Let the Market Decide: Kodak and Post Office
Thomas Sowell on why the market should decide on the fate of the Post Office, just as it has decided the fate of Kodak, Montgomery Wards, Studebaker, Eastern Airlines, etc.
"Just as Kodak's technology made older modes of photography obsolete more than a hundred years ago, so the new technology of the digital age has left Kodak behind. Great names of companies in other fields have likewise vanished as new technology brought new rivals to the forefront, or else made the whole product obsolete, as happened with typewriters, slide rules and other products now remembered only by an older generation.
That is what happens in a market economy, and we all benefit from it as consumer Unfortunately, that is not what happens in government. The post office is a classic example.
Post offices were once even more important than Eastman Kodak, and for a longer time, as the mail provided vital communications linking people and organizations across thousands of miles. But, today, technology has moved even further beyond the post office than it has beyond Eastman Kodak.
The difference is that, although the Postal Service is technically a private business, its income doesn't cover all its costs — and taxpayers are on the hook for the difference. Moreover, the government makes it illegal for anyone else to put anything into your mail box, even though you bought the mail box and it is your property. That means you don't have the option to have some other private company deliver your mail."
71 Comments:
You can throw in Hostess Brands.
You can put up another delivery box, as is done with newspapers.
But if someone steals from your private box, it won't be a federal crime.
Whenever Simone wants to scam me over the phone, I just ask them to mail me the information, if it is a fraud, they generally won't mail it.
Get rid of the pension requirements, for they only exist to kill the USPS.
The only thing privatization does is give someone the ability to hide the looting of a government organization. There is no benefit to killing the USPS unless you have a vested interest in ensuring its death.
as per my usual. What happens in other industrialized countries in the world?
Are there any real world analogs of totally private, non-govt postal systems?
Nothing at all as far as I know currently prevents Fed EX or UPS from delivering documents and despite what Sowell implies.. it is not "illegal" for other providers to "deliver" to your home.
The obvious solution to this is to allow USPS to increase the price without having Congress have to let them.
Let them operate as a business and charge what they have to - to cover their costs and if people don't like the increased prices, let them go to FedEx/UPS or other providers.
this whole thing about the Post Office is bogus because in theory they are supposed to operate as a business but in reality - the ideologues in Congress are still tinkering ..inhibiting them with requirements not imposed on their competitors.
Where are you going to go if they increase postage to 75 cents?
why can't they? Congress.....including those who support Thomas Sowell's "ideas".
Larry, as usual, Sowell knows what he's talking about and you don't. It is illegal for anybody other than the USPS to access your mailbox or deliver letters to your residence. I have no problem with letting the USPS raise their price to 75 cents, as long as they allow competition for those services, deal? Of course, the USPS clings desperately to that monopoly, all while they hemorrhage billions of dollars while email technology obsoletes their monopoly. Hahaha, I love it! :D
Fed Ex doesn't deliver documents to residences?
who knew!
where the ones I received "illegal"?
Quote from Larry G: "it is not "illegal" for other providers to "deliver" to your home."
The USPS has a government protected monopoly on first class mail. Courier services are only allowed to delivery urgent documents, but not to mail boxes. Also, the Federal government subsidises the USPS with tax dollars.
Nothing would make me happier than to see the Post Office actually have to compete. It's infuriating to be standing in line out the door while you can see other employees milling around in the background, stocking the envelopes shelf, or eating their chicken salad, without a care in the world.
If they lose their jobs, oh well, they'll have excellent training to become Obamacare bureaucrats.
I have a slide rule. It is app 2 meters by 0.5 meter, the one the math teacher used in class, and I bought it at a fair from my old high school some 25 years ago.
I don't use it as you may guess. It is on the wall of my study and I have explained to my kids how-and most of all why- it works.
I still like it
I have a slide rule. It is app 2 meters by 0.5 meter, the one the math teacher used in class, and I bought it at a fair from my old high school some 25 years ago.
I don't use it as you may guess. It is on the wall of my study and I have explained to my kids how-and most of all why- it works.
I still like it
Larry G,
Since 1979, private companies such as FedEx and United Parcel Service have been able to deliver documents to addresses (but not post office boxes). However, Federal Regulations implemented in 1979 require that such private companies only deliver mail labelled "Extremely Urgent" and must charge at least $3.00 per document.
So, yes, USPS does have competition in letter delivery. But that competition cannot offer competitive prices. USPS has fiercely defended its monopoly on non-urgent (less than $3.00) mail.
The United Socialist Post Office (USPO) was created in Philadelphia under noted communist leader, Benjamin Franklin, on Wednesday, July 26, 1775, by decree of the Second Continental People's Commissariat.
"The United Socialist Post Office (USPO) was created in Philadelphia under noted communist leader, Benjamin Franklin, on Wednesday, July 26, 1775, by decree of the Second Continental People's Commissariat."
Ha ha, weak try at sarcasm.
Ben Franklin had his own postmark: B. Free Franklin.
From 1753 to 1757 Ben Franklin was the Postmaster General in the Colonies. Mr. Franklin introduced precise times that mail would leave post offices and delivery by mail carriers.
Zachriel, the Continental Congress appointed Ben Franklin Postmaster, because his Post Office had been efficient, innovative and moneymaking.
Ben Franklin would be the first to advocate busting today's Post Office.
The Post Office doesn't work because for political reasons they cannot price their product properly. 44cents to have someone pick a letter up at your house(business) and deliver it to someone else's house(business)? Too, too cheap but raising it to its proper but still too cheap $1.00 or so (about what it costs in Germany) would bring outcries from Congress. Let the free market work with the PO and lets see what happens.
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Buddy R Pacifico: Mr. Franklin introduced precise times that mail would leave post offices and delivery by mail carriers. ... the Continental Congress appointed Ben Franklin Postmaster, because his Post Office had been efficient, innovative and moneymaking.
So commissar Franklin successfully advocated for a public post office, and then went about making it efficient, innovative and moneymaking. Do we understand your point correctly?
Paul: Ben Franklin would be the first to advocate busting today's Post Office.
Quite possibly.
"So commissar Franklin successfully advocated for a public post office, and then went about making it efficient, innovative and moneymaking. Do we understand your point correctly?"
No, Franklin was only in charge of the Continetal Post Office for one year. His standing on postal affairs was from his success (innovative, efficient and moneymaking) in running the post office for the Crown (1753-1774). Ben Franklin was the unanimous choice by the Contiental Congress in 1775, to be the head of the Post Office.
Buddy R Pacifico: Ben Franklin was the unanimous choice by the Contiental Congress in 1775, to be the head of the Post Office.
Right. So, Commissar Franklin advocated for a People's Post Office, then was appointed head. Still not sure your point.
NormanB: "The Post Office doesn't work because for political reasons they cannot price their product properly. 44cents to have someone pick a letter up at your house(business) and deliver it to someone else's house(business)?"
IMO, based on years of work as a FedEx industrial engineer, the variable cost to deliver mail to large city residential mailboxes is less than 44 cents. That's due to automated sorting and processing, and the huge economies of scale. However, the variable cost to delvier to small town and rural mailboxes is much, much higher than 44 cents.
Of course, the variable delivery cost is only part of the equation. The huge fixed costs for all those post offices and for all the capital equipment, plus the lush retirement benefits the USPS pays, would probably equal the variable costs.
Who decides what the price of a stamp is? Does Congress play a role?
"Who decides what the price of a stamp is? Does Congress play a role?"....
Try this site...
cool site, Juanos!
"Right. So, Commissar Franklin advocated for a People's Post Office, then was appointed head. Still not sure your point?"
I'm not sure Franklin advocated for the P.O., but he probably did. The P.O. is mandated in the Constitution along with the Navy. So, what if the P.O. had continually strived for efficency and innovation on the level that Franklin had? I am not against the Post Office completely, but it should not have a monopoly.
No one knows what the cost is of delivering a letter to your mailbox because there is currently no real market in it. The market would find a price the the government let it.
Clear case of market distortion. Amtrak is in the same boat, as it were.
Sowell - The difference is that, although the Postal Service is technically a private business, its income doesn't cover all its costs — and taxpayers are on the hook for the difference.
The financial crisis the USPS finds itself in is completely contrived. In efforts to push privatization Republicans have made obscene demands of USPS, demanding that they completely fund their pension out 75 years, covering workers that aren't even yet born, and they only have 10 years to do it. Even that obscene demand the USPS could meet if the government returned money they over funded into the prior pension plan. The USPS is completely solvent if it is allowed to play by reasonable rules.
Has anyone tried either of these sevices to cut down on junk mail?
OptOut
Opt-Out from receiving Firm Offers permanently - (mail Permanent Opt-Out Election form available through this website)...
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Juandos, those services are tempting, but I suspect I will start getting more junk mail if I sign up.
Nothing would make me happier than to see the Post Office actually have to compete.
==================================
OK, the rule prohibiting letters beng delivered all ows delivery if the charge is either $3.00 or twice the first class rate.\
With that rule, how is the Post office not competitive? Would FEDEX lower their delivery rate if they were allowed to?
funny story.
My brother wored for a firm that provided copies of videotape to customers that wnated them, say politicians who wanted a copy of a news clip.
One of ther customers was USPS who wanted copies of the unflattering ads FEDEX was running. USPS wanted copies of a particular one in a rush, so my brother sent it via FEDEX.
"There is no benefit to killing the USPS unless you have a vested interest in ensuring its death."
And we all do, Seth.
"Fed Ex doesn't deliver documents to residences?
who knew!
where the ones I received "illegal"?"
If you took the time to check the references Sprewell gave you, you might understand the problem and wouldn't embarrass yourself by writing what you just did.
"OK, the rule prohibiting letters beng delivered all ows delivery if the charge is either $3.00 or twice the first class rate.\
With that rule, how is the Post office not competitive? Would FEDEX lower their delivery rate if they were allowed to?"
You're kidding, right? Is "competition" the word that's tripping you up? Can you say "price fixing"?
What would be your guess as to FedEx's reaction to elimination of monopoly status for the USPS?
hydra: "OK, the rule prohibiting letters beng delivered all ows delivery if the charge is either $3.00 or twice the first class rate.\"
That's not exactly correct. The law says that the competitor's price must be the GREATER of $3.00 or twice the first class rate. Only when the rate for 1st class mail exceeds $1.50 does the "twice the first class rate" clause kick in.
In either case, USPS can legally underprice any competition by a large margin. That's why USPS continues to enjoy a monopoly on first class mail.
Hydra: "funny story ... USPS wanted copies of a particular one in a rush, so my brother sent it via FEDEX."
Here's a funnier story, or perhaps a sadder one:
USPS could not on its own move priority mail across the nation with any degree of reliability. So for many years it has contracted with private air freight companies to move millions of tons of priority documents from airport to airport.
Since 2001, FedEx has been the private air freight company under contract to move USPS priority documents. Without FedEx, USPS priority document service would likely be so unreliable it could not survive.
Today, USPS is the largest single customer of FedEx, providing $1.3 billion annual revenue.
I know a little about this because I was the program manager who developed the first FedEx proposal to move USPS priority documents.
FYI: looks like UPS and FedEX partner already with USPS, eh?
"We are able to provide our customers postal services through our utilization of the United States Postal Service® (USPS®) work share program. With our operational efficiencies, we are able to obtain better postal rates for customers, while providing transit times that are comparable to First-Class Mail®."
http://www.upsmailinnovations.com/about/index.html
"The FedEx SmartPost network is designed for online retailers and cataloguers who ship high volumes of low-weight shipments to residential customers. FedEx SmartPost has an integrated national network that picks up, sorts and delivers packages directly to U.S. Postal Service facilities for final delivery to residences."
http://www.postalnewsblog.com/2011/10/24/usps-partnership-drives-record-fedex-holiday-volume/
Of course cusps contracts with private air carriers. So does fedex.
Certainly the government
knows how to fly aircraft. That usps chooses not to is hardly a sign of incompetence.
picks up, sorts and delivers packages directly to U.S. Postal Service facilities for final delivery to residences."
++++++++++++++++
Gee, a system.
Maybe instead of wishing for the demise of usps, we should be working for the best over all result.
"Maybe instead of wishing for the demise of usps, we should be working for the best over all result."
And that would most likely be achieved by removing barriers to competition for all mail and package delivery.
"Certainly the government
knows how to fly aircraft. That usps chooses not to is hardly a sign of incompetence."
It is a sign that the least expensive and most efficient inter-airport delivery is not one that they operate themselves, but a private delivery service. One that is more competent.
In a sense, it doesn't matter what the USPS does, because nobody writes letters anymore. Just like nobody under a certain age reads paper newspapers anymore, nobody under a certain age writes letters. I'm in my 30s and if you exclude paper bills, I think I've written at most 5 letters in my life. By comparison, I've written thousands of emails. And I've handled all my bills online for years now, no paper there either. This is why the number of postal workers is down from a peak of 800k in '99 to 574k last year, almost a 30% decline in a little more than a decade. The sooner they start closing branches and shut it down, the better, as there's just no need for a post office anymore.
Jon: "The financial crisis the USPS finds itself in is completely contrived. In efforts to push privatization Republicans have made obscene demands of USPS, demanding that they completely fund their pension out 75 years, covering workers that aren't even yet born, and they only have 10 years to do it."
Why are you misrepresenting the Postal Accountability and Enhancement Act of 2006? Does it sound worse when you call it a pension plan prefund requirement instead of the actual requirement to prefund retiree health benefit plans?
As to Republicans making obscene demands, HR 6407 was cosponsored by 2 Democrats and 2 Republicans, and although both houses had Republican majorities at that time, the bill passed the Senate by unanimous consent, and the House by voice vote, so there's no record of who actually voted for or against the bill.
The postal workers retirement fund is actually in surplus, and the surplus could be used to prefund the health care plans, except like all other federal trust funds, there isn't actually any money in it, as it has been spent long ago. An accounting gimmick would move non-existent money from one collection of IOUs to another. Big deal.
You might want to consider getting your facts straight, in the future, before you make unfounded and untrue assertions about things you don't seem to know much about.
Elsewhere you mention a Constitutional mandate, and you are, of course, correct. Here's the whole thing: "The Congress shall have power - To establish Post Offices and post Roads."
By extension, Congress had power to "Make all laws which shall be necessary and proper for carrying into execution the foregoing powers..." which allowed Congress to hire people to work in those Post Offices, and things like that.
There was no mention of home delivery, or days or hours of operation, and there was certainly no grant of monopoly power. There is also no requirement that a government postal system MUST exist, only that it may.
I'm not sure you want to make much out of that Constitutional authority business.
If USPS is irrelevant, how come people complain about lines in the Post Offices?
:-)
"If USPS is irrelevant, how come people complain about lines in the Post Offices?"
The complaint is about the postal workers who would be helping reduce those lines if it were a private sector enterprise.
so there would be no queues if the private sector was doing it?
or are you saying that if WalMart used govt workers that there would be more workers but less checkout lines?
;-) just asking...
"so there would be no queues if the private sector was doing it?"
You wouldn't see workers not giving a shit about the lines as they go off to lunch when a line is winding out the door.
We don't disagree about that in large part though at my local post office when the lines get long - supervisors step forward to open up more registers and they form a separate line for package pick-up.
but in general.. I don't disagree.. govt workers tend to take job security for granted.
hydra: "Certainly the government
knows how to fly aircraft. That usps chooses not to is hardly a sign of incompetence."
Actually, I agree with what I think you are saying. USPS was pretty smart in 2001 to turn over the transport logistics to FedEx. USPS was pretty dumb to refuse to consider that option in 1994, when we first proposed that it to them.
FYI, I refer to the FedEx postal transport operation as "transport logistics" because it is much more sophisticated than just "flying aircraft". "Flying aircraft based on a USPS design" is what USPS asked FedEx to bid on in 1994 - and what we refused to do becuase their design was glaringly inefficient.
Hydra: "Of course usps contracts with private air carriers. So does fedex."
I don't believe FedEx contracts with large airlines for normal transport, but rather for expediting the few packages which get mis-sorted. That could have changed since I left the company years ago, but I don't think so. I don't think their contract with the pilots allows that.
Do you have some knowledge about FedEx contracting with private air carriers for large movements of packages or freight? Or are you just guessing?
When I was engineering FedEx operations, the company did contract with trucking companies for moving most of its non-priority packages.
is Fed Ex unionized?
Does it sound worse when you call it a pension plan prefund requirement instead of the actual requirement to prefund retiree health benefit plans?
Sounds about the same to me. What private company is required to prefund a health benefit out 75 years?
As far as blaming Democrats as well, I'll accept that criticism.
If the retirement fund is in surplus why do they have to spend about $6 billion per year funding their obligations out 75 years? If it was a surplus they wouldn't have to fund it. Maybe I'm not understanding you properly.
Larry G: "is Fed Ex unionized?"
FedEx pilots unionized in 1992, voting to be represented by ALPA (Air Line Pilots Association).
As far as I know, only the pilots are unionized. But FedEx has acquired a number of companies since I left the company, and may have absorbed other union contracts through those acquisitions.
About FedEx unionization: before the pilots unionized, FedEx founder and CEO Fred Smith announced that unionization of pilots would cause him to reconsider expansion plans and likely result in an emphasis on non-flying businesses. If you have followed FedEx since 1992, you wold know that Fred Smith has since expanded the company's U.S. ground business far more than the U.S. air transport business.
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anytime someone mentions FedEx these days.. I think about "Castaway".
:-) yeah.. I know.. it's old now
Jon: "If the retirement fund is in surplus why do they have to spend about $6 billion per year funding their obligations out 75 years? If it was a surplus they wouldn't have to fund it. Maybe I'm not understanding you properly."
Maybe not. The legislation you condemn so harshly restructures the manner of funding for retirement, and creates a separate fund for retiree health care benefits. Read for yourself Title VIII sections 802 and 803 of HR6407.
Not knowing your sources, it's not clear what you consider to be obscene requirements by Republicans.
Here's more on the subject. It would appear that the problem is being addressed by the same clumsy folks who created it in the first place.
what would you say if this was made a requirement for corporations?
RonH, the report you cite confirms what I'm saying. The Obama changes still demand that the USPS fund benefits by 2016, which still means $6 billion annually. This is the root of the USPS shortfall, an obligation that is not demanded of any private company. It's got nothing to do with Sowell's fantasies about the defects of government provided services.
Government gets nothing right. Except computers, the internet, satellite communications, commercial aviation, GPS, freight, interstate highways. Moving forward it's nanotechnology and bioengineering. All the core drivers of the economy. Sowell relies on these crucially in order to tell us the government sucks at everything, like the USPS. He gets that wrong as well.
Jon: "Government gets nothing right. Except computers, the internet, satellite communications, commercial aviation, GPS, freight, interstate highways."
Government did not create the internet. That's a leftist myth.
I've worked in commercial aviation for the past 27 years. Government has been the biggest obstacle to our progress.
Not sure why you're crediting government for the modern satellite communications systems used by private enterprise. Perhaps you can explain.
Try this as a starting point for understanding the role of government in computer development, internet development, and commercial aviation. I'd think government involvement in satellite would be pretty obvious.
friendly amendment:
" The Advanced Research Projects Agency Network (ARPANET), was the world's first operational packet switching network and the core network of a set that came to compose the global Internet. The network was funded by the Defense Advanced Research Projects Agency (DARPA) of the United States Department of Defense for use by its projects at universities and research laboratories in the US"
http://en.wikipedia.org/wiki/ARPANET
Jon: "the report you cite confirms what I'm saying. The Obama changes still demand that the USPS fund benefits by 2016..."
No, it doesn't. Apparently you didn't actually read it. You missed this part:
"On September 30, 2009, Congress provided immediate relief to the USPS’s financial duress in Section 164 of H.R. 2918, the Legislative Branch Appropriations Act [of] 2010. President Obama signed the bill into law (P.L. 111-68) the next day. Section 164 of the act reduced the USPS’s FY2009 payment to the Retiree Health Benefits Fund from $5.4 billion to $1.4billion. The USPS does not escape payment of the $4 billion; rather, Section 164 includes that $4 billion in the obligation to be amortized after FY2016."
If you check other sources, you will find other relief measures since then.
"Government gets nothing right. Except computers, the internet, satellite communications.blah, blah, blah..."
This is typical statist drivel from you, Jon. It doesn't have anything to do with an unfair burden put on the USPS by Republicans. Why are you changing the subject?
This is the same government you are accusing of treating the USPS unfairly, isn't it? Do any Republicans deserve credit for marvels you listed above?
You must not realize how ridiculous your sudden departure from the subject being discussed actually looks.
I can only guess that we must have been getting uncomfortably close to your having to admit you are only parroting progressive talking points about there being a Republican agenda directed against the USPS.
I have no particular liking for Republicans, mind you, but to accuse them of conspiring against the USPS is just silly.
Jon: "Try this as a starting point for understanding the role of government in computer development, internet development, and commercial aviation. I'd think government involvement in satellite would be pretty obvious."
Jon, as I've pointed out several times in the past, you really need to broaden your horizons. Buy another book, or even several. You have surely worn that one out by now.
How can anyone take you seriously with references like that?
"I'd think government involvement in satellite would be pretty obvious."
Yes, it's pretty obvious that crony capitalists have been able to get their hands into the taxpayers pockets for a long time now.
Larry G,
Despite what the wikipedia author would have you believe, Arpanet was not the only package switched network to be developed in the late 1960s, early 1970s. And it was definitely not an internet. Arpanet was simply a system for allowing computer time at government funded universities to be shared.
Origins of the internet gives a much more balanced, less statist description - a well-researched document - of how the internet was created.
Here's one quote from Bob Taylor, who was actually in charge of developing Arpanet:
"The creation of the ARPAnet was not motivated by considerations of war. The ARPAnet was not an internet. An internet is a connection between two or more computer networks."
Jet - do you agree with these two narratives:
http://en.wikipedia.org/wiki/History_of_the_Internet
http://en.wikipedia.org/wiki/Robert_Taylor_(computer_scientist)
Jet: "Origins of the internet gives a much more balanced, less statist description - a well-researched document - of how the internet was created."
Thanks for the excellent resource.
Jet, I've laid this all out for Jon and Larry before. They feign ignorance of the history simply so they can go on spreading lies yet again.
Sprewell: "Jet, I've laid this all out for Jon and Larry before. They feign ignorance of the history simply so they can go on spreading lies yet again."
Actually, only Jon is *feigning* ignorance.
I know _you_ have laid it out.
forgive me for wanting more than one source - and some agreement among the sources....
so I asked if these two narratives were valid histories or do you think they are wrong?
http://en.wikipedia.org/wiki/History_of_the_Internet
http://en.wikipedia.org/wiki/Robert_Taylor_(computer_scientist)
I think a germane point is that DARPA certainly seemed involved in some of the basic research and yes it did take commercial entities to "make it work" but do you disagree that DARPA was involved in the early development of tcp/ip, packet switching and networking?
I don't get you guys. It's almost as if you insist on a different view and you reject all other sources ... why?
Larry: "Jet - do you agree with these two narratives:"
Did you notice Jet's comment begins with: "Despite what the wikipedia author would have you believe,"
That should have prevented you from asking the question.
Did you notice Jet's comment begins with: "Despite what the wikipedia author would have you believe,"
That should have prevented you from asking the question.
84 separate references?
you boys are a HOOT!
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