Privatization-Not Junk Mail-Is Needed to Reform the U.S. Postal Service

The U.S. Postal Service, which lost $5.1 billion last year ($10.6 billion if you include a required payment to prefund its retiree health care) and is expected to lose another $14.1 billion this year, is looking for ways to make some money. Thus, it is launching the “Every Door Direct Mail” campaign to generate more targeted junk mail for small businesses. Since even a successful junk mail promotion would only make a tiny dent in the USPS’s fiscal problems, other proposed reforms include increasing First-Class Mail postage by 11% (from 45 cents to 50 cents per stamp), eliminating Saturday delivery, and taking longer to deliver letters. Talk about ingratiating yourself to your customers.

In fairness, the Postal Service is also embarking upon long overdue efforts to scale back its operations by closing and consolidating up to 3,800 post offices and 223 mail-processing centers, as well as seeking flexibility from Congress to rein in its excessive personnel costs (such as employee benefits), which account for about 80% of its expenses. Even this will be inadequate to save the USPS, however, as e-mail, online bill payment, e-filing of taxes, social media like Facebook and Twitter, and telephone communication continue to replace physical mail services.

In fact, ask Congress seeks to reform the Postal Service, it is asking the wrong question entirely. The proper question is not about how to “fix” the Postal Service, but rather how to improve postal services for customers. This will never be adequately resolved as long as the USPS maintains a monopoly on mail delivery and business decisions are made arbitrarily by politicians and postal regulators. Only a free and competitive market can recognize and satisfy the ever-changing desires of postal consumers.

In my latest commentary, I outline the Postal Service’s reform efforts, as embodied in its newly revised five-year business plan, and use a brief period of private mail delivery entrepreneurism from the mid-19th century (before the competition was eventually squashed by the federal government) to illustrate that not only is postal privatization possible, it has already been doneā€”and should be sought once again. Below is an excerpt of that column.

The truth is, however, that because the Postal Service has a monopoly on delivering mail, there is no way to know whether a five-days-per-week or six-days-per-week delivery schedule is ideal, or even how much should be charged to deliver a letter. Matters such as prices, service speed, frequency of delivery, and additional mail products and services should be determined by competition and consumer preferences, not arbitrarily by politicians and postal regulators.

As Lysander Spooner, who challenged the government mail monopoly when he formed the American Letter Mail Company in 1844 noted in his essay, “The Unconstitutionality of the Laws of Congress, Prohibiting Private Mails,”

Universal experience attests that government establishments cannot keep pace with private enterprize in matters of business (and the transmission of letters is a mere matter of business.) . . . [Private enterprise] is constantly increasing its speed, and simplifying and cheapening its operations. But government functionaries, secure in the enjoyment of warm nests, large salaries, official honors and power, and presidential smiles . . . feel few quickening impulses to labor, and are altogether too independent and dignified personages to move at the speed that commercial interests require. . . . The consequence is, as we now see, that when a cumbrous, clumsy, expensive and dilatory government system is once established, it is nearly impossible to modify or materially improve it. Opening the business to rivalry and free competition, is the only way to get rid of the nuisance.

While Spooner and several other private mail entrepreneurs sprouting up during the period of about 1839-1851 (see this Cato Journal article by Kelly B. Olds for an excellent history of private mail delivery during this period) were eventually shut down by the government, they proved that private mail delivery was possible. And the competition they provided forced the government to drastically reduce its prices in the process.

Given that the delivery of information and products is certainly not a core governmental function and the USPS operates under an obsolete business model with unsustainable personnel costs. It is time to embark upon a new age of postal privatization.

See the full article here, as well as a previous op-ed of mine on the topic that was published in the Washington Times.