Amazon

Your Tax Money is Subsidizing Retail Leviathan Amazon.com’s Shipping Costs

Enormous retailer Amazon has been keeping anti-trust lawyers busy in recent weeks as they prepare to purchase Whole Foods, but the latest revelation regarding the retail giant will disturb many Americans.

The company, which started out as a simple online bookstore with a strange name, has grown into a gargantuan entity of global retail.  Not only does Amazon still sell a great number of book, both in physical and electronic formats, but the website is now home to a number of speed-delivery options including Amazon Now – a service that will bring a predetermined cadre of items to your home within the day.

Famously, Amazon has looked into drone delivery services in the past, but have yet to coordinate an appropriate relationship with the FAA and other governmental agencies in order to do so.  As it turns out, however, Amazon does have a great relationship with the USPS – which translates to a taxpayer subsidy for the retailer coming straight from your wallet.  One Wall Street Journal writer broke is down thusly:

“In my neighborhood, I frequently walk past ‘shop local’ signs in the windows of struggling stores. Yet I don’t feel guilty ordering most of my family’s household goods on Amazon. In a world of fair competition, there will be winners and losers.

“But when a mail truck pulls up filled to the top with Amazon boxes for my neighbors and me, I do feel some guilt. Like many close observers of the shipping business, I know a secret about the federal government’s relationship with Amazon: The U.S. Postal Service delivers the company’s boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon.

“This arrangement is an underappreciated accident of history. The post office has long had a legal monopoly to deliver first-class mail, or nonurgent letters. The exclusivity comes with a universal-service obligation—to provide for all Americans at uniform price and quality. This communication service helps knit this vast country together, and it’s the why the Postal Service exists.”

The article goes on to explain that, while the practice of undercutting their own costs is technically verboten, that hasn’t stopped Amazon from taking advantage of a U.S. Postal Service whose revenues are down a whopping 40% from their peak business years, previous to the widespread use of email.

Institutions such as the USPS were once believed to be doomed due to the advent of messaging technology, but have done seemingly well to adapt to the new internet economy.  In this particular case, however, it is the American taxpayer who is keeping this integral service afloat due to our unending need for more and now.

 

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