Amazon: from manufacturing to delivery?

Awhile ago, I asked a question on Quora.com about how much of an average residential UPS or Fedex truck was Amazon packages, but no one could give an authoritative answer, but I have long suspected that it’s at least half. But as Amazon sucks up more and more of the delivery services’ capacity, it’s beginning to make sense for them to take care of that job too in some places.

In a public interview at this year’s Code Conference put on by Recode, tech journalist Walt Mossberg asked Amazon founder and CEO Jeff Bezos about the growth of white Amazon vans in some metropolitan areas, and specifically about whether Amazon wants to replace existing delivery services.

“We will take all the capacity that the U.S. Postal Service can give us and that UPS can give us and we still need to supplement it,” Bezos explained.

Apparently, the Christmas 2013 disaster when so many Amazon packages were late was the real turning point.

Maybe I need to think about selling my UPS stock.

Chuck Schumer on the Excessive Burden of Taxes

N.Y. Sen. Chuck Schumer thinks federal taxes are an onerous burden on those who work hard and excel and thus should not be levied on them. Has the liberal Democrat taken a sudden conservative turn? Not exactly. Schumer is just pandering to fans of the Olympic Games.

“Our Olympian and Paralympic athletes should be worried about breaking world records, not breaking the bank, when they earn a medal,” said ‎Schumer. “Most countries subsidize their athletes; the very least we can do is make sure our athletes don’t get hit with a tax bill for winning. After a successful and hard fought victory, it’s just not right for the U.S. to welcome these athletes home with a tax on that victory.

Schumer is proposing that Olympians’ cash prizes should not be taxed. While it’s nice to see a liberal acknowledging the drag that excessive taxation causes on those who wish to excel, I wish he would see that the same principle applied to middle-class laborers and white-collar workers, and even to upper-class business owners who create jobs and capital.

DollarShaveClub.com Will End TV As We Know It

Ben Thompson looks at Unilever’s acquisition of DollarShaveClub.com for $1 billion and sees in it the seeds of destruction for massive consumer products companies like Proctor & Gamble. And because companies like Proctor & Gamble are the source of ad revenues that keep most television on the air….

Note that metric: cartridge share. According to the traditional way of measuring marketshare Dollar Shave Club only has 5% of the U.S.; the discrepancy is due to the massive price difference between Dollar Shave Club and Gillette. And yet, the price difference is the entire point: in a world with good enough products (Dollar Shave Club imports their blades from Korean manufacture Dorco) that can be bought on zero marginal cost websites and shipped to your home directly there is no reason to charge more.

The implications of this go far beyond P&G: fewer Gillette razors also mean less TV advertising and no margin to be made for retailers, who themselves are big advertisers; this is why I argued last month that the entire TV edifice is not only threatened by services like Netflix, but also the disruption of its advertisers, of which P&G is chief.

Beware of Counterfeits when shopping on Amazon

CNBC reports on the growing problem of Chinese counterfeiters gaming the system on Amazon. Just because it says “fulfilled by Amazon” doesn’t mean that it’s authentic.

Always a problem, the counterfeiting issue has exploded this year, sellers say, following Amazon’s effort to openly court Chinese manufacturers, weaving them intimately into the company’s expansive logistics operation. Merchants are perpetually unsure of who or what may kill their sales on any given day and how much time they’ll have to spend hunting down fakers.

Some of the signs of fakers include lots of reviews that say “I received this item at discount in exchange for an honest and unbiased review.” And just because an item is cheapest and/or is listed as the bestseller in the category, doesn’t make it the real deal. As always, caveat emptor.

If you want to weed out the sub-standard products, you will want to get familiar with Fakespot.com.

Is Amazon “redlining” minority neighborhoods in Boston?

Amazon.com

The Boston Globe notices that Amazon offers same-day delivery service throughout most of the Greater Boston area, except for the mainly black and Hispanic neighborhoods of Roxbury, and implies that the reason is racism, while saying it’s not racism. Same-day delivery is offered to Amazon Prime customers, who pay $99 per year for the program, on order of $35 or more. If you order early enough in the day and pay a little extra for certain, but not all, items, you can get it the same day.

Predictably, the politicians and community activists are quick to decry the unfairness of it all and to claim that all services should be available to everyone, regardless of where they live. But what the Globe and the activists don’t do is ask the most important question: How many Amazon Prime customers live in Roxbury?

Roxbury is the poorest neighborhood in Boston. What are the odds that there would enough Prime subscribers in that neighborhood to make same-day delivery, which is a very expensive premium service for Amazon, a good use of resources? It’s not Amazon’s duty to make people feel better by using money on them.1

As the CEO of Newbury Comics notes in the article, there are lots of retailers that don’t have stores in Roxbury. Is that unfair too?

Whose fault is it?

The Globe then expands the net to decry all the ways that life is unfair to residents of Roxbury. Trendy foodie delivery companies, with names like Caviar and Drizly, don’t deliver to Dorchester and Mattapan, two other neighborhoods with high populations of poor minority residents. Given the cost of the food they deliver are poor people likely to order from them?

People in these neighborhoods also pay more rent relative to their incomes. Well, yeah, because they’re poor. When you’re poor, then everything is relatively more expensive. They also face longer commutes to work. Again, duh.

I drive an hour in the morning and 1-1/2 hours in the evening on my commute. That’s the price I pay to live in a three-bedroom house in the suburbs that would sell for $250,000, rather than a three-bedroom condo near my office that would cost twice that, at a minimum. We all have to make such compromises.

I’m not saying, Let them eat cake. What I’m saying is that the poor would be better served by politicians and community activists who worked harder at fixing the root causes of poverty—“Why are these people poor”—instead of inculcating a sense of entitlement about services and opportunities they don’t have access to in their current situation.

But it’s a lost easier and personally rewarding for liberal pundits and pols and newspapers to get people angry at faceless corporations and the “rich” than at the failed and inept policies that keep them poor. Class warfare doesn’t serve the rich or the poor, but those who benefit from diverting attention elsewhere.

  1. I should say here in the interest of full disclosure that I am an Amazon Prime customer and also earn money from Amazon affiliate links. I also participate in the Amazon Vine program in which I receive products in exchange for reviews. But those facts have no bearing as this post isn’t so much about defending Amazon as much as it’s pointing out the flaw in the article’s logic. ↩︎

Why My Local Electric Company Won’t Install Solar Panels on My House

Two summers ago, a salesman came by the house to pitch installation of solar panels. It was one of those new companies that instead of selling you the panels, leases them to you. You pay a monthly fee that is supposed to be less than your electric bill. In return, they do all the work of installing and maintaining the panels and replacing them. They also make money selling the surplus electricity back to the electrical grid and by getting the tax rebates from the government.

It’s not a perfect system. For one thing, some companies don’t disclose all the costs. And some homeowners have been put in a difficult spot when they try to sell their homes because the new owner has to agree to take over the lease and has to qualify on credit. And, by law, they can’t install battery backups so when the sun isn’t shining, at night or during storms, you have to draw from the grid, which also removes another big bonus of solar that when the power lines are down you still have electricity.

But overall, it’s a step in the right direction for the “green revolution” and for renewable energy in America. So why aren’t the big electric utilities leasing solar panels and putting them on homes across America themselves? In fact, all of the major players are smallish companies, newcomers to home residential power.

Like many mature industries facing disruption from new upstarts, rather than using their vast resources to innovates, instead they hunker down and use external forces—legislation and lawsuits, for example—to maintain control. They’re using their clout with public utility commissions to create extra fees for solar power producers. They also play both sides against the middle, on the one hand pushing the passage of the aforementioned laws that prevent the use of battery backups and then claiming that by lowering their own rates while still relying on the grid at night, the solar companies are raising the costs for the poor and minorities.

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Getting Rich on the Backs of the Poor (Adjuncts)

I’ve written about how higher education is just the next big bubble about to burst, how it’s a grand scheme of a surfeit of schools putting millions into crippling with mediocre educations that leave them unemployable, unmarriageable, and living in their parents’ basements after graduation. I’ve also written about the incredible higher-than-inflation rise in tuitions over the past 30 years that having nothing to do with supply and demand and everything to do with government pork for big banks supplying student loans.

But did you know that much of that money is not being spent on the top-notch education you thought your kids were getting? Instead they’re hiring administrators and bureaucrats at an unprecedented rate, while sloughing off teaching to low-paid adjuncts who get slave wages and no benefits. Oh, and they have to pay union dues too, thank you very much.

Now the adjuncts are getting more vocal about it. Still, I wonder how many of those millennials out there demonstrating at #FeeltheBern rallies and for Hillary, demanding free tuition and free education and free everything, all the while decrying the so-called income gap and bloated CEO pay, realize that the adjuncts teaching them are suffering under their noses every day.

But then the students often don’t know to ask. If more of them learned how many of their classes are taught by poorly paid, unsupported teachers, even as their tuition rises, how would they react? Would they question the value of their education? Call for reform? Or would they do what I suspect I would have done if I’d known Harvey, the most valuable teacher in my undergraduate career, was an adjunct: burned with embarrassment, and never reached out to him after the semester closed, because I’d already received too much?

Why New York Subway Lines Are Missing Countdown Clocks

Why New York Subway Lines Are Missing Countdown Clocks – The Atlantic:

“The story of how it could take 28 years to install clocks that tell you when the damn trains are coming turns out not to be about some dinosaur fixed-block signaling system and the gleaming new technology here to replace it. It’s simpler than that: It’s the story of a large organization’s first encounter with a large software project.”

If you wanted a snapshot of every problem a bloated government agency could have, here it is: necessary modernization held back by unions that won’t trade hours for a system that works; contracts bloated by greed and political posturing; intentional inefficiencies introduced into the system so as not to “kill the job”; spending hundreds of millions to create duplicate systems; and more.

At one point, the reporter says it will take 175 years before the whole MTA signaling system–which is early-20th century vintage now–will replaced. 175 years! That would be like a major transportation infrastructure in our largest city today relying on technology from 1840!

A Penny for Your Books

A Penny for Your Books – The New York Times:

“But Thriftbooks’s Ward and Discover Books’s Hincy are quick to paint themselves as book lovers, and savers. ‘We feel we give books the best and maximum opportunity to be sold or redistributed or recycled,’ Hincy says. ‘When I started with this company, it was all about keeping books from landfill demise.’ Or, as Ward puts it, ‘10 years ago, before companies like mine existed, those books were seen as having no value at all.’ And even Moss concedes that his store’s used-book sales have been fairly steady over the past 10 to 15 years.”

Ever wonder how anyone makes money selling used books for a penny on Amazon?

Is Duke right that $60,000 tuition is a bargain?

MedicalCenter

Duke University is fighting back against the perception that college education is overpriced and a waste of time by claiming that in fact $60,000 per year is a bargain. Yeah, you read that right, a bargain. In fact, they claim that in order to reflect actual costs they should charge $90,000 per year. It makes you wonder why it costs more than 1.7 times the median household income[1] to educate one college student per year.

Now Duke offers a breakdown of where that $60,000 goes toward its overall budget, but I don’t think it convinces as well as they think it does. They say that $14,000 of the yearly total goes toward administrative and support salaries. That’s nearly 25 percent. But don’t you need secretaries and custodians and cafeteria workers and, well, whatever else administration does? Let’s look at it another way. According to a 2011 Washington Monthly article, since 1975 colleges have vastly expanded their administrative functions without a concurrent expansion of teaching roles:

Between 1975 and 2005 […] the faculty-to-student ratio has remained fairly constant, at approximately fifteen or sixteen students per instructor. One thing that has changed, dramatically, is the administrator-per-student ratio. In 1975, colleges employed one administrator for every eighty-four students and one professional staffer—admissions officers, information technology specialists, and the like—for every fifty students. By 2005, the administrator-to-student ratio had dropped to one administrator for every sixty-eight students while the ratio of professional staffers had dropped to one for every twenty-one students.

And so the next generation is mortgaging their futures to employ vast armies of “vice presidents, associate vice presidents, assistant vice presidents, provosts, associate provosts, vice provosts, assistant provosts, deans, deanlets, and deanlings, all of whom command staffers and assistants.”

As for the actual faculty, they cost $21,000, plus another $7,000 for their support staffs. Duke claims that it costs that much to hire star professors and to pay for research teams and teaching fellows and assistants and labs. But does all that research and publishing and all that activity actually help the undergraduate? Does it help him get a job after graduation? Is it worth thousands of dollars in loans and the interest on those loans? It benefits Duke and the research and publication probably benefits society (not to mention the lucrative profits from monetizing the scientific discoveries), but it’s just another burden placed on those least able to afford it.

A couple of other salient facts about Duke’s pie chart. For one thing, it seems to assume that the university’s operating income for its operating budget comes from tuition, but for the vast majority of colleges a substantial portion of their funds comes from gifts to the school, investment income from endowments, and in the case of public schools, tax money. Thus their pie chart is skewed in one way.

Another fly in the ointment is that $20,000 that goes to financial aid. This is the part that seems odd. Give us $60,000 and then we’ll give some portion of that back as aid. If you get more than $20,000 back you’re actually getting a discount. If you get less than $20,000 then you’re helping subsidize other students.

That’s right. About 60% of students are mortgaging their futures at the cost of tens of thousands of dollars in interest over the years in some cases, in order to help pay for the other 40% of students to go to school too.[2] Does that seem right? Duke admits that about half of all their students are paying $20,000 per year to subsidize their classmates’ education.

Now some would say that’s okay because those who can afford to pay should help those who can’t. Except “can afford to pay” is such a subjective judgment. There are families that have scrimped and saved, that have mortgaged everything, that have foregone retirement saving in favor of college saving. And even then most end up with huge post-graduation loan burdens.

There is a higher-education bubble, just like there was a housing bubble a few years ago, and despite Duke’s dissembling, tuitions are out of whack and are imposing incredible burdens that are beginning to drag down our economy. Most young people would be better off learning a trade, going through non-tradiitonal education, or getting jobs that train you as you go than if they spent four years learning gender theory, partying like maniacs, and cramming for exams in order to forget everything the next day.


  1. Median household income in the US from 2008 to 2012 was $53,046  ↩

  2. According to a chart provided by Duke at the NPR link, about 55% of students pay full price and another 5% pay between $40,000 and full price.  ↩

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