(AMZN) The Most Unlikely Marriage in the Market

In the last week, the stock market has hit an all-time high just as the approval rating for Congress hit an all-time low.

Folks are clearly pleased with the private sector and disgusted with the public one. Overall, that’s a good thing for your stock portfolio.

Here’s why…

As I’ve said before, the best reason to be bullish on stocks for the long haul is the free-enterprise system itself.

Everyone has economic wants and needs. And every day, billions of workers in the private sector are out there knocking themselves out to bring you products and services that are better, cheaper or longer lasting.

Every business exists to serve people. And as a shareholder, you own a fractional interest in a thriving business. The more people you successfully serve, the more money you will make. (Just ask Ray Kroc’s descendants.) Capitalism says you can have anything you want if you just provide enough other people with what they want.

What a beautiful system. Not surprisingly, it has lifted more people out of poverty than any system ever devised.

And Then There’s Uncle Sam

On the other hand, we have the public sector. Yes, we need government to defend the shores, police the streets and make sure everyone plays fair. But as Thomas Jefferson lamented, “The natural progress of things is for liberty to yield and government to gain ground.”

That is what we plainly face today with a regulatory state that continues to pile on mandates, restrictions, prohibitions, regulations and “revenue enhancers,” otherwise known as taxes.

This is not just expensive for consumers and problematic for business owners, it risks strangling the goose that lays the golden eggs. Even those who favor a robust social-welfare system should understand that you cannot adequately fund government spending without a healthy and growing economy.

Fortunately, there are areas where the public and private sectors can engage constructively.

Amazon.com Inc. (Nasdaq: AMZN) is demonstrating how.

This week it will begin partnering with the U.S. Postal Service to deliver packages on Sundays to customers in New York and Los Angeles. The service will soon be expanded to other cities.

Talk about an unlikely twist…

The Postal Service – which is expected to lose $6 billion this year – has closed locations and proposed ceasing Saturday delivery to cut costs. It not only isn’t competent to fulfill its core function – delivering the mail – but wants to do less of it.

Amazon, on the other hand, is driven – as all successful companies are – to make sure its customers are delighted with its services.

It already offers same-day delivery of groceries in many cities. Now the online retailer wants to offer immediacy on orders from its website too. Notice how the private sector gets better and more efficient while the public sector just gets worse and worse. (That’s what happens when you don’t have a profit motive.)

Both Amazon and the Postal Service have declined to discuss costs, volume projections or the length of the contract. But it’s reassuring to see the marriage of one of the nation’s most successful enterprises with one of its most troubled.

Here’s hoping this represents a model for future cooperation between government and business. And, in particular, that the Post Office becomes more like Amazon rather than the other way around.

Good investing,

Alex


View original at: Investment U

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