Although the United States Postal Service (USPS) has lost more than $50 billion over the last decade, its defenders insist that Postal financials are in fine health. They claim this number is misleading and deceptive. In reality, even if the USPS is considered “profitable,” this is largely due to its many government protections—which Postal Service advocates fail to enumerate.
USPS operations and the role of Congress both need to be considered in the evaluation of our postal system. They are legally bound to each other. While Postal Service unions state the USPS has been running a profit since 2013, this is only if the legally required prefunding of retiree health benefits is not included. Undoubtedly this $5.6 billion per year requirement from Congress has been burdensome for the USPS. However, the Postal Service could not boast its so-called “profit” without the subsidies and monopolistic powers it receives from Congress. The USPS receives major advantages from the federal government, as well as burdens. The two cannot be divorced from each other.
As I wrote in an earlier E21 article about the problems facing the USPS, it is estimated the Postal Service saves over $2 billion each year from not paying taxes. It is also able to borrow from the U.S. Treasury at a reduced rate, which is equivalent to another annual subsidy of almost $500 million. The USPS’s monopoly on mailboxes cannot be ignored, either. Enacted in 1934 to protect the revenues of the now defunct United States Post Office Department, the law gives the USPS a major competitive advantage by prohibiting private companies from delivering letters, bills, and other similar material to households’ mailboxes. It is hard, if not impossible, to picture the USPS profiting without these protections.
While no private company has a retiree benefit prefunding requirement similar to that of the USPS, no private company has the vast array of USPS protections. Imagine how much better off FedEx or UPS would be if they had a monopoly on doorstop package delivery. Applying this same logic to mailboxes, the USPS’s current monopoly would be considered ridiculous, especially when no other industrialized country has this type of law. The Postal Service wants the benefits of being a government monopoly, but none of the restrictions.
Defenders of the USPS try to justify its viability by pointing to the growing revenue of its package delivery. If the Postal Service is efficient enough to provide competitive package delivery, then it should have no problem operating in a privatized system.
The USPS helps the community through various non-economic benefits such as food drives, letter carriers who help those in need while out on their routes, and a network able to quickly deliver medication in the extreme event of a bioterror attack. However, these benefits do not occur because the Postal Service has a monopoly. Private companies and their employees regularly do meaningful philanthropic work, are willing to help those in need, and could certainly volunteer or be hired to utilize their network in the event of terror attacks.
Government-protected monopolies such as the USPS prohibit imaginative and innovative solutions. In part due to restrictions from Congress, 21st-century ideas are often rejected. In 2012, the company Outbox was shut down by the Postmaster General for digitizing letters, shredding junk mail, and unsubscribing people from unwanted catalogs. According to Evan Baehr, the co-founder of Outbox, the USPS’s chief innovation officer told him that “digital is a fad. It will only work in Europe." A private company could not sustain itself in today’s economy with executives holding this line of thought.
With the Internet’s prominence, times are clearly changing in the postal industry. For example, USPS mail volume dropped 28 percent in last 10 years. But rather than adapt to new opportunities, the United States is operating an outdated postal model. Countries all across Europe have liberalized their postal markets, giving flexibility to postal companies and increasing competition. Even in a privatized postal industry, everyone receives their mail—the main concern of privatization critics.
Some anti-privatization organizations cite Article 1, Section 8, Clause 7 of the Constitution, which states that Congress has the authority “To establish Post Offices and post Roads.” In this sentence, there is no requirement for the government to deliver the mail or to prohibit others from doing so. As Post Offices have already been established, the legal justification for privatization is obvious.
Yes, the Postal Service provides value to Americans—but it could clearly be improved. Privatization would provide the USPS with autonomy and freedom to operate in ways that reflect today’s economy. Abandoning both government protections and restrictions would bring postal delivery into the 21st-century. There would be no better proof of the USPS’s viability than its ability to compete as a private company.
Shane Otten is an E21 contributor.
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