Commentary & Analysis
Dr. Joe: It’s Time to Stop Cooperating with Postal Reform
Forget postal reform; Dr. Joe Webb calls for privatization of the postal system.
By Dr. Joe Webb
Published: March 30, 2018
It's time to stop cooperating with postal reform. It's time to start demanding privatization and the end of the postal monopoly, and foster the growth of new competitors.
The monopoly is a sham already. Look how we've all gotten around it: e-mail, e-marketing, websites, social media, content marketing, search engines, aside from UPS and FedEx and others. But preservation of that monopoly of that air inside the post box ripples through print media and suppresses its use. That monopoly was paid for by the USPS agreeing to fund its pensions on its own in an actuarially appropriate manner. We've already seen how they've ignored that obligation—so if they persist in not paying for the supposed monopoly privilege, then there should be no further insistence on maintaining the monopoly.
Notice how printing shipments have declined at about the same rate of decline as the prices of computers and wireless communications.
While USPS prices (as reported by the Bureau of Labor Statistics—this is a net figure—some specialty rates have been raised higher than this) exceed the Consumer Price Index, and elbow out prices of printed goods, this means that on a net basis, USPS prices exceed inflation by 3.5% (20.5–17) while commercial printing prices are now 13% cheaper than they were in 2009 (4–17). Print has its own problems keeping up with the comparative cost benefits of digital media, and the USPS distribution costs. And the costs of software, computing technologies, and capital investment in automating direct mail to comply with regulations and increase productivity to make up for rate increases, are not acknowledged by the marketplace.
So stop demanding postal reform—it's a ploy to go along and get along, to perpetuate the large mass of bureaucracy and its inertia, and demand the freedom to choose in the marketplace. Decades of cooperation toward reform have led nowhere. Now's the time for a different path.
What would privatization look like? There are instances around the world of where it has been done. It would at least make things "less worse." Any privatization should include ownership of USPS by its employees and pension plans as an incentive for innovation, commitment, and urgency. The disbanding of the PRC should occur on the very first day of privatization.
The truth is that no one knows what postal rates should be because there are no interactions of buyers and sellers on a daily (or more frequent) basis to set those prices. Imagine a marketplace where there could be postal delivery futures where trading on delivery times would be set based on postal workload availability and the desire of communicators for specific delivery times. Communicators could have a choice of their mailing times where prices would be a factor in their decisions—today, prices only provide a yes/no decision for use. Negotiated prices are only for the biggest mailers and biggest shippers. Small mailers and small businesses are currently ignored, and not nurtured. This process would end the short-sighted contribution margin pricing for big mailers and broaden the marketplace by allowing postal delivery brokers to compete in the market and consolidate the communications of small volume users. No doubt this transition would be chaotic at first, even for a couple of years, but for so many of the products and services we buy, there is little acknowledgement of the complex actions of a marketplace that support them, in how food, raw materials, and other goods are delivered to the market with simplicity on the outside and an amazing network of competitive cooperation of product creators, wholesalers, and transportation in the market on the inside.
"Postal reform" does nothing except impose continued failed solutions in new wrappers on a marketplace. Stop whining to a deaf, inert, and entrenched bureaucracy. It's time to set postal delivery free and attract entrepreneurs, new capital, and new ideas, to communicators and their audiences.