The Real Cost of Christmas Cards: Ending the USPS

According to the Greeting Card Association, the average American receives around twenty-six Christmas cards each year. Ignoring the price of the cards and envelopes, the cost of shipping those cards through the USPS would be $11.44 at 44¢ per stamp. That would seem like small change were it not for the $9.2B deficit the U.S. Postal Service will have at the end of the fiscal year.

The Post Office Department was created in 1792 as one of the five original cabinet-level departments under George Washington. As a matter of fact, such a department is one of the few specifically authorized by the Constitution wherein Article I, Section 8, Clause 7 Congress is granted the power “To establish Post Offices and Post Roads.” At a time in which methods of communication were sparse, Congress needed a system with which they could relay important public information to their districts, and a system with which their districts could reach them in return.  In itself, this does not violate the moral purposes of the government, but the fact that the government issued the Postal Service a coercive monopoly over mail delivery does.

But in 1971, President Nixon “semi-privatized” the USPS in a fashion similar to the “private” Federal Reserve System. The current USPS is directed by a board of eleven, nine of which are appointed by the President. It is granted exemptions on federal regulation of employee pay and, at present, receives no government appropriations. At the same time, it is subject to a complex set of other regulations from the federal government and its mail rates are determined by an independent body known as the Postal Rate Commission.

As early as the mid-1970’s, the USPS tried to take advantage of its semi-private status and proposed to cut over 12,000 post offices which were underutilized or located too close together. A study by the Government Accountability Office estimated that the plan could have saved the USPS around $100M a year, approximately $437M when inflation is taken into account.

Naturally, politicians cried foul – after all, their constituents held those jobs and used those services.  So, in 1977, they amended the Postal Reorganization Act to forbid the closings, arguing that rural post offices have some sort of intrinsic value. Furthermore, Congress asserted that “service” should be more important that “profit.”

As an alternative, the USPS moved to halt Saturday services in order to keep stamp prices low. At the time, Americans preferred ending Saturday services to increasing stamp prices, but again, Congress intervened. The House passed a resolution opposing the proposed plan, and just the threat of more binding regulation was enough cause for USPS to drop the plan. The cost of not cutting Saturday services was $400M a year, or $1.75B in today’s terms.

In 2006 under the Bush Administration, Congress passed the Postal Accountability and Enhancement Act which required the USPS to fund its entire retiree health pension program in ten years. No other government organization or private company is compelled to comply to such regulations. The USPS again proposed the idea of five-day mail delivery and closing facilities, but Congress again rejected such notions.

Despite congressional opposition, Postmaster General Patrick Donahue released a plan in July of 2011 to cut nearly 3,700 post offices and 250 mail processing centers around the country. In addition, stamp prices will increase to 45¢ as of January 22, 2012. According to a USPS study, 3061 of the post offices marked for closing make less than $27,500 in revenue annually, while 385 post offices that make $600K annually but are within 5 miles of another post office and 188 post offices that make less than $1M a year but are within 0.5 miles of another post office will also be shut down. Additionally, the delivery speed of first class mail will be slowed, and 120K workers will be laid off.

Rather than simply allowing the USPS to make these cuts, Congress asked for time“to complete an overhaul of the cash-strapped agency’s operations.” USPS officials complied, delaying the cuts five more months for a congressional solution that will likely only do one of two things: 1. cost taxpayers more by bailing out the USPS or 2. make things worse (not that the two are mutually exclusive).

The new rise in communication technologies has allowed people to communicate at a previously impossible speed. Telephone , E-mail, and other forms of Internet communication have naturally produced a dent in USPS revenues, and rightfully so – time is one of man’s scarcest resources, and these new technologies allow for far more efficient means of communication.

Nevertheless, this does not mean that there is no market for physical mail – cards are generally considered far more personal than an electronic messages – but this does not mean that the USPS should be allowed to maintain its monopoly over the mail-carrying market. There are certainly other private companies waiting on the sidelines to offer such services to its own customers, FedEx and UPS being notable examples. In any case, current congressional oversight of the USPS is not conducive to the efficient operation of any business. Regardless of whether the American public is forced to subsidize the USPS through taxes or not is irrelevant. The government should not direct the business practices of the USPS – it should survive or fail on its own merits in the free market without coercion or assistance by the government, as should every other business.  Furthermore, there is no particular size of the USPS which should be maintained, despite congressional sentiments to the contrary. The correct size of the USPS will, like any other business, be determined by the free market and its objective value to customers.

But what of those USPS services that are rationally utilized by Congress? If the USPS were to fail (which would not necessarily occur if it were privatized – it could still reorganize itself into a properly functioning business), how could Congress and other governmental agencies deliver mail which is ethically justified even under a capitalistic government?

The obvious answer is that the government could purchase the services from private businesses. Still, there are problems associated with this idea, such as the possibility of legislators and other bureaucrats choosing the services of businesses to which they are personally attached despite excessive cost to the government. If government officials had a vested interest in the success of a particular business, they should be compelled to recuse themselves from any decision involving said business. Congress’s ethics rules generally disallow its members from voting on such decisions, but only a constitutional amendment would invariably prevent this kind of corruption.

Instead, there is another solution which would remove official governmental correspondence from the private sphere altogether: the military. The U.S. military has thousands of bases nation-wide and a rather efficient system of transportation, and it is not out of the realm of reason to assume that it would be possible for the government utilize this system for official correspondence (and official correspondence only – private correspondence and other deliveries can be handled by private companies at the sole expense of those sending the mail). State governments could also use this system or simply employ the services of their respective National Guard units. This way, the complex problem of choosing a private company to deliver government correspondence would be eliminated, the USPS could be privatized, and the U.S. can begin to move in the direction of a free market.

Regardless, completely privatizing the USPS is only one of many issues that must be addressed in order to achieve a moral government. On scale of degrees, this issue is completely benign compared to the danger posed by other quasi-governmental agencies like the Federal Reserve or regulations like the Dodd-Frank Act. All government interference into the just liberty inherent in the life of every man must end.  The holiday season means many things to many people, and this year, let this be added to the list: let it serve as a reminder of, despite all we have to be thankful for in the United Sates, how much more we can and ought to achieve.

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