How can Uncle Sam run national healthcare when it can’t even run a mail delivery system? This week Postmaster General John E. Potter informed congressional staffers, postal union officials and others in Washington that the U.S. Postal Service (USPS) is bankrupt and will not survive unless it is given greater flexibility in determining delivery schedules, price increases, and labor costs by lawmakers, postal regulators, and unions. The remarks were sparked by the fact that the USPS lost $3.8 billion last year and is projected to lose another $238 billion in the next ten years if changes are not made. These figures notwithstanding, it is amazing to me that in 2010 we still have a government run postal system in America. Isn’t it time to privatize the Post Office?
Article II Section 8 of the U.S. Constitution gives Congress the power “To establish post offices and post roads. When the Constitution was ratified America was a very different place than it is today. We were a very rural society with many of our countrymen residing in far off lands to the west. Mail carriers provided the primary mode of delivery for important letters, documents, and packages. In their wisdom, the Founders realized that the safest, most effective way for these items to get to their recipients was through a government run system.
But things change and today America is an incredibly advanced country. We are a technologically savvy nation with websites, email, scanners, text messaging, and other communication devices. In fact, the Postal Service’s financial woes stem from competition caused by technology. Last year, the USPS experienced a 13 percent drop in mail volume primarily due to more people using email to communicate than snail mail. Additionally, companies like UPS and Fed Ex do an excellent job of delivering urgent letters and packages not just in the U.S. but around the globe. Lastly, some will argue that folks in rural areas will not be serviced if mail delivery became totally private. But, this would affect very few people in modern America. Even then the market should decide if a location is worthy of a private mail delivery system. If the answer is no (no entrepreneur comes forward to provide the service) then those residents could relocate.
Of course, just because the Constitution grants a power to Congress does not mean it has to put it into action. The changes sought by the Postmaster General would target delivery schedules and prices in order to close the budget gap of the postal system. It could mean the end of Saturday mail deliveries, longer delivery times, and postage price increases that exceed the rate of inflation. And Americans would not have a choice because the USPS maintains a legal monopoly over the delivery of non-urgent mail. This is so typical of a government run enterprise – instead of cutting staff like the rest of America during this recession to save itself, it proposes less service and higher costs for its customers. This is another reason why government should run nothing and why the USPS should be abolished altogether.
At the end of the day, the USPS is in trouble because it is government run. It doesn’t react to market conditions by laying off excess staff. It is burdened with bureaucratic waste and inefficiencies. Its management has to petition outsiders for permission just to make changes that are needed to ensure its viability. Even then, because it owns a monopoly over an industry and has an explicit government guarantee against failure it will cut services and raise costs on its customers – something that is not nearly as possible in a market based system. Lastly, even though it is billions in debt and has long outlived its usefulness, no one in Washington is saying it should be abolished. Government run enterprises just don’t know when it is time to close up shop. We have learned these lessons from Washington running a relatively easy enterprise to operate. The question we have to ask is, do we really want to entrust healthcare, a much more complicated endeavor, to Uncle Sam?