Wired: Stop the U.S. Mail

A shorter version of this article originally appeared in Wired Magazine

It’s been said that Americans will put up with anything, as long as it doesn’t involve waiting in line. ATMs, e-tickets and Amazon have gone a long way towards placating our impatience. And as I stood in a long line this holiday season to send a gift, I asked myself why the saying didn’t apply to the US Postal Service. In this age of instant communications, trillions of dollars crossing borders in nanoseconds and grandmas with email, why do Post Offices even exist?

As a kid, I had subscribed to National Lampoon dealing with a dozen blow-in cards per issue that said, “Pay us $9.99 a year and we will have a snappily dressed government employee personally deliver our magazine to your door.” How’d they do that? Well, in 1872, Congress outlawed private mail delivery within cities and gave the USPS a monopoly over first-class letters and third-class mail like magazines, catalogs and junk mail (a prize if you can tell the difference). They even technically own your mailbox.

Comedian Dennis Miller asks, “Does anyone else find it odd that the Post Office sponsored the Tour de France that takes 3 weeks to go 500 miles?”

But why does the USPS still have this monopoly? It may have been a “natural monopoly” back then, but in 2005? C’mon. The “national interest” argument is the only one left - the U.S. economy would seize up without the Post Office. The service is, after all, the 2nd largest civilian employer. It’s 38,000 post offices and 200,000 vehicles and 15,000 daily flights operate so that 729,000 career employees can deliver 200 billion pieces of mail each year.

The numbers look impressive. So would track miles of horse-drawn trolleys if they had a monopoly on travel. Meanwhile, 35 billion emails are sent every day, 16 billion SMS messages traverse the ether each month, and AOL alone delivers 2 billion instant messages daily. Does any of this take three-quarters of a million workers? Nah, just a few latte sippers in data centers to reboot the Windows NT servers a couple of times a day.

Meanwhile, the USPS raked in $3 billion profit in fiscal 2004 (untaxed), and plans to its raise rates, again, in 2006, to cover increased labor costs which are 80% of the $64 billion USPS budget. Part of the problem is the unholy trio of the U.S. Postal Service, the American Postal Workers Union and the Postal Rate Commission. 

Technology’s raison d’etre is to get the labor out of these tasks. The Ludditious American Postal Workers Union has fought time and again too many “labor-saving devices” that would increase productivity. The Union’s wages seem to stay above those of average factory workers. The USPS’s monopoly means no shareholders to complain, no lawyers to file class action suits against it. Commissions shouldn’t set rates; free markets should set rates.

In 1993, facing deficits, the USPS called on the gods of Elvis, and sold 500 million 29-cent Elvis stamps, most of which are decorating personal Elvis altars in homes. Marilyn Monroe and Bugs Bunny have helped close deficits, but unless Jessica Simpson chokes on a Chicken-of-the-Sea tuna sandwich, that well has run dry.

So what would happen if the Postal Service’s 133 year monopoly disappeared tomorrow? Would the US seize up like an engine without oil? Hardly. Better alternatives to the USPS are already here, and plenty others would be unleashed.

Bills offer the best opportunity to bury the USPS. Companies need to be paid. But sending bills and checks to and fro is terribly inefficient, costing $2-10 per transaction. Some suggest that 25% of the cost of a phone call is billing. Companies should pay US to pay bills online, which could easily scale to 110 million households. For those without computers, banks would fill the void as they already deal with half the solution: personal checks. Tellers could pull up your bills and assist you with those to be paid, for a fee (and a line) of course.

Private carriers would deliver catalogs and magazines, which are all presorted. Junk mail doesn’t make the cut, like you care. Bank and brokerage statements are a web click away. And there’d be a profitable market for rural areas, currently subsidized by city dwellers and suburbanites. Stamps? Electronic payment removes the lucrative float.

And Greeting Cards? Six out of the twenty billion handwritten household originated letters are greeting cards - how quaint - but isn’t picking up the phone or instant messaging grandma better than sending a $3.50 card whose bad poems you don’t bother reading anyway? Some entrepreneur will cut a deal with Hallmark and others to offer 30% off for the delivery of cards with machine readable addresses. All sorts of innovation will occur when free markets and new technologies are rapidly applied instead of resisted via legislation.

Which leads me to the best reason for ending the postal monopoly: To make home package delivery cheaper. UPS and FedEx can, and almost already do, handle all the packages that Amazon and EBay and my household rely on for their existence. But it’s no secret that UPS and FedEx HATE delivering to your house, because of the time it takes to get out of the truck and ring the bell. The penalty is staggering - homes often pay 10% to 20% more than business deliveries. Allowing these package humpers to carry first and third class mail would make this “suburban tax” disappear.

Of course, the Postal Service wouldn’t just rollover and die in the face of this new competition. But it is going to fail anyway, eventually. As comedian Dennis Miller puts it, does anyone else find it odd that the Post Office sponsored a race (the Tour de France) that takes 3 weeks to go 500 miles? 729,000 voters and union lobbyists will fight to the death, but congressional backbones should just end the monopoly and see what happens. Let entrepreneurs flourish and start companies that will offer today’s mail carriers more productive jobs tomorrow. As long as these new firms offer snappy outfits.

Comments

[Vish]

I agree wholeheartedly. Everytime I enter a US post-office I shudder at the thought of the delays. I walked in to my local post office this week and was told I needed to make an appointment and come back another day for submitting my passport application - a task that takes 5 minutes and could have been done by the person who spent 3 minutes making my appointment.

I grew up in India where one can still 'public' (government owned) banks alongwith private banks (what you normally see in the US). Private banks don't have the long lines and wait-times that public banks do. Even though the fees are slightly higher, customers hate to go to public banks. So why do public banks survive? Because they have the government's blessing and because the govt grants them special privileges that the private banks don't enjoy.