Myth, Reality, and the U.S. Postal Service

(This is an excellent rebuttal to a recent op-ed piece by columnist Thomas Sowell)

by Matthew Broder
VP, Pitney Bowes External Communications

Once upon a time, virtually everyone thought that the Earth was the center of the universe. And why not? From the human perspective, the Earth is unimaginably vast, stretching to the horizon and beyond, while the Sun and the Moon seem relatively small, and appear to traverse the ‘fixed’ Earth’s sky. Of course, as science advanced and people began to understand new concepts of space and time, a new paradigm emerged to replace this archaic idea.

I couldn’t help but think about this as I read Thomas Sowell’s attack on the U.S. Postal Service (USPS) on the website of the New York Post. His arguments are based on only the most superficial interpretations of the market for sending physical information and goods from one place to another, and it’s important that more complete analyses be heard as well.

Sowell perpetuates the myth that, somehow, privatization of postal delivery will lead to “cheaper or better” mail service. He cites the profitability of FedEx and UPS—both great companies—as evidence that the private sector would trump a government service.

Cheaper? As of Jan. 22, the USPS will charge exactly forty-five cents to send a confidential, hack-proof message from anywhere in the U.S. to anywhere in the U.S. It’s a good deal for consumers, and it’s an even better deal for businesses that use the mail to communicate with their customers or reach out to prospects. In fact, it’s about the lowest first-class postage rate of any industrialized country, and helps make the USPS a major economic engine.

Sowell might also ask executives at FedEx and UPS whether they want to take on the USPS’s duties, particularly at 45 cents per piece. The brilliance of their business models is that they have accurately segmented the mailing and shipping market, and identified those customers who are willing to pay more for the speed and transparency they offer. Sowell may not realize that even these iconic companies are increasingly turning to the USPS for last-mile package delivery in less-profitable markets.

What if Congress changed the law and allowed any private delivery company to transport mail, as Sowell recommends? Here’s what would happen: sharp entrepreneurs would offer competitive services for urban and wealthier suburban markets, where they wouldn’t need huge fleets of trucks or lots of employees to serve a large number of customers. Elsewhere they would either charge more, or leave the territory to the Postal Service, which would effectively get the leftovers: rural areas, and lower-income urban and suburban areas, where service levels would be even harder to maintain absent the revenue generated by more profitable urban business centers. In short, some customers would win, but many would lose, and it would fall to the government to support those negatively affected.

Sowell’s argument ultimately is an attack on the whole concept of community. He writes: “If people who decide to live in remote areas don’t pay the costs that their decision imposes on the Postal Service, electric utilities and others, why should other Americans have to pay those costs?”

Let’s follow this logic: if I ‘decided’ to live in New Orleans before Hurricane Katrina, I shouldn’t expect any help from anyone outside the storm’s path? If I ‘decided’ to hike in a national park and was injured in a fall, I shouldn’t plan on a park ranger coming to assist me? If I ‘decided’ I wanted to go to college but couldn’t afford it, I shouldn’t count on any government loans to help close the gap?

Do any of us really want to live in a country like that? I don’t.

Make no mistake, the Postal Service is in trouble and needs reform. The private sector probably has an important role to play in those reforms, particularly in back-office operations, but Sowell’s ideas will only make things worse. America needs a strong postal network to get the mail to and from every address in the country at a reasonable price. If Sowell argues otherwise; well, he might as well try to argue that the Earth is the center of the universe.

(Photo source: Technology Gadgets)


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