Should the USPS Become Its Own Business?

America is the home of capitalism. If someone can do the same job for a better price, they’re going to come out ahead. Why would anyone spend more for the same service?

For a capitalistic nation, we have some weird things going on. The United States Postal Service is the best example. This is a company that lost $3.1 billion in the third quarter alone, what reason is there to keep it around? If it were any other business, it would have gone under by now. And if the company goes too far into debt, we may end up seeing a taxpayer bailout in several years.

The good news is that the USPS does not get taxpayer funds, so it’s supposed to be a self-sustaining business. The only problem is that email became really popular, so instead of spending 44 cents on an letter, people are emailing each other for free.

So first of all, law prevents post office closures on purely economic grounds. Wait, so there’s a business that is losing money and it’s legally unable to close one of it’s stores? This one is mind-boggling for me.

The USPS has a monopoly on first-class mail. Only the post office is allowed to deliver first-class mail, so if you want to get a simple letter, you either need to send it first-class via the post office, or you can choose another service such as UPS or Fedex and pay a higher price for it.

Post office officials would love to run their business more like a business. They want to close the offices that don’t make money, they want to increase USPS stamp prices, and they want to cut Saturday delivery to save about $3 billion per year.

So why is there a monopoly on first-class mail and why does the government support it (even though it’s not exactly part of the government)?

The premise of the USPS is that everyone in America should have the same service: Regardless of whether a letter is delivered down the street or across the country, the price would be the same. Most of the 2,000 that are currently in the process of being closed are located in rural or subsurban areas where getting to another offic would be difficult for many people.

So the cost of hemmoraging money needs to be weighed against the benefits of giving a service everyone. Another large factor is that the United States Post Office is the second largest civilian employer with a workforce of 583,000 behind only Wal-Mart, and 87% of the employees work full-time.

Making major changes to the post office has major ramifications for the post office as a company as well as for all the people it employs.

Readers, what should happen to the USPS? Should it be allowed to lose money at an alarming rate and continue to borrow money from the fed as it needs? Or should it become more privatized and let it fend for itself?

7 Responses to Should the USPS Become Its Own Business?

  1. MoneyCone says:

    And the USPS chief earns more than the President! The service at our local usps office is just outright appalling.

    I’ll say open up the competition.

  2. Evan says:

    Even as a libertarian this service seems like one the Federal Government should be in charge of.

    The problem is that it is ran like a quasi-business and quasi-admin agency. Pick one and run with…Oh, and maybe lets tame the entitlements!

  3. Eric says:

    I don’t think the government should let the post office die, but I think it needs to see some major changes.

    I think it needs to start treating its employees more like private sector, as the pension fund is a top cash drain right now. 401(k) style retirement plans do not have a long term liability, they are simply an operating expense.

    I also think it needs to make changes to be more efficient and cut costs. Post offices don’t need to be so close together and they should cut Saturday delivery for starters.

  4. krantcents says:

    The people who run the post office are hardly entrepreneurs. Remember, they are government workers. It needs an overhaul.

  5. RT says:

    Also there are numerous other laws that are contingent on an operating Post Office…such as the ability to serve court notices via the mail, attempt to make collections on accounts etc.

  6. You and your “keep unnecessary jobs so people have employment” ideas completely boggle my mind. If you close post offices then some of those people will lose their jobs. At the same time, UPS and FedEx and all the other companies that will need to pick up the slack will be hiring.

    Will there be a net loss of employment? Probably. But that’s called progress. Should be uninvent the internet so the post office and libraries can thrive again? Of course not!

  7. J Ascher says:

    No, the USPS should not be a private business! We saw the mess Fannie Mae and Freddie Mac got into when the government made them autonomous.

    The internal postal system of a country is too vital to its well-being to be in private hands. Congress, once again, is to blame by putting strangling restrictions on how the post office can operate. The post office itself shares significant blame by not negotiating better with its employees’ union. Just as the car makers negotiated poorly with those unions, so too has the USPS. Unions serve an important purpose, but management is responsible for acting in its best interests too.

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