A Modern Fable

A big orange bear and a weasel with hair plugs were playing Monopoly. The bear kept landing on, buying properties and building hotels on them. The weasel’s strategy was to keep passing GO and collecting $200 ... and trying to keep landing on Free Parking, railroads, utilities, Community Chest and Chance. The weasel had amazing luck and actually was in the lead for quite a while as he kept rolling the precise numbers to avoid paying the orange bear any rent. He even spent some time in Jail where he sat waiting while his opponent kept building hotels and spending money.

The weasel also had uncanny luck in what cards he drew from his landed-on Chance and Community Chest places. There, the cards he received gave him a kickback from “the bank” and a tax refund from the IRS. Each player (in this case the orange bear and the Chinese dragon) had to give him huge penalties ... and the (Ukrainian) Board of Directors paid him an extra dividend. In fact, he was riding so high that all the spectators in this televised match from the weasel’s basement felt sure that he was a shoe-in to win ... particularly since none of the orange bear’s hotels were collecting any rents.

But then something dramatic happened! The orange bear discovered that the weasel was playing with loaded dice ... and all the Chance and Community Chest cards had been forged. The orange bear strenuously objected to this cheating “hoax” by the weasel ... which caused the weasel to challenge the orange bear to go behind the barn to settle things.

The orange bear quickly accepted ... but when he arrived behind the barn, the weasel had forgotten why they were there ... and was in the process of caressing and smelling a beaver’s silky hair.

The orange bear went back to play more Monopoly successfully for another four years.

Demogogue

Searching Google Images for the word "demagogue," 8 out of 10 images first produced were of Trump. Now tell me that this is not purposeful .. either human-directed or coded into its supposed impartial search "algorithms." Given the absolute monopolistic power that Google now weld s in the Internet search market, this corporate-directed political bias is a very dangerous combination. This is bound to be corrected either voluntarily or involuntarily ... and should be.

A Model Business?

Or an unstoppable "A to Z" business model? Let's tell it like it is ... Amazon is a growing monopoly ... a monopoly that is slowly devouring the entire retail marketplace. This Seattle supercompany is doing this with a business model that exhibits at least one classic trait of a monopoly -- pricing offerings at a loss in order to grab market share away from its competition. It can do this for four main reasons:

1) It has a highly efficient and effective distributed warehouse operation based on automation and tough personnel policies that keep its customers very content.

2) The Internet has provided Amazon a real-time ordering system that is extremely convenient to its customers ... centered around its sophisticated server farms. These server farms are also the basis of Amazon's Cloud Services which generate the bulk of its profits ... which then carry the generally unprofitable much bigger on-line retail operations. There are a few other revenue streams like Kindle and Echo.

3) An extensive and sophisticated American parcel delivery infrastructure headed by the U.S. Postal Service, UPS, FedEx and Amazon's own growing in-house capability. In fact, many analysts believe that Amazon has, in its strategic quiver, designs to eventually vertically integrate to totally control it's own delivery system.

4) Due to these previously mentioned operational advantages ... and solid cash flow due to much depreciation of plant, Amazon enjoys a stratospheric price-earnings ratio (181 at last count vs. a market average of around 18) and an outstanding credit rating. This allows them to cheaply finance its ambitious expansionist plans ... including its recently announced purchase of Whole Foods.

The end result of this superior business model is that Amazon has strategic advantages that seem impossible for classic destination stores to overcome. The question really is: Is this a good monopoly or a bad monopoly? Here is a chart that puts this crushing advantage into perspective:

This chart is from: CNBC Article. Now Jeff Bezos and Company is moving into food. What is next ... Clothing? Shoes? Furniture? Cars? Building materials? Is there nothing  that is sold in stores that cannot be sold online through Amazon?

Already there is talk of shopping malls closing because of the "Amazon effect". And this effect does seem unstoppable ... because of the good parts of this company (#1 and #2 above). But it also requires the bad parts (#3 and #4) to make this all possible. The question then becomes: Should the government step in before there is only one retail stock left to buy -- AMZN?

This is a question for Ayn Rand to answer if she were still alive. I know instinctively that our government won't allow us just one huge retail option ... but to step in and stop the Amazon juggernaut will make millions of their customers unhappy. And it will be turning the term "free market" on its head.

I'm happy that this very tough decision is not up to me ...

Goodbye ...

to the Internet Explorer. Microsoft has decided to phase out this Internet browser in favor of a newer technology, "Project Spartan" ... see: PC Magazine Story. This browser once held north of a 80% market share, but upstarts have been quietly eroding this monopoly over the last so many years until the boys at Redmond had to take this technology out behind the shed and shoot it.

This blog you are reading had 4031 hits over the last month and here is the breakdown of what browsers were used to reference it: Firefox - 46%, Chrome - 31%, Safari - 9%, Explorer - 7%, the rest - 7%.  Now we can see why Microsoft is making this move. As Dean Wormer said in Animal House, "Fat, happy (actually drunk) and stupid is not a way to go through life."

So, as it turns out, Microsoft has been forced to face its past lassitude and will try to use the leverage of its other monopolies to once again crush its competitors.

We'll see.

The Name of the Game

As promised, to take one of my previous posts (see: Funny Money) a little further, I would like to create an extended metaphor for the U.S. economy under the current administration and our Federal Reserve Bank's (FRB's) new policies.  The metaphor I choose is the game of Monopoly.  Here are the updated rules for the "Chicago-style" version of this old favorite:

- The name of the game has been changed to "Big Government Monopoly."

- The amount of cash in the "bank" (now called the FRB) has been tripled as has the amount of paper money each player gets at game start.

- The railroads have been replaced with government-funded high-speed monorails to entertainment destinations.

- The color of hotels has been changed from red to green.

- Passing GO now gets a player a government hand-out of $1000, but he/she must kick-back 20% to the SEIU.

- Any and all Wall-Street bankers who land on "Go to Jail" are exempted from this fate.

- "Free Parking" exists only for Chevy Volts, Toyota Priuses and other "green" cars ... the "free" refers to electricity plug-in stations.  Gas-guzzling cars landing on "Free Parking" are crushed.

- The utilities (now just solar and wind powered) can no longer be purchased by players.  They are now government-owned and landing on them requires players to tithe to the FRB.

- Players can mortgage their properties for as much as 200% of assessed value.  After four turns around the board, the mortgages are forgiven by the FRB.

- Players wanting to build houses or hotels on their properties must first pass stringent environmental-impact muster.

- An onerous Luxury Tax is charged to only those players who look like they are winning.

... and so it goes ...