April 4, 2018

Trump vs. Amazon In Exactly 100 Words

Chris Kleponis/CNP via ZUMA

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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?

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

payment methods

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