Krugman’s specialty is international economics, and his book (with Maurice Obstfeld and Marc Melitz) on the subject is a standard text. But he’s also good on most other economics subjects. If you invest in bonds you’ve done a great deal better over the past few years following his advice than that of the famous (and mega-rich) “Bond King” Bill Gross. As Krugman has often stated, that’s not because he has some special insight; it’s because he relies on economic models that make sense and have been tested against the real world. It’s science in action, making rigorous and efficient use of available information.
But his 20 October New York Times column, “Amazon’s Monopsony Is Not O.K.,” has no science or modeling in it; it’s pure polemics. Nobody’s entitled to his own facts, as Krugman frequently emphasizes (a point lost on many of his critics), but polemics are a matter of taste, and this one smells pretty rancid to me. No surprise, since it’s mostly a reprise of points already raised by Franklin Foer, among others, and already shot down by many.
To be sure, Krugman makes it clear that he doesn’t fall into the “Amazon-is-a-monopoly” trap with Foer, at least not literally; his meme of choice is that Amazon is a monopsony. Taken literally that would mean that Amazon is the only buyer in town, at least for books. That transparently isn’t true, so Krugman goes through a windmill act and concludes that well, after all, it is the biggest middleman for online book sales (a market it pioneered) and doesn’t that make it a monopsony?
Well, no, actually not, as Passive Guy, esq., explains, not under the legal definition. Not under the economics definition either, Professor Krugman.
But, but… Look at all the terrible things Amazon is doing with its ill-gotten market power, not giving Hachette books pride of place in its marketplace, simply because they have no contract and don’t seem to be able to negotiate a new one. It’s conclusive evidence of reckless, all-devouring market power! (You might want to look up the definition of market power and see how well it seems to fit.)
And anyway, today Hachette, tomorrow the world! Look how already they’re trampling others underfoot! Next they’ll come for you and me, any day now!
Good polemicist that he is, Krugman saves the conclusive evidence for last: Amabezos is loading the dice in favor of Paul Ryan’s latest screed, and against Daniel Schulman’s critical look at the Koch brothers. (In case you wondered, Krugman has no use whatever for the Koch brothers, and a good deal less for Ryan.) “What matters is whether it [Amazon] has too much power,” he solemnly and gravely concludes, “and is abusing that power. Well, it does, and it is.”
And can we think of anybody else who might be abusing his great power (as a hugely popular columnist and blogger), maybe just a little bit? I largely agree with Krugman on mega-rich and their political water boys, and don’t find Amazon or Jeff Bezos one bit warm or cuddly. But Krugman’s claim to a prime place in the sun rests on his command of the facts and objective argument, and he’s not living up that in this column.
It matters because Krugman has a towering and largely well-deserved reputation, and a lot of people take him at his word on topics they themselves know little of. Take a look for instance at the 1028 mostly admiring comments. It’s a public trust, and this time he blew it.
William D. O’Neil’s sloppy and unprofessional Web page is at http://www.analysis.williamdoneil.com/.
image via Wikipedia