Wednesday, April 17, 2013
Even parts of government that look like a business never get run with the efficiency of a business. Just look at the post office.
They buy commercials and tout their services the way private businesses do. They offer a service that customers want.
But a real business can't get away with losing billions every year. (I guess in the era of bailouts, I should say shouldn't get away with it.) The post office lost $16 billion last year, despite having all sorts of advantages that most private businesses don't have.
They have a near monopoly on first-class mail delivery. You want to deliver something to someone? You better not put it in their mailbox -- that's illegal. The U.S. Postal Service doesn't pay sales tax or property tax. They don't even pay parking tickets.
With advantages like that, how do they lose money?
They are part of the government, under the thumb of Congress, and that invites calcified, inefficient behavior.
"We are expected to operate like a business, but Congress has not allowed us the flexibility to operate like a business," said Postal Service Board of Governors Chairman Mickey D. Barnett on my TV show. It's all "part of being a quasi-governmental entity. That's how the cookie crumbles." Barnett added that the post office has "union contracts that have no layoff provisions."
Reality is at odds with the proud claim on the post office's website that "Since Ben Franklin ... the Postal Service has grown and changed with America." But it's barely changed. You don't tend to see change in "quasi-governmental entities." You see stagnation.
This year the post office tried to limit Saturday delivery to save money. But Congress forbade the change. The politicians' constituents like getting their mail six days a week.
"They don't want a cut in Saturday delivery," Rep. Alan Grayson, D-Fla., told me.
"The USPS does need reform," Rep. Sam Graves, R-Mo., told the Kansas City Star. "However, reducing core services is not a long-term plan. I worry that reducing services will lead to other reductions like closing rural post offices."
But the post office should do both. The government maintains hundreds of tiny local post offices, each of which brings in less than $700 a month. Running those offices costs much more than that. Some are just one mile away from other post offices.
People like "universal service," which has been taken to mean that every American must get mail service, no matter how deep in the boondocks they live. The post office even hauls mail by mule to the bottom of the Grand Canyon.
"The post office provides something that's extremely valuable and has to be maintained, and that's universal service," Grayson told me. "There are countries a lot poorer than the United States, including the Congo ... that try to provide universal mail service to everybody. ... People don't want post offices closed!"
On the floor of Congress, Sen. Al Franken, D-Minn., proclaimed that universal service is required, saying, "It's in the Constitution."
But it's not. The Constitution says, "Congress shall have the Power To ... establish Post Offices." But it doesn't have to use that power.
Cato Institute budget analyst Tad DeHaven argues, "People living in rural America aren't living there by force. ... Go back to history. Private carriers picked up the mail from the post office and took it the last mile, or people came to the post office and picked it up."
And private alternatives are much better today. We have e-mail. UPS delivers 300 packages a minute and makes a profit . Federal Express, UPS and others thrive by finding new ways to cut costs. They don't do it because they were born nicer people. They do it because of the pressure of competition. They make money -- while the post office loses $16 billion.
Why not just privatize it? No more special government protections, no limit on competitors offering similar services.
Then mail service would be even better than before. The market delivers.
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