companies are a good example of this. They all operate under the same business model. They focus on sales of new technology, a technology that does not seem to follow a rational decrease in price, as we saw with computers. They focus on new subscribers rather than on loyal customers since they know that customers won’t leave because of the trouble of switching over to another company that will cost about the same and treat them identically. Customer support is a literal joke, a dog and pony show with incompetent minimally paid employees that make phone calls a nightmare. Humans have been reduced to only four primary functions. Wage slaves, consumers, taxpayers, and reproductive units. Everything else is just window dressing. May the Apocalypse come soon.
A great article, with a few minor quibbles.
You wrote “That means Wall Street investors will stay in the game, even though they have people who know there is zero chance for Tesla to profitably make cars anytime soon.”, but it’s much worse than that.
Those “Wall street investors” are often not, perhaps usually not, capitalists in any real sense. They are institutional investors, meaning pension funds and the like, that have been utter enmoled and penetrated by the left. All too often their management is 100% lefty to the bone, they have been on a government-like tit their whole lives and they always will be, even if they destroy their employer by causing it to invest in trash like Tesla.
And I’m sorry to disagree with you but getting cheap stuff on-line is indeed a great legacy. The savings to consumers from Amazon slicing out vast layers of middlemen have been extraordinary.
The best thing Amazon has done is engineer their own destruction. Internet marketing software is readily available, cheap, and more and more manufacturers and wholesalers are using it. I have noticed that my business internet purchases keep climbing, but those from Amazon are declining.
The real killers of inefficiency have been FedEx, UPS and their ilk. When Platt Electric Supply can beat my local Canadian wholesaler of electrical panels and breakers using their own website and an international courier to Canada, you know something good is happening.
Now if only Trump can be persuaded not to screw up international trade we’ll have enough money up here so we can buy your stuff.
The Viking raids on Britain were a great innovation from the perspective of the Vikings. From the perspective of the Brits, not so much.
I had no idea Amazon was sending out large, hairy, blonde men with edged weapons to steal money and nubile women from American citizens.
What a great business idea, no wonder they’re so successful.
You are missing the point. Just because you like something, does not mean it is a good thing. Even if it is good for you, it may not be a great idea to scale it up. Often, trade-offs in the small scale are monstrously intolerable on the large scale.
This is how I think about medical licensing. Like any guy in a powerful union, it was good for me. I don’t think it is good for society as a whole.
I was suggesting that comparing Viking raids and Amazon business practices is not convincing.
You have written things similar to this article before and the arguments seem to me emotional and inadequate.
Until you can give a numerate reasoning process demonstrating that Amazon and its ilk are destroying more American wealth than they are creating I can’t consider your position, much less accept it.
I’m not an economist but I recommend to anyone who wants to read a good opposition to the Z-Man position http://timworstall.com/ and http://www.adamsmith.org/blog/.
Well, Pot, you are the one calling the Kettle black here. Your “argument” is that you like cheap stuff so it must be good. That’s solipsism.
Try this. Name three negative consequences to global internet companies crushing your local supplier.
No, my argument is that cheap stuff for me rules, unless and until you prove positively that my cheap stuff hurts the family.
So where’s your proof?
I know Amazon hurts some businesses and people. How many? How much? Compare that to the benefits to consumers like me.
Until you do that, you got nothing.
Again, solipsism. Your ignorance is not an argument.
Easy:
1. Massively growing permanent unemployment.
2. Consquent civil and social unrest.
3. An increasingly fragile, brittle, and complex economy devoted to diminishing returns.
Let’s give credit where it’s really due — the robber barons were MUCH better showmen that Zuckerborg, Musk, Bezos, et al. Their antics are what gilded the Gilded Age. And they actually benefited the public — Carnegie’s libraries vs. Zuckerborg’s… what? A few years back, Bill Gates tried to be the modern Carnegie and put computers in every classroom. He got laughed out of public life for such a transparent publicity stunt.
No successful hi-tech company in the past twenty years has not been a CIA project.
I read a decent article that stated even with a perfect battery (zero size and infinite capacity) E vehicles will never take over the industry as it would require the the electrical grid double in size along with all that would entail. Add to that the problems with unreliable power generation (solar and wind) that is currently in vogue and there’s a nice cluster fuck in the making.
Yep. When you do the math, building out the infrastructure to quickly charge electric cars would require us to rethink and re-engineer the entire power grid. Even a small number of electric cars could cause localized problems.
moving to electric vehicles, and upgrading the grid, would have been ideal usage of obama’s stimulus package. a kind of Manhattan project for wholesale conversion. of course he would never think to do anything useful, and would have fubar’d it horribly.
Moving everyone to electric vehicles would require building about 1,000 nuclear reactors. There’s about 100 in the US right now. So, good luck with that!
we are going to go ubiquitously nuclear eventually, might as well have used the stimulus money to get it jump started.
Once *all* costs are factored in, the nuke industry has never turned a real profit.
The Reptilians have a plan for this, it’s called the “smart grid.” All electric cars/appliances/air conditioners/etc. will come with malware installed which makes them only operate when the grid allows them to.
Wind typically generates about 25% of its nameplate capacity on average. Solar PV is lower. But sometimes it is 100% or more. This means that the transmission from wind farms must be sized at 4x the typical output factor of the wind generators, a significant cost for the consumers of electricity. conventional power plants have much higher plant factors, normally in the 60-85% range.
So, any ideas about converting the vehicle fleet to electricity would entail very large investments in transmission infrastructure, all for lower quality electricity supply. Already the electricity network managers in the UK are talking about reliable grid supply as a “Luxury”.
Well, but the overall idea is to eventually do away with private automobiles for individuals entirely. Run the public transit system on the spark-juice.
Bingo. Tesla electric cars for the few remaining cloud people (the rest of us won’t be able to afford them), and a bit of public transportation (probably some old buses or streetcars) for the rest of us. We won’t be going anywhere anyway, as food, entertainment, and anything else we need will be delivered in by Amazon. Vote at home, work at home, everything happens at home. And then the authorities will turn the power off…
Well…in that vein, GM has dumped $500 million into Lyft and has established a fleet of “rental” cars for Lyft drivers only. I do not foresee this being a viable business model, but I’m not a cloud-person, nor am I clouded by funny-cigarette smoke.
I disagree. Most cars would be charged at night when electricity usage is at it’s least. You only have to run the plants you already have for peak load all the time.
There’s a lot of work being done on cheap stationary load batteries, flywheels, etc. and they could charge at night and be used to charge cars during the day.
“…Tesla…The trouble is the company does not exist to make cars. It operates as a tax sink, where government subsidies flow into it…”
I support, (meaning I agree with tax breaks), electric cars for military, personal freedom and environmental reasons. I also support solar power, not big main power line load, but individual solar for people’s houses and property. Individual solar combined with electric cars removes some of the power of the monopolistic Oligarchical State.
I also believe that this will not happen overnight and that subsidies will be needed for this. If we wait until oil becomes scarce it will be much more difficult to switch over as resources will be strained. The policy now I see as just right. We slowly use up oil resources while all the time creating new supply.
Musk said something that made me think, I’m pro nuclear but he said that if you covered the whole area required for nuclear, including the set back area for safety, then you would get more power covering the whole area with solar cells than you could get from the nuclear plant. That’s significant I think. If he can make his solar roofs work I think it would be a big advance.
I need to mention that I consider the addition of personal solar roofs as part of this plan to build out a electric car network.
Only double? I think that’s optimistic. I did a back-of-the-envelope calculation some time ago and came up with a factor of 5.
And don’t forget the thermal problems (heat generation from zero size) and environmental problems of recycling, etc.
The massive university health systems are on a similar track. Once they stop growing they will begin to lose money hand over fist. Then they will ask for government money that they aren’t already getting because too big to fail.
Bezos is a presidential wannabe. He owns WAPO and has the biggest mansion in Kalorama . Narc Zuckerberg will probably run against him in the primary.
Bezos’ famous comment that “your margin is my opportunity” represents a public good in that it forces companies to become more efficient, lest the Eye of Mordor is cast in their direction.
Amazon is profitable when it wants to be. All Bezos has to do is reduce internal reinvestment of capital for a quarter and Wall Street gets all giddy.
The US has been over represented in retail square footage for too long, and Amazon is the forcing function to rationalize that situation.
That’s mostly bullshit. Amazon got to play by special rules that allowed them to crush traditional retail. They are still playing by special rules. They get huge subsidies to build their distribution centers. If I want to start a book selling business, the state is not building me an off-ramp, giving tax abatements and other subsidies.
What Amazon is doing is systematically transferring wealth from the middle class to the wealthy. It’s techno-feudalism.
Facebook and Google are also heavily subsidized by the government (the cyclonic Deep State). Oh, my! I do believe there is a pattern forming here.
how are they subsidized?
hahaha what a loon
I thought you’d never ask.
https://medium.com/insurge-intelligence/how-the-cia-made-google-e836451a959e
I’ve suspected for years that while Google’s ‘front end’ (programmers, offices, ect.) is in San Fran the server farm that makes it’s search, mail, and YouTube function is in Utah (yes, Utah):
https://infogalactic.com/info/Utah_Data_Center
Google is also in Oregon. So is Facebook. They negotiated great rates for the power their data centers consume coming straight off the dams on the Columbia. Which of course means everyone else pays higher prices for the promise of a few jobs running the data centers.
I think it is probably a safe assumption that Google works closely with the US intelligence. This was probably true from the early years. There’s nothing novel about intelligence agencies working with private business. The most famous example is Howard Hughes and the Glomar Explorer. Given their position in global communications, my guess is there are hundreds of Google employees who are actually government intel people.
Again, there is nothing unusual about this. Contractors like Raytheon, for example, are perfect for stashing away intelligence assets. It’s perfect cover and these companies regularly post staff all over the world working on sensitive projects.
For example, Google Earth is simply a civilian application of an old CIA earth-imagery program. They declassified the low-resolution imagery for public use, and Google monetized it. I used to work in that domain, Defense/Intel contracting, and a great many things we use in the world today have their roots in the Defense industry. Including the entire Internet. (i.e. DARPA-net)
I have no actual problem with that, but people have to not be stupid about how that data and information is being used against them. There’s a reason the main stream press is more or less ignoring (i.e. covering up) the illegal “unmasking” of Trump staff by NSA/CIA. Real, criminal, violations were committed by the Obama Administration.
A good rule of thumb about anything that originates from the Government is that you have it now because they developed something much better to take its place. That’s true for imagery, collections/SIGINT, crypto, and a bunch of other things we use each day.
..and Kodak in the fifties and sixties did much work for the govt. Catholics In Action and Friendly Big Indian.
WSJ: In 2006, 11 Silicon Valley and Bubble billionaires met Obama in Palo Alto and told him they’d make him President.
The result? Hundreds of billions in contracts servicing the surveillance state, rewiring the NSA and Wall Street, trillions in financial products and derivatives. Fusion centers. CDSs and CDOs.
Who’s been to Sterling and Dulles lately? Harlem? Money POURING in as the heartland is stripmined.
Well, yes they are, but the savings we get vastly exceed what they transfer.
If that were true, they would not need the subsidy. What Amazon, Google, Faceberg and so forth are up to is not new. This is old fashioned corporatism. The state works hand and glove with the corporate entity to achieve mutually beneficial ends. For the state, it means control and for the corporate, it means the elimination of competition.
Again, life is trade-offs.
Subsidies always trouble me because their amount is always hard to determine and their benefits, if any, even harder. Plus the moral question of whether it is wrong for a business to accept a subsidy freely given by idiot politicians nearly always supported by idiot voters.
I personally hold the split personality view that subsidies are evil and politicians who give them ought to be hung from a lamp post, but if they are there a business must take them.
Fred_Z, receiving a subsidy is a practical equivalent of receiving stolen goods. Knowingly.
No, no, no it’s a practical application of Canada Bill Jones dictum: It is immoral to let a sucker keep his money.
How else will the silly idiot voters learn? Talking nice to them has absolutely no effect. Pillage them until it hurts. Then they’ll learn.
Yes. The Age of the Robber Barons was built on government subsidies to the railroads. Later, those same subsidies (at the expense of the railroads) were extended to the automobile industry (the interstate highway system, the single greatest artifact ever constructed by man, was one such), and then to the airlines.
Words to fear: “Public-Private”.
Crown Corporations, Colonial Companies. Internal colonization and external resource wars.
Stealth Empire. Not so bad, if only the marketing were honest about it.
Instead, we drown in virtue-signaling campaigns. Maybe because we are targeted as well, ya think?
Venture socialism.
hahaha good one!
That’s it, that’s it, that’s it right there!
No, you are wrong. I understand that it’s nice to think Bezos’ company is a fake and failure because you don’t like the man. But what you are saying is not true. Amazon is very obviously profitable before internal reinvestment, and anyone who thinks otherwise doesn’t know how to read a balance sheet and income statement.
Who said Amazon was “fake and a failure?”
It is doing what it was designed to according to the evolving business plan. The fact that the man running the show is a socialist at heart is another matter.
What I find problematic is that Amazon, after all these years, has no viable, significant competition. I learned how to read accounting statements in biz school and they are as bad as statisticians work … numbers, lies, and damn lies. They are created to say what the Board wants them to say and can be “figured” as such.
Hi I don’t agree that scavenging margin to eliminate competition is good for the public over anything other than the short term. Amazon is not here to help.