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Your Local Bookstore is a Microcosm of the American Economy

As is the case in most sectors, local bookstores have been decimated by monopoly corporations.

In September, six months into California’s seemingly interminable lockdown, my local bookstore tweeted a plea: “Friends, the past few months have been the most difficult in our company’s 126-year history and Vroman’s needs your help to stay open. Here’s how you can support your local indie!”

Over this same six-month period Amazon and Instacart deliveries had piled up outside my door in droves, like a 21st-century tech-enabled reincarnation of the Berlin Airlifts or UNICEF food drops into war zones. The store’s tweets asked you to buy books without free (much less next-day) shipping, make donations directly to the store, or wait days, if not weeks, for your “curbside” pickup order to be ready. In the vacuum of free-market decision-making, Smith’s invisible hand would be alternately shoving, slapping, or pushing me in the direction of the one-click experience.

But I, like other millenials on both the political left and right of late, have been influenced by what classical economic liberals like Thomas W. Hazlett call the “hipster antitrust” movement—by the romantic notion that price alone should not be the sole metric of economic benefit. Hipsters that we are, we idealize small businesses and the buy local movement, even if their prices are higher and their service is slower, because we suppose that small businesses have more character and a deeper connection to the community.

Such thinking, according to Hazlett and the cadre of economics Ph.D.s who work as consultants and expert legal witnesses on behalf of Big Tech, can be dangerous. In his well-researched piece for Reason magazine “The New Trust-Busters are Coming for Big Tech,” as well as an invited paper before the House Judiciary Committee, the economics professor has sought to dispel the notion that Amazon and other tech titans suppress innovation. He even suggests that landmark antitrust cases such as those against Standard Oil (1911), United Shoe Machinery (1954) and AT&T (1982) either had little benefit for consumers or, in the case of the latter, was a lawsuit in which the government effectively fought a war with itself over poorly designed “common carrier” regulations that instead of dissuading monopoly formation arguably encouraged it. (In the case of AT&T, then, deregulation as opposed to more regulation was the alleged answer to the problem, as it was in the case of the airlines in the late 1970s.)

“Absent demonstrable harm, letting things play out produces robust competition, oodles of innovation, and even new competitors,” Gazlett asserts confidently. Conceding that markets are imperfect, this school of thinking probably amounts to something similar to what Friedrich Hayek posits in The Road to Serfdom (1944), and is a kind of paraphrasing of Churchill’s words about democracy: Free markets are the worst form of economic arrangements, except for all the others.

By this line of thinking I am free, as a consumer, to support my local bookstore with acts of economic altruism, but I shouldn’t expect legislators or federal regulators to help in my cause. “Where adjustments in policy may be made to improve competitive outcomes, they ought surely to be implemented,” Hazlett writes. “But suppressing incentives for innovation by categorically ratcheting up antitrust enforcement risks errors that are decidedly weighted against efficiency and consumer welfare.” New Deal trust-busters are, according to thinkers like him, wrongly lionized for a record that in his view is mixed at best; regulators err as often, if not more so, than markets.

Despite his evidence, I continue to shop at my local bookstore, even if I don’t make all my purchases there. I cling to the notion that 40 or 50 measly bucks not spent at Amazon somehow makes a difference. Miraculously, Vroman’s survived the pandemic, so my hipster consumerism must have paid off. Even the local indie movie theater next door, Laemmle, survived the plague while the bigger Arclight chain went bust. The market worked how it was supposed to, right? Customers voted with their dollars and chose to keep alive the unique “Main Street” retail experience of a small bookstore and movie house while letting drab chains around it die.

The independent bookstore owners I spoke with fear that anecdotes like the one above are simply a stay of execution. In the words of Gayle Shanks, former American Book Association President and owner of Changing Hands Bookstore:

My bookstore is 47 years old and as its founder, I have dealt with many competitive issues over our lifetime including dealing with the bookstore chains moving into my city in the 90s–at some point, there were 25 Barnes and Nobles and Borders in the Greater Metropolitan Phoenix area–but the threat from Amazon for indie stores like mine is bigger than that by leagues.

In Shanks’ view, along with those of at least three other bookstore owners I spoke with, the plight of indie bookstores is not an isolated concern: “The issue with Amazon is the issue with all of retail right now: People have learned that speed and convenience trump everything else, and maybe price point too.”

When Shanks says “learned” I take that to mean both habituated to and, to a certain extent, indoctrinated and seduced by; we both come to expect instant online gratification and come to believe it is good for us. But the economic and the human are, and always have been, overlapping realms of life. What if a one-click world is actually bad for the economy and our souls because Big Tech deprives us of face-to-face human interaction? We are, after all, relational beings.

“You don’t have to be best friends with someone to form a community,” Janet Geddis of Avid Bookshop in Athens, Georgia, tells me. An interaction with a cashier or clerk at a small business is an act of community-building. She adds: “To me, supporting an independent bookstore and other independent businesses is a simple way to make sure your community is stronger economically and relationally.”

In a kind of secularized version of the “seamless garment” argument in Catholic theology—in which one must be pro-life for the whole of life, from cradle to grave, so to speak—the bookstore owners I spoke with see their shops as indissolubly bound up with a vision of the common good and the Main Street economy as a whole.

According to Neil Nevins, co-owner with Katharine Nevins of MainStreet Bookends in Warner, New Hampshire, superstores such as Amazon, Walmart, and others offer “the illusion of low price.” The illusion has to do with the hidden backend costs of Main Streets filled with empty display windows while Amazon fulfillment centers loom ominously at the edge of town. “You end up spending more in the long-term,” Nevins tells me, because when Main Street businesses close, sales and property tax revenue are lost to local governments, who in turn squeeze more property and income taxes out of everyday Americans. “When Bezos and Amazon pay no federal income tax, or very little federal income tax, while we get hit with increasing taxes, there needs to be action on the federal level,” Nevins insists.

Complementing his insistence that legislation and more aggressive regulatory enforcement are needed is a story of individual and local action in lieu of sweeping reform at a national level. In the 1990s the Main Street of Warner, New Hampshire, was dying. Neil and his wife Katharine were not entrepreneurs by trade, but decided they had to do something. The bookstore was part of a broader vision not just for selling books but for reviving Warner’s little downtown and preserving its unique character. Many of the big banks turned them down for small business loans. “The bank’s justification for turning us down was that we were losing businesses on Main Street,” Nevins said. A local bank finally came through with the loan, local carpenters and community volunteers helped them get the shop ready, and they opened just in time in 1998 for Warner’s Fall Foliage Festival when tens of thousands of visitors come to their town.

The bookstore succeeded, and as a continuation of their community-building efforts, they launched a 501c(3) nonprofit, MainStreet Warner, Inc., to promote community events and to support the arts and education for the community. This includes a community park and amphitheater, literacy programs, and connecting farmers to families experiencing food insecurity. “People here decided that supporting the bookstore is necessary in order to support a Main Street that will survive. . . . After we opened, [other] businesses started coming back,” Nevins said. Other nearby communities haven’t been so lucky. “We’re surrounded by towns that have lost their Main Streets, lost their local economies.”

Nevins explains to me how those store closures have a broader impact. “For every $100 you spend at a local hardware store or bookstore, half or more goes back into the community,” he said. “At Walmart you’re lucky if that number’s $30. And at Amazon you get nothing back.” Shuttered or semi-shuttered Main Streets lead to blight and a deteriorating quality of public services for tax-starved municipalities. Inevitably, property taxes go up on homeowners who are hit down the road by up front low prices.

The three bookstore owners I spoke with all agree that more must be done—that changes in consumer habits, while something and significant in themselves, are not enough.

“I’ve been pushing the consumer education side of things for a long time,” Janet Geddis of Avid Bookshop confides, “[but] I wonder if my focus on consumer behavior is distracting me from what could really make a huge change. . . . I’ve been thinking a lot about how responsibility is being put on the consumer [and whether] that can be a distraction from the larger issues at hand.”

“So much of this is going to be dependent on the Biden Whitehouse and the DOJ,” echoes Gayle Shanks, lamenting that the Obama Administration was not more aggressive in its pursuit of antitrust violations.

A lawsuit recently  filed on behalf of Bookends and Beginnings, an indie bookstore outside Chicago, sheds light on the high-stakes nature of courtroom decisions which, in turn, could impact the thinking of regulators at the FTC and DOJ Antitrust Division. The complaint notes that Amazon commands 90 percent of the online sale of trade books and upwards of 50 percent of the market overall. It also alleges a horizontal price-fixing conspiracy among the Big Five publishers (Hachette, Harper Collins, Macmillan, Penguin Random House, and Simon and Schuster). In the words of the complaint:

Defendant Amazon participated in and facilitated the horizontal agreement among the Big Five Defendants by coordinating a series of substantially identical agreements with the same anticompetitive terms and making clear to each of the Big Five Defendants that it was offering each of them a similar deal.

These agreements, known as Most Favored Nation agreements or MFNs, effectively eliminate “Amazon’s current and potential retail competitors’ ability to offer superior prices, price promotions, or early releases.” According to the complaint, the Big Five have effectively been bullied into overdependence on Amazon as a means of self-preservation: “The Big Five Defendants have indicated a preference to diversify from Amazon, not to become more dependent upon it. They acted against their own self-interest by agreeing to anticompetitive MFNs that restrict their channels of distribution.”

As Amazon puts the squeeze on the Big Five, the danger becomes one of losing a truly pluralistic intellectual environment—a concern not entirely dissimilar to that of Big Tech censorship on social media platforms. “What Amazon values is not what the industry in general values…in terms of the art of the book and the dissemination of ideas,” Danny Caine, bookstore owner and author of How to Resist Amazon and Why, and subject of a profile in the New Yorker, recently told me. The booksellers community fears that as the Big Five face further and further pressure to consolidate and acquiesce to Amazon’s demands, America’s print culture will be reduced to bestsellers. Intellectual diversity—and in turn democracy itself—would suffer as a result.

While I wait for politics and policy to play themselves out, I sit, for now at least, firmly in the antitrust hipster camp, thinking that my local craft beer and craft coffee purchases, along with the occasional trip to Vroman’s, somehow tip the scales in favor of the community and economy I wish to preserve.

Kurt Hofer is a native Californian with a Ph.D. in Spanish Literature. He teaches high school history in a Los Angeles area independent school.

This article was supported by the Ewing Marion Kauffman Foundation. The contents of this publication are solely the responsibility of the authors.



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