Trump vs. Amazon In Exactly 100 Words

Chris Kleponis/CNP via ZUMA

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

I think I’ve now read upwards of a dozen articles about whether Amazon pays a fair rate for shipping its packages via the post office. It’s insane. The journalists of America are apparently required to write detailed explainers about every single stupid thing that Donald Trump tweets. They do this even when they know that Trump is motivated solely by personal animus, not by any serious policy preference.

Here is everything you need to know in 100 words. In every business, there are centralized departments—factories, billing, computer services, etc.—that are used by lots of different product lines. The cost of these common services has to be allocated across different products, and the post office is no different. It has lots of costs—trucks, planes, distribution centers—that are used by all their product lines: first class mail, priority mail, packages, etc. The question is: are they allocating these costs properly to their package business? If their allocation is low, they can charge less for package delivery while still making it look like they’re turning a profit.

That’s it. It’s a technical question of cost accounting, and as I can tell you from personal experience, every product manager lobbies creatively to get their allocations as low as possible. The Postal Regulatory Commission believes the current allocations are OK, but if you put your mind to it you can come up with nearly any allocation formula you want. As it turns out, some guys from Citigroup did exactly that and came up with a higher allocation formula for packages. This allowed them to predict that USPS package charges would eventually have to go up and therefore FedEx would get more business, which made FedEx a great buying opportunity. Given the history of Wall Street firms finding creative ways to hype their stock picks, you may decide for yourself whether to believe this.

As for Trump, who cares? He saw this on Fox News and tossed off a tweet because he hates Jeff Bezos. Why does he hate Bezos? Because Bezos (a) really is a self-made billionaire, and (b) he owns the Washington Post. Everybody knows this. Can we all stop pretending that cost accounting for the USPS package delivery business is a genuine story that we should all be concerned about?

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate