The past year has been a trashy year, and not just because of the United States’ tumultuous political climate. Rather, the problems with trash have become more central to environmental and economic reform than ever before.

For some, plastic straws sparked the conversation when Seattle banned single-use plastics this past summer, an event that swept the internet and inspired mass numbers to act against pollution. The real trash tale, however, is much grimmer than the sliver of environmental hope provided by any limit placed on plastic drinking tubes. With the United States producing the most waste globally and China recently enacting limitations on how much foreign garbage it will import, the trash is piling up. Americans are now coming face-to-face with a hard reality: reduce waste or suffocate under the consequences.

It’s no secret that the United States has a huge problem with waste. Though home to only 4 percent of the world’s population, the U.S. produces more than 30 percent of the planet’s total waste, according to a report by Frontier Group. The average American throws out 7 pounds of materials each day, with over half of all materials scrapped by homes and business ending up in landfills and only a third being recycled or composted.

Source: Frontier Group

The expanding $60 billion solid waste industry in the U.S. indicates the large-scale effort required to domestically manage all of the garbage produced. At this rate, however, the U.S. has not been capable of managing all of its own trash. While the wasteful reality of the U.S. may be “Land of the free, home of the brave… and lots of garbage in between,” the U.S. has made every attempt to steer away from such a reputation within its physical landscape. As a result, the U.S. has been exporting about one-third of its recyclables, with half going to China, according to NPR. To paint a global picture, nearly half of the planet’s plastic trash since 1988 — including single-use plastics, food wrappers and plastic bags — has been sent to China to be recycled into other forms of plastic goods, according to The Verge.

At first, this was a mutually beneficial trade agreement for both the U.S. and China: the U.S. would have significantly less trash to deal with on its home turf, and industrial China was able to acquire foreign currency while turning plastic into profit. The USC-US China Institute reported that, as time went on, the U.S.’s biggest dollar value export to China was trash, with Bloomberg reporting that Americans shipping more than $5.6 billion worth of scrap to China in 2016. At its peak, the Chinese recycling industry supported nearly 12 million jobs, and the recycled plastic was being turned into products valued over $64 billion a year. Environmentally, recycling also provided China a means to save energy when compared to industries like mining and logging. It was a business model that seemed to be indestructible.

Source: Bloomberg

Come 2012, however, what appeared to be an untouchable, powerful and productive market took a turn for the worst. China’s labor market shrunk for the first time. U.S. scrap exports to China fell for the first time since 1996. The next year, more foreign direct investment went to Southeast Asia than China. Then, the big one hit at the end of 2017: China notified the World Trade Organization that it had decided to ban imports of 24 categories of solid waste, effective March 2018. Now that China is post-industrial and rests on more financially-steady ground, the trash ban is the country’s next step toward improving the quality of life for its citizens by reducing emissions and creating a more sustainable nation.

“There was no doubt there was a great deal of discontent within China, and if they had announced a five-year transition, they would have faced domestic opposition,” said Dr. Douglas Becker, an international relations and environmental studies professor at the University of Southern California. “The reports coming out of the areas near the largest trash dumps in south China are a lot worse that people realized, and not by a small amount. So they sensed that they needed to do something fairly drastic.”

China is not backing down from the ban. Considering this change was essentially put in place immediately, though, the policy threw the U.S.’s trash processing system for a whirlwind.

“If it doesn’t go to China for two to three months, you’ll have 1 million tons of paper stacked somewhere in the American economy,” said Ranjit Baxi, president of the Brussels-based Bureau of International Recycling, to Bloomberg.

Baxi was exactly correct, as the U.S. is already feeling the effects of the ban. The Washington Post reported that states like Massachusetts and Oregon are changing some of their waste restrictions, dumping recyclable material into landfills. In California, the effect has been “heavy” according to a Waste Dive report that has been tracking the outcomes of China’s scrap limitations since Nov. 2017. Locally, an LA County Sanitation Districts official told Marketplace that 15-20 percent more material is ending up in the Puente Hills facility as residual contamination. Managing waste domestically in a sustainable fashion already posed a significant challenge, but now with China out of the picture, trash is pouring out of American landfills.

“Depending on the areas and cities, landfills are filling a bit more quickly, and I know there has been some talk about large cities trying to find the landfill space further and further from their city centers, perhaps even in different states,” Becker said. “That tends to engender quite a bit of opposition.”

The scariest thing? Even though the trash trade went on for decades, the ban has only been in practice for less than a year, but the consequences are already eliciting drastic results.

Source: Asian Review

China’s decisions to limit its importation of trash is like a form of self-care: by cutting out toxic relationships, the country is now able to focus on improving the life quality of its citizens. America, however, cannot function without exporting its scrap, so Southeast Asian countries have become China’s replacement. Thus, China itself may be on a greener path, but the waste problem at large simply has simply shifted from one landmass to the next, raising the same environmental issues for different people groups.

“I think the same concerns the Chinese had with the areas of toxicity are also valid in South and Southeast Asia where the trash is going,” Becker said. “As far as Southeast Asia is concerned, for some, they do want the materials to help them industrialize, but it’s largely a means by which to make money. So, I imagine [importing trash] would be pretty bad for the local populations, the same reason why the Chinese chose to end this.”

In essence, Southeast Asian countries are importing waste for similar reasons that China did. Recycling was an introductory means toward progress, but processing trash is not a long-term environmental or economic solution. Countries such as Malaysia and Thailand are already expressing frustration at the burden the increasing amounts of trash have placed on the countries.

Steve Wong, managing director of Fukutomi, a plastic recycling and trading company in Hong Kong, told Asian Review that Southeast Asian nations cannot handle even half of the volume China imported in the past.

“The abrupt China ban leaves [Southeast Asian] countries unprepared to receive the huge influx of waste,” Wong said.

Waste in Thailand. Source: Asian Review

From Jan. to March 2018, Thailand imported 121,000 tons of trash, a 17.7 percent increase from the same period a year before, according to data released by the Global Trade Atlas. Malaysia’s trash importation increased fourfold, and Vietnam, Taiwan and South Korea also have seen significant increases. Meanwhile, China and Hong Kong have seen more than 90 percent decreases.

Just because China banned the import of scrap in favor of the environment, however, doesn’t mean Chinese recyclers were financially happy with the decision. According to Wong, an estimated 1,700 licensed Chinese recyclers were affected by the import ban, and about 40 percent of them have relocated their operations to Southeast Asian countries.

“Up to 1,000 Chinese businessmen are asking for licenses to do recycling in Thailand, with total investment of up to 250 million baht ($7.6 million),” said a senior official at Thailand’s Industry Ministry. As a result, Thailand has put an indefinite hold on licensing to counter Chinese land ventures, according to Asian Review.

Between fights for land, trash and the environment, the entire trash trade narrative boils down to the same core problems: How do we fix our massive trash habits, and why is waste so problematic?

Frontier Group lists several environmental consequences of waste production. Most notably, about 42 percent of all greenhouse gas emissions are created from the production, transportation and disposal of goods, which is a direct contributor to global warming. Garbage that does not get dumped in landfills or recycling plants often ends up in the ocean, which is detrimental for marine biodiversity, habitats and overall water quality. Air quality is affected. Discarded materials waste natural resources. Landfills decrease property value and overall quality of life. The list, really, could go on forever.

U.S. citizens, however, can only do so much because the larger issue of waste is a top-down problem. Though each American disposes an average of 2,555 pounds of materials per year, those materials only make up 3 percent of all solid waste in the United States. When a majority of waste comes from industrial processes like mining, manufacturing and agriculture, encouraging individual choices, ultimately, can only make so much of a difference.

So, as a quick anecdote, let’s return to the plastic straw ban. Though Seattle issued a ban in July on all single-use plastic straws and utensils at all food service businesses, it was not the first city of its kind to enact such a ruling. Seattle made the plastic straw ban trendy, though, because the city is the birthplace of Starbucks, which is an inherently trendy brand. Therefore, the small-scale straw issue became widespread as Seattle-based Starbucks no longer could utilize their famous green single-use plastic straws.

As the negative view of plastic straws caught on, many were suddenly switching their plastic straws for paper or stainless steel ones and felt they were saving the planet as a result. The truth? There are eight million tons of plastic streaming into the ocean annually, and plastic straws only make up 0.025 percent of that waste, according to National Geographic.

“[The plastic straw ban is] not going to solve the problem, but it’s at least raising awareness for a lot of people — an increasing amount of recycling, pressure being placed on corporations in particular to try and manage some of the packaging issues,” Becker said. “There’s a greater public awareness as a result of this. I think that’s probably going to continue.”

The plastic straw ban is more of a poster child for larger environmental and economic problems associated with waste than it is the actual solution to waste itself. Even if the U.S. were to completely rid of every plastic straw in sight, the U.S.’s need to export recyclables and deal with the environmental consequences of trash would not be impacted. The plastic straw ban, however, does have the potential to start a chain reaction with eradicating bigger forms of plastic. With China’s limitations on trash and increased awareness surrounding waste, maybe in coming years the world won’t be such a trashy place after all.

Black Friday and its shopping craze have been the hallmark beginning of the United States’ holiday season for decades, with the term first becoming popular in print in the 1960s. In years past, the holiday (if one can call it that) has been characterized by eager deal-seekers crowding outside of stores, waiting for midnight to strike so they can grab hot, discounted items before they’re sold out. It has become an iconic sight to see the most intense shoppers actually fight over the last product on the shelf, with many recorded fights turning into viral videos in the process. Black Friday is, after all, the busiest shopping day of the year.

 

Black Friday isn’t just a family shopping tradition — it’s an economic necessity for retail, too. In the U.S. economy at large, consumer spending accounts for about two-thirds of U.S. economic activity, and holiday spending makes up a decent chunk of that. For example, in 2013, the U.S. retail industry generated over $3 billion in sales during the holiday season, accounting for 19.2 percent of the industry’s total sales that year. Additionally, 768 thousand employees were hired to aid with the increase in consumer shopping, according to Statista. After a dip in spending following the 2008 recession, holiday retail sales have continually been on the incline.

Holiday retail sales continue to soar. Source: Statista

Holiday spending in 2018 will be no exception. With the Los Angeles Times reporting high consumer confidence with low unemployment, rising incomes and a greater sense of job security, shoppers are spending enthusiastically. This holiday season, retail sales are expected to total $1 trillion (a 5.8 percent increase from 2017) according to research by eMarketer, and online sales may reach $123.73 billion (a 16.6 percent increase from 2017).

Black Friday 2018 saw record online sales, raking in $6.22 billion, which is up 23.6 percent from a year ago. With that, $2 billion of those sales stemmed from smartphones, according to CNBC.

Increases in e-commerce spending across Thanksgiving weekend. Source: Statista

As Black Friday trends show, online shopping, clearly, is the future of retail. The e-commerce giant Amazon has been at the forefront of consumers’ shift from physical shopping to online shopping. Outside of holiday expenses, Amazon has proven to be strong competition with large brick-and-mortar stores that were once thought to be invincible. Take Macy’s and its iconic red star for instance. In June 2018, the company’s stock price was down 45 percent from its all-time high in July 2015. Additionally, Amazon is estimated to pass the behemoth Walmart and become the top player in the U.S. apparel industry, according to Investopedia.

The increasing popularity of Amazon demonstrates that the e-commerce giant is the prime (pun partially intended) destination for online sales. Source: Investopedia

I don’t necessarily think brick-and-mortar stores are going anywhere because they are still central to the American shopping experience. After all, It wouldn’t be the holidays without someone anxiously running to Best Buy to purchase some discounted 60 in television. The prominence of e-commerce, however, will only continue to offer more competition to physical retailers, which will be an interesting trend to watch as the digital age continues to envelop our lives.

If you were to ask me a year ago what I thought would be trending a year later, plastic straws definitely would not have been on my list.

I’d like to consider myself an advocate for sustainability: I’m vegan, I recycle and I try to repurpose items. Until recently, I had never considered that plastic straws — a commodity that’s unquestionably been available since the 1960s — placed any strain on the environment, businesses or the economy at large.

Well, turns out the impact of plastic straws, though present, is not nearly as severe as many hyped it up to be. With eight millions tons of plastic streaming into the ocean annually, straws only comprise 0.025 percent of that waste, according to National Geographic. The small-scale issue went mainstream this summer when Seattle — home of Starbucks and its famous plastic green straws — announced a ban on plastic straws and utensils at all food service businesses.

From there, the issue blew up on social media, with many claiming to be dedicated environmentalists because they now abstained from plastic straws. As Greenpeace has pointed out, however, 40 percent of plastics in the ocean are from single-use plastics, with plastic straws only making up a tiny fraction. According to Vox, The World Economic Forum reported that there are 150 million metric tons of plastic in the ocean, and scientists predict that by staying with this trend, there will be more plastic than fish in the ocean by 2050. As someone who comes from a coastal area where seafood is a huge market, that doesn’t sound like the best situation to be in.

Where plastic pollution sources from. Source: EcoWatch

So why focus on plastic straws at all? In the Business Insider video “Why plastic straws suck,” chief scientist for the Ocean Conservancy George Leonard notes how plastic straws are only the beginning.

“I think straws are a bit of a poster child here for the bigger question of society’s kind of over-reliance on single-use plastics and the fact that a lot of the stuff is ending up in our marine environment,”  Leonard said.

Biodegradable paper straws, which are slightly more expensive, have been introduced as an eco-friendly alternative to plastic straws, which can take 500 years to decompose, according to The Independent. Aardvark Straws, a paper straw manufacturer, has been a key player with introducing this change. When pulling up the company’s website, a banner at the top reads that overwhelming demand for paper straws has delayed shipping times, illustrating how consumers are eager to change their plastic usage. David Rhodes, Aardvark Straws’ global business director, told National Geographic that the economic value of paper versus plastic straws extends beyond business expenses.

“There’s no getting around that a paper straw will cost about a penny more than a plastic straw,” Rhodes said. “For large corporations, that equals hundreds of millions of dollars, but the cost to the marine environment, you can’t put a price on that.”

Aardvark Straws at work. Source: Imbibe

CNBC reported that paper straws cost 2 ½ cents each, as opposed to half-cent for plastic straws.

“You go from something that is very, very, very cheap, to something that is still actually cheap,” said Adam Merran, CEO of PacknWood, a food service products company, to CNBC.

That’s where the economics of plastic straws come in to play: changing drinking straw habits may affect business expenses, but the ultimate economic value comes with protecting the priceless marine environment in the long run.

According to the World Wildlife Fund, the direct output from coral reefs, seagrass, mangroves and marine fisheries is valued at $6.9 trillion U.S. dollars. Clearly, investing in eco-friendly habits now — even if they come at a higher cost — will allow natural resources to maintain (or potentially increase) their value in the future, which is beneficial to everyone.

Source: The World Wildlife Fund

Remember: plastic straws are only the beginning to revolutionizing consumers’ environmental and economic goals.

Amazon’s power over specific producer markets and Facebook’s dominance over advertising are eerily reminiscent of Standard Oil’s monopoly on oil in the late 19th century. By owning or controlling 90 percent of the U.S. oil refining business, Standard Oil was able to form trusts with other oil companies and drive out competition with others in the same business. Though Standard Oil was able to provide a quality product at a reasonable, stable price, the company uncomfortably wielded too much power in one of the nation’s most important industries. Ultimately, the government put antitrust laws into practice, breaking down Standard Oil’s trust and, ideally, preventing further monopolies from forming.

Now in the digital age, the large-scale presence of Amazon and Facebook isn’t as tactile as, say, oil, but that doesn’t mean their potential to monopolize isn’t as — if not more — dangerous. The way consumers interact with these companies may be primarily online, but their impact is both felt and seen in the real world.

World domination is taking on a more pixelated form. As these digital dominators revolutionize modern life — from making purchases to how people interact — many of their victims may not realize how dependent they’ve become. The relationship is reciprocal: These digital entities would not exist without consumers to collect information from, while consumers could not function in their everyday lives without these digital entities.

Yes, Amazon and Facebook are the culprits of seeking world domination, and the widespread economic impact they’ve had in the past two decades is both intriguing and alarming.

On one hand, the accessibility Amazon and Facebook provide have made modern life easier than in times past. Facebook has 1.6 billion active users. Amazon is predicted to end the year with 50 percent of the United States’ e-commerce market. Clearly, the two companies have an extensive presence in society. For the consumer, the instant communication and near-instant gratification offered by the digital sphere are shaping the ideal marketplace. This may be a great situation for consumers, but it doesn’t come without a cost.

Amazon holds the largest portion of U.S. retail ecommerce sales. Source: CNBC

These digital companies buy users’ information in exchange for a curated service that is basically guaranteed to fulfill customers’ exact wants. Facebook especially has been accused of being an “ad-targeting machine” that tries to pass as a social networking site. Consumers, however, are unquestionably becoming increasingly dependent on these large digital companies to make economic decisions, with ambivalent feelings about online privacy. According to a survey of 1,600 people by the University of Sydney, over half of 18-29 year-olds agree with or are indifferent about the statement “There is no privacy — get over it.” Customers’ lives may be simpler by allowing Amazon and Facebook to take the reigns, but the grand digital dominance of these companies may prove more dangerous than anticipated.

Young people are conflicted about privacy in the digital age. Source: ABC News

Amazon, as most any digitally literate citizen knows, is an online retailer where consumers can buy nearly anything — anything — and have it shipped to their door. As discussed by Jonathan Taplin in his book “Move Fast and Break Things,” Amazon has created a monopsony over certain goods, which is essentially the inverse of a monopoly. A monopsony is when a buyer, as opposed to a seller in a monopoly, has control over who can enter a specific market to sell goods.

“Amazon has a near-monopoly position in the distribution of ebooks,” Taplin writes. “Beyond books, Amazon captures fifty-one cents of every dollar Americans spend in online commerce. It wasn’t supposed to be this way.”

Ironically, in 2014, New York Times opinion writer Paul Krugman published an article titled “Amazon’s Monopsony Is Not O.K.,” where Krugman dissected Amazon’s role in the ecommerce market.

“Amazon doesn’t dominate overall online sales, let alone retailing as a whole, and probably never will,” Krugman writes. “Don’t tell me that Amazon is giving consumers what they want, or that it has earned its position. What matters is whether it has too much power, and is abusing that power. Well, it does, and it is.”

Come 2018, research by eMarketer tells an updated story: Amazon now shares 49.1 percent of retail e-commerce sales, which is nearly 5 percent of the total U.S. retail market online and offline.

Further, Taplin points out that the main consequence of Amazon’s monopsony in the book business forces authors and publishers to work for less money. He details how Amazon is able to practice a form of “rent-seeking” by denying publishers access to its large customer base and extracting excessive “rents” from publishers because the company has driven out seller competition. Arguably, Amazon’s path to digital retail dominance came rapidly and without much question because of the convenience the company brought to consumers. As a result, however, the consequences of Amazon’s presence are only recently being studied.

VIDEO: Here’s Amazon’s impact on the economy

Beyond damaging competition with selling in the book market, Amazon has established other monopsonies that have had disastrous effects for classic physical retailers.

“Amazon has changed the market in many ways. By the end of this week, Sears will file for bankruptcy. That’s a direct result of Amazon. Kmart will file for bankruptcy probably within the next two months. There’s really no place for the old-fashioned retail to exist in a world where Amazon can undercut their prices,” said Taplin in an interview. “Amazon wants to rule the world. It’s simple.”

Facebook is a whole other beast.

As mentioned, Amazon holds a monopsony over particular retail markets, like ebooks. This makes it harder for other buyers to enter the market because Amazon’s prices are so competitive that any smaller seller would have a hard time being successfully profitable. Facebook, on the other hand, is the largest social network in the world with over two billion monthly active users or MUAs. The platform also owns Instagram and WhatsApp, which each has over a billion MUAs.

Facebook’s MUAs only continue to grow. Source: Statista

With such a large reach in the social media realm, Facebook has a near-monopoly on affinity side advertising, according to Dan Faltesek’s Medium article “Social Monopsony.” Taplin discusses Facebook’s business model in the same light, noting that the platform centers around selling advertising at a higher rate than comparable internet sites.

“In short, if you are looking to make a large social buy, Facebook is your only option,” writes Faltesek. “The case that Facebook has a near monopoly on in-stream affinity network advertising is fairly clear.”

The “Big Two” Facebook and Google control over 60 percent of internet advertising. No other online advertising platform has a market share exceeding 5 percent, according to Forbes.

Why is Facebook’s advertising scheme so successful? It’s simple: Microtargeting.

Microtargeting is a marketing strategy where a company collects specific information on consumers — where they live, what they like, what their friends like and so forth — and push advertising content their way that directly reflects their specific interests. While this can be an effective strategy for marketers, in a world where there is only one buyer of user attention, regulation is necessary, as Faltesek points out.

Based on the aforementioned details of both companies, Amazon and Facebook clearly have successful business models. In 2017, Facebook raked in over $40 billion in revenue while Amazon earned over $177 billion. Their overwhelming dominance, however, has taken a large toll on competition, which is essential for a free marketplace. With all other digital retailers fighting for a tiny portion of online advertising and physical stores being driven out of business because of Amazon, more regulation must be adopted to keep the marketplace stable and democratic.

“We’ve got ourselves a little challenge here in America: On one side you have Jeff Bezos and on the other side you’ve got democracy,” said director of the New America Foundation’s Open Markets program Barry Lynn in a New Republic article. “We can choose who we want to trust in. Do we want to trust in America and Americans and American history? Or do we want to trust in Jeff Bezos? That’s what this comes down to.”

As history has shown, the digital sphere has had a large societal impact despite evolving over a short period of time. Now, it’s just up to consumers to decide how digitally dependent they want to be.

When the phrase “world domination” is used in reference to a powerful entity, the first image that often comes to mind is a villain in a cartoonish suit who absorbs power as the surrounding world crumbles — sometimes even accompanied by evil-sounding thunder in the background. World domination, however, is not limited to unrealistic individuals who wear masks that shield their true identities from being associated with their heinous crimes. Instead, the modern-day world dominator takes on a more digital form, making their tactics easily accessible to the public by interacting with their followers on a daily basis. As loyal followers build trust in the entity, individuals are more willing to divulge information as the power source grows in influence, teaching the dominator to tactfully increase its followers based on previous behavioral patterns. The cycle repeats until the dominator has created such a large presence that its followers literally cannot go about their day-to-day lives without it but, even worse, don’t really question this codependency.

Yes, Amazon and Facebook are the culprits of world domination — or, at least, they’d like to be.

The digital sphere as the modern world knows it has only been in existence for about two decades but has completely revolutionized the way humanity functions. Twenty years may be an extremely short period relative to all of time, but this small sliver of time has seen unprecedented societal and economic progress that has rewired the way we consume goods, interact with others and even perceive ourselves. This progress will only continue to exponentially grow, and digital companies like Amazon and Facebook will play a vital role in evolving our economic choices alongside forming our digitally-dependent society.

On one hand, the accessibility and connectivity Amazon and Facebook provide have made experiencing life in the 21st century easier than ever before between instant communication with peers and having nearly anything imaginable delivered right to one’s doorstep with the click of a button. As mentioned earlier, however, people unquestionably are becoming increasingly co-dependent on these large digital companies to live their everyday lives and make economic decisions — emphasis on unquestionably. While individual consumers make their lives easier by passively allowing these massive digital entities to become interwoven in their lives, the dominance of Amazon and Facebook on a grander economic scale may prove more dangerous than anticipated.

Primarily, the superiority Amazon has over specific producer markets and the dominance Facebook has over advertising are reminiscent of Standard Oil’s monopoly on oil in the late 19th century. By owning or controlling 90 percent of the U.S. oil refining business, Standard Oil was able to form trusts with other oil companies and drive out competition with others in the same business. Though Standard Oil was able to provide a good quality product at a reasonable, stable price, the company, from the government’s perspective, uncomfortably wielded too much power in one of the nation’s most important industries. Ultimately, the government put antitrust laws into practice, breaking down Standard Oil’s trust and, ideally, preventing further monopolies from forming.

Now in the digital age, the large-scale presence of Amazon and Facebook isn’t as tactile as, say, oil, but that doesn’t mean their potential to monopolize isn’t as — if not more — dangerous. The way consumers interact with these companies may be limited to a screen, but their impact is both felt and seen in the real world.

Amazon, as most any digitally literate citizen knows, is an online retailer that consumers can utilize to buy nearly anything — anything — and have it shipped to their door. As discussed by Jonathan Taplin in his book “Move Fast and Break Things,” Amazon has created a monopsony over certain goods, which is essentially the inverse of a monopoly. A monopsony, according to Taplin, is when a buyer, as opposed to a seller in a monopoly, has control over who can enter a specific market to buy goods, which drives prices down.

“Amazon has a near-monopoly position in the distribution of ebooks,” Taplin writes. “Beyond books, Amazon captures fifty-one cents of every dollar Americans spend in online commerce. It wasn’t supposed to be this way.”

Ironically, in 2014, New York Times opinion writer Paul Krugman published an article titled “Amazon’s Monopsony Is Not O.K.,” where Krugman claimed that “Amazon doesn’t dominate overall online sales, let alone retailing as a whole, and probably never will.” Come 2018, research by eMarketer tells an updated story: Amazon now shares 49.1 percent of retail ecommerce sales, which is nearly 5 percent of the total U.S. retail market online and offline.

Further, Taplin points out that the main consequence of Amazon’s monopsony in the book business forces authors and publishers to work for less money. He details how Amazon is able to practice a form of “rent-seeking” by denying publishers access to its large customer base and extracting excessive “rents” from publishers because the company has driven out seller competition. Arguably, Amazon’s path to digital retail dominance came rapidly and without much question because of the convenience the company brought to consumers. As a result, however, the consequences of Amazon’s presence are only recently being felt and studied.

“Monopsony power has probably always existed in labor markets, but the forces that traditionally counterbalanced monopsony power and boosted worker bargaining power have eroded in recent decades,” writes Alan Krueger of the Princeton Economist.

VIDEO: Here’s Amazon’s impact on the economy

Beyond damaging competition with selling in the book market, Amazon has established other monopsonies that have had disastrous effects for classic physical retailers.

“Amazon has changed the market in many ways. By the end of this week, Sears will file for bankruptcy. That’s a direct result of Amazon. Kmart will file for bankruptcy probably within the next two months. There’s really no place for the old-fashioned retail to exist in a world where Amazon can undercut their prices,” said Taplin in an interview. “Amazon wants to rule the world. It’s simple.”

Facebook is a whole other beast.

As mentioned, Amazon holds a monopsony over particular retail markets, like ebooks. This makes it harder for other buyers to enter the market because Amazon’s prices are so competitive that any smaller buyer would have a hard time being successfully profitable. Facebook, on the other hand, is the largest social network in the world with over two billion monthly active users or “MUAs.” The platform also owns Instagram and WhatsApp, which each have over a billion MUAs.

Facebook’s increasing MUAs from 2008-2018, according to Statista.

With such a large reach in the social media realm, Facebook has a near monopoly on affinity-side advertising, according to Dan Faltesek’s Medium article “Social Monopsony.” Taplin discusses Facebook’s business model in the same light, noting that the platform centers around selling advertising at a higher rate than comparable internet sites.

“In short, if you are looking to make a large social buy, Facebook is your only option,” writes Faltesek. “The case that Facebook has a near monopoly on in-stream affinity network advertising is fairly clear.”

Why is Facebook’s advertising scheme so successful? It’s simple: Microtargeting.

Microtargeting is a marketing strategy by which a company collects specific information on consumers — where they live, what they like, what their friends like and so forth — and pushes advertising content their way that directly reflects their specific interests. While this can be an effective strategy for marketers, in a world where there is only one buyer of user attention, regulation is necessary, as Faltesek points out.

So where does this leave modern society? For how much longer will we be so codependent on these massive digital entities? Digital enterprise is no longer an experiment — it’s a legitimate business with large impacts on the consumer market and needs to be treated as such. On the security side, in light of data leaks like the Facebook Cambridge Analytica scandal that took place earlier this year, these digital companies have shown that while they have a massive presence, they don’t always have control over where their data goes, which is a major issue that needs to be addressed. Additionally, increasing amounts of people have shown distrust in being so digitally present or have removed themselves completely from social media platforms, so now is a crucial moment that will determine if living digitally dependent lives is sustainable in the long-term.

“Until these companies begin to take responsibility for what’s on their platform, it’s going to be complete chaos and anarchy. This is not healthy for democracy, and I don’t think it’s healthy for humans, as you can tell in terms of what I think about your addiction to your smartphone that it is probably not a good thing. It’s not making you smarter. It’s just making you more distracted,” said Taplin in an interview.

At the end of the day, the digital sphere can change intensely in only a short period of time. While one cannot be certain where certain digital platforms will be in the next two decades, one can know for sure that the digital market is here to stay. Now, it’s just up to consumers to decide how digitally codependent they want to be. The digital sphere may be prominent, but allowing it to have personal dominance is an individual choice.

$16.5 million — that’s how much Daniel Middleton, the highest paid YouTuber of 2017, made last year, according to Forbes. Since its founding in 2012, Middleton’s channel “DanTDM” has amassed over 20 million subscribers, 13 billion total video views and an active audience that keeps coming back for more gameplay videos.

Middleton’s position isn’t an idiosyncrasy. Falling only a few places behind him are the household names Logan Paul (18.5+ million subscribers) and Jake Paul (17+ million subscribers), who made $12.5 million and $11.5 million in 2017, respectfully. That same year, the highest paid female YouTuber was Lilly Singh “||Superwoman||” (14+ million subscribers), who made $10.5 million.

“Influencers are social media ‘stars’ who have monetised their subscriber base on Instagram by posting pictures and endorsing brands,” defines Yasmin Jones Henry of the Financial Times. The modern world of internet influencers/content creators, however, has only sprung up in the past decade, so how did these individuals go from making videos in their bedrooms to raking in millions of dollars? The answer is simple: advertisements.

In the past, advertisers have paired with traditional media, like television and radio, to focus on larger interests in hopes of having their product be a contender for the general audiences. Influencer marketing, however, has come along with more niche, new-form media, which has allowed advertisers to hyper-target consumers for more successful sales.

“One result of social media has been the democratization of influence and creativity. We no longer need the approval of large corporations to determine what content is truly worthy of views,” writes Matthew Biggins in an article on influencer economics for Medium. Biggins is right — we, the viewers, have taken the power out of the hands of big corporations and have redirected that decision-making authority to ourselves. We decide what we like and what content to ingest, which produces a positive feedback loop of receiving content that repeatedly satisfies us. This is where influencers come in. As viewers constantly returned to the same creators for reliable quality content, the influencer economy continued to expand, leader influencers naturally to become the next tool for advertisers to use.

“Sixty percent of Gen Z are more likely to believe what a YouTube star says over what a movie star says,” said Deborah Weinswig, the Managing Director of Fung Global Retail & Technology,

Images from Visual Capitalist.

In late 2017, roughly 70 percent of brands were using influencers. On just Instagram, which is a platform often used to establish or expand a creator’s social media presence, influencer marketing is a $1 billion industry, according to Retail Dive. Overall, companies primarily have been redirecting their advertising funds to online video and sponsoring Instagram posts, which can cost companies tens of thousands or hundreds of thousands of dollars per post.

Though influencer marketing is clearly the future of business and retail (and the large sums of money involved seem to indicate success), the newness of influencers still has kinks to be worked out when compared to traditional media advertising. While the number of traditional media viewers tends to be concretely-based, many pages with thousands of followers may consist of purchased, fraudulent fans, leaving companies to make investments they can’t be sure will yield the results advertised.

Nonetheless, the way consumers discover and purchase goods in our larger economy is changing for good. No longer can the intertwined economics of entertainment and retail sales rely on relating to the general public in hopes that something will stick.

“Beyond creating content for brands, another driving force of the influencer economy is the consumer’s hunger for representation,” writes Bof Team for Business of Fashion.

So, yes, individually liking something on Instagram is an economic transaction after all. Welcome to the influencer economy.

Consumer spending is, without a doubt, one of the backbones of American culture. In the United States, it’s often impossible to go even one day without buying something, whether it’s purchasing a simple pack of gum or dropping some serious cash on a brand-new car. With these everyday, but vital, contributors to the United States’ economy in mind, it’s no wonder that consumer spending is one of the most important economic indicators for the U.S., accounting for about two-thirds of the U.S. economy. More specifically, retail sales (often the most common picture of consumerism) cover 40 percent of consumer spending. Given the seasonal nature of retail, sales reports are released on a monthly basis to be compared to that same month of a previous year. So yes, one could say that the holiday season and exchanging presents are not just about good will to all, considering sales made during that time are an especially strong indicator of how well (or how poorly) the U.S. economy is doing.

Additionally, it is important to note that, naturally, retail sales directly reflect consumers’ wealth and confidence in the economy. The more household incomes increase and stock prices rise, the wealthier people feel, which inclines them to spend more. If consumers are economically insecure about the future, they will spend less. To best illustrate this concept, let’s briefly look at consumer spending before and during the Great Recession of 2008.

On Oct. 25, 2011, The Economist published an article titled “Hard times: How the economic slowdown has changed consumer spending in America.” Given the year, 2011, the piece was written as the United States was attempting to climb from the depths of the crash that began in 2008, and the above graph depicts how resulting consumer spending changed between 2007 and 2010.

Personally, I was still in late elementary school when the crash occurred, and I distinctly remember that the recession did not hit my family hard until 2011 when my father was laid off from his full time job. As the graph communicates, the recession led to an overall decrease in consumer spending by the nation, and I definitely remember that my family had to reduce our spending, too. Now that I’m studying the topic years later with a more mature perspective, it’s interesting to see how my family’s decreased spending habits at the time reflected those of the nation as a whole, which is something my 11-year-old self could not process.

Most notably, the article points out how consumer spending had changed at large, writing, “Between 2007 and 2010, average annual consumer spending per unit—defined as a family/shared household or single/financially independent person—fell by 3.1% to $48,109. Average prices over this period have risen by 5.2%, so real consumer spending has fallen by almost 8%.” The article then compares these spending habits to those of the “peak years” of 2003-2006, stating that consumer spending actually rose by 8.2 percent during that time. Consequently, recession years brought less spending on luxuries like sugar and nicotine, whereas the earlier prosperous years saw an increase in spending on non-necessities, namely household goods and alcohol, by 13 percent and 19 percent, respectively.

Simply put, as depicted by this short sliver of time that had such a drastic, historic impact on the U.S. economy, when consumers aren’t spending, it’s not because they’ve lost interest in American consumerism; rather, decreased consumer spending indicates a much larger problem within the grander economic landscape. After all, America is nothing without its consumer goods, so a thriving economy is the best way to keep America and it’s (morally conflicting) consumerist values alive and well.

 

SOURCES:

https://www.economist.com/graphic-detail/2011/10/25/hard-times

Greg IP. The Little Book of Economics

Terri Thompson. Writing About Business