The U.S. Postal Service has been hemorrhaging money for decades, and it’s not hard to understand why. As a government protected monopoly, the Postal Service cannot adjust to changing market conditions like an ordinary business. In addition, they are often subject to political pressure and must make decisions on factors other than economics. The obvious solution is to remove government from the postal business. Allow Postal Service to make decisions without being pressured by politicians who know nothing about the business of carrying mail, and then allow other mail carriers to compete directly with them. The market will sort it out.
The Washington Post editorial board today makes the issue much more complicated than it needs to be.
The Postal Service is funded by ratepayers, not taxpayers. But because of its mailbox monopoly, its pricing decisions for both market-dominant and competitive products must be reviewed by the Postal Regulatory Commission. Any rate increases must be linked to inflation, and federal law prohibits the closure of failing post offices. This cumbersome structure of oversight creates significant obstacles to change.
So far so good. They’ve correctly identified the problem. Unfortunately, after stumbling upon the truth, they get up, dust themselves off, and move on as if nothing happened.
One proposed reform would limit mail delivery to five days a week. The shift clashes with the Postal Service’s Universal Service Obligation, which mandates that service remain at 1983 levels. In a world where bills can be paid, taxes filed and communications carried out at the push of a button, coverage standards that date from an era when the mail functioned as the nation’s nervous system look increasingly absurd. Congress must redefine the Universal Service Obligation in a way that makes sense for a new century.
As collective bargaining begins this fall for major portions of the USPS’s 500,000-strong career workforce, Congress and the Postal Regulatory Commission must also require that arbitrators take the Postal Service’s finances into account, allowing room for reasonable cuts in hiring and benefits rather than assuming that employee costs can simply be passed along to taxpayers. With an institution as large and entrenched as the Postal Service, reform moves slowly. By redefining universal service, encouraging reasonable bargaining and beginning to reshape the USPS’s monopoly to free it from crippling regulatory structures, Congress can ensure that the Postal Service moves in the right direction.
This is a round-about, and ineffective, way of trying to accomplish what markets would offer all on their own. We don’t need to make sure arbitrators take into account this or that factor, we need to realize that any arbitrator is bound to fail at mimicking the dynamics of free markets. Only market competition allows the best and most efficient models to dominate.
When government is recognized as the problem, the best solution is to simply remove it from the equation.
