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Press Release

    The Competition is in the Mail

    10/16/2003

    In 1928, Joseph Stalin, Dictator General of the USSR, launched the first Five-Year Plan for the communist nation, aimed at making its economy perform like a free market economy—except that it would be better because it would be free from the evils of the market. In 2003, John Potter, Postmaster General of the USPS, launched the first Five-Year Strategic Planfor the US Postal Service, aimed at making the government business perform like a free market business—- except that it would be better because it would be from the evils of the market.

    But the “evils” of the market—competition and profit incentive—are what make the market perform. The post office’s efforts to run like a business, without being a business, continue to fail just like the Soviet Union’s efforts to run like a market economy without being a market economy failed. The post office can issue all the Five-Year Plans it wants, and continue to talk about being “businesslike”, but until it is removed from the protection of a government monopoly, it will not perform like a business. The government monopoly shields the post office from the very thing that pushes businesses to perform-— the constant threat of going out of business. Until that threat becomes a reality for the postal service, it will be pushed to perform by nothing but dusty Five-Year Plans sitting on shelves in the offices of postal bureaucrats.

    An efficient and well-performing postal service would be good for the US economy. As it stands now, as an entity that has lost money in 11 of the past 15 fiscal years, with $6 billion in losses since 1971, and hopelessly lacking the incentive to improve, the post office is a drag on the economy. This is bad news, considering it is at the center of a $900 billion mailing industry, and is itself as big as the 11 biggest company in the country with $69.8 billion in annual revenues and over 750,000 employees. An entity this large needs to face the pressures of competition to insure it performs as well as possible.

    Not only is the post office free from the pressures of the market to perform, it also is free from the pressures of the government to perform. President Bush established the Commission on the US Postal Service to examine the state of the service and recommend reforms. The Commission, after 6 months of deliberation and testimony, issued a number of recommendations in July. Buried on page 75 of the post office’s Five-Year Strategic Plan, the post office admits the plan, “does not directly address the specific legislative and statutory changes recommended by the Commission.” They don’t have to—they’re the post office.

    A Government Accounting Office report states that the US Postal Service believes the “executive orders and Office of Management and Budget (OMB) instructions generally do not apply to USPS.” And that, “there are no written guidelines or regulations that require USPS to comply with Federal Trace Commission guidelines.”

    In the same report, the post office claims that the Postal Reorganization Act of 1970, which established the postal system as we know it, was “broad enough to empower USPS to provide whatever services or conduct whatever activities…that appropriately serves the purposes set forth in law for USPS.”

    But the US Postal Service also unilaterally determines what “appropriately serves the purposes set forth.” This has led the postal service into many markets where private companies already operate. But the postal service isn’t just another competitor. It is a powerful government entity swinging around a slew of government-granted advantages. It is Sammy Sosa batting at a t-ball game.

    The US Postal Service doesn’t pay taxes. It doesn’t pay parking tickets. It doesn’t pay for license plates for its trucks. It is free from regulations, and can write regulations that control the competition. It has a special line of credit with the US Treasury. It gets a pass on customs inspection.

    The postal service has taken these advantages and moved in to the express package delivery business, which was already, and still does, provide a better service than the government behemoth. Although it is just supposed to deliver the mail, the postal service now consumes large amounts of advertising dollars (that’s junk mail) that would otherwise go to support newspapers, magazines, internet sites, or TV shows. It is in the phone card business, the stuffed animal business, the pin business, and many others.

    If the postal monopoly is not repealed, the postal service should at last be prevented from entering into, and by doing so damaging, already competitive markets.