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Press Release

    Going Postal

    08/27/2003

    On July 31st, after several months of deliberation, discussion and testimony, the President’s Postal Commission unveiled its recommendations for reforming the US Postal Service.

    Disappointingly, the postal monopoly emerged unthreatened and the best recommendations were far from great. Worse, the best recommendations still face the gauntlet of political approval, which usually leaves good ideas mangled by compromise. However, we should not miss the silver lining while looking for gold.

    The Commission did recommend that labor expenditures be examined and brought under control. Changes here could offer substantial savings, considering the 900,000-person work force accounts for about 80 percent of Post Office expenses. The unions will cry foul at any mention of reforming the collective bargaining and retirement plans, but the truth is many postal workers are paid wages considerably higher than an equivalent private sector job. This unnecessary expense is paid for by everyone who has to send mail through the postal monopoly.

    The closure of low-activity Post Offices is another sound recommendation from the Commission. They rightly suggest using a process similar to that used to select military bases for closure. This has already stirred up political protest. Governors, despite having nothing to do with the federal delivery of mail, want a say in which Post Offices are closed. Also, Senator Harry Reid (D-NV) has proposed a law that would severely limit the ability of the Postal Service to close any branches in sparsely populated areas—exactly the sort of places that may not need expensive, separate, free standing Post Offices. Regardless, before any Post Offices are closed, the statutory ban on such actions must be lifted.

    The Commission also said the Postal Service must be prevented from overcharging for its monopoly-secured delivery of letters, and using such takings to subsidize services that compete with private businesses. The recognition of this problem is a big step forward for postal customers and competing companies. Although poor accounting practices by the Postal Service make it impossible to know for sure, it is generally accepted that part of the $0.37 we pay to send letters and bills goes to subsidize other parts of the mail stream.

    This is threatening to customers in that it results in higher prices, and increases the possibility that efficient, private express delivery companies will be forced out of business. A federal agency cross-subsidizing its competitive products by overcharging for monopoly services makes the already difficult task of competing with a government entity even more daunting. These private companies already have to compete with a Postal Service that does not have to register its vehicles, pay taxes, collect sales tax, or pay parking tickets, and is exempt from zoning laws, and has the power to regulate its competitors.

    Private companies have to earn their market share while the Post Office can buy it with monopoly profits. This problem will only grow worse if, as the Commission recommends, the Post Office is given greater pricing flexibility.

    But even if the postal workforce is slimmed from big and fat to lean and mean, and Post Offices in ghost towns are closed, and the Post Office stops picking on private companies, these changes are still the equivalent of curing chicken pox by scratching. They deal with the symptoms, and not the cause of the problem. With the Postal Service, making changes within the current structure ignores the fact that it is the structure itself that is the problem. The Postal Service is a federal agency that tries to act like a business and compete with businesses, but hides behind the big brother of government whenever a challenger steps up.

    With annual sales of about $70 billion, and its place at the center of a $900 billion mailing industry, the Postal Service is a major player in our market economy, and would be a boost to the economy if it was a competitive business, rather than a government-protected wanna-be business. An efficient, quick-moving, cost-conscious, profit-seeking postal system which answers to the consumers, not the government, would have wide spread economic benefits—not to mention branches open at convenient times. It is not bureaucratic reform that will make this happen, it is competition and market pressure brought about by the removal of the monopoly.

    Being a political entity, the future of the Post Office will be decided by a political process. The labor unions will have their lobbyists reminding members of Congress how many members they have, and lobbyists for junk mail advertisers will be flexing their economic clout. So, it is up to CSE members to be the voice of the consumer, the voice least heard, but the people paying the price to prop up the current, failing system. The Senate Governmental Affairs Committee has scheduled a September 3 hearing to examine the Commission’s report. Let your Senator know what you think: call the CSE Toll-Free Member Hotline at 1-888-564-6273 to be connected directly!