U.S. Post Office $174 Billion Lost Since 1800

The United States Post Office (USPS) is one my favorite agencies to talk about. In an analysis I did I examined how much the USPS actually lost since 1800. I was able to get a hold of this USPS data which shows the annual expenses and revenues since 1800. When you add up the losses (not adjusted for inflation) they amount to $33 billion. I used the WestEgg inflation calculator and figured out a factor to use for every year to figure out what the yearly loss or gain would be in 2012 dollars. When you inflation adjust the cumulative amount since 1800 it comes out to be $174 billion. This figure is really understated because the U.S. Post Office doesn’t pay taxes if it buys trucks, tires, or other equipment.

In my analysis it was interesting to find that the number of post offices actually peaked in 1901 at (76,945). These days (2012) there are around 26,755 post offices. The peak year for the pieces of mail was greatest in 2006 with 213 billion pieces. What is interesting is that throughout the 1990’s the amount of mail increased even as the internet was coming around. However it wasn’t until 2002 until the number of mail pieces actually decreased. The pieces of mail will only continue to decline in the future as more people use e-mail, texting, and cell phones which are all forms of communications that are in competition with snail mail. 

If any rational person heard a government organization had lost $174 billion since being created what would they do? Most rational people would say can we improve it an economist or business person would say can we eliminate it. Meanwhile in the private sector FedEx in the past 3 years has earned over $4.6 billion in profits. UPS in this same time period has made over $9 billion.  Most rational people would ask if we really need the service. In the case of the post office it is a no brainer given we have companies like UPS, FedEx, DHL, and many more logistics companies. What is even more bizarre is that if mail was privatized it would actually increase government revenue since the added profits private companies would be making would be taxed. Also the 546,000 employees that currently work at the U.S. Post Office could apply for jobs in these private logistic companies. Private companies would hold these employees to a higher standard. For instance back in 2011 we all remember the U.S. post office employee who was caught defecating in a yard who then was placed on administrative leave (this employee would be fired immediately in the private sector).

Why not let the private sector take over an area the government can't seem to handle?

Death of Arcades

In my younger days I was much more interested in video games than I am today. Most people who are now in college or just recently graduated from college can remember an era where kids pumped arcade games full of coins, played games like Teenage Mutant Ninja Turtles, X-Men, and Street Fighter. Today, very few arcades exist. My question is why have arcades seemed to have vanished?

To this day I can remember in virtually every mall in Houston there was some form of an arcade. I can even remember Sam Houston Racetrack having a mini arcade. I would imagine it allowed parents to drop their kid off somewhere while parents did their shopping. The main arcade I remember was a place called Exhilarama which was located in Memorial City Mall. Exilarama was not only an arcade but had food, a playground, and go carts. I remember in the 1990s this place on the weekend would be packed full of kids. By 2000 the company was defunct and a new arcade came in called Tilt. Tilt was only around for a few years and then went out of business. Discovery Zone which was a place people usually had their birthdays also went out of business in 1996 due to filing for bankruptcy. The bankrupt stores where bought by Chuck E. Cheese which is still in business today. The only other large chain arcade I can think of is Dave and Buster’s which is targeted to adults. According to Play Meter a magazine that covers the arcade industry in 2010 there were only 2,700 arcades which decreased from 4,000 in 2006. As of 2004, Konami stopped making arcade games however Sega and Namco still do. In the 1980’s the amount of video game arcades peaked at 13,000. I remember arcades in places like Cici’s Pizza and Mr. Gatti’s.

So the question is what caused the decline of arcades? The main reason is that video games that consumers could play at home over time became more powerful and allowed people to play some of the exact same games as they were in the arcade. Street Fighter 2 was one of these games. Mortal Kombat was another game that many people played on arcade in the 1990s then became widely available on video consoles. Also the internet had a large effect on how people played games. Today, people can play games online with others from around the world. Back in the day you could only usually play against whoever showed up to the arcade. During the 1990’s we had the introduction of Playstation 1 and 2, NES, SNES, Sega Genesis, Sega Dreamcast there was little reason to go the arcades. Instead of spending an afternoon pushing quarters into a machine people could have unlimited play at home. Also computers also became much cheaper during the 1990s. There was always demand for playing games on the PC however, during the 1990s the graphics, computing power, and hard drive space for computers increased dramatically.

Technology over time improves and becomes cheaper for the masses. The arcade/video game industry is one example of this. Creative destruction is the process of letting bad ideas fail and only the best ideas stick around in the market place. I would argue that today more people have access to video games than ever before at a cheaper than any other time in history.