Does the government subsidize Amazon?

Discussion in 'Politics' started by Zambo, Jul 14, 2017.

  1. Zambo

    Zambo Poo Flinger
    Lifetime Member

    Joined:
    Jun 12, 2014
    Messages:
    6,096
    Oxbucks:
    $2,625
    Ratings:
    +9,742 / -41
  2. ChiefGator

    ChiefGator A Chief and a Gator, Master of the Ignore list!!!!

    Joined:
    Nov 9, 2015
    Messages:
    5,037
    Oxbucks:
    $1,116
    Ratings:
    +2,361 / -201
    Part of the government invented the internet, so yes in a sense they have a subsidy to every business that uses the internet.
     
  3. NavetG8r

    NavetG8r Stupid
    Lifetime Member

    Joined:
    Jun 11, 2014
    Messages:
    13,128
    Oxbucks:
    $552
    Ratings:
    +9,385 / -64
    If so, are they trying to put small businesses out of business? Amazon is killing a lot of small businesses. I went to one the other day, didn't have what I wanted. Told him he's forcing me to use Amazon. He said, yeah, I get that a lot.
     
  4. TheDouglas78

    TheDouglas78 Well-Known Member

    Joined:
    Jun 12, 2014
    Messages:
    9,942
    Oxbucks:
    $2,063
    Ratings:
    +5,258 / -56
    They are killing a lot of brick and mortar businesses that aren't small business as well. The death of the mall type stores is being attributed to Amazon type businesses.
     
    #4 TheDouglas78, Jul 14, 2017
    Last edited: Jul 14, 2017
  5. URGatorBait

    URGatorBait #TeamBrad
    Lifetime Member

    Joined:
    Jun 11, 2014
    Messages:
    24,640
    Oxbucks:
    $1,803
    Ratings:
    +11,887 / -171
    I find the use of the word subsidy interesting here...if this were UPS and not USPS it would simply be called the arranged business deal and not a subsidy, seems like because the government is semi involved (since USPS is not technically a federal entity) all of a sudden the subsidy word gets thrown around. Fact of the matter is, USPS has a network pre-built, and in order to gain business/revenue (potentially ensure they continue to exist in the first place) they bring in business at rates that gets those shippers in the door.
    A subsidy suggest an actual physical payment to make up the direct difference of cost...that isn't what is happening. USPS is simply charging a rate that gets them the business.

    That isn't a subsidy...that's capitalism baby ;)

    Let's face it, USPS would be struggling without outlets like Amazon.
     
    • AlexDaGator

      AlexDaGator The Hammer of Thor
      Lifetime Member

      Joined:
      Jun 19, 2014
      Messages:
      6,564
      Oxbucks:
      $2,458
      Ratings:
      +9,147 / -11
      Post Office needs to be reformed (or privatized).

      It's not as vital to our communications systems as it once was. I don't think anybody would be heartbroken if they ceased regular Saturday delivery or closed a few locations. It's just bills and junk mail anyway. Maybe the rare card or invitation.

      It lost $5.1B in 2015 and $5.6B in 2016. It should aim to break even every year (if it remains a part of the government).

      They need to charge more for junk mail and more for packages. I don't like subsidizing Amazon, but I really hate subsidizing junk mail.

      Alex.
       
      • Zambo

        Zambo Poo Flinger
        Lifetime Member

        Joined:
        Jun 12, 2014
        Messages:
        6,096
        Oxbucks:
        $2,625
        Ratings:
        +9,742 / -41
        Interesting POV. So lets say Qatar airways can fill up their aircraft with free fuel from the state and therefor operate at a competitive advantage, certainly that would be considered a subsidy, no? How is that different that allowing the public mail carrier to transport Amazon's packages at an average loss of almost 2 bucks per package? If it were capitalism the PO would be out of business. But since they get taxpayer money to pay the bills they can continue to operate.
         
      • URGatorBait

        URGatorBait #TeamBrad
        Lifetime Member

        Joined:
        Jun 11, 2014
        Messages:
        24,640
        Oxbucks:
        $1,803
        Ratings:
        +11,887 / -171
        yes, because the oil/gas itself is the physical payment/subsidy...there is a physical transfer involved, which is the definition of a subsidy.

        Why is it not a subsidy when Big Business A buys bulk windows at $100 a window, but Small Business B pays $150 per for the very same window but doesn't buy as much? It's just business, and when you pump more production into the business, you can do so at a better rate.

        Now, the amount the fed gov sends to USPS is itself a subsidy, I agree.

        I never read in that article that they were taking a 2 dollar "loss" on every package. They are shipping at a discounted rate from the joe blow walk in rate, but that doesn't necessarily equate to a loss. Of course their structure indeed makes it difficult to pinpoint what is making money and what isn't. It is pretty clear, however, that they were losing money before they were delivering amazon packages...even at a discounted bulk rate, delivering amazon packages may actually be what is keeping them from going belly up completely, while snail mail continues to dwindle and may make them only pennies on the dollar. Without seeing the actual revenue streams separated out, it isn't impossible to think that delivering amazon packages, even at a bulk discounted rate, could very well be "subsidizing" ;) the continued existence of USPS itself.

        I find it difficult to believe that USPS would be more stable by not having large amounts of packages from amazon coming through it, and if that is the case, they should cease handling amazon shipments immediately...I'm willing to bet there is a reason they aren't.

        To the extent that they aren't covering their total outlays, I am not seeing where it is said that it is BECAUSE of amazon shipments...again, a discounted rate does not equate to a loss on an individual unit basis...I mean unless someone wants to argue that they were making money only up until they started shipping amazon packages, I just find that difficult to believe.
         
        • URGatorBait

          URGatorBait #TeamBrad
          Lifetime Member

          Joined:
          Jun 11, 2014
          Messages:
          24,640
          Oxbucks:
          $1,803
          Ratings:
          +11,887 / -171
          and of course now i can't re-read the article because wsj wants a subscription :headslap:
           
        • ChiefGator

          ChiefGator A Chief and a Gator, Master of the Ignore list!!!!

          Joined:
          Nov 9, 2015
          Messages:
          5,037
          Oxbucks:
          $1,116
          Ratings:
          +2,361 / -201

          Great post, but are they not struggling with business from Amazon???
           
        • Zambo

          Zambo Poo Flinger
          Lifetime Member

          Joined:
          Jun 12, 2014
          Messages:
          6,096
          Oxbucks:
          $2,625
          Ratings:
          +9,742 / -41
          I'm not so sure this is just about economy of scale or bulk discounts.

          The PO is a government service specifically in place so private parties can send correspondence and goods to each other. They are mirrored by for profit companies like UPS and FedEx who basically provide the same service. It is good that those companies exist and compete with each other. It gives value to the consumer. But if the post office can do the job cheaper than they can then it becomes hard for them to compete. Its one thing if the PO is just more efficient and better run than those companies (har-dee-har har). Its quite another thing when the PO can deliver a package cheaper simply because they don't have to make a profit.

          Ergo a law was put into effect which says that the PO can accept money to deliver packages but that they can't perform that service for less than their cost to do so. I think that makes sense. What the article is claiming is that the original formula for computing the cost of packages is in need of adjustment due to the change in how many packages are being sent. For example, if the total cost to deliver the mail is 4 million bucks, and 25 percent of the mail delivered are packages, then the cost to deliver the packages should be computed as 1 million dollars, and the price per package based on that number. Yet the number of packages delivered has skyrocketed in the last years but the calculation hasn't changed.

          On the other hand, I can see how it could be argued that if it weren't for Amazon, the PO might be suffering even bigger losses and need to be propped up with even more taxpayer money to stay afloat. In either event I think its an interesting study.
           
          • URGatorBait

            URGatorBait #TeamBrad
            Lifetime Member

            Joined:
            Jun 11, 2014
            Messages:
            24,640
            Oxbucks:
            $1,803
            Ratings:
            +11,887 / -171
            Similar, but with WAY less infrastructure to maintain, doing so at sometimes much higher rates, and not covering every conceivable location within the US like USPS does, in fact the two you mention use USPS for final mile type deliveries regulary.

            agreed.

            If there needs to be recalculation to make costs per item more appropriate, then by all means, they should do so...I just didn't get that from the article. All I got was dude wants to call a difference in prices for one entity a subsidy as compared to another with not much of a basis in between. Unfortunely I cannot reopen the article.

            Absolutely.
            They really need to do some creative thinking and at least get themselves to at least break even...it needs to be outside of the box of "let's just charge more for stamps". I am of the belief that they are doing exactly that with entities like Amazon...however, if it is required to increase the rates of those entities in order to stay afloat, and they can do so without losing the business to the UPS and FEDEX types, then by all means, do so.
             
          • Gatordiddy

            Gatordiddy Well-Known Member
            Lifetime Member

            Joined:
            Jul 23, 2014
            Messages:
            3,524
            Oxbucks:
            $1,596
            Ratings:
            +3,796 / -9
            One crucial element missing in this discussion about the USPS (one of my customers)-
            Congress funds the pensions for Federal Agencies- yet the USPS has to pre-fund all employees pensions with absolutely no assistance from the Feds.
            This equates to the majority of their fiscal debt.
            I'm not saying they would be an awesome efficient profit making machine if Congress paid the pensions but it would be a huge relief to their bottom line.

            One other note -
            They are on an IT transformation path that is on par or better than most commercial entities and definitely most Federal agencies. Their new IT leadership are some smart folks.
             
            • pilot-in-fla

              pilot-in-fla Deplorable
              Lifetime Member

              Joined:
              Jan 15, 2015
              Messages:
              15,544
              Oxbucks:
              $828
              Ratings:
              +4,711 / -72
              First of all, every major carrier -- UPS, FedEx and USPS, provide big discounts to major shippers like Amazon. That is just how business works and there are also some real economies of scale from big accounts to justify discounts.

              Now as far as the USPS pension contribution, at least some of this was run up in the past but, at some point, it should certainly be paid from postal revenue and not paid for by taxpayers. Taxpayers certainly aren't expected to foot the pension expense for UPS or FedEx.

              But what would be fair is to have a serious study as to what level of postal service is reasonable as regards number of days of delivery, number of post offices, etc. and if the Congress wants to have more than would be economically justified, then that difference should be paid for by appropriated funds.
               
            • LagoonGator68

              LagoonGator68 Well-Used Member
              Lifetime Member

              Joined:
              Jun 12, 2014
              Messages:
              4,720
              Oxbucks:
              $311
              Ratings:
              +2,548 / -93
              You bid on a contract. You win the contract. You hope you bid correctly. Sometimes you don't.

              Even after registering, I can't read the wsj article. But isn't it possible the USPS could be losing $10.00 per package if it wasn't for having the Amazon contract which cuts the overall loss per package to $2.00 due to economies of scale? The truck and driver are going by every address daily except Sunday, regardless.
               
            • alcoholica

              alcoholica Well-Known Member

              Joined:
              Jun 11, 2014
              Messages:
              10,223
              Oxbucks:
              $1,875
              Ratings:
              +7,842 / -252
            • Detroitgator

              Detroitgator General Factotum
              Lifetime Member

              Joined:
              Jul 15, 2014
              Messages:
              11,512
              Oxbucks:
              $2,684
              Ratings:
              +9,239 / -23
              Let me know when USPS employees are not covered under CFR... technically. ;)
               
            • URGatorBait

              URGatorBait #TeamBrad
              Lifetime Member

              Joined:
              Jun 11, 2014
              Messages:
              24,640
              Oxbucks:
              $1,803
              Ratings:
              +11,887 / -171
              :trump:
               
            • Detroitgator

              Detroitgator General Factotum
              Lifetime Member

              Joined:
              Jul 15, 2014
              Messages:
              11,512
              Oxbucks:
              $2,684
              Ratings:
              +9,239 / -23
              But I'm right... technically. Let me know the success rate of dealing with work/pay/benefit rules for employees that are both in a union (where a contract can be reopened) but are also under CFR (which requires a change in LAW). I'll wait. ;)
               
            • URGatorBait

              URGatorBait #TeamBrad
              Lifetime Member

              Joined:
              Jun 11, 2014
              Messages:
              24,640
              Oxbucks:
              $1,803
              Ratings:
              +11,887 / -171
              technically :lol:
               

            Share This Page

            The Box

            Help

            You don't have the necessary permissions to use the chat.

            • About Us

              Our community sprung up when the Gatorsports message board was shut down in the summer of 2014. We pride ourselves on offering Gator-biased, yet critical discussion among people of all different backgrounds. We are working every day to make sure our community is the best Gator message board you will find.
            • Like us on Facebook

            • Buy us a Zima!

              The management works very hard to make sure the community is running the best software, best designs, and all the other bells and whistles. Care to buy us a non-alcoholic Zima? We'd really appreciate it! Just click the "Donate" tab at the top of the page.