Article Published in The Orlando Sentinel
Stamp prices are about to rise again. The U.S. Postal Service recently requested a 5.4 percent across-the-board jump in postage rates, so consumers can expect to be whacked with an increase in early 2006.
It seems that even with its mailbox monopoly, the USPS can’t make ends meet.
If USPS were a competitive company — as opposed to a bloated federal bureaucracy — stamp prices would be falling, not rising. 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.
USPS is simply unable to capitalize on its multibillion-dollar technology investments or on its massive economies of scale. A December study by leading experts of the Postal Rate Commission notes: “The doubling of overall volume coupled with scale economies should have resulted in the average price of the stamp dropping in real terms.”
Clearly, rate increases are no longer the answer — if they ever were. The Postal Service is a huge, massively expensive bureaucracy in which high wages and liberal benefits gobble up roughly two-thirds of all revenues.
And because Americans are barred by law from mailing their ordinary letters through any organization other than USPS, the rate increase is actually a form of taxation.
The Postal Service claims the increase is a necessary one.
USPS representatives say the rate increase doesn’t have to do with operating costs and is instead the result of a congressional requirement to pay money into a federal escrow account. Yet even so, the organization has more than $70 billion of unfunded liabilities — mostly retirement and health benefits. Any way you look at it, this organization is in deep financial trouble.
Worse than that, no one really knows where USPS money goes. The Postal Service remains an accounting maze with little of the reporting or financial transparency requirements that the U.S. Securities and Exchange Commission demands of private companies. Forty percent of all costs are lumped into a general overhead slush fund.
And because the USPS pays no taxes, neither government regulators nor the public can turn to tax documents to see how the Postal Service’s $69 billion in annual revenues are spent. The books are so Byzantine, the USPS itself is in the dark.
Do U.S. consumers and taxpayers need to subsidize the politically powerful postal unions?
How much does this drag on real growth and productivity cost the American economy?
Why should an organization still running on 19th-century time retain a stranglehold on delivering our mail?
Yes, mail delivery was a legitimate function of government 100 years ago.
But in today’s world of efficient, cheap, high-tech communications, the expensive, overstaffed USPS monopoly is a ridiculous anachronism.
Why exactly can’t we privatize the service and throw open the market to competition?
Privatization is not as radical a proposal as it might at first seem. Countries as diverse as New Zealand and Sweden allow competition in mail delivery.
In Germany, stock in Deutsche Post is being sold off to the public. Japan is in the process of privatizing its national post, and Britain has announced that the Royal Mail will lose its monopoly at the end of this year.
Everywhere electronic communications are reducing the need for paper mail. As a result, mail volumes — with the exception of junk mail — are dropping.
Yet despite fantastic leaps in processing technology, Postal Service costs are going up rather than down.
There has been little in the way of productivity gains at USPS. According to the Treasury Department, “productivity at the Postal Service has lagged the private sector by large margins” for more than 30 years.
Even postal “insiders” support privatization. On leaving office, William Henderson, the U.S. postmaster general from 1998 to 2001, stated it clearly enough: “What the Postal Service needs now is nothing short of privatization.”
He went on to recommend an employee stock-ownership plan to help motivate USPS workers. Postal Rate Commissioner Ruth Goldway, an outspoken leader for sensible reform, is on record saying that “the service needs to be privatized and the letter and letterbox monopolies phased out.”
Our Postal Service, meanwhile, continues to bury its head in the sand and defend its out-of-control spending. It has 700,000 career employees. That’s bigger than any two branches of the military combined.
And it pays those employees about 25 percent more than their private-sector counterparts, something troops putting their lives on the line certainly can’t expect.
Meanwhile, the USPS sucks up a slew of government benefits. Besides contributing nothing to tax revenues, it is immune from anti-trust and truth-in-advertising laws, and it has a direct line of credit with the U.S. Treasury.
The USPS argues that it needs all this government largess so it can continue to provide “universal service,” which it defines as six-day-a-week delivery to every home in the nation.
And it claims that if mail delivery were left up to the private sector, some folks just wouldn’t get served.
This is completely untrue. Sweden and other countries contract remote deliveries to private bidders with no problem.
In this day and age, it would be ridiculous to call six-day-a-week mail delivery essential. Most of us get mainly advertisements and solicitations in our mailboxes. In other words, the USPS has become a massive, money-losing subsidy program for junk mailers.
The private sector could do the mail better, cheaper and faster. In recent years, innovations of private entrepreneurs have shown countless possibilities for getting information and goods from point A to point B.
They’ve paved the way to online bill payment, fast photo transmission and overnight door-to-door delivery — with friendly customer support to boot.
Free of any monopoly chokehold, telephone and Internet service has become steadily cheaper and more efficient through the years. Stamp prices, on the other hand, have risen with inflation since 1970.
Consider this: In 1984, the year Ma Bell was broken up, the average long-distance phone call cost 28 cents per minute. Meanwhile, a first-class stamp cost 20 cents. Today, the average long-distance telephone rate has plummeted to 11 cents, while stamps have soared to 37 cents. If telephone prices had risen with inflation like stamps, a long-distance call today would cost a whopping 51 cents per minute.
Example after example suggests that if we open the mail market to competition, it will deliver the improved level of mail service consumers want.
Paper delivery would not disappear without government subsidies. But the USPS, in whatever form it takes, would no longer have an iron lock on your mailbox.
You’d pay less, have more options and get better service for your money.
It is time to bring some common sense to U.S. postal policy. We don’t need a government bureaucracy that delivers primarily junk mail. The U.S. Postal Service should be privatized without delay.
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