Stop the US Mail! When we end the Postal Service's government-backed monopoly, private carriers will deliver better alternatives.
It's been said that Americans will put up with anything - as long as it doesn't involve waiting in line. And as I wasted half a day mailing a gift this past holiday season, I asked myself why that sentiment doesn't apply to the US Postal Service. In the age of instant communication, with trillions of dollars crossing borders in nanoseconds and grandmas sending email, why do post offices even exist?
As a kid, I subscribed to National Lampoon, which had about a dozen blow-in cards per issue that basically read, pay us $7.95 a year and we will have a snappily dressed government employee personally deliver our magazine to your door. How'd they do that? Well, in 1825, Congress outlawed private mail delivery within cities and gave the USPS a monopoly over first-class letters and third-class items like magazines, catalogs, and junk mail (a prize if you can tell the difference).
But why does the USPS still have this monopoly? The only possible argument is that the US economy would grind to a halt without the postal service. It is, after all, one of the largest civilian employers. Its 707,000 workers need 37,000 post offices, 200,000 vehicles, and 15,000 daily flights to deliver some 550 million pieces of mail a day.
Sure, the numbers look impressive. But so would track miles of horse- drawn trolleys if that industry had a monopoly on travel. Consider that each day 35 billion emails are sent, 1 billion SMS messages traverse the ether, and 2 billion instant messages are delivered by AOL alone. Does any of this take almost three-quarters of a million workers? Nah, just a few latte sippers in data centers to reboot the servers a couple of times a day.
Meanwhile, the USPS raked in a $3 billion profit in fiscal 2004 (untaxed) and plans to raise its rates, again, in 2006. The price hike is needed to cover the rising labor costs that make up a majority of their $65 billion in operating expenses. The Ludditious American Postal Workers Union has time and again fought labor-saving technologies that would increase efficiency. And postal workers' wages seem to stay above those of average factory employees. The USPS monopoly means no shareholders to complain, and no lawyers to file class actions against it.
So what would happen if this 180-year-old trust disappeared tomorrow? Would the US seize up like an engine without oil? Hardly. Better alternatives to the USPS are already here, and plenty of others would emerge.
Bills offer the best opportunity to bury the USPS. Companies need to be paid. But mailing bills and checks is terribly inefficient, costing $2 to $10 per transaction. Some analysts suggest that 25 percent of the cost of a phone call covers billing. Companies should persuade more of us - through incentives - to pay bills online, a method that could easily scale to 105 million households. Bank and brokerage statements, too, are a click away. For those without computers, banks would fill the void. After all, they already deal with all those personal checks. Tellers could pull up your bills and assist you with those to be paid, for a fee (and a wait in line), of course.
Private carriers would compete for contracts to deliver catalogs and magazines. Junk mail doesn't make the cut - like you care. Electronic payment replaces stamps, removing a lucrative float enjoyed by the USPS. Innovation coupled with a free market would lead to profitable opportunities in rural areas, currently subsidized by city dwellers and suburbanites.
Which leads me to the best reason for ending the postal monopoly: to make home package delivery cheaper. UPS and FedEx can, and almost do, handle many of the packages that Amazon.com and eBay and my household rely on for their existence. But it's no secret that UPS and FedEx hate delivering to our homes, because of the time it takes to get out of the truck and ring the bell. The penalty is staggering - residential deliveries often cost 10 to 20 percent more than those for businesses. Allowing these package humpers to carry first- and third-class mail would make this "suburban tax" disappear.
Let's take the first step and end the postal monopoly now. As the USPS collapses under its own weight, entrepreneurs will start companies that will offer today's mail carriers more productive jobs. And the new firms may even offer snappy outfits.