The sinking US postal service fails to deliver

In Opinion
Courtesy of MCT

The U.S. Postal Service is both a sentimental representation of imagined simpler times and an anachronistic throwback to a different era. It is also a heavily bureaucratized and bloated organization whose heyday seems well in the past. Perhaps the most revealing fact of this dysfunctional agency is the sorry state of its labor and services management.

After all what other agency can claim to have invented a euphemism for insanity; ‘going postal’?

Sentimentality aside, recent news concerning the U.S. Postal Service is troubling. In an attempt to break even, stamp prices have been raised to 45 cents, but the Postal Service still plans to default on its retiree health care payment obligations for the second time in two months, to a combined tune of $10.1 billion. For a single quarter of fiscal 2012, the Postal Service lost $5.2 billion and mail volume is down 20 percent from its peak as a growing amount of correspondence is sent through the internet.

Congressional meddling disallows the Postal Service from enacting significant money-saving organizational restructuralization, such as ceasing mail delivery on Saturdays or slowing delivery speeds. Meanwhile, Senators refuse to allow underutilized post offices to be closed in favored districts in order to avoid public ire. The the Postal Service even plans to cut sweet deals with advertising companies in order to send discounted junk mail to mailboxes in an attempt to raise badly needed revenue.

These measures ensure that the Postal Service will continue to hemorrhage money and never again become a profitable government agency; all while alienating the public and calling into question the basic premises of the Postal Service’s mission.

Lysander Spooner is a name that unfortunately has almost been lost to obscurity. However, he and his adversarial relationship to the post office are a major contributing factor to why we have postal service in a form which we recognize today.

Spooner was a 19th century entrepreneur who lambasted a strangely familiar problem: poor postal service at high prices. Seeing a good business opportunity, he created the American Letter Mail Company to deliver parcels for as low as 6 ½ cents (while the post office charged 25 cents). Private innovation developed other novel ideas that we now take for granted, such as prepaid stamps and door-to-door pickup and delivery.

Of course, this perturbed the Postal Service, who sought governmental protection to halt the flouting of their monopoly and loss of revenue to Spooner’s and others’ new start-ups. Spooner was finally defeated in the courts and forced to shut down, but not before the the Postal Service adopted his innovations and standard postal rates were forced to dip to 4 cents-where they remained for almost another century.

Article I, Section 8 of the Constitution enumerates to Congress the power “To establish post offices and post roads,” but enshrined nowhere is a granting of government monopoly. In fact, it is currently perfectly legal to create a private-sector mail carrier service under the Private Express Statutes, with one prohibitive caveat; mail cannot be delivered at prices below that of official the Postal Service rates. Unfortunately, governmental price-fixing intentionally makes a competitive mail market impossible.

We can observe the striking differences between a governmental operated agency and its private sector quasi-competitors of UPS and FedEx. To maintain legality, these private parcel delivery services are allowed only to ship packages, but they might stretch the definition of ‘package’ by enclosing documents and letters in cardboard envelopes for delivery. Nevertheless, they are fiscally solvent and suffer none of the dilemmas currently plaguing the Postal Service.

Perhaps Congress should look to the lessons of history and legalize competitive private mail delivery. Then again, that action is exceedingly doubtful, since the government hates competition.

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  • Bucur Constantinescu

    No other private or public entity is required to prefund its retiree healthcare benefits 75 years in advance within a 10-year period. Add the Great Recession to the mix and get a clearer picture as to why the Postal Service finds itself in the current financial chaos. Also keep in mind that USPS has overpaid $100 Billion in its pension funds – monies which Congress would not return. Take all this into consideration and now tell me how bad this government service truly is?

    The Postal Service did not raise the price of stamps to 45 cents in order to break even. It is constrained by law to raise rates only in relation to inflation. USPS processes and delivers 40% of the world’s mail volume and is one of the most efficient and least expensive postal systems ever assembled on this planet.

    USPS only has monopoly over letter mail delivered to recipients’ mail boxes. If customers choose to mail a letter via UPS or FedEx – they can do so right now. The major motivator for those advocating privatization is to put more money into corporate pockets and deprive millions of Americans of an essential and long-standing institution.

    Sentimentality aside, perhaps the author should look to the lessons of history more careful … then again, he probably hates the Postal Service.

  • dave

    Why do relatively poor and middle class kids choose highly subsidized
    state schools such as CSUF over other private institutions in the
    competitive marketplace such as USC or Pepperdine?

    The US Postal Service is almost every town in the U.S.
    Would private companies in a competive marketplace offer this?

    The Post Office should be seen as a public good such
    as the relatively inexpensive State school that you attend.

  • Blockpusher

    As soon as anyone brings up the name “Lysander Spooner”………you know that its another ignorant Tea Bag diatribe. They are just ill informed mouthpieces for the Cato Institute or some other right wing propaganda mill.. Let your paragons of private enterprise, Fed Ex and UPS deliver to every house in the USA…….. EVERY DAY………and see how solvent they remain.

  • Mike G.

    I think you guys are missing the author’s point. If the post office is so effcient, it should not have anything to fear from private competition.

  • Brian

    The unwillingness or inability of the U.S. Congress to deal with the sustainability issues facing the United States Postal Service (USPS) is one of the most egregious examples of government not working in the best interest of the people. Though the shift toward online communication and the drop in direct-mail advertising due to the recession have harmed the Post Office’s financial stability, the real culprit has been Congress itself.

    In 2006, Congress passed the Postal Accountability and Enhancement Act, which restricted the Postal Service’s ability to raise the cost of stamps, limited the possibilities of it to engage in non-postal services and mandated the Postal Service, which receives no direct taxpayer dollars for its day-to-day operations, to prefund 75 years worth of retiree healthcare benefits over the next 10 years. This type of mandate is not required for any other agency, public or private. It costs the USPS about $5.5 billion per year.

    And, it demonstrates that in many cases, government is not the problem. Rather, politicians, driven by ideological zeal and an interest in furthering corporate dominance in our society, are the problem.

    The possibility of laying off of hundreds of thousands of postal employees and closings of thousands of post office branches is detrimental to every American, particularly those who are low-income and reside in urban or rural areas. The service provided by the post office is affordable and efficient. The USPS would be financially sustainable with a few legislative tweaks and without the absurd requirement to prefund three-quarters of a century worth of healthcare costs.

    In recent years, the USPS has eliminated 130,000 full-time positions and proposed changes would eliminate 155,000 more. This would directly lead to higher costs to the USPS and lower standards of service to American citizens. In a time with a sagging economy and unemployment rates still much too high, why is cutting hundreds of thousands of workers and no longer guaranteeing top-notch service even an option? The answer lies with our woefully inadequate leaders in Congress — from the ones who hate government and purposely want to eliminate the USPS to the ones who recognize the role postal service plays but do not have the courage to stand up and defend it.

  • Liam Skye

    Earth to Barbeau! Earth to Barbeau! USPS delivers to 150 million delivery points every day. UPS and FedEx each cover about 5% of those delivery points on a given day – and they charge 4 to 5 times as much for similar services. In my experience they both provide very good service – as well they should for the premium rates they charge.

    Your revisionist history lesson reveals your ignorance of the topic. The United States Postal Service did not even exist in the time of Lysander Spooner. Spooner, plan to skim profitable areas while not serving less profitable areas is not an option for USPS due to its universal service mandate.

    Since you also decided to put your ignorance of the Private Express Statute (PES) on public display, lets pick you apart on that one as well. PES allows the carriage of letter mail by private curriers only if they charge no less than 6 times the going rate for a letter. With today’s letter rate of $.45, that means anyone can deliver letters as long as they charge at least $2.70. Both UPS and FedEx do carry letters – and they charge around $7 for doing so. Kind of deflates your ludicrous claim that ” governmental price-fixing intentionally makes a competitive mail market impossible,” eh? I know, I know – facts are such inconvenient things, aren;t they?

    Do some research, Barbeau. You’re a great writer but you don’t know diddly about your subject matter.

  • Sue

    Fed Ex and UPS can deliver all the letters they want, but can they do it for 45 cents? Cheap, universal service is what the USPS delivers.
    The USPS was not designed to make a profit and would break even if they didn’t have to prefund retiree benefits for people not even born yet.
    The mailing industry employees 3 million people not just postal workers.

  • grannybunny

    There is no private entity willing or able to compete head-to-head with the Postal Service in providing universal service at an affordable price. FedEx and UPS have both declined interest, and they couldn’t handle the job, even if they were interested. The Postal Service delivers 170 billion items per year to 150+ million (and the number keeps growing) addresses. FedEx and UPS — combined — deliver 7 billion items to 30 million addresses, consigning a substantial portion of those to the Postal Service for “the first and last mile.” Without competition from the Postal Service, its competitors would serve even fewer addresses, at an even higher cost. Operationally, the Postal Service is profitable. It’s current financial crisis is not the result of mismanagement or inefficiency, but rather the direct consequence of Congress’ treating USPS as its cash cow. In 2006, the Postal Service was debt-free and profitable. Then, the lame-duck Congress mandated USPS to prefund 75 years’ worth of future retiree health benefits within 10 years — a draconian burden to which no other entity, public or private, has ever been subject — and it is bankrupting the Postal Service. Congress is using the resulting $42+ billion slush fund to render “revenue-neutral” some of its other (over)spending. It’s just a cheap accounting trick to transform off-budget Postal revenues — paid by Postal customers, not taxpayers — into on-budget money accessible to Congress.

  • SH Freeman

    The author makes a very good point. And Mike G simplifies that down to one clear sentence.

    Everyone else doesn’t see the big picture. Open your minds. Just think for one second why fedex and UPS do so well WITHOUT government assistance.

    Stop regurgitating what you hear on the news or what the government tells you and just think for a second. Use your brain. Use reasoning and common sense. This is why we go to school. So we can think for ourselves, think critically…not to do and accept what the government tells us.

    And why wouldn’t anyone think competition in an industry is a good thing? Do you think an Apple monopoly on cell phones would still cost you $200 for your iphone?!?

    And I hate to break it to you, Congressmen are government workers. Congress is the government’s most representative body. So when you lambaste congress, you are lambasting the government. Time to go to UPS…

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