End of Post Office (Hopefully)

A recent article in Business Week entitled “The U.S. Postal Service Nears Collapse” discusses the current problems with the United States Post Office and talks about why the post office is having problems and brings up some possible solutions. The author of the article makes the mistake of claiming USPS (United States Postal Service) could be number 29 on the Fortune 500 list. Although, the USPS employs close to 600,000 people it is constantly losing money. Companies on the Fortune 500 list are profit seeking firms not government sponsored entities.

I found online data that showed the income and expenses of the USPS since 1789. The data looks as if it is adjusted for inflation. I took the annual difference of the income and expenses and calculated the surplus or deficit. The total sum of losses for USPS since 1789 has been $13 trillion! Actually this understates the total deficit since USPS doesn’t pay taxes like corporations do. Most recently in 2010, USPS lost $8.37 billion. In 2010, USPS took in $67 billion but spent over $75 billion. I don’t know of any publicly traded company that takes in $65 billion and loses money.

Obviously there are some reasons why the post office is in trouble. The internet transformed communication and make it very cheap to transfer data, ideas, and information. So instead of writing long letter to friends and relatives people could just send an e-mail. People handle most of their finances online which gets rid of bills or checks that people get which would also reduce the mail. The USPS doesn’t really have incentive as for profit businesses. Business have to create value while government funded problems can just ask for more appropriations or money from the government. The government has a monopoly on the first class mail service and is it illegal for anyone else to deliver first class mail. Something also I find interesting is that no post office worker has ever been laid off. For profit businesses don’t operate this way. I would love to see UPS, FedEx, DHL, or any other business start delivering first class mail.

People might say “those greedy companies will increase prices!”. One problem that very few people realize is that anyone that pays taxes funds the USPS. People just look at the stamp price or whatever they are mailing and not including their portion of taxes that are going to the organization. Also how often do we see lines at the post office? I have a feeling a profit seeking company would reduce the size and number of lines. Whenever we go into McDonalds, Macys, Kroger, we rarely see lines as long as the post office. Another question people might bring up is “how would mail get to our house?”. I have a feeling companies could figure out the wants and needs of customers and plan accordingly. Companies could deliver the mail every day or maybe only a couple of days a week. The decisions and wants and needs of millions of people would determine what would ultimately happen. According to the USPS website in the first 3 years of service workers get 13 days of annual leave plus 13 sick days plus 10 days of holidays per year. This would be over a month’s worth of time off per year.

Even countries in Europe don’t have the government taking care of first class mail. In countries like Sweden, Germany, Finland and many more countries have companies that take care of the mailing needs of millions of people.

I really wish we could abolish the USPS and allow for profit companies to come in and improve the efficiency and accuracy of the mailing system. In a million years no government burecrat would have ever dreamed of UPS.