Truth About Post Office Lost in the Mail

by David E. Shellenberger on November 29, 2012

Government regularly insults our intelligence. The Transportation Security Administration, whose only legitimate role seems to be to remind the public that the government is incompetent and abusive, recently claimed that unionization of its employees was a positive:

By giving our workforce another venue to raise and discuss workplace issues, collective bargaining holds the potential to help TSA improve security, its level of service and improve employee performance and morale.

Jim Harper of the Cato Institute suggested the reality: “Giving union protections to TSA workers seems like a recipe to make that agency even worse.”

Similarly, Postmaster General Patrick Donahoe, addressing how he would like to see the U.S. Postal Service survive after a record loss of $15.9 billion, just claimed the entity is “self-sufficient”:

Most people don’t realize we’re 100 percent self-sufficient. …. We pay our own way. We take no tax money. What we operate on, what comes in the door in terms of revenue, stamps and packages.

The reason most people don’t realize this is that it is false. First, the USPS was allowed to borrow up to $15 billion from the U.S. Treasury, a limit it reached in September, and is unlikely to be able to repay. Second, it receives modest subsidies for “revenue foregone.” 

Third, it receives a huge implicit subsidy through its monopoly on the delivery of first class and standard mail (formerly called third-class mail) and its monopoly on access to mailboxes. Fourth, it has additional privileges, as noted by the Cato Institute:

The USPS is exempt from vehicle licensing requirements, sales taxes, and local property taxes. It doesn’t have to pay parking tickets, and it has eminent domain powers. It pays to itself the income taxes that it would owe if it were a private business.

The USPS is not self-sufficient. It is a floundering creature of government, unjustified and unjustifiable.

The Answer

The USPS’s mission, like that of any failing government operation, is survival. However, this mission is inconsistent with the public interest. Private firms competing in a free market, not a government entity controlled by politicians, should provide the delivery of mail.

The government should close the USPS and sell it for scrap. It should also eliminate all the regulatory barriers that have hindered competition. The market will take it from there.

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