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Hayek on Funny Business

 

I read in the WSJ today that Amazon gets a $1.46 subsidy per parcel for the last mile delivery. Bezos, you thief, put down the Prime package slowly and slide the money back to the taxpayer. Carefully. Slowly. No funny business.

But that is kind of what business, big business, has become. Funny Business. Jamie Dimon of JP Morgan Chase in an interview in The NY Times magazine explained back in the dark days of 2009 that Chase was adding a sixth business line, government relations. Wow! Such candor.

Elon Musk makes a dreamy electric car, the Tesla S 90. 0-60 in minus 2.3 seconds. Beam me up or forward, as you wish. She is kind of sexy. Love it. And Musk’s auto company is worth more than GM or Ford or just about every other auto company combined, even though Tesla makes a tiny fraction of the cars they do. But don’t cry for GM Argentina, they are after all, Guvament Moteurs.

So why is Tesla worth so much? Well Elon makes electric cars and that makes government grants, subsidies, tax credits, and dinner on the taxpayer. The calculation is that Musk’s company’s value equals about the same amount as his government subsidies.

Call Hayek. Those theories were simply wrong. The government can create value!

And those Tesla’s are good for the climate (except when recharged by dirty midwest coal power plants) and good for my testosterone shot (I am definitely feeling a bit low-T). However, what is a lion without the grrrr? Can a Tesla S be a babe magnet like say a McClaren 720S (with only 3.9 lbs per horsepower – vrrrooom, vrrrooom)? Well, kinda.

Tesla’s sound barrier breakers are so quiet no one, not even you, can tell they are scratching off. They accelerate like a 747 at 35,000 feet shifting from 400 mph to 500 mph. You feel it, but there is no vibration in your soul.

To deal with this near silence in a Tesla, I decided one can play car engine noises on an Apple iPhone to make it sound like the storm and crank of raw acceleration in the morning, the smell of victory. I learned this from reading that Jaguar amps up its engine sounds with speakers located next to the engine…. virtual horsepower. Is nothing sacred? Jag too gets state assistance – but quietly.

Now my iPhone is made by Apple who uses Ireland as a phony corporate location to lower its taxes to the point that they are smaller than that chip that runs my Apple Watch. US taxpayers be damned.

Then there is me, I order all sorts of stuff on Amazon, used books by Friedrich Hayek, new books by Salma Hayek, special scented candles, Cheerios from Amazon’s newest acquisition, Whole Foods, and the occasional bag of cement. And when I do this I am the one who gets that $1.46 subsidy – which makes the deliveries of 50 lb. bags of cement economical. Memo to myself, order more, get more $1.46 rebates. You gotta problem with dat? How about a cement suit for you? If you order in the next 2 hours and 17 minutes, Amazon can deliver a bespoke cement suit by 8:00 PM tomorrow, subsidized.

So to heck with the rest of you. I am planning on buying a government subsidized Tesla – after my fragile Porsche 911 sort of had a senior moment (not enough government subsidies for Porsche). I will cash in on those Tesla subsidies. Or, I may buy a government financed (rescued) GM ‘Vette. Sweet. I am typing this on my iPad and checking my Apple Watch to see what time it is before my next Prime delivery, all purchased for a price deeply subsidized by tax avoidance and a holding company in Barbados owned by an Apple subsidiary in Panama and arranged by a lawyer located in the Caymans. And lest you think there is a limit to my venality, I will order my car, food, and new Apple Watch VII on Amazon – that buck and a half makes it a great deal and all this possible. The government is my friend, BFF and most definitely a “best friend with benefits.”

The public trough is open. Its all you can eat. Just don’t make too much noise.

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  1. Profile photo of Jamie Lockett Reagan

    I read that piece in the WSJ and its a bit disingenuous for the author to state that “Amazon” gets this subsidy when in truth it’s simply that the Post Office hasn’t updated its cost allocation to all packages so that they reflect accurate pricing. Hence if you or I send a package through the mail we also get this “subsidy”. That Amazon noticed this fact and has the business infrastructure in place to take advantage of it isn’t some nefarious scheme on their part -it’s fault of the USPS for not keeping pace with changing fixed cost allocation.

    • #1
    • July 14, 2017 at 8:08 am
    • Like11 likes
  2. Profile photo of Richard Finlay Member

    Is there any economic activity, any more, that isn’t somewhat dependent on a government subsidy? What happens if they ever really run out of other people’s money? What happens if the pervasiveness continues to increase, until only subsidized activity can exist and the entirety of ‘business acumen’ is persuasiveness in competing for those subsidies? Is corruption the natural expression of hierarchical societies?

    • #2
    • July 14, 2017 at 8:08 am
    • LikeLike
  3. Profile photo of James Madison Member
    James Madison Post author

    Jamie Lockett (View Comment):
    I read that piece in the WSJ and its a bit disingenuous for the author to state that “Amazon” gets this subsidy when in truth it’s simply that the Post Office hasn’t updated its cost allocation to all packages so that they reflect accurate pricing. Hence if you or I send a package through the mail we also get this “subsidy”. That Amazon noticed this fact and has the business infrastructure in place to take advantage of it isn’t some nefarious scheme on their part -it’s fault of the USPS for not keeping pace with changing fixed cost allocation.

    Well, its not exactly as if Amazon does not know they are taking advantage of the situation. They are not lobbying for an increase in rates. They are driving a wedge through the center and using it as a means to destroy Mom and Pop. Jamie, its all legal – Tesla, Apple, GM, Amazon. Its all government. Its all good.

    Amazon needs a 6th line of business and call the Dept. of Exploiting the Hell Out of Politicians, the Government and the People. My suggestion is they buy a newspaper and portray themselves as the voice of the people. They should buy the WaPo (oh, they did?), after all Democracy Dies in Darkness, and bending the government to their purpose is part of that process.

    • #3
    • July 14, 2017 at 8:28 am
    • Like10 likes
  4. Profile photo of James Madison Member
    James Madison Post author

    Richard Finlay (View Comment):
    Is there any economic activity, any more, that isn’t somewhat dependent on a government subsidy? What happens if they ever really run out of other people’s money? What happens if the pervasiveness continues to increase, until only subsidized activity can exist and the entirety of ‘business acumen’ is persuasiveness in competing for those subsidies? Is corruption the natural expression of hierarchical societies?

    I think Aristotle’s thought this to be true. Plato, most definitely.

    • #4
    • July 14, 2017 at 8:30 am
    • LikeLike
  5. Profile photo of Amy Schley Member

    James Madison (View Comment):
    They are not lobbying for an increase in rates.

    So being a good Heyakian business requires lobbying for higher fees, thus increasing the costs for one’s customers?

    Really?

    Why not tell Bezos that his entire paycheck belongs to the government and we the people will only let him have what we think he ought to have? To each according to his needs, and all that.

    • #5
    • July 14, 2017 at 8:36 am
    • Like7 likes
  6. Profile photo of EDISONPARKS Member

    Thumbs up on the Hayek photo/quote!

    • #6
    • July 14, 2017 at 8:36 am
    • Like3 likes
  7. Profile photo of Jamie Lockett Reagan

    James Madison (View Comment):

    Jamie Lockett (View Comment):
    I read that piece in the WSJ and its a bit disingenuous for the author to state that “Amazon” gets this subsidy when in truth it’s simply that the Post Office hasn’t updated its cost allocation to all packages so that they reflect accurate pricing. Hence if you or I send a package through the mail we also get this “subsidy”. That Amazon noticed this fact and has the business infrastructure in place to take advantage of it isn’t some nefarious scheme on their part -it’s fault of the USPS for not keeping pace with changing fixed cost allocation.

    Well, its not exactly as if Amazon does not know they are taking advantage of the situation. They are not lobbying for an increase in rates. They are driving a wedge through the center and using it as a means to destroy Mom and Pop. Jamie, its all legal – Tesla, Apple, GM, Amazon. Its all government. Its all good.

    Amazon needs a 6th line of business and call the Dept. of Exploiting the Hell Out of Politicians, the Government and the People. My suggestion is they buy a newspaper and portray themselves as the voice of the people. They should buy the WaPo (oh, they did?), after all Democracy Dies in Darkness, and bending the government to their purpose is part of that process.

    Wait why is this Amazon’s fault? Taking advantage of market conditions is what businesses are supposed to do. Are Mom and Pop stores given a “sidewalk” subsidy because people are able to walk into their stores with ease? This “subsidy” is entirely the fault of the Post Office not allocating fixed costs appropriately according to their established rules. Maybe there’s a business reason for this, I don’t know, but that “subsidy” applies to all packages – not just Amazon ones. In order to be an actual subsidy there would need to be a government mandate to give Amazon, and Amazon alone, a discount on package delivery rates. That is not what’s happening. It’s not even that Amazon used its large marketshare status to negotiate better rates (which again is what businesses are supposed to do), but rather that they are just paying the USPS the rates they charge everyone.

    • #7
    • July 14, 2017 at 8:38 am
    • Like9 likes
  8. Profile photo of Steve C. Member

    James Madison (View Comment):

    Jamie Lockett (View Comment):
    I read that piece in the WSJ and its a bit disingenuous for the author to state that “Amazon” gets this subsidy when in truth it’s simply that the Post Office hasn’t updated its cost allocation to all packages so that they reflect accurate pricing. Hence if you or I send a package through the mail we also get this “subsidy”. That Amazon noticed this fact and has the business infrastructure in place to take advantage of it isn’t some nefarious scheme on their part -it’s fault of the USPS for not keeping pace with changing fixed cost allocation.

    Well, its not exactly as if Amazon does not know they are taking advantage of the situation. They are not lobbying for an increase in rates. They are driving a wedge through the center and using it as a means to destroy Mom and Pop. Jamie, its all legal – Tesla, Apple, GM, Amazon. Its all government. Its all good.

    Amazon needs a 6th line of business and call the Dept. of Exploiting the Hell Out of Politicians, the Government and the People. My suggestion is they buy a newspaper and portray themselves as the voice of the people. They should buy the WaPo (oh, they did?), after all Democracy Dies in Darkness, and bending the government to their purpose is part of that process.

    No tree grows to the sky. Even Amazon is subject to the slings and arrows of outrageous fortune.

    • #8
    • July 14, 2017 at 8:40 am
    • Like2 likes
  9. Profile photo of Robert McReynolds Member

    James Madison (View Comment):

    Richard Finlay (View Comment):
    Is there any economic activity, any more, that isn’t somewhat dependent on a government subsidy? What happens if they ever really run out of other people’s money? What happens if the pervasiveness continues to increase, until only subsidized activity can exist and the entirety of ‘business acumen’ is persuasiveness in competing for those subsidies? Is corruption the natural expression of hierarchical societies?

    I think Aristotle’s thought this to be true. Plato, most definitely.

    Unfortunately because of fractional reserve banking, the FDIC, and how the FED operates, there will never be a shortage of “other people’s money,” at least physically. It just won’t be worth anything.

    • #9
    • July 14, 2017 at 8:45 am
    • Like2 likes
  10. Profile photo of I Walton Member

    Tell me more about Selma Hayek.

    • #10
    • July 14, 2017 at 8:47 am
    • Like9 likes
  11. Profile photo of Robert McReynolds Member

    Jamie Lockett (View Comment):

    James Madison (View Comment):

    Well, its not exactly as if Amazon does not know they are taking advantage of the situation. They are not lobbying for an increase in rates. They are driving a wedge through the center and using it as a means to destroy Mom and Pop. Jamie, its all legal – Tesla, Apple, GM, Amazon. Its all government. Its all good.

    Amazon needs a 6th line of business and call the Dept. of Exploiting the Hell Out of Politicians, the Government and the People. My suggestion is they buy a newspaper and portray themselves as the voice of the people. They should buy the WaPo (oh, they did?), after all Democracy Dies in Darkness, and bending the government to their purpose is part of that process.

    Wait why is this Amazon’s fault? Taking advantage of market conditions is what businesses are supposed to do. Are Mom and Pop stores given a “sidewalk” subsidy because people are able to walk into their stores with ease? This “subsidy” is entirely the fault of the Post Office not allocating fixed costs appropriately according to their established rules. Maybe there’s a business reason for this, I don’t know, but that “subsidy” applies to all packages – not just Amazon ones. In order to be an actual subsidy there would need to be a government mandate to give Amazon, and Amazon alone, a discount on package delivery rates. That is not what’s happening. It’s not even that Amazon used its large marketshare status to negotiate better rates (which again is what businesses are supposed to do), but rather that they are just paying the USPS the rates they charge everyone.

    I gotta say, I agree with Jamie here. If the government is going to create a means for a private entity to keep more of its property (i.e. profit/earnings), then the private entity would be dumb not to take advantage of that creation. Also I think there is a bit of language tampering going on here. A subsidy is something quite different from a tax credit or whatever this particular mechanism is called. Subsidizing is what the government does for, say, Planned Parenthood. Structuring your business in such a way to minimize how much money the government takes from you is not a subsidy because the money you are protecting is yours to begin with.

    • #11
    • July 14, 2017 at 8:51 am
    • Like9 likes
  12. Profile photo of Amy Schley Member

    Robert McReynolds (View Comment):
    I gotta say, I agree with Jamie here.

    There’s one for the record books. 😀

    • #12
    • July 14, 2017 at 8:53 am
    • Like3 likes
  13. Profile photo of MLH Member
    MLH

    I Walton (View Comment):
    Tell me more about Selma Hayek.

    Here ya go. Need more?

    • #13
    • July 14, 2017 at 9:00 am
    • LikeLike
  14. Profile photo of Jamie Lockett Reagan

    Amy Schley (View Comment):

    Robert McReynolds (View Comment):
    I gotta say, I agree with Jamie here.

    There’s one for the record books. 😀

    Oddly enough Robert and I probably agree on like 95% of policy issues, its always a personality thing between us. That bugs me more than I care to admit publicly as more often than not its me reacting badly.

    • #14
    • July 14, 2017 at 9:01 am
    • Like3 likes
  15. Profile photo of Jamie Lockett Reagan

    Robert McReynolds (View Comment):

    Jamie Lockett (View Comment):

    James Madison (View Comment):

    Well, its not exactly as if Amazon does not know they are taking advantage of the situation. They are not lobbying for an increase in rates. They are driving a wedge through the center and using it as a means to destroy Mom and Pop. Jamie, its all legal – Tesla, Apple, GM, Amazon. Its all government. Its all good.

    Amazon needs a 6th line of business and call the Dept. of Exploiting the Hell Out of Politicians, the Government and the People. My suggestion is they buy a newspaper and portray themselves as the voice of the people. They should buy the WaPo (oh, they did?), after all Democracy Dies in Darkness, and bending the government to their purpose is part of that process.

    Wait why is this Amazon’s fault? Taking advantage of market conditions is what businesses are supposed to do. Are Mom and Pop stores given a “sidewalk” subsidy because people are able to walk into their stores with ease? This “subsidy” is entirely the fault of the Post Office not allocating fixed costs appropriately according to their established rules. Maybe there’s a business reason for this, I don’t know, but that “subsidy” applies to all packages – not just Amazon ones. In order to be an actual subsidy there would need to be a government mandate to give Amazon, and Amazon alone, a discount on package delivery rates. That is not what’s happening. It’s not even that Amazon used its large marketshare status to negotiate better rates (which again is what businesses are supposed to do), but rather that they are just paying the USPS the rates they charge everyone.

    I gotta say, I agree with Jamie here. If the government is going to create a means for a private entity to keep more of its property (i.e. profit/earnings), then the private entity would be dumb not to take advantage of that creation. Also I think there is a bit of language tampering going on here. A subsidy is something quite different from a tax credit or whatever this particular mechanism is called. Subsidizing is what the government does for, say, Planned Parenthood. Structuring your business in such a way to minimize how much money the government takes from you is not a subsidy because the money you are protecting is yours to begin with.

    It’s not even that – the USPS is a GSE. A government sponsored private corporation. It’s really up to the USPS to set its prices in such a way as to maximize its profitability. If it sees value in packages being given a lower rate so as to increase postal route utilization then I see no problem with that.

    • #15
    • July 14, 2017 at 9:02 am
    • Like1 like
  16. Profile photo of The Reticulator Member

    EDISONPARKS (View Comment):
    Thumbs up on the Hayek photo/quote!

    I had never seen that photo of him before.

    • #16
    • July 14, 2017 at 9:03 am
    • Like5 likes
  17. Profile photo of Jamie Lockett Reagan

    The Reticulator (View Comment):

    EDISONPARKS (View Comment):
    Thumbs up on the Hayek photo/quote!

    I had never seen that photo of him before.

    I feel that if that photo was more prominent the man’s ideas would gain more traction.

    • #17
    • July 14, 2017 at 9:09 am
    • Like10 likes
  18. Profile photo of RushBabe49 Thatcher

    The USPS might even be profitable, if it was not required by Congress to pre-fund retiree pensions! Half its income goes to pay retired employees not to work!

    • #18
    • July 14, 2017 at 9:14 am
    • Like5 likes
  19. Profile photo of Robert McReynolds Member

    Jamie Lockett (View Comment):

    Robert McReynolds (View Comment):

    Jamie Lockett (View Comment):

    James Madison (View Comment):

    Well, its not exactly as if Amazon does not know they are taking advantage of the situation. They are not lobbying for an increase in rates. They are driving a wedge through the center and using it as a means to destroy Mom and Pop. Jamie, its all legal – Tesla, Apple, GM, Amazon. Its all government. Its all good.

    Amazon needs a 6th line of business and call the Dept. of Exploiting the Hell Out of Politicians, the Government and the People. My suggestion is they buy a newspaper and portray themselves as the voice of the people. They should buy the WaPo (oh, they did?), after all Democracy Dies in Darkness, and bending the government to their purpose is part of that process.

    Wait why is this Amazon’s fault? Taking advantage of market conditions is what businesses are supposed to do. Are Mom and Pop stores given a “sidewalk” subsidy because people are able to walk into their stores with ease? This “subsidy” is entirely the fault of the Post Office not allocating fixed costs appropriately according to their established rules. Maybe there’s a business reason for this, I don’t know, but that “subsidy” applies to all packages – not just Amazon ones. In order to be an actual subsidy there would need to be a government mandate to give Amazon, and Amazon alone, a discount on package delivery rates. That is not what’s happening. It’s not even that Amazon used its large marketshare status to negotiate better rates (which again is what businesses are supposed to do), but rather that they are just paying the USPS the rates they charge everyone.

    I gotta say, I agree with Jamie here. If the government is going to create a means for a private entity to keep more of its property (i.e. profit/earnings), then the private entity would be dumb not to take advantage of that creation. Also I think there is a bit of language tampering going on here. A subsidy is something quite different from a tax credit or whatever this particular mechanism is called. Subsidizing is what the government does for, say, Planned Parenthood. Structuring your business in such a way to minimize how much money the government takes from you is not a subsidy because the money you are protecting is yours to begin with.

    It’s not even that – the USPS is a GSE. A government sponsored private corporation. It’s really up to the USPS to set its prices in such a way as to maximize its profitability. If it sees value in packages being given a lower rate so as to increase postal route utilization then I see no problem with that.

    And likely a reaction to market forces being applied to it by UPS and FEDEx. Hey look, the Austrian school of economics actually works!!

    • #19
    • July 14, 2017 at 9:14 am
    • Like3 likes
  20. Profile photo of James Gawron Thatcher

    JM,

    First, the photo of Hayek is maintaining my morale and I thank you. As for Elon Musk and the Tesla. Musk is a genius. He is a genius at telling people what they want to hear. First, that he is rapidly advancing electric car technology so that soon and the economically viable electric car will we be available. This is total nonsense. He isn’t concentrating his effort on low-cost manufacturing techniques at all. Also, the manufacturing techniques he is using actually use far more carbon than a gasoline car would burn in a decade. This is why he is a genius. Like Gruber and Ben Rhodes, he has discovered the effectiveness of lying. If you just tell an SWJ or a soft headed modern moderate what they want to hear, Global Warming exists and you just keep throwing taxpayers money at it to solve the problem, they will give you anything and never question the total failure of your results.

    In short, Musk is a genius because the rest of us are idiots.

    Regards,

    Jim

    • #20
    • July 14, 2017 at 9:31 am
    • Like4 likes
  21. Profile photo of James Madison Member
    James Madison Post author

    Jamie Lockett (View Comment):
    It’s really up to the USPS to set its prices in such a way as to maximize its profitability.

    Yes, just like Fannie Mae pricing for sub prime risk, the USPS is behaving rationally. Social policy and government subsidies never figure into their thinking. Right? And now that FedEX and UPS are organized and invested in USPS serving the last mile of delivery, they will no doubt lobby to preserve this government subsidy that favors BezoCo versus Mom and Pop Co. Is that fair? Is that efficient? Does that reflect real costs?

    As for Amazon adapting to the rules, I have no problem with that at all. But Teslanomics is a road to oligarchy. And Solyndromcs leads to waste. If USPS was an actual private company and not subject (or protected by) to non-market forces, it might reflect real costs in prices instead marginal cost pricing, betting on bailouts – being a GSE.

    • #21
    • July 14, 2017 at 9:46 am
    • Like3 likes
  22. Profile photo of James Madison Member
    James Madison Post author

    James Gawron (View Comment):
    . . .In short, Musk is a genius because the rest of us are idiots.

    Regards,

    Jim

    Read the Powerline article referenced in my post. Two parts. Very well done. When oil reaches $300, electric cars without subsidy will make sense.

    • #22
    • July 14, 2017 at 9:51 am
    • LikeLike
  23. Profile photo of Amy Schley Member

    James Madison (View Comment):
    And now that FedEX and UPS are organized and invested in USPS serving the last mile of delivery, they will no doubt lobby to preserve this government subsidy that favors BezoCo versus Mom and Pop Co. Is that fair? Is that efficient? Does that reflect real costs?

    This “subsidy” that isn’t (as has been pointed out several times) is equally available to all comers, Mom and Pops included. In fact, many tiny specialized producers survive on internet orders and the USPS pricing that makes them profitable. If Mom and Pop are wedded to the notion that customers can only walk through the door and don’t exist through the internet, Mom and Pop are due for retirement anyway.

    As for fair, efficient, and reflecting real costs, I’m game for removing the laws that make it illegal for anyone other than the USPS to carry mail. Subject the USPS to market forces for everything they carry and don’t subsidize the inevitable collapse. Let UPS and FedEx take over the entire mail service instead of just parcel delivery.

    Of course, what happens to your pretty narrative about Amazon being the evil crony capitalists when they continue to thrive then?

    • #23
    • July 14, 2017 at 9:58 am
    • Like2 likes
  24. Profile photo of James Madison Member
    James Madison Post author

    Amy Schley (View Comment):

    James Madison (View Comment):
    And now that FedEX and UPS are organized and invested in USPS serving the last mile of delivery, they will no doubt lobby to preserve this government subsidy that favors BezoCo versus Mom and Pop Co. Is that fair? Is that efficient? Does that reflect real costs?

    This “subsidy” that isn’t (as has been pointed out several times) is equally available to all comers, Mom and Pops included. In fact, many tiny specialized producers survive on internet orders and the USPS pricing that makes them profitable. If Mom and Pop are wedded to the notion that customers can only walk through the door and don’t exist through the internet, Mom and Pop are due for retirement anyway.

    As for fair, efficient, and reflecting real costs, I’m game for removing the laws that make it illegal for anyone other than the USPS to carry mail. Subject the USPS to market forces for everything they carry and don’t subsidize the inevitable collapse. Let UPS and FedEx take over the entire mail service instead of just parcel delivery.

    Of course, what happens to your pretty narrative about Amazon being the evil crony capitalists when they continue to thrive then?

    Amy,

    If a GSE does not charge full price and wins business from other for-profit suppliers, is the discount not a subsidy which benefits those who take advantage of it? In this case Amazon and me.

    This arrangement favors one channel of distribution over another. It picks winners and losers, which is what we want our government to do, right?

    How can GSE’s (like Fannie Mae or USPS) afford to not charge full cost? Taxpayer backstop maybe? Fannie Mae and Freddie Mac cost us about $180 plus billion. Sounds like the GSE’s are not playing by the same rules.

    Amazon is exploiting a foolish USPS non-cost recovery pricing strategy to win marginal revenue that covers marginal cost, but not full cost. Amazon customers and Bezos win.

    • #24
    • July 14, 2017 at 10:11 am
    • Like2 likes
  25. Profile photo of Robert McReynolds Member

    James Madison (View Comment):

    Jamie Lockett (View Comment):
    It’s really up to the USPS to set its prices in such a way as to maximize its profitability.

    Yes, just like Fannie Mae pricing for sub prime risk, the USPS is behaving rationally. Social policy and government subsidies never figure into their thinking. Right? And now that FedEX and UPS are organized and invested in USPS serving the last mile of delivery, they will no doubt lobby to preserve this government subsidy that favors BezoCo versus Mom and Pop Co. Is that fair? Is that efficient? Does that reflect real costs?

    As for Amazon adapting to the rules, I have no problem with that at all. But Teslanomics is a road to oligarchy. And Solyndromcs leads to waste. If USPS was an actual private company and not subject (or protected by) to non-market forces, it might reflect real costs in prices instead marginal cost pricing, betting on bailouts – being a GSE.

    That’s a good point, GSEs are usually second in line behind the big banks when it comes to getting bailouts. And I don’t know about the serving the last mile bit. In my neighborhood, I see the UPS truck and FEDEx truck almost everyday dropping off packages. The only packages that are dropped off by USPS come from Amazon.

    • #25
    • July 14, 2017 at 10:13 am
    • LikeLike
  26. Profile photo of Robert McReynolds Member

    Amy Schley (View Comment):

    James Madison (View Comment):
    And now that FedEX and UPS are organized and invested in USPS serving the last mile of delivery, they will no doubt lobby to preserve this government subsidy that favors BezoCo versus Mom and Pop Co. Is that fair? Is that efficient? Does that reflect real costs?

    This “subsidy” that isn’t (as has been pointed out several times) is equally available to all comers, Mom and Pops included. In fact, many tiny specialized producers survive on internet orders and the USPS pricing that makes them profitable. If Mom and Pop are wedded to the notion that customers can only walk through the door and don’t exist through the internet, Mom and Pop are due for retirement anyway.

    As for fair, efficient, and reflecting real costs, I’m game for removing the laws that make it illegal for anyone other than the USPS to carry mail. Subject the USPS to market forces for everything they carry and don’t subsidize the inevitable collapse. Let UPS and FedEx take over the entire mail service instead of just parcel delivery.

    Of course, what happens to your pretty narrative about Amazon being the evil crony capitalists when they continue to thrive then?

    Spooner would be so proud!

    • #26
    • July 14, 2017 at 10:16 am
    • Like2 likes
  27. Profile photo of Amy Schley Member

    James Madison (View Comment):

    Amazon customers and Bezos win.

    All people who have packages shipped through the mail win. Yes, that includes my Amazon Prime packages, but it’s also a win for me when I buy a 1970s silk scarf from Estonia, a bamboo head umbrella from New York, a discount vintage style dress from China, or a case of champagne from Monticello.

    Meet me halfway here — yes, the low shipping rates are the result of government interference in the market, and yes, I’m against it, but they are neither Amazon’s fault nor exclusively for Amazon.

    • #27
    • July 14, 2017 at 10:20 am
    • Like2 likes
  28. Profile photo of Robert McReynolds Member

    James Madison (View Comment):

    Amy Schley (View Comment):

    James Madison (View Comment):
    And now that FedEX and UPS are organized and invested in USPS serving the last mile of delivery, they will no doubt lobby to preserve this government subsidy that favors BezoCo versus Mom and Pop Co. Is that fair? Is that efficient? Does that reflect real costs?

    This “subsidy” that isn’t (as has been pointed out several times) is equally available to all comers, Mom and Pops included. In fact, many tiny specialized producers survive on internet orders and the USPS pricing that makes them profitable. If Mom and Pop are wedded to the notion that customers can only walk through the door and don’t exist through the internet, Mom and Pop are due for retirement anyway.

    As for fair, efficient, and reflecting real costs, I’m game for removing the laws that make it illegal for anyone other than the USPS to carry mail. Subject the USPS to market forces for everything they carry and don’t subsidize the inevitable collapse. Let UPS and FedEx take over the entire mail service instead of just parcel delivery.

    Of course, what happens to your pretty narrative about Amazon being the evil crony capitalists when they continue to thrive then?

    Amy,

    If a GSE does not charge full price and wins business from other for-profit suppliers, is the discount not a subsidy which benefits those who take advantage of it? In this case Amazon and me.

    This arrangement favors one channel of distribution over another. It picks winners and losers, which is what we want our government to do, right?

    How can GSE’s (like Fannie Mae or USPS) afford to not charge full cost? Taxpayer backstop maybe? Fannie Mae and Freddie Mac cost us about $180 plus billion. Sounds like the GSE’s are not playing by the same rules.

    Amazon is exploiting a foolish USPS non-cost recovery pricing strategy to win marginal revenue that covers marginal cost, but not full cost. Amazon customers and Bezos win.

    Is the subsidy then not for the GSE and not the person who takes advantage of the service being subsidized? If you have a choice between spending $2 per pound per parcel to UPS and $1.42 per pound per parcel to USPS, are you not just making a sensible business decision? I feel in the middle of both lines of argument here, but the most important part I think is not losing the language. Subsidy has a specific meaning, and I fear you are not using it correctly.

    • #28
    • July 14, 2017 at 10:20 am
    • Like3 likes
  29. Profile photo of Umbra Fractus Coolidge

    What this ultimately comes down to is that people are upset that Amazon is not paying more than they need to.

    Should the USPS charge Amazon, and only Amazon more to make up for the so-called, “subsidy?”

    • #29
    • July 14, 2017 at 10:23 am
    • Like2 likes
  30. Profile photo of Amy Schley Member

    Robert McReynolds (View Comment):
    Spooner would be so proud!

    Excuse me? Have you not heard of the Private Express Statutes?

    Outside a few exceptions, it is illegal to create a private postal service to compete with the USPS.

    “Extremely urgent” letters[edit]

    In 1979 the Postal Service authorized the delivery of extremely urgent letters outside the USPS; this has given rise to delivery services such as Federal Express and UPS‘s express mail services. Records of pick up and delivery must be maintained for Postal Service inspection if the time sensitive exception is being used.

    Lawful private carriage[edit]

    It is possible to set up a private mail delivery service known as “lawful private carriage” if the USPS postage is paid in addition to any private postage fee that is collected.

    Occasional private mail delivery[edit]

    One does not need to establish a private mail delivery service for the occasional commercial transport of a letter outside the mails so long as the rate which would have been due to the USPS is affixed in stamps, the stamps are cancelled in ink, and the date of receipt by the carrier or the transport of the letter, are noted thereon.

    Special messenger services[edit]

    There are limited exceptions for special messenger services which deliver less than twenty-five letters for an individual or company per occasion.

    Free delivery[edit]

    The delivery of letters without compensation and without the affixation or payment of any postage is allowed under 39 CFR 310.3(c) by third parties, and under 39 CFR 310.3(b) for one’s own letters which includes regular employees only delivering company mail.

    Cargo delivery[edit]

    There is an exception for the delivery of what otherwise would be considered a letter if it is sent with cargo and the letter is somehow incidental to the ordering, delivery or shipping of the cargo [39 CFR 310.3(a)].

    Other exceptions[edit]

    Other exceptions to the PES include:

    • Letters that at some point during their pick-up or delivery had previously entered into the USPS mailstream, unless the letters are consolidated.
    • Letters addressed to specific persons that fall outside the purview of the PES.[citation needed]
    • Certain documents and objects that are not considered letters, even though containing a message.
    • #30
    • July 14, 2017 at 10:27 am
    • Like4 likes
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