Bloomberg BusinessWeek has a long story outlining the desperate financial situation that the United States Postal Service is facing. The USPS is currently approximately $15 billion in debt, and with revenues continuing to drop—and, as is becoming the all-too-familiar refrain with government agencies these days, costs of health care and retirement benefits for workers are rising rapidly. As the Bloomberg story reveals, the USPS has no real plan to deal with what even its advocates are calling its imminent insolvency.
Consider this passage from the story:
The USPS has historically placed the interests of its unions first. That hasn’t changed. In March it reached a four-and-a-half-year agreement with the 250,000-member American Postal Workers Union, which represents mail clerks, drivers, mechanics, and custodians. The pact extends the no-layoff provision and provides a 3.5 percent raise for APWU members over the period of the contract, along with seven upcapped cost-of-living increases. The union is happy. “Despite the fact that the postal service is on the edge of insolvency, the union and management have reached an agreement that is a ‘win-win’ proposition,” said APWU President Cliff Guffey on the union’s website.
Consider all of the pathologies contained in that passage—the destructive mindsets, the counter-productive incentives, the perverse priorities.
Those pathologies are brilliantly exhibited by the way the USPS is responding to changing technologies and changing realities of delivering correspondence. In Europe, of all places, postal services have been largely privatized. Sweden’s Posten, for example, closed and then privatized most of its remaining post offices, over complaints and doomsday predictions; yet the service is by most accounts better now than it has ever been. The same has happened in Germany, where the now privatized postal service competes with other postal delivery systems, including digital delivery systems, and turns a profit.
The USPS’s business plan? They hired someone to try to convince banks and other large companies not to use rising digital technologies but to continue using paper statements that must be mailed instead. No wonder they’re in such bad shape.
The solution seems obvious: privatize, and repeal federal laws and regulations that restrict competition. The patterns here follow a familiar path: public-sector services staffed by public-sector unions perform badly and get themselves into a terrible financial position; private and for-profit services perform much better, leading to better service and higher customer satisfaction; yet people do not want to try privatization.
Allowing private individuals, entrepreneurs, companies, and others seeking profits—in other words, free enterprise—compete to meet people’s desires and needs always seems scary. Yet it almost always works when allowed, and it almost always works better than what the government-provided services offer. Fear of the scary monsters in the unknown of the market—we don’t know who exactly will provide the good or service, how exactly it will be provided, which attempts will succeed and which will fail, and so on—continue to stop people from availing themselves, and others, of the enormous benefits of market competition.
Perhaps market competition and free enterprise would not work better in the provision of some goods or services than government provision. But surely the repeated success of the former and the repeated failure of the latter entails that the burden of proof has to be on those arguing for the latter over the former.
There are many places where this reasoning applies—I think it applies to government monopoly provision of public schooling, for example—but it also applies to the USPS. There are romantic attachments to the idea of a USPS, but at some point we need to put romantic attachments aside and look at reality. Cut the USPS loose. Let human ingenuity follow natural incentives to find better ways to satisfy our desires. No system is perfect, and no human attempts at anything will be without mistake or failure, yet there is every reason to be confident that ending the government monopoly on mail carriage would lead to improvements, exactly as free enterprise has our improved our lives in countless other ways.
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