Op Ed Published in The Orlando Sentinel
The U.S. Postal Service today raises stamp prices once again, pushing the cost of mailing a letter to 39 cents. The USPS is already saying it will file for further increases, so before the year is out, we’re likely to see an additional price increase.
As captive consumers, barred by a federally enforced monopoly from taking our letter business elsewhere, this might be a good time to look at how mail delivery is handled in the rest of the world.
In contrast to the United States, many industrialized nations — and even some developing ones — are opening mail delivery to free-market competition.
In some places, governments have retained ownership of the former state monopoly, which competes with private companies, while other countries have gone in for wholesale privatization.
Let’s take a brief tour of the globe.
Japanese Prime Minister Junichiro Koizumi last year made international headlines when he gambled his re-election on a plan to privatize Japan Post.
A gigantic government bureaucracy, Japan Post runs nearly 19,000 post offices, and, through its banking arm, has become the biggest deposit-taking institution in the world.
An advocate of smaller government generally, Koizumi saw breaking up Japan Post as key to his country’s economic health.
Koizumi called snap elections after his privatization plan was rejected by parliament. In a vote that was essentially a referendum on his proposal, he won in a landslide.
His plan to split up and privatize Japan Post will get under way in 2007.
Good idea for U.S., too
Interestingly, the U.S. government favored Japanese postal reform. A 2005 report from the Office of the U.S. Trade Representative strongly urged Japan’s government to pursue postal deregulation, noting that it would contribute to economic growth.
If it’s good for the Japanese, shouldn’t it be good for us, too?
Plenty of governments would say yes.
All 25 members of the European Union must open mail delivery to competition by 2009, but many are ahead of the game.
Britain has turned the Royal Mail into a government-owned corporation and fully abolished its monopoly Jan. 1.
The German government has been steadily shrinking the scope of the Deutsche Post monopoly, which now applies only to domestic letters weighing less than 31/2 ounces, Germans can take bigger letters and packages to a sprouting field of competitors, such as the growing parcel chain Paketeria and a new mail company being launched by a group of publishers.
This month, the Deutsche Post monopoly will shrink further, to letters weighing less than 1.8 ounces, and in 2008 it will be phased out entirely.
As it has privatized and lost its monopoly privileges, Deutsche Post has been granted permission to operate like a corporation. It has used this newfound freedom to snap up companies worldwide, including such major logistics players as DHL and Airborne Express.
The fully privatized Netherlands postal service, TNT, has gone on a similar global buying spree, expanding into China, Great Britain and Germany.
Should the U.S. Postal Service ever get around to privatizing, it will have to play catch-up with these two leaders in the global mail industry.
Postal privatization is not limited to the wealthy world. Development experts typically advise poorer countries to privatize and liberalize state monopolies as a way to boost their economies, and some have done just that.
South Africa allows competition in the postal sector. Just this month the Nigerian government announced a plan to privatize its post office, and Jordan has embarked on a privatization scheme.
The Vietnamese government, meanwhile, has announced a plan to gradually reduce the scope of its national postal monopoly and said it will open the postal sector to foreign investment once the country is admitted to the World Trade Organization.
That’s right: Vietnam, in this case, is ahead of the United States in embracing capitalism.
Some nations, meanwhile, already have more than a decade of experience with postal deregulation. New Zealand was the first country to launch significant reform, back in 1986, culminating in a fully abolished monopoly by 1998.
“As a result of reform, New Zealand Post has introduced services and has improved its efficiency without government support,” wrote Rick Geddes, an economist and the author of Saving the Mail. Not only that, but the real price of mailing a letter fell by almost 30 percent from 1987 to 1995.
Contrast New Zealand to the United States, where, despite new technology — such as modern reader/sorters that process more than 30,000 pieces of mail per hour — stamp prices have risen with inflation since 1970.
Finland completely abolished its postal monopoly in 1991. Sweden did so in 1992. Geddes, who surveys postal deregulation in 10 countries, writes that “the net effect of reform has been positive.”
Benefits of deregulation
We can also look closer to home for evidence of the effects of deregulation.
In the 10 years after U.S. deregulation in their respective industries, natural-gas prices fell — after adjusting for inflation — by 27 percent to 57 percent, the price of long-distance telephone service by 40 percent to 47 percent, and that of air travel by 29 percent.
Why not let postal customers reap the same rewards?
Defenders of our postal status quo offer a weak argument in favor of continuing the postal monopoly: They say that only a monopoly-protected USPS can provide “universal service,” or delivery to every household in the nation.
In fact, there’s no evidence for this claim. Private package-delivery companies have shown that they can deliver everywhere, even as monopoly rules force them to charge at least double the Postal Service rate. The private sector, moreover, has proved capable of providing our truly crucial communications links, namely telephone and Internet access. The result is near-universal service, at prices that fall year by year.
What if we don’t deregulate our mail? The Postal Service is saddled with more than $70 billion in unfunded liabilities — money it has promised to future retirees, mostly in the form of health-care benefits, that it simply does not have.
It would not be surprising if the USPS sought a way out of this mess by asking Congress for a bailout. This is an organization, after all, that has received $27 billion in taxpayer-funded appropriations since 1970.
Set our mail free
The Postal Service also gets everyday government benefits: It is exempt from all kinds of burdens — including most taxes, antitrust law, truth-in-advertising regulations, even parking tickets. It also enjoys eminent domain, which is the right to seize private property.
What we don’t pay in taxes, we’ll pay in steadily rising stamp prices. Our money will go to fund a taxpayer-owned organization that routinely hides its financial information from the public; pays workers 25 percent more than their private-sector counterparts; and gives big discounts to the bulk mailers who dump fliers on our doorstep every day.
In short, we’ll pay more and more to help fund a government-subsidized junk-mail operation.
Let’s embrace the capitalist principles that America, quite rightly, urges other nations to adopt. Let’s set our mail free.
Sam Ryan is a senior fellow at the Lexington Institute in Arlington, Va.
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