I’m going to divert myself from my normally safe topics of conversations, and briefly wander into a matter of politics, because Representative Jesse Jackson Jr. has been getting a lot of press lately for his astonishingly stupid remarks about the iPad costing American jobs.
First of all, blaming the demise of Border’s on the iPad is a bit like blaming the winning horse for making slower horses lose. Go to your favorite financial reporting site, and examine the stock prizes for Borders, for Barnes and Noble, and for Amazon. As recently as 2007, they were all running neck and neck in terms of performance: in fact, the traditional book sellers were outperforming Amazon through most of 2001-2003. But in 2007, Amazon exploded, nearly tripling in price, and despite the recession which caused a temporary dip, it has continued its remarkable growth. Amazon is now trading at nearly $200, while Barnes and Noble is limping along at $9 and Borders faces bankruptcy.
Why would this be the case? Well, it’s simply because Amazon is a better way to buy books.
For one thing, to many destinations, it’s cheaper. For reasons which escape me, Amazon doesn’t charge sales tax for orders shipped ot most destinations. Here in California, that means that list prices are often lower than you’ll find in brick and mortar stores, and often lower even if you take shipping into account. We can thank the Internet Tax Freedom Act for this, which says that stores which do not have a physical selling presence are not required to collect sales taxes. (According to Amazon’s page on the matter at least, I am still confused by the rationale.) Presumably Congress can address this potentially unfair issue with legislation, although state and local governments frequently make curious choices in decreasing the value of money in their jurisdictions by imposing additional taxes, putting themselves at a disadvantage when compared to other areas.
But beyond cheapness, Amazon also is simply a better place to buy books. In the first place, I can get very close to any book that I want, new or used. I have rather esoteric and technical tastes in books, and it’s not wrong to say that most stores (such as Borders) simply don’t have the books I’m interested in buying. But, if I go Amazon’s website, I can get anything which is print, and many used books (integration of new and used books in search is an awesome feature of Amazon). I recently got old out of print books on analog computing and computer architecture by doing searches on Amazon.com. B&N and Borders simply aren’t any help for those kind of searches. Yes, if you wander into a Borders, you can have them order a book for you, but presumably you don’t need their help to do that: if you know what you want, you can just order it yourself. And if you don’t know what you want, you can use their recommendation service to help find books that maybe you do want.
And of course lastly is that Amazon actually has an electronic book strategy. Amazon recognized the potential of electronic books early, invested and developed consumer products to fuel demand for ebooks, and now is reaping huge benefits. B&N is a step behind, but is at least trying to be competitive. Borders? They didn’t have a clue.
Amazon has recognized that it isn’t Borders who is their competition: it’s Apple. The iPad is an excellent ebook reader (and the Kindle app is the best of the ebook readers) so Amazon has to figure out a way to compete in that market without having to go directly toe-to-toe with Apple. And, they discovered a good way: the Kindle, a less expensive (if less capable reader) that has enough good features to make it a reasonable choice.
Okay, now, back to Jackson’s comments.
The iPad (and probably just as importantly, Amazon) probably did destroy American jobs in one sense: they provided an insanely great product that changed the way that people buy and consume books. That’s disruptive: it means that the thousands of people whose job it was to insert themselves between publishers and book buyers are simply lost. You probably don’t use a travel agent any more either, since services like Expedia and Travelocity exist. But the fact is that there really isn’t any practical reason for you to not just download your books or have them shipped directly from a central warehouse, and there are many consumer benefits to doing so.
We are facing an employment crisis: the skills that many of us have are simply not that valuable, especially in the sales arena. We can lament the loss of jobs (and it is a serious problem) but we shouldn’t misunderstand what is going on here: technology is creating new ways for manufacturers to sell more directly to consumers. It’s just more efficient. As consumers, we’ll enjoy reduced prices, right up until the point where our own jobs are lost, and we can’t afford to be consumers any longer.
If you thought about this a little bit harder than Jackson did, you might be comforted by the idea that there are winners and losers, playing in some kind of zero sum game. But don’t get too happy: the winners are very few in comparison to the number of losers. Besides widening the gaps between rich and poor (which I’d submit isn’t good) it also has certain risks. As wealth becomes concentrated, the power of the few wealthy is increased. With increases in power comes increased potential for abuse and, well, insanity.
Blaming winners is silly. If the game is unfair, change the rules. If it’s no fun for the majority of participants, change the game. Provide value to participating in society, rather than exploiting it.