Why France's Amazon Tax Will End Up Killing Books

Libertarians often joke that if the horse lobby had been strong enough, they would have blocked Ford's development of the automobile. While this didn't happen, many other lobbies representing declining industries have much more strength and were able to get restrictive legislation adopted on their behalf. This is the case for books in France, where François Hollande's socialist government has adopted a tax on books ordered from Amazon. It should get through the senate by the end of the year.

Why do such a thing? According to Culture Minister Aurélie Filippetti, the online book retailer practices "dumping" and is cutting prices so it can establish a quasi-monopoly once it destroys all of its competitors. She also points out that Amazon is destructive for local bookstores. With the new tax, Amazon will have a much harder time going around the French book laws adopted in the 1980s, which include a unique price for all books sold in the country.

Any resemblance between this policy and the candlemaker petition is no coincidence at all, especially in France. Lafayette's homeland has always seemed to prefer Colbert to Bastiat, state control to freedom in trade. This "Amazon tax," which Hollande wants to extend to other internet services worldwide, is just another example of government unjustifiably intervening in the market.

It is unjustifiable because it assumes that people are better served with more bookstores. France has 2.5 times more than England, even though they have the same population. If that were the case, then the government wouldn't have to intervene in the first place because people would simply go to those bookstores.

But if the bookstores need "protection" to survive, it means that they no longer satisfy customers' demands. Be it because of bad service or low quality/price ratio, it doesn't matter. People have voted with their wallets that Amazon did a better job.

Keeping people from buying books where they want to amounts to yet another broken window fallacy. With such a protection, we "see" that books are sold in many small, locally-owned outlets and that these jobs are saved. However, we "don't see" that people have to pay more for their books, leaving less money for everything else, and we very likely miss many innovations, wealth, and job creation.

So if Hollande really wants to help bookstores and the book industry, he should liberalize it rather than fossilize it in the unrealistic concept of perfect competition. Just look at computers: this relatively free market has had a dramatic decrease in the cost of megabytes over the past 25 years. You could do the same with internet prices and cellphone costs. In other words, any business that needs the government to survive needs to die promptly so buyers are free to buy something else.