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Washington Can’t Even Run a Mail Delivery System

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How can Uncle Sam run national healthcare when it can’t even run a mail delivery system? This week Postmaster General John E. Potter informed congressional staffers, postal union officials and others in Washington that the U.S. Postal Service (USPS) is bankrupt and will not survive unless it is given greater flexibility in determining delivery schedules, price increases, and labor costs by lawmakers, postal regulators, and unions. The remarks were sparked by the fact that the USPS lost $3.8 billion last year and is projected to lose another $238 billion in the next ten years if changes are not made. These figures notwithstanding, it is amazing to me that in 2010 we still have a government run postal system in America. Isn’t it time to privatize the Post Office?

Article II Section 8 of the U.S. Constitution gives Congress the power “To establish post offices and post roads. When the Constitution was ratified America was a very different place than it is today. We were a very rural society with many of our countrymen residing in far off lands to the west. Mail carriers provided the primary mode of delivery for important letters, documents, and packages. In their wisdom, the Founders realized that the safest, most effective way for these items to get to their recipients was through a government run system.

But things change and today America is an incredibly advanced country. We are a technologically savvy nation with websites, email, scanners, text messaging, and other communication devices. In fact, the Postal Service’s financial woes stem from competition caused by technology. Last year, the USPS experienced a 13 percent drop in mail volume primarily due to more people using email to communicate than snail mail. Additionally, companies like UPS and Fed Ex do an excellent job of delivering urgent letters and packages not just in the U.S. but around the globe. Lastly, some will argue that folks in rural areas will not be serviced if mail delivery became totally private. But, this would affect very few people in modern America. Even then the market should decide if a location is worthy of a private mail delivery system. If the answer is no (no entrepreneur comes forward to provide the service) then those residents could relocate.

Of course, just because the Constitution grants a power to Congress does not mean it has to put it into action. The changes sought by the Postmaster General would target delivery schedules and prices in order to close the budget gap of the postal system. It could mean the end of Saturday mail deliveries, longer delivery times, and postage price increases that exceed the rate of inflation. And Americans would not have a choice because the USPS maintains a legal monopoly over the delivery of non-urgent mail. This is so typical of a government run enterprise – instead of cutting staff like the rest of America during this recession to save itself, it proposes less service and higher costs for its customers. This is another reason why government should run nothing and why the USPS should be abolished altogether.

At the end of the day, the USPS is in trouble because it is government run. It doesn’t react to market conditions by laying off excess staff. It is burdened with bureaucratic waste and inefficiencies. Its management has to petition outsiders for permission just to make changes that are needed to ensure its viability. Even then, because it owns a monopoly over an industry and has an explicit government guarantee against failure it will cut services and raise costs on its customers – something that is not nearly as possible in a market based system. Lastly, even though it is billions in debt and has long outlived its usefulness, no one in Washington is saying it should be abolished. Government run enterprises just don’t know when it is time to close up shop. We have learned these lessons from Washington running a relatively easy enterprise to operate. The question we have to ask is, do we really want to entrust healthcare, a much more complicated endeavor, to Uncle Sam?

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About Kenn Jacobine

  • http://joannehuspek.wordpress.com Joanne Huspek

    Good points, but as an ex-postal worker, you have to mix in there a very serious set of unions. Even management has a union. I left 18 years ago, but even back then they were trying to thwart the growth of UPS and FedEx.

    I suspected that deals were made regarding automation. On the small scale, I saw deals being made locally. A lot of money was wasted, for sure.

    It’s been a long and painful decline. Let’s put this monolith out of its misery.

  • Kenn Jacobine

    What I don’t understand is if government is so benevolent why do government workers need a union?

  • http://ruvysroost.blogspot.com Ruvy

    Government employers are NOT benevolent. THAT is why there is a union. But unions notwithstanding, technology decrees that a very different mechanism be used to deliver mail, if there is to be a government run service.

    This much I can tell you. The minute the government shuts down the postal service, you can expect price rises in private delivery services and expect to see the end of free e-mail.

  • Kenn Jacobine

    But Ruvy, on this site we are always told about the altruistic virtues of government and how it cares about us. Why do they need a union? Isn’t that the same thing that employees of big, bad, greedy corporations need?

    I can’t see how opening up the non-urgent mail market to competitive foces will make the price go up. In terms of email, there are a lot of providers and very few if any would go to a pay system. They would never survive in the market.

  • Clavos

    Back in August of 2009, I wrote an article advocating shutting down the USPS entirely. It was based, as is Kenns’, on the deplorable state of the USPS as an enterprise, and the amount of taxpayer money it is hemorrhaging. Like Joanne, I am a former postal employee (letter carrier), and saw from the inside the incredible waste, cronyism, and debilitating disincentives to the workers created by the powerful postal unions.

    Today’s USPS even hires FedEx and UPS to carry out its long hauls, because they, with their greater efficiency, are better able to do so; the mail thus hauled is then carried by the postal service only on the so-called “Last Mile,” i.e., the actual delivery to residences and businesses. Even this phase is less efficiently handled by the postal service, but the unions prevent contracting the Last Mile out because they know that would be the death knell of the USPS, as Congress would finally see that the postal service has outlived its usefulness.

  • http://drdreadful.blogspot.com Dr Dreadful

    Isn’t it funny that Kenn bangs on about the sanctity of the Constitution, then casually discards it as soon as it doesn’t suit his argument?

    The USPS does have its shortcomings – for example, they once returned a business letter I’d mailed to a local Target store because I’d got one digit wrong in the street address – but by and large it’s still the quickest, cheapest and most reliable method for sending letters and small packages.

    I’ve got no problem in theory with doing away with a government-run postal service – the one in Britain was privatised several years ago and doesn’t seem to have suffered any significant detriment – I just worry about what would replace it. Please God, not UPS… I could bore you with tales of all the bother I’ve had with them recently, but I won’t. :-)

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I’m not certain how this relates to the present discussion, but here’s the latest on the UPS CEOs compensation.

    To my thinking, that’s obscene. No person deserves 5.5 million dollars in yearly income, certainly not today when millions are suffering.

    As far as I am concerned, this is reason enough to boycott UPS. Just let them starve.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    In fact, when you order books through Amazon.com, insist they be shipped via USPS.

    Otherwise, refuse the order.

  • http://drdreadful.blogspot.com Dr Dreadful

    That’s all well and good, Roger, but what if the company you’re ordering from only uses UPS?

    Freedom of choice doesn’t seem to be very prevalent in the shipping industry.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Well, if enough people take a stand, they might change the shipper.

    Besides, the other option is to subsidize your local bookstore.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I tried to find a link to an earlier “Wall Street Journal Report” show aired earlier today, thus far to no avail.

    The industry is being besieged by the advent of the Internet, e-mail and technological advances. Mailing letters is an anachronism. Only sending packages will eventually constitute the core.

  • http://delibernation.com Silas Kain

    Well, I have to say I find the postal service to be one of the few “government” agencies which actually has done a good job delivering for the American consumer. Sure FedEx and UPS have made an impact. And Lord knows email has turned us into a detached, impersonal culture. That being said, I don’t care what anyone thinks. There’s nothing like a personal hand written note coming in the mailbox from someone you care about. My 81 year old Mom still drops me a card or a note at least every other week. Just to say hello. Just to say “I Love You.” Just to say “I care.” And Mom only lives 40 minutes away. She says that there’s nothing like a note. She’s right.

    Technological advances are w wonderful thing — but what happens when the power goes out? What happens when the cable lines are cut? What has happened to the importance of penmanship in our educational system? Electronics do not replace the unleashing of creativity via pen and paper — ask the greatest literary authors. Even Bill Clinton’s memoirs were written on legal pads in the first draft. There’s a little security in knowing that the Postman will still be there. Gee, they should make a movie about that.

  • http://blogcritics.org/writer/dan_miller Dan(Miller)

    The power (as distinguished from obligation) of the Congress to “To establish Post Offices” is in Article I (not Article II), Section 8. It confers a power, not an obligation. Article I also grants the Congress power (as distinguished from obligation) to grant letters of marque and reprisal.

    The congressional power to do these things is not an obligation to do them.

    Doc’s observation,

    Isn’t it funny that Kenn bangs on about the sanctity of the Constitution, then casually discards it as soon as it doesn’t suit his argument?

    is a bit off and rather a cheap shot. As far as I am aware, the Congress has granted neither letters of marque nor of reprisal for a very long time, despite its power to do so. Does the failure of the Congress to grant them suggest a disregard of the Constitution?

    Ken’s suggestion does not disregard a constitutional obligation; it suggests that the exercise of congressional constitutional power to establish post offices (and post roads, for that matter) be reconsidered. Perhaps there are better ways now of delivering the mail.

    Dan(Miller)

  • Baronius

    I don’t think my life would be any different if the post office went to Mon-Wed-Fri delivery. If the cost of a stamp went up to $1, I’d have 5% less recycling material.

  • Clavos

    Besides, the other option is to subsidize your local bookstore.

    Except, it costs more than Amazon.

    Besides, I’m quite happy with both UPS and FedEx, and I buy almost everything (except groceries) online these days, so Io use their services frequently. I even bought my current car online, only went to the dealer to pick it up and pay for it, but picked it out, negotiated the selling price and chose what dealer I wanted it delivered to all online directly with the manufacturer.

    And I don’t really care how much the shippers pay their CEOs.

  • Clavos

    Only sending packages will eventually constitute the core.

    And junk mail, which actually is the biggest (and most profitable) segment of the mail market.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Well, junk mail seems to be garnered by the USPS, so what’s their complaint?

    I can’t really defend inefficiency, even at the hands of the government. Everyone knew what was in store and they should have prepared for it beforehand.

    Public subsidy makes sense but only to a point. There has also got to be responsible management.

  • Clavos

    There has also got to be responsible management.

    The USPS’ problems are the attributable to the unions far more than to management, which has its hands tied by Congress. Congress courts and kowtows to the unions for their votes.

  • Clavos

    Well, junk mail seems to be garnered by the USPS…

    Only because of monopolistic laws; by law, only the USPS can place something in your mailbox. Were this law to be rescinded, the USPS would lose almost all of that business to lower-priced private carriers.

  • http://drdreadful.blogspot.com Dr Dreadful

    Doc’s observation […] is a bit off and rather a cheap shot.

    No, Dan, I did pick up on the distinction. It just struck me that Kenn’s all-or-nothing approach to the Constitution, of his articles past, had suddenly become a bit more liberal.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Dan(Miller),

    Perhaps there are better ways now of delivering the mail.

    Privatization only? FEDEX for more profit? What about all the jobs lost, don’t they matter?

  • Glenn Contrarian

    Kenn –

    “The free market is the cure for all that ails us!” And that’s the answer to the Postal service…or at least that’s what you’d have us believe.

    But how well does the free market work out in the real world? Let’s talk health care for a moment.

    Before the Reagan administration, most HMO’s were non-profit. And at that time, most middle-class people could afford health insurance.

    That was changed, and almost all HMO’s became for-profit companies. Tell us, Kenn – how’d that work out for America? How efficient is a system where the private insurers regularly pay $140 for ONE Tylenol pill or $1000 for ONE syringe? I’m sure the CEO’s would be more concerned if they weren’t busy flying to Hawaii on their private Gulfstream V’s….

    Those who support a strictly market-based health-care system claim that the competition inherent in a free-market system would drive efficiency beyond anything a government could provide. BUT in reality, Medicare works quite well with a 2% administrative overhead, whereas admin costs of HMO’s run anywhere from 15% to close to 30%.

    In other words, the free market is NOT always the most efficient way.

    Now as far as the Postal service goes – when it comes to a comparison of the value rendered to the price paid by the user, can you name a more efficient postal service on the planet? No, you can’t.

    Of course the BC conservatives will blow their top when they see the previous paragraph. Why? Because they cannot conceive that there’s anything a government can do that the free market can’t do better. The free market has its place – absolutely! But there ARE certain things the government does far better than the private sector…fire departments, police, the military, AND the post office.

    Now before you start pointing out FedEx and UPS, remember that the bulk carrying service is one thing – the reliable and CHEAP delivery of first-, second-, and third-class mail is another thing altogether. NO private company has the infrastructure necessary to even begin to provide what the USPS does with letter-carrying. NOT a single one.

    Furthermore – and this is the most important point – it works just fine for there to be several package delivery services…but tell us exactly how competition would work with LETTER delivery. Just ‘sign up’ with whichever delivery service you want? Ah, and THEN instead of having highly efficient and dependable daily routes as the USPS does, each different carrier will have to keep (and update daily) each of the single addresses that it will deliver to, regardless of how far apart…and regardless of the fact that it might be just ONE letter to a particular out-of-the-way address every day.

    It’s one thing to use a truck to deliver to lots of different places, packages that cost $15 on average to ship. It’s another thing altogether to use a truck to deliver a few pieces of 50-cent first-class mail pieces to all those different addresses.

    No, this will NOT lead to efficiency. This will lead to greatly-increased inefficiency, and greatly-increased first-class mailing costs. But at least you’d have more CEO’s flying their private jets to Hawaii!

    (and we didn’t even touch the matter of security, like that of reliable deliveries of social security checks to millions of elderly people every month)

    In summary, Kenn, the free market has its place. The delivery of letter mail ain’t it. But if you just gotta try it, go ahead – and we can experience with our presently safe and reliable and CHEAP postal service what we experienced with our HMO’s at the beginning of the Reagan revolution.

  • Clavos

    CHEAP postal service

    Cheap???

    It swallowed over $7,b.billion of our money to pay its losses in 2009, $5billion the year before.

    Efficient??

    If it were efficient, it it would make money, not lose billions of it.

    meh

  • http://blogcritics.org/writer/dan_miller Dan(Miller)

    Jeannie Danna,

    I said, Perhaps there are better ways now of delivering the mail. (emphasis added) I don’t know whether there are or are not. I was responding to Doc’s observation that

    Isn’t it funny that Kenn bangs on about the sanctity of the Constitution, then casually discards it as soon as it doesn’t suit his argument?

    I saw nothing funny about it. The Constitution does not require the Congress to establish a postal system or post roads, any more than it requires the Congress to grant letter of marque or reprisal (which in view of piracy off the coast of Somalia might be a good thing to do). It permits these things; to require them is quite another matter.

    We live in a very rural area in Panama. There is no rural postal service here. That means that we have to pay for a post office box in a city roughly 30 KM away and occasionally go over bad roads to the post office to collect very infrequent snail mail. We combine those trips with shopping and other trips there. Mainly, the postal service is necessary to receive IRS forms and communications and to respond to them. The IRS does not use FedEx to send them, and it costs almost as much to send one annual tax return to the IRS via FedEx as it does to rent a PO box for a year.

    Fortunately, we can do just about everything else which is necessary via e-mail; this costs about $60.00 per month but it’s worth it; that’s how we keep in touch with folks in the U.S. and how I occasionally submit articles and comments to BC and others.

    If private enterprise can do a better job less expensively than the USPS, I’m all for it.

    Dan(Miller)

  • Clavos

    What about all the jobs lost, don’t they matter?

    No, not to the point of being subsidized by the rest of us, emphatically, NO!

  • http://blogcritics.org/writer/dan_miller Dan(Miller)

    Glen,

    I think I understand your point. How about the junk mail clogging down the USPS system? I don’t receive it here (except SPAM, for which G-mail has a very good filter) and I don’t miss it even a little bit.

    Dan(Miller)

  • Clavos

    That junk mail is the ONLY profitable operation in the USPS system, Dan(Miller).

  • Clavos

    Glenn 22,

    The only problem with your HMO example is that the health insurance business is a long ways from being a free market scenario.

  • http://cqpinion.blogspot.com/ Krutic A

    I can venture a couple guesses on how healthcare will work when the post office can’t:

    1) The laid off postal people will get certified as physician’s assistants and they will be your ‘doctors’. Since bringing in millions of new people into the system won’t increase the supply of medical professionals, there will be a shortage anyway.

    2) The post office will be merged with the DMV which will also be the place where you will go for your annual physical.

    I, for one, can’t wait.

  • STM

    Kenn: “Isn’t it time to privatize the Post Office?”

    Why not privatise all the state motor vehicle departments while you’re at it, and the whole of the American school system. User-pays education. Anyone who can’t afford it can just work in menial jobs getting $8 an hour.

    Perfect for 21st century America, and at least then you’d have a couple of people out of a population of 300 million who could point to Mexico and Canada on a map (unless it was upside down).

    Actually, why not privatise everything, including the military. Think of the advantages with that one: No wars unless you can make a decent profit. Nah, scrub that … that’s already happening.

    Road and infrastructure building, then, all users pays. An America built on tollways and dodgy bridges and railroads.

    That way, you can have a bunch of people standing around in Washington getting paid to do nothing but play trouser-pocket eight ball.

    Eventually, you could privatise the presidency.

    He/she doesn’t do what the big corporate shareholders and lobbyists want, he gets a kick up the rear and royally punted.

    Oh, hang on … you’ve already got that too, haven’t ya??

    Or maybe you could just privatise racoon hunting but make it compulsory for everyone wear a ‘coonskin hat … after all, wasn’t that preferred headgear a few hundreds years back and if you want to send America back to its salad days, everyone needs to look the part, right??

  • Kenn Jacobine

    Glenn,

    As I said in my article, health care is a much more complicated endeavor than delivering letters. Do we have problems with our health care system? Absolutely! Primarily it is one of high cost. But, Washington’s proposals are not going to address that issue. And the history of government’s involvement in enterprises is one of gross waste, inefficiencies, and ineffectiveness. Medicare has trillions of dollars in unfunded liabilities that eventually will come due. Obama wants to make coverage universal and cap premiums. This is akin to rent controls – all it will do is raise costs and reduce supply.

    Health care is complicated. We need to look at the 3rd party payer issue. We need to look at private licensure. We need to cut middle class taxes to alleviate costs. And we need a sound monetary system – not one that serves only the interests of big banks and erodes our purchasing power. None of these issues are being discussed in DC.

  • Kenn Jacobine

    STM,

    We are only talking federal government here. Education is a state issue and if the feds would stop handing down unfunded mandates to the states our education systems would be better off.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Clavos, #23

    Your money? No, didn’t you hear? We are going to take it all away from you, by raising the taxes on the wealthy, reigning in the insurers, and while we are at it, we are going to extend unemployment and cobra, for those that need it most, the people displaced by all of this , PRIVATIZATION.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    STM,

    Your comments are very enlightening, it’s too bad that you are speaking to people that are, for the most part, blind to the possibilities of forward thinking.

  • Clavos

    Another article pointing out the inevitability of the eventual failure of the USPS.

    The author, Jarrod Dicker, notes:

    However, as the USPS’ troubles mount, shipping companies in the private sector are having no problem staying afloat. Despite the slowdown associated with the recession, private, non-government affiliated services FedEx (FDX) and United Parcel Service (UPS) still reaped celebratory profits last year. In 2009, FedEx saw total revenue of $35.5 billion and $98 million in profits while UPS made $45.3 billion in revenue and $2.2 billion in profits.

    With its overpaid, bloated workforce and punishing union work rules, there’s no way the USPS will be able to compete with the leaner, meaner private services.

    It’s just a matter of time.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Ken Jacobine,
    $30 million of U.S. taxpayer money was recently spent to renovate school headquarters and these housing units for soldiers attending the school.

    Vicky Imerman: It’s an outrage. It’s the use of our tax dollars, American tax dollars, for what I think your average American feels is a distinctly un-American purpose.

    Why is it OK to spend our money on this School Of America, but and not a 44 cent stamp and the people whose livelihoods depend on it?

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Did you like that extra and word, Clavos? :)

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