Postal Service

by Rose Pedenko 

The Washington Post, bastion of journalistic excellence that it is, recently reported what most Americans already know – that the United States Postal Service is a failed government enterprise.  The Postal Service estimates $238 billion in losses in the next 10 years and a drop of 26 billion pieces of mail.  As most federal estimates go, that figure will likely increase exponentially under the ever coercive lawmakers, postal regulators and labor unions that want even more flexibility to compel Americans to absorb the cost of their inefficiency.  They seek impossible remedies in an effort to expand government control and ultimately stifle American incentive.  It’s as if the bureaucrats and liberal leaning media are tone-deaf to the mounting anger of the citizenry that want to reduce government spending--and want to reduce it now.

There was once a commonly held belief that delivering the U.S. mail was too big or impossible for private enterprise to handle efficiently.  It is clear that even the Postmaster General now acknowledges that the 13% drop in mail volume last year was a result of business migrating away to faster, cheaper and more dependable delivery via the internet or other more efficient, competitively-priced services.  That, of course, begs the question, why do we need the USPS?

Delivery services, like UPS and Fed-X, have been fully capable of handling comprehensive domestic distribution for years.  The fact they have been subject to corporation taxes, sales taxes, vehicle license taxes and other onerous regulations, means they have also effectively been subsidizing their biggest competitor--the U.S. Postal Service.  What a great country!!

The postal service lost $2.4 billion from April through June of 2009, bringing the year’s losses to $4.7 billion.  In spite of a bad economy, in the 4th quarter of 2009, UPS' domestic profits increased over 60% from the previously mentioned low point in the 2nd quarter.

Rather than Congress rationally evaluating the failures of this government entity to compete in the free marketplace, it has allowed Postmaster General John E. Potter to throw good money after no money by spending an additional $4.8 million for outside consultants to provide even more ideas to further rip-off American taxpayers.  At a time when other (better) products and services mean a drop in prices to Americans, as we have witnessed with cellular, cable and satellite services, the Post Office will increase prices that exceed the rate of inflation.

Another question that begs a rational answer is why we permit federal/public employees to unionize and further drive up costs to American taxpayers.  Labor unions not only complicate the agency’s path to a firm fiscal footing but will inevitably prevent it from ever achieving the kind of profits enjoyed by private enterprise.  The Post Office does not need to reshape how Americans send and receive their letters and packages--Americans are doing that themselves.  Perhaps this bad news from the post office will be accompanied by yet another attempt by government to regulate the chief competitor to the USPS--the internet.

Congress should be asking itself “what would happen if the Post Office failed?”  The answer, of course, is nothing.  Private enterprise is 100% capable of delivering all of the United States mail in a time and cost-effective manner.  But rather than stop the fiscal bleeding, our elected misrepresentatives will probably enact further mind-numbing legislation to prevent what should be the complete and utter demise of a badly run business.  Where else have we heard this lately?

Unlike consultants paid to blow smoke up the Postmaster General’s ass, I have no interest in the Post Office reducing its costs.  Americans should strongly encourage their “elected” officials to shut down the Post Office, eliminate the Postal Regulatory Commission, and while we are at it, the handful of other useless and inefficient agencies whose sole purpose is to swindle and steal from a citizenry that is quickly going postal.

In trying to quell the uproar over the government takeover of medical care in the US, Obama made a point that I think is really worth exploring.  He said:

[I]f the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining -- meaning taxpayers aren't subsidizing it, but it has to run on charging premiums and providing good services and a good network of doctors, just like any other private insurer would do -- then I think private insurers should be able to compete. They do it all the time. I mean, if you think about -- if you think about it, UPS and FedEx are doing just fine, right? No, they are. It's the Post Office that's always having problems. (emphasis mine)

This argument really breaks down on a number of levels, and it's worth a look at all of them.

First, let's start with the fact that Obama's comparing the most advanced medical care system in the world with the job of moving a package from Point A to Point B.  Any schmuck can take a package - which has your name and address right on it - and get it from here to there. If I gave anyone reading this post an addressed package, you could jump in your car and drive it to the destination with minimal failure (allowing for flat tires, the recipient having moved and left no address, random explosion of the house, whatever).

The fact is, shipping isn't a teribly complicated business.  Yet even Obama admits that the Government option is the one that gets it wrong.  He points out that FedEx and UPS are doing it right, but the USPS isn't.

So that raises the next point of failure in his argument.  It's not like FedEx and UPS were doing it first, and the government created a new mail delivery vehicle to force FedEx and UPS to lower their costs.  FedEx and UPS, to the contrary, sprung up in response to a near complete failure of the government option.  They arose from the ashes of countless lost packages, and inefficient government bungling.  They recognized a market for reliable package delivery.

Let us imagine, however, that we treat package delivery the way we treat medical care.  In the package delivery business, you must a) declare the value of your package, and b) acknowledge that should it be lost or damaged, you will be entitled to only that amount.

In May of 1996, a man cut off his own hand believing it to be evil. He refused to let doctors reattach the hand, then sued them for not doing so.  He claimed they should have known he was nuts and forced him to accept the reattachment of the hand.  While this is an extreme example, this sort of frivolous suit is filed every day.  Malpractice suits and insurance contribute a staggering amount to the costs of health care.  The total amount can be debated, but a Congressional Budget Office Brief looking at malpractice insurance premiums paid by doctors rose twice as fast as medical spending between 2000 and 2002 - roughly 15%.  For general surgeons the hike was even greater running at 33%.

In package delivery, the cost of package breakage doesn't rise dramatically year over year.  If it did, the companies would look at ways to reduce breakage and loss.  Yet our government has ignored the skyrocketing costs of malpractice and malpractice insurance as a part of the reform debate.

Costs are a huge problem. We get that.  But that raises another key difference between the healthcare debate and the President's chosen analogy of package delivery.  Research into package delivery technology isn't a dramatic portion of the package delivery costs.  Do they buy equipment? Yes.  Do they invest in dfferent ways to scan barcodes and create shipping labels? Of course.  Are they handwritten package slips a huge pain in the ass versus the barcoded, Internet-generated slips? I imagine they are.  But unlike, for instance, pharmaceutical companies, the amount they spend on R&D is fairly constrained.  They don't spend a decade or longer trying to figure out a way to move ONE particular size and shape of package.

As a result, comparing the amount of money invested in drug research and clinical trials to the box moving industry is probably a silly thing to do.  Yet their was POTUS, telling us that the two are somehow equivalent.

Looking at his argument,  the one part of the example the President got right was when he said, "It's the [Government] that's always having problems."  If you think the same people that brought you Katrina, the US Postal Service, the missing $400 million dollar Mars Global Surveyor, the $600 hammer and the $900 toilet seat, and countless other blunders will do a better job with health of every American, look no further than the countless stories of Medicare and Medicaid fraud and abuse.

The fact is, Obama's example probably gives us more to think about as an example of why we shouldn't let government manhandle our health care system.  As Obama points out, and as the famed economist Milton Friedman said, "The government solution to a problem is usually as bad as the problem."