A few weeks ago I wrote my Baltimore Sun column about conservatives' attacks on the Post Office as an example of government ineffectiveness and inefficiency. The USPS is, after all, losing money right now--burdened as they are by hefty labor costs and massive pension obligations. But industries that rely upon the postal service to deliver their goods and solicitations are not complaining. In fact, as I noted, many are strong advocates of maintaining the USPS:
According to the USPS' 2008 annual report, of the 201.9 billion pieces of mail delivered, only about 10 percent originate from households. The other 90 percent comes from businesses, agencies and other nonhouseholds. And although the private letters, bills and magazines we receive at home comprise 40 percent of our mail, the other 60 percent is advertising: credit card applications, coupons and other forms of junk mail.I went on to suggest that privatizing mail delivery would lead to far more expensive shipping costs. The idea that a private company would both deliver mail to every office and home six days a week, and collect it from the same plus thousands of drop boxes scattered across the nation-- all the while maintaining walk-up offices in every town--and still be able to deliver a first-class envelope to any address for a mere 44 cents (an amount that hasn't changed in real terms after 30 years) is simply an absurd expectation. And, while that means taxpayer dollars now subsidize the mail, again, a lot of the redistribution is going from taxpayers' pockets to corporate balance sheets.
Which means that the post office is an even more important boondoggle for the companies flooding our mailboxes with solicitations. The trade groups know the score: The magazine publishers support USPS solvency, and the direct mail industry says it will gladly accept five-day mail delivery if necessary. And in 2006, a Republican Congress and Republican president passed a law mandating that the USPS set aside billions to cover its long-term pension obligations.
Big business and the GOP are not trying to starve this federal beast.
Anyway, I got a lot of nice emails from postal carriers, both active and retired, about the column. (They must have some network for circulating such stuff, because the emails came from many corners of America.) But a late straggler of an email that just arrived two days ago from a man whose identity I will not disclose--other than to report that he's from southeast Oklahoma--really surprised me. Here's the key excerpt:
Pres. Obama made the comment that UPS and FedEx are doing fine. [See video clip, above.] What I'm writing to you about is that in the very rural areas both UPS and FedEx take packages to the local post office and pay the Postmaster to have the rural carriers deliver their packages, neither UPS or FedEx want to take their trucks down the rough back roads to be shaken apart. I am a retired Postal employee, I was the [title redacted] in southeast Oklahoma where I serviced 125 post offices. Nearly every time I was in a rural post office FedEx or UPS would show up, bring a load of packages to be delivered and pay the postage to have them delivered. I asked a few Pm's [postmasters] about it, they each explained that it was cheaper for them to pay the Postal Service to deliver the packages than to have to drive their trucks sometimes miles into very remote areas. I just never hear the USPS officials even mention this when being compared to the other delivery services. I don't think Oklahoma is the only state where this happens. (emphasis added)So there you have it. If the private carriers could afford to deliver everywhere for one flat rate and still turn a profit, they'd be doing so. But they can't. And that means that, in terms of redistributive nature of the USPS, at least insofar as redistribution occurs from one segment of the American population to another, some portion of that redistribution goes from urban and suburban areas to rural areas. Maybe rural voters--who tend to vote Republican, and preferred John McCain over Barack Obama last year by eight points--ought to keep that in mind the next time they criticize health care reform by comparing it to Cliff Clavin.
And so should the president.
79 comments
Did you make this post with the fact in mind that John Ratzenberger was used as a celeb endorsement by at least one Tea Bagger rally? :)
Reality is so damaging to Republican Ideology.
The USPS could do a LOT better if they were able to hire and fire like they needed to do.
However, this super-conservative, evangelical American male from Alabama is willing to admit: As a semi-autonomous gov't corp, they do pretty well.
UPS will sometimes use the USPS on a large scale, even in non-rural areas. As an example, I ordered two copies of the last Harry Potter book from Barnes and Noble. The book released at midnight on a Friday. Because B&N only uses UPS, I didn't expect to get the books until the following Monday. To my surprise, UPS had delivered the books to USPS which then delivered them to me on Saturday AM.
And, while that means taxpayer dollars now subsidize the mail
Are you sure this is correct? According to the USPS site and Wikipedia, the Postal Service receives no taxpayer dollars whatsoever.
When I was working as an FSM clerk for the USPS from '95 to '01, the biggest supplier of postal processing and sorting equipment was Martin Marietta. I wonder how many Republican congressmen realize that? It sure seems strange for Republicans to be attacking a defense contractor's largest customer for one of their product lines. One would think that the defense contractors would remind them of this...
Then again, the biggest reason for the radical increase in postage rates over the last 30 years is the radical increase in the price of fuel.
@Dale - The USPS is, for the most part, able to hire and fire as they need to (using casuals) because the APWU, NALC and NPMHU are three of the impotent unions currently in existence and, in my experience, often take the side of management against their membership in disputes.
Does this mean that the final scene we saw in Castaway would never happen because the USPS would be delivering those FedEx packages?
I asked my postal carrier how is that they are losing their shirts so quickly. She attributes it to a drop in delivery of periodicals due to the increasing propensity to get information from the internet.
Big businesses are like any other welfare recipients, they love and support benefits they enjoy so long as some other tax payer is picking up most of the cost.
Why do you think the health insurers loved Obamacare so long as other taxpayers or the uninisured were compelled to pick up the bill for all the currently uninsured to buy health insurance policies and then screamed bloody murder when the Baucus bill taxed the insurers. Ditto Big Labor.
Hypocrisy is one of the moral hazards of government redistribution of wealth.
Here in Louisville where UPS has their hub, they daily send one or two semi-loads of packages to the USPS here for delivery to remote destinations. Once had a UPS exec tell me that the UPS and Fed Ex ads showing deliveries to prospectors in the desert etc were the biggest fibs on tv, they relied on USPS to deliver those. They were not going to the expense to send trucks out like that.
I think the point is that the Government could be far far FAR more efficient in delivering mail than it has. The Post Office has been on the Government Accountability Office's 'High Risk' report for the better part of 2 decades, making it one of the most (if not THE most)inefficient spenders of taxpayer money in the Country.
Whether or not FedEx or UPS takes their mail to be delivered by the Postal Service is irrelevant, what's relevant is the fact if you were going to pick any government agency as a perfect example of perceived government inefficiency, it's the Post Office.
Bart DePalma said...
Big businesses are like any other welfare recipients, they love and support benefits they enjoy so long as some other tax payer is picking up most of the cost.
Which is why they are so against insurance reform. Because status quo is dumping the trues costs of their business practices onto taxpayers, and society in general.
They've been screwing their customers, progressively worse, for decades. They've been running a slopy business. It's about time the "market", their customers, gave them a swift kick in the cajonies.
So why is it again that you are so up in arms against health insurance reform that attempts to hold insurance companies to task?
Big businesses are like any other welfare recipients, they love and support benefits they enjoy so long as some other tax payer is picking up most of the cost.
According to their website, the United States Postal Service does not take any taxpayer money whatsoever. They are entirely funded through fees.
As such, taxpayers are not picking up the cost.
I live in Chicago, and I've received packages from FedEx "SmartPost" - which is where FedEx uses the USPS to deliver a package.
I love it, because the USPS carriers have a key so they can come into my building and drop off a package. FedEx and UPS will (can) only deliver if you are home to buzz them into the building, and won't leave packages outside (even with your approval on their slip). Otherwise you end up driving out to a single pick-up location waaaaay in the suburbs to get your package in person.
At least FedEx will deliver on Saturday. UPS won't, so as a city dweller who works days, it is almost impossible to actually receive a package delivered via UPS.
USPS would probably gain a great deal by creating a partnership agreement with FedEx and UPS, so that they get a good rate for delivering for the private carriers.
John Potter, the postmaster general, recently gave a speech at the National Press Club that outlined the things he would like to do...but is forbidden from doing by Congress. Both D's and R's alike get in the way. For example, they've got more retail outlets than McD's, Starbucks and Wal-Mart combined...but are prohibited from selling anything other than postal products and services. Going to five delivery days instead of six and closing down locations, those are business decisions that have turned political.
http://www.press.org/video/player.cfm?type=lunch&id=18669
http://www.nasdaq.com/aspx/company-news-story.aspx?storyid=200910081646dowjonesdjonline000626&title=us-postmaster-generalno-more-business-as-usual
Persuter
Where do people like you get their info? Is there any credibility to your claims that the USPS is getting taxpayer money? Why do conservatives habitually refuse to stick to the facts during a discussion? The GOP should be renamed the ITF (Ignore The Facts) Party.
I'm not sure I support privatizing the post office, but your main points do not convince.
The reason fedex and UPS can't profitably deliver to rural post-boxes is one of economies of scale. They only deal with a small volume, which doesn't justify sending trucks everywhere in the country. The elimination of the USPS would vastly increase the volume of mail carried by both postal carriers. Instead of delivering a couple of amazon.com packages, they would also be delivering mail. If there are areas that were underserved, subsidies can take care of it.
The real issue is one of operating costs and responsiveness. Would private companies have the same labour costs as governments? Would they be more responsive to consumer needs.
I think you make a mistake in focusing on the fact that a stamp costs 44 cents. It doesn't. Taxpayers pay for the postal service, and so it costs all of us a lot more than 44 cents when somebody sends a stamp. In particular, people in cities, are effectively subsidizing rural mail delivery.
Privatization would likely be bad for a minority of people, but good for the nation as a whole. The former effect could be mitigated by subsidies for rural mail delivery.
Of course, if two competing companies can't get the economies of scale, won't lower the bottom line, and aren't going to be responsive to consumers it isn't worth it. Moreover, mail delivery may be a natural monopoly. If that is the case, privatization will result in an entity that is probably little different from the USPS, while giving citizens less leverage over outcomes.
A couple other points to remember about the post office:
1) It has traditionally used first-class mail to subsidize its other operations, particularly the delivery of newspapers and magazines. The media have always maintained that this subsidy is a first-amendment issue, and until the internet came along, they were probably right.
2) FedEx and UPS also have to thank the post office for the creation of a universally recognized segmentation of the country by zone - the ZIP code. It's been around for 40 years, but think how much harder it would be to deliver mail without such a routing code, particularly if the address is partially illegible.
If not for the post office, which created the ZIP code and distributed a map of it for free, a private carrier would have had to spend considerable sums to come up with a map. Once the map was devised, the company would not have shared it with competitors.
Suppose UPS had done this. Then we probably would never have seen a FedEx - which came along in the 70s, because the cost of coming up with a map would have been a significant barrier to entry.
BD: Big businesses are like any other welfare recipients, they love and support benefits they enjoy so long as some other tax payer is picking up most of the cost.
Persuter said...
According to their website, the United States Postal Service does not take any taxpayer money whatsoever. They are entirely funded through fees.
The government has granted the USPS a monopoly on first class mail, which pays for its overspending and other inefficiencies. Anyone who buys a stamp is in effect paying a tax, or if you prefer a fee, to support the USPS.
Dwight said...
Which is why they are so against insurance reform. Because status quo is dumping the trues costs of their business practices onto taxpayers, and society in general.
Hardly.
Private insurers enter into agreements with their insured to provide contracted for benefits in exchange for premiums. Private insurers have no obligation whatsoever to provide benefits for those who do not contract for them. Thus, private insurers cannot be dumping any cost on the tax payers.
According to their website, the United States Postal Service does not take any taxpayer money whatsoever. They are entirely funded through fees
Despite having an exclusive monopoly on first-class and bulk mail, the post office chronically loses money -- about $7 billion this year, with another $7 billion anticipated next year.
But why should its managers and employees worry? They know they can rely on their operating losses being covered by a combination of congressional subsidies (financed by taxpayers) and rate increases, which will be rubber-stamped by the so-called Postal Rate Commission.
Wow GROG, just WOW! Didn't taking out gov regualtion of the entire economy and sending millions of jobs overseas and crushing the middle class prove to you that gov has a role? Think if we really left Goerge Bush types in charge for another decade or two, the counrty would be a complete shambles!
In point of fact, the USPS has been undertaking a marginal form of privatization for many years now, by establishing lower rates for bulk mailers who pre-sort their mail before handing it over to the post office. It has worked out pretty well -- in fact, an entire industry has sprung up out of it. However, there is no way the entire system could convert over to it without radical reductions in services.
To call the USPS inefficient is gross ignorance. There is no private corporation in the country that could POSSIBLY do all that it does for 44 cents per letter. So your Aunt Tillie got a letter two weeks late. That happens when you have an input of 200-some billion pieces per year, a significant portion of it accepted without requiring even minimal standards of addressing. And ask your banker or broker what he thinks about sending out monthly statements via FedEx or UPS.
BdP: Income redistribution will ALWAYS occur in areas where the society as a whole has accepted certain levels of services to be the right of everyone in the country. The country would agree, by massive numbers, that people in rural Oklahoma deserve the same mail service as those in New York, and so a system is established whereby the folks in New York pay a few mills a year to "subsidize" Oklahomans.
Same with health care -- MOST Americans agree with the statement "nobody should be denied health care because they cannot afford it." The only issue is who is going to pay the subsidy. NOW, the insured pay for it by being charged higher premiums as the insurance companies pay higher fees to doctors and hospitals to cover those who cannot pay. Under various form of health care reform, the taxpayers will bear that burden. But SOMEBODY is going to have to pay it, unless we're willing to have hospitals turn patients away to suffer and die because they're poor.
So stop bitching about wealth redistribution unless you're willing to bear your fangs and say that it's more important that you get your few mills a year than that farmers in the boondocks be able to get their packages delivered, and that you think people who are sick and poor should shut up and die without bothering you.
If anything, the large bulk mailers subsidize rural delivery. Even with automation discounts, it still costs a good bit to send bulk mail.
The USPS has a legal monopoly for the delivery of letters (Title 18, Chapter 38 of the US Code)
Private insurers enter into agreements with their insured to provide contracted for benefits in exchange for premiums. Private insurers have no obligation whatsoever to provide benefits for those who do not contract for them. Thus, private insurers cannot be dumping any cost on the tax payers.
No, by taking the premiums while they are healthy and then dumping them back onto society when they do get sick. Or they reach age 65.
Bradford:
To suggest that deregulation was the cause of the recession is laughable. Take a good hard look at Barney Frank's lending philosophy and how the housing market started this whole mess.
The USPS loses billions of dollars a year which is simply subsidized by the federal government. What in the world do you think is going to happen to nationalized healthcare if they can't run the post office?
One of Obama's great quotes:
UPS and FedEx are doing just fine, right? . . . It's the post office that's always having problems,"
GROG-
Really? So Fannie and Freddie brought on the whole recession and Lehman and Bear and Goldman had nothing to do with it? The SEC adbicating its role had nothing to do with it? The crushing of the middle class via jobs moving overseas was just a great thing for America? Yup....can I have some of what you're smokin'?
I would love for someone to point out one item the government has handled that has been privatized and done cheaper and better? KBR in Iraq(more expensive and faulty), Medicare advantage (more expensive), Blackwater (enough said)! and are we really talking about the fact that letter carriers might make a bit more at the Post Office than UPS? Last check, UPS CEO made 5.6 mill last year compared to the post master general's 800k, but we all know where wing nutties want the money going, certainly not to the working man.
@Slasher 14 To call the USPS inefficient is gross ignorance
I completely disagree with you. And so does the investigative arm of the US Government
http://www.gao.gov/products/GAO-09-937sp
http://www.gao.gov/new.items/d09271.pdf
In more important news- GOP schism along Glenn Beck nutballs versus traditional nutballs, Palin v Newt:
http://tpmdc.talkingpointsmemo.com/2009/10/whose-side-are-they-on-the-big-gop-schism-in-ny23.php?ref=fpa
Will 2012 be the final schism between the social and fiscal conservatives and the ending of the Reagan coalition that is their only hope at national prominence? It would be hilarious if Fox' Ailes brings the final end to his own beloved party via encouraging Beck and Teabaggers!
One thing that should be kept in mind when complaining about the rise in postage rates - it's really not that significant.
From Jan 1985 to Dec 2009: 3.2% annually
From Jan 1991 to Dec 2009: 3.0% annually
From Jan 1995 to Dec 2009: 2.8% annually
From Jan 2002 to Dec 2009: 3.3% annually
From Jan 2006 to Dec 2009: 4.4% annually
From Jan 2007 to Dec 2009: 4.1% annually
While the rise in postal rates is slightly higher over the last 4-5 years, it actually tracks the consumer price index fairly well, as Tom alluded to in his post.
1974: 10 cents
Adjusted by CPI: 43.8 cents
1985: 22 cents
Adjusted by CPI: 44.2 cents
1995: 32 cents
Adjusted by CPI: 45.3 cents
So there may be questions about the postal service's reliability, or long-term solvency due to less mail overall, but the fact is, it's kept its prices at a reasonable level for a long time.
I love the USPS--in the 27+ years that I have spent in this country, I have never once lost a single mail, domestic or international, something that I cannot say for FedEx. USPS is reliable and cheap and it is one of the better examples of government services to ordinary citizens.
I love the USPS. I hate UPS.
USPS will leave packages on my doorstep. UPS makes me come to them to pick it up.
no argument that you won't find private enterprise delivering mail to every office and home six days a week, collecting it from the same plus thousands of drop boxes scattered across the nation, maintaining walk-up offices in every town, and still delivering for 44 cents. but that level of service is probably unnecessary. you could cut paper mail delivery down to, say, 3 days per week without impacting business (since there are other means -- fedex, ups, etc -- for urgent business). paper mail is largely obsolete. heck, even kramer realized that 10 years ago.
Bart:
Anyone who buys a stamp is in effect paying a tax, or if you prefer a fee, to support the USPS.
???
Yes. The USPS is supported by fees paid for its mail. I do not see any reasonable way to call buying a postage stamp a "tax". Yes, there are "stamp taxes", but that's where you have to buy a stamp when YOU manufacture something like a pack of cards. You're paying them a "fee", as you said, to send the mail. That is not a taxpayer subsidy at all. Anyone can buy a postage stamp, even foreigners and illegal immigrants! :o
The government has granted the USPS a monopoly on first class mail, which pays for its overspending and other inefficiencies.
Ah, they "granted" them a monopoly? The monopoly on first class mail comes with the legal requirement to deliver that mail to any address in the United States for the same price. They also have all kinds of other, less obvious restrictions. These legislative restrictions cost the Postal Service, according to the FTC, some 500 million dollars a year. (Far more than the actual subsidy they do receive, by the way, which is being exempt from state and local taxes, saves them about 100 million a year.)
GROG:
The USPS loses billions of dollars a year which is simply subsidized by the federal government.
Do you have any evidence for this whatsoever or are you just assuming? The USPS lost money the last two years but made money the four years before that. What federal subsidies are you referring to? I can find some special cases where they got federal money, as in 2003 when they were required to institute biological safety measures and the gov't paid for it. But that's clearly not the same thing. Where are these federal subsidies of billions a year?
slasher14 said...
There is no private corporation in the country that could POSSIBLY do all that it does for 44 cents per letter...The country would agree, by massive numbers, that people in rural Oklahoma deserve the same mail service as those in New York, and so a system is established whereby the folks in New York pay a few mills a year to "subsidize" Oklahomans...So stop bitching about wealth redistribution unless you're willing to bear your fangs and say that it's more important that you get your few mills a year than that farmers in the boondocks be able to get their packages delivered.
So much drivel, so little time.
1) All private companies could deliver mail as they do packages to rural areas better than the USPS.
2) I have no problem whatsoever with folks who choose to live out in the country, myself included, to have to pay all of the cost of the delivery of first class mail as they presently do for packages.
Same with health care -- MOST Americans agree with the statement "nobody should be denied health care because they cannot afford it."
And the vast majority of Americans do not believe that they should be paying to insure Americans who can afford health insurance but choose not to buy it. If the government mandates were removed, an individual could afford catastrophic insurance for what they spend for cigarettes and booze.
I think USPS supporters ignore the sheer power that monopoly on first and third class mails gives them.
We'll use Tom's "Rural" example. Why is it cheaper for Fed-Ex to drop off packages with USPS, rather than deliver them itself? Because, USPS is going there anyway. They have a boatload of first class mail and magazines they need to deliver. Items that Fed-Ex can't BY LAW deliver.
Furthermore USPS protects its monopoly viciously. Historically, they brought suit against a troop of Boyscouts that decided to raise money by hand delivering Christmas Cards... infringing on the monopoly.
USPS supports say "just" 44 cents a letter from, say, DC to San Francisco. And, if you delivered 1 letter that way...it'd cost you about 4 days, and $500. But...if you delivered 1,000 letters that way (and I imagine there are WAY over 1,000 pieces of mail from DC to SF in any given day)...it'd cost you just the same...4 days, $500.
You wouldn't have to abolish USPS...just open up its monopoly. Of course, that would be a buisiness disaster for it.
“1) All private companies could deliver mail as they do packages to rural areas better than the USPS.”
No, they couldn’t. In fact, that was point of this post, that they can’t even deliver packages to rural areas. They dump them on the USPS because they can’t make a profit off of it. If we left the mail to private companies, some people just wouldn’t get mail because it was too costly to deliver it to them.
You’re confusing profitability with overall efficiency. UPS and FedEx are far more profitable than the USPS because they don’t have to deliver the services that the USPS has to. And they look more efficient because they only do the things that make them profitable. If UPS or FedEx were tasked with what the USPS has to do, they would fail miserably.
While not directly related to this discussion. It seems as though the argument over 44 cent letters is fairly moot. I have not sent a personal letter in many years, and I've gradually converted to paying all of my bills electronically. I still get a few bills via post, but I suppose I should stop doing that.
Arguing about whether any private corporation could deliver 44 cent letters anywhere in the country is about as relevant long term as arguing whether any private company would deliver whale oil to rural North Dakota. It just doesn't matter.
Similarly, I expect magazines to stop being delivered via dead tree in the next decade, and what will that leave the Post Office to do? If it gets down to a daily dose of poorly printed advertising circulars and credit card offers, I might just remove my post box.
I do occasionally send a package via USPS, but I get almost all of my packages via UPS, and could easily switch to UPS or Fed-Ex for my package sending needs.
Given the reason for existence of the USPS is delivering slips of paper in envelopes, I'd expect the organization to follow the path of losing more and more money, pricing themselves further out of relevancy, turning to Congress for a bailout, continuing to lose money, getting bailed out again, and again and finally dying a slow and expensive death.
hosertohoosier: The reason fedex and UPS can't profitbly deliver to rural post-boxes is one of economies of scale. They only deal with a small volume, which doesn't justify sending trucks everywhere in the country.
FedEx and UPS have the choice to use USPS for delivery where doing it themselves would be less profitable (or even unprofitable). Both operations have different economies of scale, but private companies have no obligation for nation-wide service (and can even quit the business). In sparsely populated areas, delivery of mail and electricity is a natural monopoly that is often served by a non-profit organization such as rural electric cooperatives. Industry may simply choose not to compete (or deliver) in those areas.
Nitpicking:
Having USPS of FedEx pay USPS to deliver their packages proves only one thing: it costs them less to do so than to deliver the packages themselves. Maybe they could do it themselves and still turn a profit, but it would be less than what they do now.
So saying that they can't is not supported by anything.
Bart DePalma said...
So much drivel, so little time.
~~~~~~~~~~
hmm, passive/aggressive, disingenuously smug BDP is stealing my bylines ;)
My work is done ...
The cost of a postage stamp in 1950 was 2 cents. If postage had increased at the rate of inflation a stamp would cost 18 cents today.
Wow, what a partisan hackjob. So typical of 538.com these days-- take basic data, and twist it to fit your political message.
Let's see your conclusion:
"So there you have it. If the private carriers could afford to deliver everywhere for one flat rate and still turn a profit, they'd be doing so. But they can't."
And let's see what premise that conclusion was drawn from:
"...it was cheaper for them to pay the Postal Service to deliver the packages than to have to drive their trucks sometimes miles into very remote areas."
This premise says that C(a) [the cost of scenario "a"] is lower than C(b) [the cost of scenario "b"].
Profit = Revenue - Cost. Revenue is the same in both scenarios, so we can conclude: P(a) > P(b).
But how can you possibly conclude from the above that P(b) is negative???? You can't. That is not a logical conclusion from the data provided.
Yet you have no problem drawing it when you say "If the private carriers could afford to deliver everywhere for one flat rate and still turn a [positive] profit...."
While it's theoretically possible that the private firms wouldn't turn a profit by delivering here, no data you provided leads us to that conclusion. So, for a moment, let's assume that they still do turn turn a profit. In that case, what's the government really subsidizing here? Our tax dollars are going... towards padding USPS and FedEx's profit, because they, like many other firms around the country, know how to use government services to cut corners and buff their profit margins. Maybe Democrats will keep that in mind next time they go to the polls.
I'm totally fine with any private carriers being able to deliver US mail. The only requirement be that the service every area that the USPS does and they do not do this by sending the mail through the USPS.
That would be a fair, level, playing field.
Otherwise, you'd just get companies coming in and cherry-picking the areas that make the most money with the least amount of effort. Then the USPS would lose those profitable areas and their critics would just bash them even more for it.
Of course, I do have a concern. As hosertohoosier said, UPS can't justify personally delivering to all these rural areas because of a lack of economies of scale. So what happens if the monopoly is lifted and several carriers go in to try to make it work. Well, now they split all that mail among themselves, thus lowering their economy of scale.
While this is going on, the USPS changes how they invest in trucks, sorting machines, personnel, etc. to take into account their new volume levels. So now if those companies find that no, it's not something they can do profitably and go out of business, the USPS is left in the lurch. Now they have to deliver all this mail and weren't able to invest wisely because they couldn't plan ahead. So now they have all these extra expenses trying to turn their company back around to doing what it was before all this started.
It all smells like a potential taxpayer bailout to me. All so some people who don't understand that some services may need to be a monopoly can run an experiment to see who is right.
On the other hand, as has been pointed out many times, the USPS does not receive tax subsidies. They make their money solely in user fees (postage, mailing materials, etc.) The one asterisk is that monopoly thing that bugs people. So they'd rather take a non-taxpayer funded system and roll the dice in a way that could very well end up in a taxpayer funded bailout.
David said...
BD: “1) All private companies could deliver mail as they do packages to rural areas better than the USPS.”
No, they couldn’t. In fact, that was point of this post, that they can’t even deliver packages to rural areas.
:::sigh:::
Check the UPS and Fed Ex delivery maps. If the area has road access, they deliver.
In fact, the USPS subcontracts out package transportation out to UPS and Fed Ex to save money.
Oh, and one addendum to my post. USPS should be allowed to have the same flexibility to change services as the private carrier. So if one of these new carriers decided to deliver US Mail only three days a week, the Post Office could do that, too. The USPS would also be given the ability to close as many post offices as it wanted.
Of course, as with the drawbacks above, this could likely end up meaning rural areas have no post office anywhere nearby, which could eventually get these people motivated to flex some political muscle.
From
http://www.upsmailinnovations.com/support/frequentlyaskedquestions.html
Q. Why does the Post Office have my UPS Mail Innovations package?
A. UPS Mail Innovations works with the U.S. Postal Service, providing the pick-up, processing, and interim transportation of mail, with final delivery being made by domestic and international postal services.
--
So there's at least some link.
From
http://fedex.com/us/smartpost/
FedEx SmartPost offers you an efficient, value-oriented, and timely way to ship high volumes of low-weight packages to residential customers. We pick up, sort, line haul, track and deliver your packages by leveraging the delivery network and capabilities of the USPS and the Canada Post Corporation. As a result, you reduce transit time, minimize handling, and maximize postal discounts.
The USPS does use a private carrier, FedEx delivers the USPS overnight mail point to point.
I wonder how much of this is confusion over the term "deliver".
There's two meaning. There's the literal definition, meaning UPS/Fedex drives a truck to the address and delivers your package.
Then there's the more flexible meaning, meaning "deliver" it to you by getting another carrier to actually do the literal delivery to your address.
Yawn,
The GOP is sad to pick on the post office.
Can someone list the size and scale of the last 20 largest defense contract overruns?
Then compare the percentage of the overrun to the actual product produced. Then do the same for the budget of the post office.
Those defense contractors can make a pretty buck and they are very inefficient it seems--no better than Cliff the Postman.
$296 billion in cost overruns by defense contractors last year. This is more than the EU budge on defense.
Lets estimate the cost per person. $1000 per person in waste to these defense companies (private solid firms, right?--LMAO).
Wow! This post office overrun each year is like the $32 Bear DNA scandal that McGramps talked about last year. Boy did that score well with the voters.
I am quite surprised that no one has mentioned the private express statues, which date to 1792. This gives the postal service the 'monopoly' on first class mail, in exchange for their obligation to deliver everywhere at the same price. Without the postal service, rural America would be paying much higher prices for delivery. Free marketeers love the free market when it is to their benefit. We subsidize (relatively) expensive rural mail delivery because it is the right thing to do.
This was the subject of a paper I wrote in grad school.
The USPS was not granted a monopoly. I could start a company right now that delivered letters from one person to another. But you know what? I don't because there is no way I could do it for less then the USPS does it now. That is why UPS and FedEx use the USPS for some of their deliveries.
Also, I can use FedEx or UPS to deliver a letter. So please explain to me how you justify saying that we have granted the USPS a monopoly on delivering mail when if I want to have a letter picked up taken to my friend across town I can chose between the USPS, FedEx, UPS, or a bike messenger? All offer the same basic service at different prices and different time frames. There is no monopoly.
Run along and watch Fox or something.
No big scandals at the post office. LOL
Maybe check into some defense contractors and no bids contracts. Maybe that is the place to find cost excesses in private companies. Read up and check it out.
The post office is a thing of beauty by comparison.
You'd think conservatives would simply go to the free-market solution and just avoid using the USPS. Send everything via Fedex.
If every anti-government conservative actually followed through on their rhetoric, they could crush the USPS in a year.
But no, alas. So much easier to just bitch and moan on the internet.
Rillion:
The far right wingnut website, ftc.gov, explains the monopoly the USPS has and the implicit subsidies it receives.
Do some research.
To all and sundry:
1. FedEx and UPS will not accept packages which are not properly addressed, by which they mean on THEIR pre-printed forms, WITH a Zip Code, enclosed in THEIR envelopes. The USPS will accept any envelope of reasonable but not necessarily standard size, with the address written in free hand with or without a zip code. They have people who decipher mail which their automated machines cannot figure out. They give advantages to bulk mailers who do some of their work for them via pre-sorts (as I noted) but they take anything they get.
FedEx and UPS require you to use their drop boxes and/or offices; the USPS has FAR more drop boxes and will pick up mail from your mailbox itself, which means they have essentially MILLIONS of drop boxes.
There are reasons why this is how things are. Fedex and UPS are designed to handle mail which is of higher value to the sender (or recipient) than is that of the general run of USPS mail. You can't track lost mail if it's not highly standardized; the USPS doesn't track lost mail (unless standardized at a higher cost) AT ALL. So you pay more for FedEx and UPS. Nobody has a problem with that.
But to suggest that either company could do ALL the things that the USPS does (which is what I said, BdP) for 44 cents a letter is simply absurd. FedEx and UPS don't even try because they're servicing a different market than the USPS is servicing, and to ramp up to serve the USPS's market would require a massive capital investment. Why do it when the country is satisfied with the USPS and they can make profits just fine by going for the high end?
The USPS does all these cost ineffective things because the law MAKES them do it, and the law makes them do it because the service is supposed to be for EVERYBODY, not just the educated and the bulk mailers and the conveniently located. The USPS originated in a country that was primarily rural and marginally educated for the most part, and it has continued to service those in those categories because it's meant to serve everybody. That they have been able to do this and maintain a totally reasonable price for their services is a triumph of the principle of economy of scale, combined with not having to satisfy wealthy CEOs and stockholders with profits and monster salaries.
2. Whoever it was thinks Boy Scouts should be allowed to take over mail routes has not thought things through. Boy Scouts are children. Children have to go to school. During school hours, who mans the post office to sell stamps and hand out packages too big for home delivery? When little Joey goes off to college, who trains his replacement? Are you prepared to guarantee that EVERY community in the country will have this army of children at its beck and call? When an undertrained child screws up a registered letter form and costs somebody a fortune as a result, what is the recourse -- spanking? Learn about the world and grow up.
Who decides that troop 84 gets the west side route when troop 93 wants it? Some local politician? Yeah, that'll work. Market forces? So troop 84's kids can offer to work for less than troop 93's because their parents are wealthier. Yeah, that'll get you a motivated work force.
Most importantly, how do you propose to maintain the economy of scale which allows the USPS to operate as it does if sections of it can be carved out at the whim of local entrepreneurs because they can undercut the USPS wage rates in their little bailiwick?
All you can see is the typical mindless capitalist (as opposed to thinking capitalist) view that if you can pay a kid a dollar an hour to deliver mail, you've improved upon paying a man or woman whatever it is that they make because the kid doesn't want a living wage (since his parents are supporting him) or vacation pay or a pension plan or health care. You want a coolie, and if you can find a kid willing to work as one, well hell, fire the adult. Son of a bitch probably is a union man, which means he probably votes Democratic. Fuck him.
Henry Ford would vomit at your ignorance. He wanted ADULTS working for him, and he paid them a wage large enough so that they'd WANT to do a good job and so that they could afford to buy the cars he was producing. In the early 1900s, when he was building his factories, he could have hired labor at rates far lower than what he paid -- there was a massive pool of immigrant labor available. He understood that to always pay bottom dollar was the road to INefficiency.
You ought to learn from him.
How the hell is USPS inefficient?
I have never lost a package or mail with them. FedEx sent something I ordered from here in New Jersey to Colorado before realizing it was not meant to go there.
What the hell is so inefficient about paying 44 cents to put a sticker on an envelope and have it arrive anywhere in the lower 48 within 3-4 days. What more can you ask for? Seriously.
They talk about Bush Derangement Syndrome. I think a lot of people have government service derangement syndrome.
And while on the subject, I've never had any problems at the DMV. You wait on a line or two, maybe three. JUST LIKE EVERY OTHER ASPECT OF SOCIETY!
Grow up you babies.
Anyone who thinks private companies are more responsive to custoners than government agencies didn't lose about 20 hours of their life in toto on the phone to Bangalore trying to get their computer fixed. Cut off multiple times and having to start over from scratch. Endlessly reloading the system before they would admit a hardware problem. Finally getting authorized to send it in and waiting almost 1 month to get it back.
I suppose the market is supposed to eventually force these companies to improve or go out of business. Well, eventually is a long time and I hear their competitors are worse. Meanwhile, I'm in and out of the DMV in 15 minutes and have resolved tax issues in a single 10 min phone call with the feds and the state.
It's about choice, not just for abortion. Monopolies, whether public or private, are generally a bad thing, but I want a choice between the USPS and UPS and FedEx. I want a choice between public transit and my car. And I most definitely want a choice between public and private health care.
Ummm the Postal Service does not receive government subsidies.
Ummm yes they do.
Ummm, no they don't.
@juvanya
How the hell is USPS inefficient?
What's inefficient about USPS is that conservatards have to work really hard to come up with something bad to say about it.
The truth is, most of the things government does, it does better, fasted, cheaper, and more efficiently than private companies could ever hope for. But conservatards have this meme they've been pushing, that gummint is bad, taxez iz bad, and private enterprize iz better, alwayz - because this meme works well for the monied elites who can't get rich off government programs, and who can brainwash watchers of Fixed Noise into being paranoid about gummint takeoverz.
You have to realize, most conservatives don't really think much. It's easier when you're being told what to think.
The government has granted the USPS a monopoly on first class mail, which pays for its overspending and other inefficiencies. Anyone who buys a stamp is in effect paying a tax, or if you prefer a fee, to support the USPS.
WTF????
Anyone who buys insurance is in effect paying a tax, or if you prefer a fee, to support the insurance company.
Anyone who buys milk is in effect paying a tax, or if you prefer a fee, to support the grocery store, truckers and the dairy farms.
You are truly stupid.
The fact remains(as has been pointed out already) that UPS and the extremely incompetent Fed Ex could not deliver a letter anywhere in the lower 48 for 44 cents.
It is like the health care debate, about a third of the income of private carriers go to overhead, less than 5% of the money allocated for medicare goes to overhead, yet the government is inefficient and private industry is so much better.
Right wingers have serious problems dealing with reality.
Grog--
The USPS receives some money from the government, but that's for things like delivering ballots of servicemen and women. It's minimal, those appropriations are regularly cut of the budget, and they are not subsidies.
Other than that, the USPS has been off-budget since the Nixon years.
But thanks for coming out.
And Grog, your assertion that
"The USPS loses billions of dollars a year which is simply subsidized by the federal government."
Is completely fabricated out of thin air. It's not true, it's not close to true, it's not in the same ballpark as true, it's not on the same planet as true, and it hasn't been since 1971.
Bradford--
The USPS uses FedEx and other commercial airlines to ship mail because it is against the law for the USPS to buy its own fleet. Since Congress says it can't do the cheapest thing, which would be to own its own fleet, what would you suggest?
BdP says: In fact, the USPS subcontracts out package transportation out to UPS and Fed Ex to save money.
I'm assuming BdP is refering only to package TRANSPORTATION as opposed to delivery. According to my postmaster, the only USPS mail or packages that are delivered by FedEx are international, priority items, and UPS delivers NO USPS mail at all. (In point of fact, UPS won't even deliver packages to USPS post offices -- FedEx will.)
Now if you're talking about the privates transporting mail and package sacks in their planes, well, what does that prove, other than that the USPS saved the taxpayers some money by renting space on somebody else's huge capital expense? Sounds like a pretty smart move to me.
FedEx and UPS specialize in high priority mail and they charge high rates for it, which means, in turn, that they have large capital outlays to be able to guarantee the rapid delivery that its customers expect for their money. At one time, and possibly even today for all I know, UPS used to fly planes EMPTY just to be sure to have them in position to make deliveries in places where they anticipated immiment volume.
There's nothing wrong with doing that, and nothing wrong with charging top dollar for it. But the USPS is not in that business. None of it has remotely anything to do with the relative efficiency of the USPS vs. the privates. They're in different markets, and there is no evidence that the privates could do what the USPS is doing more efficiently.
I'm done with BdP, because talking to him is a waste of time. He states that FedEx and USPS could deliver mail as the USPS does for 44 cents a letter and expects us all to genuflect as if he knew something, when in fact he has no evidence whatsoever to back up his words. He joins Pete Kent on my "don't waste your time on them" list. Enjoy your 155th re-reading of Atlas Shrugged, Brian. I'm outa here.
There is no USPS monopoly on 1st class mail. Stick your letter inside a UPS or FedEx envelope and they will be happy to deliver it. Of course they will charge you at least 10x what the USPS charges, but they will deliver it.
Hey there, all unfortunately ignorant of history commentators. The US Post Office/UWS Postal Service has ALWAYS relied on contractors to transport mail BETWEEN post offices. Express riders, stage coaches, riverboats, trains, airplanes and trucks all carried the mail under contract to the US Post Office. AMTRAK carries the US Mail for the USPS to this day. Look out the window next time you fly out of a major airline hub and you'll likely see a whole lot of USPS mail tubs going up the baggage ramp into the aircraft. Where your USPS "inefficiencies" come into play is at the terminal end of mail delivery. Seems no one has been able to dramatically improve on the sort and deliver system developed by Benjamin Franklin in the 18th Century. The final leg of delivery still has to be hand sorted, and taken to virtually every address in the U.S, on a daily schedule. Still damned cheap at less than half a dollar an item. BTW, if the package "Absolutely, Positively" DOESN'T "has to be there overnight", USPS 1st class Parcel Post is a bunch cheaper than FedEx or UPS.
maf-
I never suggested anything, just pointed out the fact.
If the post office didn't have to deliver so much junk and advertising, perhaps they wouldn't need to buy so much expensive equipment or hire so many people or work so extra hard. I don't think the overall picture allows them to evaluate the true total costs of the junk mail on the system. Those huge customers get special rates for pre-sorted and bulk mail, but does it really pay the same share of the system as my constantly rising first class stamps?
I think the post office is wonderful. Especially when they bring baby chickens.
I've long wondered: is there any country (of any size) in the world that operates with only private postal systems?
I've dug a little, but haven't found an answer.
(If not, is it a mass conspiracy by all those countries because they all hate private enterprise?)
Taxpayers pay for the postal service, and so it costs all of us a lot more than 44 cents when somebody sends a stamp.
It can't be said enough times that THIS IS WRONG. There is NO SUBSIDY and hasn't been since 1971. If you think it is, please check your sources, because your sources are wrong.
http://money.cnn.com/2009/05/08/news/economy/postal_service/index.htm
Even though it's a federal agency, the Postal Service has not received any taxpayer funding since the early 1980s, when it was phased into an independent, self-sufficient financial entity. "We're not seeking any tax dollars," said Postal Service spokesman David Partenheimer. "We don't use tax dollars for our operation."
Also of note:
UPS and the extremely incompetent Fed Ex could not deliver a letter anywhere in the lower 48 for 44 cents.
This is understating what the USPS does. That 44-cent stamp will get your letter delivered to any of the 50 states, any inhabited US territory, and anywhere within the military mail system.
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