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Sunday, July 21, 2013

Governmental dysfunction? Oh yeah

Mail was delivered to my house yesterday -- a Saturday. For years it's been evident that the U.S. Postal Service is collapsing financially because electronic communication has cut into the volume of mail. My mailbox doesn't see a first-class letter, inbound or outbound, for days on end. Furthermore, we get far fewer catalogs and other "junk mail" now. In fact, the only type of mail that we probably get as much of, if not more of, these days compared to ten years ago is parcels. Internet shopping is the explanation. But unfortunately for the USPS -- although fortunately for you and me -- Fedex and UPS compete vigorously with USPS for parcel delivery.

The U.S. Congress has put the USPS into a hopeless situation by:

  • Limiting price increases for stamps. In most other first-world countries, equivalent stamp prices are much higher: Canada, 61 cents; UK, 92 cents; Germany, 76 cents; Japan, 80 cents (all converted to USD).
  • Requiring the USPS to pre-fund retiree obligations for a 75-year period. No other current or former federal agency has such a stringent requirement.
  • Forcing the USPS to continue six-days-a-week service. Three-days-a-week would suffice for me.
The word denial comes to mind. Saturday delivery was a major topic earlier this year, but have you heard anything about it recently?

Meanwhile, local politicians exacerbate the problem by preventing the justifiable closure of redundant post offices. In Raleigh, for example, there was furor when the USPS tried to close the smaller of its two downtown post offices -- a ridiculous intercession by former Mayor Charles Meeker.

What do politicians not understand? One need not have an MBA from the Harvard Business School to see that restoring the USPS to break-even requires a massive slash of operations and a large increase in prices. It's not either-or; it's both.

I don't often agree with those who say "government is broken" or words to that effect. Usually that's just a campaign slogan or a gross generalization. But in this case, if our political leaders cannot find the courage to fix a relatively simple problem like the USPS, I don't know how they can fix the more complex ones that we face.