Framing the Dialogue

Stamp of Disapproval

“Wanted. Young, skinny, wiry fellows. Not over 18. Must be expert riders. Willing to risk death daily. Orphans preferred.”

That job description for a Pony Express rider would not garner much attention today, but that was the genesis of today’s postal service.  The only qualifications that might match are the age requirement and the need for a driver’s license.  Unlike most people I have respect for the United States Postal Service.  Their troubles have been well documented by both liberals and conservatives as the USPS is a very popular agency to point to regarding the failure of government.

Most recently the USPS proposed a rate hike which was “kiboshed” by regulators.  In their denial the regulators stated that the USPS’s problems were because of a “failed business model” rather than by the recent recession.   If you cheered that decision because you liked the price of stamps to stay the same you probably have a lot of company.  I also like cheaper postage, but having spent some time selling on ebay and Amazon I have gotten a closer look at our local operations. 

I think that most people mistakenly believe that the USPS is an arm of the federal government.  It happens to be an independent organization and although it is not supported by our tax dollars it has been liberally borrowing from the federal government even though they are supposed to be self-supporting.  Some statistics on the USPS:

  • Second largest private, n0n-government civilian employer (WalMart is number one)
  • Delivers approximately 660 million pieces of mail each day and 177 billion annually
  • Services around 142 million delivery points each day
  • Operates and maintains 36,400 post office locations
  • Operates and maintains the largest civilian fleet estimated at 218,684 vehicles
  • They use approximately 444 million gallons of fuel in 2009
  • The USPS is “governed” by the Board of Governors of the United States Postal Service

It is interesting that the USPS is considered an independent organization expected to support itself when it is controlled by its Board of Governors.  Unlike a corporation’s Board of Directors the USPS’s are appointed by the President.  They are political appointees.  What are the chances that these folks are businessmen?  Is it more likely that they supported whichever administration nominated them for the job?  The USPS cannot make essential business decisions without the consent of a group of political appointees.  In the most recent request noted above the USPS requested the rate hike in July and waited around three months for a decision.  That does not seem like a reasonable amount of time for a major business decision to be made.

I remember when gasoline prices were in the $4 range.  While its competitors, UPS and FedEx, were able to adjust their prices the USPS were not able to adjust their pricing.  They estimate that for every penny increase in fuel pricing is costs the USPS $8 million.  We remember how quickly fuel prices increased back then.  If you only take a $1.oo increase for a year without adjustment the increase costs are nearly a half a billion dollars.  How many businesses can take that kind of hit?

You may not have known that the USPS has been franticly trying to update their business model for decades.  Glenn Beck in his book Arguing With Idiots, noted that the USPS has been trying unsuccessfully to close underutilized post offices since the 1970s. They recognized the need for cost savings and tried to make changes, but were prevented by politicians. The estimated savings would have been $100 million a year.  The USPS has also proposed to eliminate Saturday delivery. This would have saved, drum roll please, $400 million dollars EACH YEAR! This was once again stopped by congress…in 1977. In fact the USPS floated both ideas again as they face major financial losses only to be opposed again by elected officials.

I would like to suggest that you meet with a venture capitalist with this proposal.  I have a legal monopolistic enterprise counting every American household and business as customers.  You’ve gotten their attention…probably undivided at this point.  That’s the good news.  This enterprise has no direct control of its pricing, is required to be unionized, cannot open or close offices without government approval, cannot modify its operations without government approval, will be vilified at every opportunity by just about everybody, and any business decisions will take several months to achieve.  Oh and every elected federal official in the United States will consider your business their personal dominion. 

As you watch the investor rapidly exit the room you may wonder about the USPS business model that was criticized by its Board.  A business model that was not written by anyone with an MBA degree, but morphed over time as the political cooks added their ingredients to this rancid stew.

Perhaps the most frightful part is how close many of our private companies are to the USPS model.  Rather than politicians on the board they are constrained by regulations.  You cannot do this; you must do this; come to testify before congress.  This is not a great climate for winning the battle in an ever competitive global economy. 

I don’t have an answer except that perhaps the folks that run the USPS may know more about how to run thier business than a bunch of politicians.  If they are to be private, let them be private.  Maybe cut them loose from government help and most importantly government interference.  I would suggest giving them a period of time where there is no competition and then they are on their own.

This will also free our elected officials from distractions such as naming the Jimmy Stewart Post Office in Indiana Pennsylvania.  It might interest you to know that our Congress found naming of a post office more critical than debating and voting to extend George W. Bush’s tax cuts which will expire December 31.  Jimmy Stewart deservedly get a post office and we’ll probably pay higher taxes.  Maybe we should sell naming rights to post offices like government-funded sports venues.  I think the D.C. Post Office should be the Progressive Post Office.

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