Trump Can Fix His Amazon—Post Office Problem Any Time: He Controls the Post Office

Politics Features Trump v. Amazon
Share Tweet Submit Pin
Trump Can Fix His Amazon—Post Office Problem Any Time: He Controls the Post Office

Donald Trump is wrong about Amazon. His economic advisers have told him repeatedly he’s wrong. And as usual, facts and logic also indicate he is wrong. Nevertheless, he persists.

Screen Shot 2018-04-04 at 9.14.03 AM.png

Some quick facts.

—The Post Office loses a lot of money. Last year they lost $2.7 billion.

—But this is largely because the USPS can’t keep up with a 2006 law that requires them to pre-fund 75 years’ worth of employee retirement benefits. Neither the federal government nor companies must provide that kind of funding.

—The volume of mail the USPS handles has dropped nearly 30 percent since 2008, and according to some estimates the service is losing about $25 million a day. This shouldn’t surprise anyone with an email account.

—Package delivery, however, is actually a Post Office positive. Last year, parcel revenue increased $2.1 billion, the USPS’s largest such increase. Package delivery brought in $19.5 billion total, about 30 percent of USPS revenue.

—Deals with private shippers like Amazon comprise about $7 billion of that $19.5 billion, and Amazon is by far the biggest shipper. We don’t know the details of those deals, which are considered proprietary.

-But we do know the USPS ships about 40 percent of Amazon’s packages (though Amazon also uses UPS and FedEx, as well as its own delivery infrastructure). Most of the USPS shipments are what Amazon calls “last mile” shipments, covering the very last leg of a package’s journey.

—A Citigroup study last year suggested the “true” cost of package shipping is about 50 percent higher than current USPS rates, ergo Amazon would be getting a before-market discount. According to CBS News, though, Citi got those numbers by “re-allocating the Post Office’s benefits costs, not the costs specific to package delivery.”

—But you can forget all that stuff, because here’s the kicker: We know for a fact the USPS doesn’t lose money on Amazon because the Post Office is required BY LAW to at minimum break even on delivery deals..

And it’s not costing us anything. Even though the Post Office is a government entity, it doesn’t run on taxpayer dollars. It’s fully funded by stamps and postage revenue.

But here’s the weird thing: Trump has all the power here. He doesn’t have to rage at his own Post Office, or imply, unsettlingly, that there’s some weird deep state Post Office conspiracy afoot. This is because, as President, Trump is in charge of who governs the USPS. He simply either didn’t know this or didn’t find it interesting or sexy, but it’s simple: Whenever he wants to get around to it, he can nominate the nine people to fill the USPS Board of Governors.

It’s sat empty for well over a year now.

That’s right: Trump has nominated zero people to the USPS board, though in November he stated his “intent” to nominate three people. An emergency board has so far been conducting USPS business. In fact, the same day Trump started rage-tweeting at Amazon, the USPS struck a delivery partnership with Amazon.

So what’s up here?

Well, it won’t surprise you to learn that this one-sided feud isn’t about fiscal policy at all, but is just Trump lashing out at a perceived enemy because he has a criminal level of insecurity.

Trump hates Amazon for two reasons, and neither of them matters to anyone in the world but Donald Trump. Considering the size and influence of the entities we’re talking about—Amazon and the federal government—this is actually kind of remarkable.

First there’s the Washington Post, a paper Trump hates, which is owned by Jeff Bezos, the same guy who owns Amazon. Trump has attacked the paper continually for printing what he calls “FAKE NEWS,” by which he means fact-based reporting unfavorable to him. After Trump’s tweets this week, the Post’s editor-in-chief Marty Baron spoke out in defense of the paper, telling the Failing New York Times

“There isn’t anybody here who is paid by Amazon,” he said. “Not one penny… I can’t say more emphatically [that Bezos has] never suggested a story to anybody here, he’s never critiqued a story, he’s never suppressed a story…

“Frankly, in a newsroom of 800 journalists, if that had occurred, I guarantee you, you would have heard about it.”

Dude’s got a point.

But in a tweet earlier this week, Trump said the Post should register as a lobbying group. Besides being yet another broadside on the First Amendment, this complaint is laughably hypocritical, considering the Trump administration’s own lobbying scandals, including his National Security Adviser retroactively registering as a foreign agent lobbying on behalf of Turkey.

If Trump tries to hurt Amazon in an effort to hurt the Washington Post, which is clearly what he’s doing, that’s a gross and, here’s this word again, dangerous violation of the First Amendment.

I can’t believe anyone needs to point out that the President is corroding democracy. This is doubly frightening because it means he’s corroding the level below that: Our belief in our democracy.

Honestly, I can’t believe we’re here. Every goddamn day. Nothing matters.

Anyway!

The second reason Trump hates Amazon is simply that he hates Bezos, who, with an estimated net worth of $114 billion, is the world’s richest man. To give you an idea of how much Bezos is worth, last year his net worth increased by $39.2 billion, the biggest one-year increase Forbes ever recorded. Forbes points out this equals “about $5.26 for every living human—enough to buy everybody a cheap wallet on Amazon and a couple quarters to keep in it.”

That single-year increase is also four times larger than Trump’s most outlandish self-declared total net worth. Which, yes, was a lie. And last year, as Bezos earned $40 billion, Trump lost $400 million according to Forbes.

Even funnier, Trump’s Twitter attacks knocked something like $16 billion out of Bezos’s pockets. This is more than four times what Trump is worth total, and Bezos is still the richest person in the world.

More alarming, though, is what Trump’s attacks are doing to Amazon stockholders. He is knowingly using the power of his office to influence the market. This is questionable and borderline illegal.

A Vanity Fair article published this week detailed just how determined Trump is to hurt the company. White House aides were quoted saying, among other things, “He gets obsessed with something, and now he’s obsessed with Bezos. Trump is like, how can I fuck with him?”

Well, one way Trump can achieve a pleasing level of with-him-f*ckery (and according to VF sources this is truly being discussed) would be to cancel Amazon’s pending multi-billion cloud-computing contract with the Pentagon.

That takes me to my last point, though: Amazon itself is a terrifyingly large company. I’m not all for it. Sure, it does a whole lot of good for a whole lot of people, and provides valuable services, employment, etc. (This is the “pro” argument for pretty much any other corporate monolith, such as Walmart, Google, Facebook, etc.) But the company has also driven many, many, many people out of business, often using “loss leader” tactics to artificially discount certain items below market cost as a way to drive sales of more profitable goods or services. It’s unclear whether such practices constitute an anti-trust problem, but it’s clear to me we need to have a serious discussion about Amazon’s possible anti-trust and monopoly risks, as well as those of similar massive internet companies mentioned above.

It is, however, well worth noting that even for all of Bezos’s money, and for all of Amazon’s size (the company has a market cap of over half a trillion dollars), it took nearly two decades for Amazon to post substantial profits. For much of that time it didn’t post any profits at all: The company strategy has always been to reinvest everything it made so it could devour more new stuff. But the news now is different: In the last quarter of 2017 (in other words, three months) Amazon posted an incredible $1.86 billion profit.

Those numbers were propped up by the Trump tax cuts, which gave Amazon an extra $790 million.