Subsidies

Amazon Prime vs. Government: The Private Sector Does It Better

Many residents of northern Canada have access to cheaper goods through Amazon Prime rather than stores selling state-subsidized products.

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Johannes Zielcke/flickr

In the U.S., Amazon Prime is just another convenience of modern life. But for many residents of Nunavut, Canada's northernmost territory, it's a lifesaver.

Nunavut is roughly the size of Western Europe, yet it has a population of only 37,462. Iqaluit, the territory's capital and largest city, has just 7,740 residents. Nunavut isn't connected to the nation's highway system, so fresh food must be flown in daily at a very high cost. Ships can move larger amounts of freight to the region, but only during the warmest months of the year, when ice does not block ports.

Prices in local stores reflect this reality. A liter of Coke can cost CA$10, equivalent to $7.90 in the U.S. A pack of diapers can cost CA$70. But those willing to pay CA$80 a year for an Amazon Prime membership can find items for far cheaper than they would in local stores. That same pack of diapers, for instance, can be found at around half price. Some of Nunavut's smaller settlements are no longer eligible for Prime's free shipping because their remoteness makes shipping there unprofitable, but in larger settlements, such as Iqaluit, Prime is a welcome alternative to the highly expensive goods found in local shops.

The Canadian government has for decades tried to mitigate high prices through subsidy schemes that cover "nutritious food" and basic necessities. The first scheme, called the Food Mail Program, subsidized Canada Post's shipping operations in northern regions. This was replaced a few years ago with Nutrition North, a program that directly funded certain retailers. Both programs have been criticized for their cost and inefficiency, yet many worry that without the subsidies, prices would be even more exorbitant.

The region's unaffordability rests on decades of discriminatory policies and government regulations. The native Inuit people used to live a nomadic, subsistence lifestyle that was well-suited to the harsh environment. Since agricultural development wasn't possible, mobility was key to finding food.

Over 60 years ago, the Royal Canadian Mounted Police (RCMP) began to kill off thousands of Inuit sled dogs under the guise of animal control, claiming that many of the dogs were diseased or dangerous. In 2010, an Inuit-led truth commission, while critical of the RCMP's actions, stopped short of saying that this was a deliberate effort to "urbanize" the Inuit by taking away their main mode of transportation. But that, nonetheless, was the effect.

No longer able to maintain their nomadic lifestyles, those who lost their dogs became "dependent on welfare and store-bought food," according to the commission report. In places like Iqaluit, many residents feel a constant tension between the desires to preserve tradition and to forge a modern Inuit identity. Many of them did not ask to live in these planned communities, but now they must find a way to make it work.

One way to make it work was the sealskin industry. Hunting seals has long been part of the Inuit way of life, but it took on renewed importance in the wake of the forced urbanization. The money made from sealskin helped offset the high cost of living in Nunavut and gave people the opportunity to continue their hunting traditions.

Unfortunately, this economic boon was short-lived. Environmental activists successfully lobbied the U.S. and Europe to ban the sealskin trade, using disturbing imagery of hunting practices to rally the public behind their efforts. Some exemptions were enacted for the Inuit, but the bans decimated the industry. Unemployment, poverty, hunger, and high rates of suicide are now the norm in Nunavut.

Perhaps this is why many residents are skeptical that Amazon Prime's free shipping will last forever. It just seems too good to be true.

With all that's happened to indigenous communities in Canada and around the world, such pessimism is understandable. Government food subsidies have never worked well in Nunavut and other northern communities because they fail to tackle the core problem facing many residents: You can subsidize food and other necessities all you want, but if you take away all the opportunities for people to make a living, even the most heavily subsidized goods will still be too expensive.

Nevertheless, there is good reason for optimism. With the current pace of technological development, moving goods from point A to point B is only going to get easier and cheaper as time goes on. A hundred years ago, no one could have imagined being able to travel halfway around the world in under a day. A decade ago, no one could have imagined being able to order something online and have it show up a few hours later. The prospect of widespread implementation of drone delivery, led by companies like Amazon, could mean that even the most remote places will have cheap, reliable links to the rest of the world. That would do more for Nunavut than any of Ottawa's programs ever have.

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  1. People are buying from Amazon instead of the state-run store? We can’t have that! How long until the canucks figure out a way to make it illegal to ship into Nunavut unless you’re licensed somehow.

    Alternatively, this sounds like a perfect place for drone delivery to come into its own. I can’t imagine there are many UPS/FedEx/whatever trucks running around Nunavut, but a drone doesn’t have to worry about getting stuck in the muskeg. Hell, I would love to see Amazon zeppelins, not just drones. BTW I claim trademark on “Amazon zeppelins” as a cover band, fan club, or some other use I can’t think of right now.

    1. I suspect that the Canadian government is actually somewhat relieved that someone else is doing what they can’t.

      1. Sort of like they are relieved when US Pharma companies develop new drugs and lifesaving technologies they can steal, or when the US provided timely, vital health care to cover those dying in long wait lines.

        1. Yeah, quite a bit like that.

    2. People are buying from Amazon instead of the state-run store, eh? What’s that all aboot?

      Fixed.

      1. Damn Canadians, with their floppy heads and beady eyes…

    3. >>>but a drone doesn’t have to worry about getting stuck in the muskeg

      swatted out of the air by those 9-foot tall polar bears, though…

  2. I think we all know that it was actually Amazon that destroyed those sled dogs so that they could collect those yearly Prime membership fees. Follow the money, people.

  3. This is an easily-solved problem. Two words: Robot Inuits.

    1. That is an awesome band name.

  4. Clearly these folks need to be relocated to a civilized locale. For the children!

  5. many residents feel a constant tension between the desires to preserve tradition and to forge a modern Inuit identity

    Maybe I’m just a selfish bastard but I can’t imagine any scenario under which my childhood growing up in that area doesn’t end with the words “get me on the next dog sled to Toronto”.

    1. I suspect some do exactly that. Once they’ve seen the city, can you keep them down on the tundra?

      1. Here’s the rub:

        Many of them did not ask to live in these planned communities, but now they must find a way to make it work.

        I suspect that it’s hard to save up to move someplace better when the government plopped your ancestors in an area and then took away every possible means of economic production.

        1. Well, I mean lets be honest. There were maybe two or three possible things they could do in the first place and all of them involved hunting things that the left thought were ‘icky’ or making kitsch for tourists that are almost entirely not interested in freezing their asses off at the ass-end of creation.

          I’m not really sure how much room there is in this world for nomads anymore, but I’d have thought this is one of those area’s where it could still work provided you had no knowledge about the outside world whatsoever.

  6. I don’t understand. According to Al Gore, the climate in these villages was supposed to look like the French Riviera by now. These people should be filthy rich, controlling some of the only land on Earth that doesn’t look like a home for giant sandworms.

  7. Amazon can do it better. But, just to be clear, at the moment Amazon loses money doing this…and can expect to for quite a while to come. Their prices are more likely to go up than down, at this point.

  8. every fucking day there are dead animal stories here. WTFRCMP?

  9. Makes me wonder if Amazon is using subsidized freight of some sort. Kinda like how US Mail is uber-subsidized in Alaska.

    1. U.S. Mail isn’t ‘subsidized’ when it is the literal government. If anything, it’s remarkable that it’s legal for them to charge anything at all.

    2. They are, actually. The WSJ had a recent article on it. ‘Why the Post Office Gives Amazon Special Delivery”

      Basically $1.50 every package.

      But somehow Bezos is a libertarian hero, just like Musk, despite leeching off taxpayers as a crony capitalist.

      1. You should have read that article.
        The USPS mis-applied some accounting factors; has to do with sloppy accounting processes rather than any sort of discount.

        1. Also, if anyone calls Bezos a libertarian hero they’re just being silly.

        2. Yes, this. What I mean to say, is that the U.S Post Office is an actual arm of the Federal Government authorized and required in the Constitution itself so I’m not sure the word ‘subsidy’ applies even if it’s analogous.

  10. Government: the only good monopoly.


  11. …Government food subsidies have never worked well in Nunavut and other northern communities because they fail to tackle the core problem facing many residents: You can subsidize food and other necessities all you want, but if you take away all the opportunities for people to make a living, even the most heavily subsidized goods will still be too expensive.

    I’d replace that with the following:

    You live in a place that sucks.

    Not trying to make light of any of the great points in the article, but…I mean honestly what would you expect living in a place like that? Is the government to blame? Well, party for sure. Perhaps even mostly. But the people who choose to live at the ass-end of creation need to take some of that blame themselves for actively choosing to live in a frozen hellscape.

    As for the Inuit, the Canadians probably should have let them keep that frozen hellscape for themselves and their dogs. At least in the United States when we stole Indian lands we were stealing something valuable, as evil as it might have been. In this instance, it would appear Canadians stole it just because they fucking dislike the Inuit. Here in the United States, this is the kind of place we would have been putting the Indians against their will. It’s that bad. Or at least it is in my limited and foolish opinion.

    1. My understanding is that they are paid to stay on their land as well. So they have no economic development, and are actively paid to stay there. This adds a significant negative incentive to moving off.

      In my experience, any time I have learned anything about Indian Law (in the US at least) it is always astonishingly worse than one would have possibly guessed.


      1. My understanding is that they are paid to stay on their land as well. So they have no economic development, and are actively paid to stay there. This adds a significant negative incentive to moving off.

        Wow, so yeah the worst of all worlds. Kudos.

        As far as the U.S. is concerned, I just start with the known genocides and assume it’s that bad across the board.

  12. I dunno about Canada, but in the US, Amazon Prime is actually subsidized by the government

    “An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip, a gift card from Uncle Sam.”

    1. Yes, and?
      The government can’t even do bookkeeping well; hardly a ‘subsidy’.

  13. Correct me if I’m wrong, but don’t the subsidized stores allow people to buy anonymously, paying cash? Most stores do, so I expect these do too.

    Amazon, however, operates a system of massive surveillance that is incompatible with democracy. To buy anything from Amazon is therefore a terrible mistake. In addition, Amazon achieves its low prices by treating workers very badly.

    I therefore hope that Canadians in remote areas will continue to have an alternative to Amazon, one which also provides some local employment, and that they will be wise enough to reject Amazon. I willingly pay extra to avoid being included in Amazon’s database, and to support decent treatment of workers. Please join me.

    See stallman.org/amazon.html for many reasons not to buy from Amazon.
    See gnu.org/philosophy/surveillance-vs-democracy.html for why massive surveillance threatens democracy.

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