Monday, August 8, 2011

Slimming down the U.S. postal service

Brad Plumer, writing at Ezra Klein's space on washingtonpost.com, considers the U.S. Postal Service and the dire economic straits they find themselves in. There was a time when the U.S. Postal Service was a vital part of our national infrastructure, but I have some questions of its present value to the American public.

Apparently, so does the Postmaster General. He has argued that 3,700 post offices in mostly rural locations be shuttered because many don't take in more then $50 a day. Yet, the members of Congress who represent districts that face closures have objected. I can understand why. I remember as a kid in Illinois driving down Route 121 or Route 36 and you knew you were "in town" when you saw the modest post office, but nostalgia is a poor reason to run the U.S. Postal Service into the ground.

I see a role for the U.S. Postal Service going forward, even as mail volume has diminished, but clearly USPS needs slimmed down and those that fight the closure of the remote mail outpost only serve to hasten the demise of the entire endeavor.

8 comments:

Colin said...

Writing in today's WSJ, Andy Kessler offers up a good idea:

End the mail monopoly. The U.S. Postal Service, which posted a net loss of $3.1 billion in the third quarter alone (there is only so much junk mail and Hallmark cards to deliver anymore), is finally starting to rationalize small post offices, recently putting 4,000 of them on a list for possible closing. Accelerate this task by ending the USPS monopoly on first- and third-class mail. Entrepreneurs will jump into action. Online bill payment will become ubiquitous. UPS and FedEx and a host of new companies will create more productive forms of delivery. The Postal Service won't end, it will just slowly fade away.

The USPS is simply a means to an end: mail delivery. End the USPS, or at the very least its monopoly, and mail will still be delivered. For the right price someone will be willing to deliver your mail to wherever you want, and I am sure there are companies eager to make money off of all the folks in these dinky towns who stand to see their post offices close.

The USPS is outdated, out of money and out of time.

Ben said...

The USPS is outdated, out of money and out of time.

This is somewhat funny. The USPS loses money because its monopoly over parcel delivery was ended, leaving space for companies like UPS and FedEx to grow. These companies always appeared to me to be more reliable than the USPS, more efficient than the USPS, and all around a better deal than the USPS until this past May.

In May, I was waiting for my bar review books to arrive from Barbri via UPS. Once the books were a week late, I called UPS to find out why they had not been delivered. The UPS representative explained to me that there was no apartment number on my address so the books could not be delivered -- this surprised me because the absence of an apartment number was not an error but representative of the fact that I did not live in an apartment. I assured the representative that my address was correct and he assured me the books would be delivered.

Two days later, instead of receiving my books, I received in the mail--that is, the post via USPS--a postcard from none other than UPS indicating the need for the apartment number I already assured them I did not have. I called UPS again, somewhat incredulous: if they couldn't deliver books to my address, how was it that they could send me a postcard requesting that information to that very same address (instead of, you know, calling me). So, I asked the UPS representative to explain this to me. Said UPS: "We [UPS] send postcards through the USPS to addresses to which we are unable because the USPS is on the ground everyday and knows the addresses and residents, they are able to properly locate you."

In that moment I realized that UPS (and likely FedEx) are free riders, generating at least some of their revenue off the good offices of the USPS. I also realized, much to my amazement, that USPS is not antiquated but performs a very useful function. Finally, I decided never to use UPS again (should I be able to avoid it).

Colin said...

I suspect another reason UPS uses the USPS to send postcards is because they are prohibited by law from doing so themselves. USPS has a monopoly on the delivery of non-urgent mail as well as exclusive rights to US Mail boxes at residential destinations.

Ben said...

That's correct but it pretty well misses the point, don't you think?

Ben said...

*The point I was making, I mean.

Colin said...

I don't know if the UPS and Fedex are a free rider off of USPS or not, but if they are, the best way we can end that is by ending the USPS and forcing Fedex and UPS to fend for themselves.

Ben said...

They are.

And by the way, the Post Office has turned a profit for the last four years. It is not out of money.

Ben said...

Sorry: Turned a profit if you take out its Congressional mandate of pre-paying future retiree benefits ($5.5 billion per year), http://www.cbsnews.com/stories/2011/07/26/ap/business/main20083506.shtml