France is poised to pass the “Anti-Amazon Tax”. This would prevent online booksellers from offering free shopping. It is part of an overall model in France (and perhaps spreading throughout Europe) where book prices are fixed by the government. The idea is to help small bookstores compete with larger chains.

This article from TechCrunch is a good overall summary of the situation.

Good for small bookstores? Yes.

Good for consumers? Absolutely not.

I’ll explain why not in a moment, but it’s important to think about who is important here. Should we care more about the plight of the supplier or the consumer? We should ALWAYS care about the consumer. Why? Because without consumption, supply doesn’t matter. (Note that I’m not saying that the consumer has primacy over the supplier. The consumer doesn’t drive supply. No, supply drives consumption; Say’s Law is correct. What I’m saying is that…) People only buy stuff that they want for prices that they want. Suppliers know this, which is why they exist in the first place. Suppliers know that it is the consumer who is most important.

Trying to force the market to “protect” suppliers that consumers don’t care about is bad for the consumer. Suppliers know this, which is why they offer discounts in the first place. Preventing them from doing so means consumers have to spend more and have nowhere to turn for alternatives (other than to find replacement products that might not be protected, such as, say, video games).

If it’s jobs your concerned about, then you need to understand that jobs are not important. What is important is productivity. (At least, productivity – not jobs – is what’s important if you care about the general wellbeing of humanity. If you care about jobs, then just hire everybody to dig holes.) And if consumers aren’t buying a product that somebody’s making, then that producer ain’t being productive; and no matter how many jobs that producers has, they’re all a waste (again, think about hiring everybody to dig holes).

From a crony capitalism standpoint, it’s also worth pointing out that suppliers are typically better suited to lobby governments for exactly these kinds of protections than consumers are to lobby against them. Concentrated gain and dispersed pain is good for the supplier and bad for the consumer. This is similar, for (one) example, to the sugar industry and sugar prices in the US where sugar costs about twice what it does in the rest of the world because of the sugar lobby.

Not terribly surprising considering that this is France, but still, worth pointing out that supplier protections of any kind ALWAYS hurt the consumer. (On this point the author of the TechCrunch article is wrong.)

-JD Cross