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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.

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink's Economics and Research Center.

 

Discussion

By Don Piontek on Mar 30, 2018

Wow! People have short memories. There were a few private "alternative" delivery start-ups that popped up in the 90's. One was a limited area delivery service funded by RRD, Quad, and few others. The other was the Alternate Delivery Service which was a private delivery service which used local newspaper carrier people. Both delivered second-class publications and catalogs (NOT 1st-class mail), and both failed. Why? Because these "private" carriers could not deliver these pubs. in a reliable manner, and the publishers got sick of all of the complaints of non-delivery from subscribers.

 

By Joe Webb on Mar 30, 2018

And I remember IPSA in the early 1970s. There are news stories about them but this document by one of the founders has some history.
http://www.dmacweb.com/IPSA/HistoryIPSA.pdf

The reason a postal monopoly was established was because of libertarian philosopher and abolitionist Lysander Spooner and his American Letter Mail Company
https://en.wikipedia.org/wiki/American_Letter_Mail_Company

This article from the Mises Institute details more attempts to break the postal monopoly in history
https://mises.org/library/usps-cursed-carriers

The communications business would have developed quite differently had these been in the marketplace.

This article from Politico laments the loss of innovation at USPS
https://www.politico.com/agenda/story/2017/06/08/us-post-office-technical-difficulties-000449

 

By George Lawrence on Mar 30, 2018

The USPS is enemy number 1. If we had a free enterprise system we would all be better off and actually Thrive. Joe is right, all of the alternative forms of communication were born out of frustration with the USPS.

Do you know how UPS was born? Frustrations with USPS.
How was Fed-Ex born? The inability of the USPS to perform.

We need a new solution are we will all suffer.

 

By HENRY HUNT on Apr 01, 2018

Hard not to agree with what's been said. All large bureaucracies are doomed to the same fate. I know, I work for one of the largest ones. Recently a leader of blank blank said the entity must focus more on delivery and less on process, more on people, and less on BUREAUCRACY. It is time for blank blank to recognize its shortcomings and to reform the way it works. Thus far more bureaucracy in the form of oversight and regulation have been carried out. One way to effect change is to stop funding areas that are automatically given money to be bureaucratic in favor of income generation results based budgets. It works simply by saying to them you prove to us what you need for funding in exchange for delivery of said goods or service and charge a fee accordingly to gain income. Come end of the financial year, if in the black continue funding, if in the red cut dollar for dollar on the loss. Gut the perks for civil servants as its all to easy to abuse them, dismantle internal tribunals that block the ability of to get rid of abusive civil servants that get up everyday and ask what can the government do for me today instead of the other way round. Fear of losing a job with reasonably good pay and benefits is a powerful incentive to engage and work harder. As for the the upper level bureaucrats abolish their posts as redundant, give severance incentives, and for those not seeing the writing on the wall, they should ask themselves who will win in an tribunal if its John Q postal worker or Uncle Sam.

 

By Seth Meyer on Apr 02, 2018

Dr. Webb,
You’ve misstated the facts concerning the USPS pension. Congress forced the postal service to prepay funds into the pension, something no other competitor is required to do. I would argue that this money, properly managed could have been used to create better products and solutions.

 

By Joe Webb on Apr 02, 2018

When I read about the negotiations at that time, that was the deal that was struck. If they got the full monopoly power, which had great monetary value, then they would have to be truly independent. Everyone knew the deal they were striking, and they also knew its pitfalls. You can't kill your parents and plead for the mercy of the court because you're an orphan.

 

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