D. Dowd Muska

 

Time for a Post-Post Office Future

September 10, 2015

It’s a business, but not really. It’s a government program, except that it’s not.

It’s the U.S. Postal Service, and whatever it is, its era has passed.

Between 2000 and 2013, the volume of first-class mail, a “profit” center, declined by 36.4 percent. As a result, net income has been in the red for each of the last eight years. In March, consultant Robert J. Shapiro documented that in the quarter-century from 1987 to 2012, USPS employee productivity grew by 0.7 percent, in stunning contrast to the transportation-warehousing industry, whose workers improved efficiency by 2.5 percent. It slammed into its debt limit nearly three years ago. Last month, the service’s inspector general highlighted “a substantial increase in delayed mail over the last several months.”

Its defenders claim that the USPS must comply with a number of burdensome congressional mandates. That’s true. Every address, no matter how remote, is to be served. Pricing must be uniform, no matter the distance. Nonprofits get a discounted rate, as do periodicals. Employees have “rights to bargain collectively over their wages, hours, and conditions of employment through their exclusive bargaining representatives.”

But the service’s taxpayer-provided goodies, direct and hidden, more than compensate for Washington’s dictates. First on the list is the mailbox monopoly. As congressional auditors described in a 1997 report, fedpols “enacted the statutory mailbox restriction in 1934 to protect the former U.S. Post Office Department’s revenue and keep unstamped matter out of mailboxes. The law was intended to stop businesses from delivering or using private carriers to deliver mailable matter to mailboxes without paying postage, which reportedly deprived the former Post Office Department of considerable revenue. In 1981, the U.S. Supreme Court upheld the constitutionality of the law.” Shapiro’s analysis noted that the USPS borrows “from the [Federal Financing Bank] at subsidized rates and with the backing of the full faith and credit of the U.S. Government.”

There’s more. Congressional researchers found that the USPS “pays no federal, state, or local taxes on its income, sales, purchases, or property. Unlike private companies, it is immune from most forms of regulation, such as zoning, land use restrictions, motor vehicle registration [and] parking tickets.” Revenue from the federal “corporate tax” it pays is dumped into the Postal Service Fund, which is then returned to the USPS. (Seriously.)

Amazingly, the post office, reorganized as a quasi-government entity in 1970, had a positive net income until 2006. Well into the epoch of widespread email, the service treaded water -- aided, it should be noticed, by not funding its retirees’ healthcare costs. But when technology advances hooked up with the Great Recession, the USPS entered an inescapable death spiral. Can any credible argument be made that first-class mail will ever rebound? And with 78 percent of its costs linked to an overwhelmingly unionized workforce, is there any realistic chance for meaningful cuts to labor expenditures?

The service is pinning a lot of hope on mission creep. Its postmaster general, The Wall Street Journal recently reported, is “pushing Congress to green light the shipping of alcoholic beverages. She also wants to expand grocery delivery and offer more Sunday delivery.”

Nice try. But it’s too late. UPS, FedEx, and local delivery firms are more than capable of handling the explosion of package delivery generated by e-commerce. Honed by the efficiencies fostered by the crucible of market competition, private-sector providers do it better, and cheaper. (Imagine what they would accomplish if permitted legal access to mailboxes.)

The only borderline legitimate justification to retain a portion of the USPS is to serve remote regions. But every decision involves a tradeoff, and living in the sticks is a choice. City- and suburb-dwellers face traffic congestion, higher taxes, and a greater risk of crime. Rural regions -- where fewer and fewer Americans live -- will suffer, somewhat, if the USPS goes away. So be it. Public policy can’t make everyone happy, nor can it achieve complete fairness. (When it tries, the consequences are usually undesirable.)

So immediately abolish the USPS in high-density areas, and sell off its considerable assets. (Refund the receipts to taxpayers.) Establish a schedule for the phase-out of post offices and mail delivery in non-metro regions, and stick to the plan, despite the inevitable squealing.

The Constitution grants Washington the power to “establish Post Offices.” But it’s not a requirement, any more than is the issuance of “Letters of Marque and Reprisal.”

The USPS can’t be fixed. Letting it continue means billions of dollars in bailouts. Something better isn’t on the way -- it’s already here.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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