Absolutely right, Charles. I would add that the greatest middle class the world has ever known was created not only with high wages (the result of strong unions) and high taxes, but with strong anti-trust enforcement. We lack all three now, but it is the third that arguably plays the biggest part in the rise of Amazon. As a recent Urbanist article points out, the company is not just trying to monopolize one area of the economy (retail) but several: https://www.theurbanist.org/2017/06/27/s….

The golden age of the American middle class died when Reagan was elected. It changed the Republican party forever, from a relatively moderate conservative party (of Eisenhower and Nixon) to a reactionary party willing to undo all social economic progress attained since the New Deal, if not the Gilded Age. The result being, of course, that we simply have entered another one.

@3:

Sure, if Sears & Roebuck had decided to create a nearly infinitely-paged catalog that sold everything from Aardvark Straws to Zymurgy equipment - and literally everything in-between - while simultaneously attempting to put J.C. Penny's, Woolworths, Macy's, Safeway, Piggly-Wiggly, A&P, Ace Hardware, NAPA Auto Parts, Radio Shack, Tower Records, B Dalton, Blockbuster Video, and FAO Schwarz - among innumerable others - out of business.

Oh, wait a minute...

You can't really buy fabric online and be satisfied. Or what about that bedspread color? It looked like a forrest green on the web, but it's a dull chartreuse when you opened the box.

@3, @4 ...but Sears didn't decline because it was out-businessed by its mail-order competitors, it declined because America underwent a massive demographic shift from majority rural to majority urban.

@6 ...and that's why online textiles retailers build high return rates into their business models.

@1 The greatest middle class in the world was created by a massive fucking World War. The liberalization of the market, with trade, and less encumbered by the anticompetitive nature of unions is what's created the worlds now GIANT middle class, more evenly distributed across the globe now, and kept us out of major global conflict since.

@3 -- There are some similarities, but some big differences. If Sears also mined a lot of the world's Manganese and controlled most of the world's electric utilities than it would be similar. If you read the Urbanist article (or the book it cites) you can see that retail is actually not where Amazon is making most of their money -- it is with AWS. This is a service that few actually are aware of, but if they monopolize it, it will lead to something similar to Standard Oil -- the domination of an industry that didn't exist a few years before, but is a vital part of the economy.

@8 Give me a break. Mutually assured destruction kept us out of a total war with the Soviet Union (we simply fought several proxy wars, resulting in the death, destruction and poverty for a huge part of the world). This conflict did lead to peace in much of Europe though, which in turn meant that the western countries of Europe (those aligned with the U. S.) followed the exact same formula as the one Charles and I described: High taxes, strong unions, high wages. Free trade between such countries has improved the living standards of those countries, just as free trade between Oregon and Massachusetts has improved the living standards of both countries. But free trade itself has not lead to a huge new middle class in the parts of the world that lack the characteristics that Charles and I described. This explains why there really isn't a world middle class ….

@9

Virtualized servers are a commodity product, where the end game is a race to zero margins. AWS has already had to slash prices to maintain market share. Even worse from a would-be monopolist's perspective is the fact that the underlying technology is open source; the barrier to entry is falling continuously.

@10 I think you might be downplaying the effects of moving a substantial part of the world's population out of poverty and into the the low-income-but-not-middle-class segment. There have been astonishing global increases in life expectancy and literacy since the 1970s. Reagan (or any other politician) had fuck-all to do with it, of course-- what's happening is the slow but inevitable process of the developing world gradually catching up with the developed world (Piketty has some excellent observations on this in that book of his that everyone bought but nobody read).

For once I agree with Charles on a point, though disagree with his reasoning. It is absolutely the case that our college students are not getting the economics education (or that of anything else of import, really) that they so desperately need. But it's because they're too busy competing in the Oppression Olympics and #wellactually'ing the administrators whose offices they've occupied. All the while, they're not being challenged to actually, ya know, think and their brains atrophy into a puddle of socially-constructed, post-modern bullshit.

@9 Agree that the cloud is really a commodity at this point with a race to the bottom b/w AWS, Azure, and Google on price, but your point about open source lowering the barriers to entry misses the mark by quite a bit. It's really not turtles all the way down. Those virtual servers ultimately run on real hardware. Lots of it. Which requires lots of space. And lots of electricity. And lots of cooling. That's not going anywhere; and it's not free as in beer.

@13

Er, that's real commodity hardware the VMs are running on, though, not the big iron of yore. The scale at which it makes more sense for a company to buy their own racks and maintain them, rather than bleed margin to a cloud provider, is shrinking every day.

The barrier to entry -- the up-front cost -- would be almost entirely in software development, if it were all built on a foundation of proprietary code instead of Linux containers, Xen hypervisor, Docker, VirtualBox, etc etc. And the OSS toolchain is only getting longer as more stuff gets built on top of it all.