Jared Kushner’s Air Bridge may have worked to not only expedite delivery of PPE, but also failed to deliver by perhaps hoarding an as yet unaccounted amount of PPE materiel. Slender Man made Air Bridge more like DoorDash.
Trump has been called a “day-trader” and the margin-businesses popular with venture capitalists excites those risk seekers playing with other people’s money. Kusher’s tasks always had some element of related profit, whether it was the Qatari financing for his white elephant building, his brother’s website, or the real estate swap pretending to be a Middle East Peace plan. A new article about his various schemes also lays out the history of Kushner’s jamming square pegs for his father-in-law.
The origins of Project Airbridge lie with MIT experts, who originally proposed a government led and funded airlift of supplies, according to the Washington Post. But it was seized upon by Trump’s son-in-law, Jared Kushner, who ran a volunteer shadow coronavirus task force that included his former roommate and people from private-equity companies and consulting firms like McKinsey. (“Young geniuses” Trump called them.) Unhappy employees at the Federal Emergency Management Agency (FEMA) dubbed them “the children.”
Yet less than two months later, after many glowing PR hits, the administration decided to put an end to Project Airbridge as members of Congress and the media started demanding answers about how the supplies were being distributed, who received them, and whether the White House was making distribution decisions based on politics rather than public health. On April 21, 10 Democratic senators, led by Elizabeth Warren, asked the inspector general of the Department of Health and Human Services to investigate the project. “The novelty and complexity of this arrangement demands heightened scrutiny and transparency,” they wrote in a letter. “However, the administration’s implementation of Project Airbridge has been completely opaque.”
The short-lived Project Airbridge is an example of how the Trump administration has taken advantage of the pandemic to boost some of the country’s biggest companies while doing little more than offer hard-hit states photo ops and the chance to compete against each other to pay exorbitant prices for PPE. And while the project did little to ameliorate national shortages of PPE, it may have a lasting impact on everything from health care costs to the consolidation of corporate power.
The companies involved in Project Airbridge are some of the biggest in the world, including McKesson, Cardinal Health, Medline, and Henry Schein. They are the huge intermediaries of the health care system, distributors of prescription drugs and medical supplies, which they buy from wholesalers and then sell to hospitals, clinics, and government agencies. Yet through Project Airbridge, the Trump administration gave these enormous firms a sweetheart deal free of much if any oversight.
www.motherjones.com/...
DoorDash does customer acquisition — by bullying restaurants. But what’s funnier about Roy’s friend’s problem (and it was a real problem because of Yelp reviews and angry customers) is that DoorDash priced the pizzas incorrectly. “A pizza that he charged $24 for was listed as $16 by Doordash,” emphasis Roy’s. And then: “My third thought: Cue the Wall Street trader in me…..ARBITRAGE!!!!”
And so the story unfolds. “If someone could pay Doordash $16 a pizza, and Doordash would pay his restaurant $24 a pizza, then he should clearly just order pizzas himself via Doordash, all day long. You’d net a clean $8 profit per pizza [insert nerdy economics joke about there is such a thing as a free lunch],” wrote Roy. They order 10 pizzas this way, and it worked! The money was free, a seamless transfer from SoftBank’s deep venture capital-lined pockets to Roy’s friend’s business bank account. Eventually, in another series of what Roy hilariously calls “trades,” they just ordered pizza dough through DoorDash for $75 in pure profit.
Later in the piece, Roy points out that DoorDash lost $450 million generating $900 million in revenue last year, which is wild. The delivery business was working just fine before DoorDash and co. swept in with piles of money to burn. Today, as Roy writes astutely, the model is broken. “You have insanely large pools of capital creating an incredibly inefficient money-losing business model,” he writes. “It’s used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses. The companies unload their capital cannons on customer acquisition, while this week’s Uber-Grubhub news reminds us, the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?”
www.theverge.com/…
Supply-chain exploitation:
That’s the thing about how industries have evolved over the past decade. I know I ascribe ZIRP as the cause of all ills in the world, but this sometimes feels like the greatest ZIRP story ever told.
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The more I learn about food delivery platforms, as they exist today, I wonder if we’ve managed to watch an entire industry evolve artificially and incorrectly. Arbitrage is about taking advantage of market inefficiencies and for all the newly minted day-traders out there, perhaps it’s time to start looking into frontier markets like pizza.
Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform. If we had to pay a customer fee on the order, it would’ve further cut into our arbitrage profits (though maybe we could’ve incorporated DashPass as part of the calculation).
themargins.substack.com/...
Managed decline:
Kushner raised eyebrows when he strutted into the role of pandemic point man for the White House, alongside his former roommate and a handful of McKinsey & Company management consultants. As Chris Buskirk wrote in these pages, Team McKinsey has “a history of doing little more than helping failing institutions fail in style while growing rich in the process.”
Project Airbridge, Kushner’s plan to take the reins of the Federal Emergency Management Agency supply-chain task force and partner with private companies to fly health care supplies to New York City from China, lived up to the McKinsey style.
Never mind that the Chinese government, through state-run media, threatened to plunge America into “the mighty sea of coronavirus” as we grappled with the pandemic. Kushner’s solution for a problem caused by China, and exacerbated by our manufacturing dependency on that country, was to turn to Beijing for “help.” Managed decline, brought to you by Kushner and McKinsey & Company.
Square Pegs, Round Holes
Kushner’s record in the public and private sector is long and mediocre. After he took over the New York Observer, the newspaper stopped its weekly print edition that had been in operation since 1987.
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Nevertheless, the president looks on as Kushner performs the political equivalent of jamming square pegs in round holes, encouraging him to try and try again.
Amid the sound and fury of the pandemic, most people didn’t notice that it was a health insurance company closely connected to Kushner, Oscar Health, that undertook development for a coronavirus website in partnership with the government. Kushner’s younger brother Joshua co-founded Oscar and is a major investor in the company, “and Jared Kushner partially owned or controlled Oscar before he joined the White House,” according to an exclusive report in the Atlantic. Though Oscar did the work free of charge before abruptly shutting down, it rightly raised the hackles of ethics lawyers.
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Trump’s greatest weakness now is his inability to recognize that Kushner is the leader of a faction within the White House whose interests come at the expense of the very people who voted for him.
amgreatness.com/...
In contrast to the United States, many other governments, for all their flaws, are actively involved in the production and delivery of crucial goods and services in an effort to contain the virus. In China, hospitals were constructed in days. In South Korea, the government provided survival kits and home visits to incentivize people to stay self-quarantined. Germany has been experimenting with heavy testing combined with innovative testing protocols.
These strategies recognize that free enterprise alone cannot meet the needs of an unprecedented public health crisis and that governments must be actively involved in subsidization, procurement, and production. But the United States has resisted granting a significant role to the public sector (an example being the president’s reluctance to invoke the Defense Production Act). This preference for markets and corporations was in full display at President Trump’s early press briefings on the coronavirus, where he stood flanked by business leaders with whom so much mutual admiration was exchanged that, were it not for the demands of social distancing, one would have suggested they all get a room.
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This philosophy today gets amplified, reiterated, and legitimized by social media stars. As the government considers its options during the current crisis, Charlie Kirk, the president of Turning Point USA, reminds us that “Socialism Sucks because it lets government pick winners and losers.” Tom Fitton, the president of Judicial Watch, warns: “Shutting down all businesses is the gov’t equivalent of hoarding toilet paper — and far more damaging to the pubic [sic] health and welfare.” (The latter being a curious case where a typo makes a nonsensical statement more coherent.)
Trump, while no doubt lacking in leadership, is obliged to cater to Americans’ mistrust of a socialized state. Before the next national disaster strikes, free market ideologues would do well to reassess their assumptions and understand that a step in the direction of state planning is not a step into a communist abyss.
blog.lareviewofbooks.org/...