Rain, sleet, snow or privatization

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Andy Kessler wrote an opinion piece in the February Wired, "Stom the US Mail!" (UPDATE: Now published) Ironic that this article arrived, delivered by the US Postal Service into my government regulated, USPS approved, postal receptacle.

Andy's primary argument is that if the US Postal Service is privatized or dissolved, the mail will still be delivered. The nationwide package delivery companies would be likely to pick up the slack or buy the Postal Service assets to continue offering inexpensive postal service.

The existence of at least 3 major international shipping companies is proof that the postal service no longer benefits from government protections. All three companies have networks of infrastructure that deliver packages to ANY home or business in the United States and most of the World.

Over Christmas, I discovered that FedEx Ground service was in fact less expensive and faster than USPS Priority to most of my destinations. I was also able to track my package for constant updates. USPS tracking has yet to deliver any information on my packages until after they arrive.

I think every reasonable person with faith in the free market believes that under a condition of competition, consumers will benefit from cheaper services and more innovation. Why have we continued to ignore the postal service monopoly?

Another postal pet peeve, I have about 300 $0.32 stamps. These stamps are no longer good for mailing a letter. My investment in 1999 should have appreciated. If only adjust for inflation, shouldn't $0.32 5 years ago be worth $0.37 today?

To be fair to all involved, the USPS claims they are as efficient as a private business in this response to another editorial.

Andy's article is excellent I recommend picking up a copy of Wired. I will post the link when it becomes available.

4 Comments

I drive by once and a while. Unfortunately, I rarely have anything to add. But in this case, I've thought about this subject some. Think of the stamp as a separate currency for the USPS. You buy 32� worth of USPS money and it gets you an amount of service, conveniently equal to the lowest level offered. The USPS increases the rates and at the same time devalues your currency.

It may not be a perfect paradigm, but it might help you sleep better at night.

Andy addressed the stamp issue in his piece, too, noting that stamps in general amount to float for the USPS. The number of outdated stamps in circulation that never get used due to the opportunity cost of buying penny stamps to make up the difference is just free money.

I know people in the USPS now doing basic research on issues of safety and efficiency that no private organization could undertake, at fear of their stock price. I am glad the USPS is doing that research to insure my safety and consider the USPS (along with parts* of the DOD) as one of the few true values within our government.

Looking at the USPS close up, you see that its not as simple as "privatize mail service". There are many reasons that the postal service is so intergal to our way of life/government. In essence, the three main reasons NOT to dissolve the postal service are as follows:

[1] emergency services
http://www.au.af.mil/au/awc/awcgate/frp/frpesf8.htm

[2] federal powers and enforcement
http://supreme.lp.findlaw.com/constitution/article01/38.html

[3] bias and power/ability to discriminate
absolute power corrupts absolutely.

In essence, its easy to look at a working system and claim this is the best solution, but when an emergency occurs, only the USPS has the full soft and hard infastructure to accomplish what needs to be done. Over the long term, the USPS gives tremendous value to its users, most of the private services are cheaper right now because they simply utilized the research/lessons learned by the post office and didnt have to fund research (I believe thats called leap frogging in econ-speak).

Darrin: Good insights regarding leap-frogging.

Bryan: If you really want to use those 300 $0.32 stamps, buy three hundred $0.05 stamps. Expecting the value of your stamps to appreciate when you yourself admit that they aren't worth what you paid for them five years ago is baffling.

Stamps are not an investment like stocks or bonds, they are a convenience feature that allows you to buy USPS services in advance so that you don't have to pay up front every time you drive by the post office and drop a letter in the slot. You want to protect yourself from inflation? Don't buy so many stamps at once.

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This page contains a single entry by Bryan published on January 26, 2005 1:02 PM.

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