Should We Privatize the Postal Service?Jan 14th, 2012 | By Dr. Jim Eckman | Category: Featured Issues, Politics & Current Events
The US Postal Service (USPS) is in trouble. It has urged Congress to allow it to cancel Saturday deliveries, with discussion about the possibility of moving to three-days-a-week delivery of the mail. In the last fiscal year, it lost $5.1 billion, with total losses exceeding $14 billion—an amount larger than the budgets of 35 states of the US!!! Article I, Section 8 of the US Constitution states that “The Congress shall have the power to . . . establish post offices and post roads.” As the existence of Fed Ex and UPS indicate, it is possible for Congress to permit the postal service to be privatized. However, as columnist George Will argues, “The belief is ‘In government, whatever is should forever be.’” Changing anything in the postal service is almost impossible. This is the political culture we now face in the United States.
How did the USPS get itself into such a situation? There are at least three factors that explain the demise of the USPS: (1) The existence of email has had a profound effect on the USPS. For example, today one can even send Christmas cards and other greeting cards via email. There is also now the digital delivery of movies and the ability to send almost anything , anywhere via an electronic format. (2) The USPS is the nation’s second-largest civilian employer, with nearly 653,000 employees. And, the USPS must shed about 1/3 of its workforce to remain viable. The problem is that 80% of the USPS costs are labor costs (compared with 53% for UPS and 32% for Fed Ex). Obviously, these labor costs make it very difficult for the USPS to be competitive. (3) Mail volume has declined about 20% over the last five years, and there is little doubt but that this decline will accelerate.
It would require an act of Congress, but does not wisdom dictate that the United States government should consider permitting a private company to take over the postal service? Allow the free market to force the postal service to be competitive. I know of no real proposal to seriously deal with all the challenges that the USPS faces. But I do know that the USPS cannot continue doing the same thing and expect to survive. The federal government cannot further subsidize the USPS because of its own debt burden. So, is it not prudent for a private company, answerable to its stockholders, to take over the delivery of our mail? Someone once defined insanity as continuing to do the same thing but expecting different results. That seems to be the dilemma of the USPS.
See George Will in the Washington Post (28 November 2011).PRINT PDF