Privatize national mail delivery?

http://www.washingtonpost.com/opinions/privatize-the-nations-mail-delive... George Will thinks so -

Quote:
The USPS lost $5.1 billion in the latest fiscal year — after serious cost-cutting. Total 2012 losses may exceed $14 billion, a figure larger than the budgets of 35 states.

The fact that delivering the mail is one of the very few things the federal government does that the Constitution specifically authorizes (Article I, Section 8: “The Congress shall have power to . . . establish post offices and post roads”) does not mean it must do it. Surely the government could cede this function to the private sector, which probably could have a satisfactory substitute system functioning quicker than you can say “FedEx,” “UPS” and “Wal-Mart.”

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Kevin Miller's picture

Privitization might work in big cities, but I don't think it would work so well out in the country areas. People out there most likely wouldn't get any mail at all if the service were privitized. Companies like Fed-Ex and UPS often contract with the Post Office to deliver packages "the final mile" to those areas. Without the Post Office, then package delivery might not even be available in small towns.
(And, yes, I am a letter carrier, in case anyone is wondering.)

Mike Durning's picture

Yes, privatize it, but by untying the hands of the U.S. Postal Service itself. It is hampered by legal restrictions and financial drains mandated by the congress that no other non-governmental agency has to face.

It is not taxpayer funded at this time in any direct way.

Jim's picture

Hey Kevin,

We met a couple of years ago at Rockford Baptist.

Wanted to say that I appreciate postal carriers. I do have a funny (or perhaps not) postal carrier story.

A question for you (and others)

For folk in rural areas, why wouldn't it work for them to have (for lack of a better term) "postal boxes" at a retailer?

My father-in-law's mail (in rural http://g.co/maps/8es5b ]Phlox Wi ) was delivered to a local store. He would go up there a couple of times a week and spin the dials and open up his box.

Now my story: Half a dozen times a year I'll receive a book in the mail. Our postal worker will stuff it inside our mailbox. It is next to impossible to dig it out. A similar package delivered by UPS is put inside the storm door.

Kevin Miller's picture

Jim Peet wrote:
A question for you (and others)

For folk in rural areas, why wouldn't it work for them to have (for lack of a better term) "postal boxes" at a retailer?

My father-in-law's mail (in rural http://g.co/maps/8es5b ]Phlox Wi ) was delivered to a local store. He would go up there a couple of times a week and spin the dials and open up his box.

Did he have to pay anything for that box? Right now, a person can go to the end of their drive and pick up their mail from their curbside box at any time without paying a dime to get that delivery. If a person's mail delivery is dependent upon them paying for a box at a retailer, then those people in financial straits may not be able to get any mail. If the postal service was privitized, then we really couldn't expect such boxes to be free, and they may only have access to their box at designated business times.

Quote:
Now my story: Half a dozen times a year I'll receive a book in the mail. Our postal worker will stuff it inside our mailbox. It is next to impossible to dig it out. A similar package delivered by UPS is put inside the storm door.

Yeah, we really do need to be careful in that regard. It can be a lot easier to push mail into a box that to pull it out.

Chip Van Emmerik's picture

Kevin Miller wrote:
Did he have to pay anything for that box? Right now, a person can go to the end of their drive and pick up their mail from their curbside box at any time without paying a dime to get that delivery. If a person's mail delivery is dependent upon them paying for a box at a retailer, then those people in financial straits may not be able to get any mail. If the postal service was privitized, then we really couldn't expect such boxes to be free, and they may only have access to their box at designated business times.

Not so sure about that. My mailbox isn't free. If I want to send something, I have to pay postage. Anything I receive has already had postage paid on it. The same thing could work privately. The price might go up, which might hinder the poor person sending something. But it wouldn't necessarily place any restriction on the receiving end of things.

Furthermore, even the private mailbox places usually have unlimited access to the mailboxes. They just cordon off the counter areas when they are closed. Which, by the way, is exactly what the Post Office already does for most of its on-site mailboxes.

Why is it that my voice always seems to be loudest when I am saying the dumbest things?

Kevin Miller's picture

Chip Van Emmerik wrote:
Not so sure about that. My mailbox isn't free. If I want to send something, I have to pay postage. Anything I receive has already had postage paid on it. The same thing could work privately. The price might go up, which might hinder the poor person sending something. But it wouldn't necessarily place any restriction on the receiving end of things.

My point was that not only would people have to pay for postage to send something, which everyone already does, but everyone would most likely have to pay a box rental fee as well, which people today do not have to pay, unless they choose to do so. The smallest size box at the post office costs 40 to 50 dollars a year, and i wouldn't be surprized if the price was similar in a privitized system. Not everyone can afford that, and those who couldn't afford it would not be able to receive any mail, which would certainly be a restriction on the receiving end of things.

Chip Van Emmerik's picture

Kevin

While that might, and I emphasize might, be true in rural areas, I don't think it's necessarily true in urban settings. Privatized mail carriers could deliver to home mail boxes, or neighborhood box stands, just as easily as postal workers do today. As I said, they might charge more to do it, but it would not necessarily have to affect the person receiving mail, only those sending mail.

Why is it that my voice always seems to be loudest when I am saying the dumbest things?

RMSprung's picture

So far, all the thoughts of privatization are somewhat correct. If I may, allow me to add a bit more insight as I retired after being a manager at all levels in my career with the USPS. Congress and the unions effectively handcuffed any positive initiatives and management has been a contributor as well--Congress requires a pre-paid plan for all future retirees to the tune of 5 Billion per year. So start the budget at that place. Moreover, the capital investment over the past 2 decades for mechanize and automation equipment was based on questionable numbers of actual pieces of mail (letters and flats). In the mid-90's, after committing a small fortune to delivery point sequence mail, etc., it was realized that the Board of Governors approved more equipment than was needed (approx 25% more as the numbers were inflated by front line management in the pencil and paper days of mail counts). This is a massive subject, so I'll pare it down to the delivery problem first. (This was before the internet)!!

Manuals require deliver; however, door-to-door is the costliest. Street boxes are next, and the lowest is neighborhood boxes (one stop). When we (management) attempted to get customers to change to any of the less costly models, an avalanche of protests spewed venom everywhere. Change everyone else, but not us. Covenant communities (gated) and older established areas are the most stubborn.

Now consider the unions. The collective bargaining is a strangle hold upon the USPS. As mail has dropped to its lowest ever, as DPS mail (mentioned earlier) means the carriers do not touch it in the office (in deliver order), one would surmise that the carriers could carry more stops as the time to case and prep a route is reduced in some cases by 50%. But NOOOOOOOO--if I were to hear, "that's not fair" one more time.... Grievances over nonsense, overtime and penalty overtime becomes standard. Yes the workforce should be reduced by attrition but that requires the others to pick up their new "fair" share--doesn't happen very often. And when grievances are not settled at the lowest levels, the unions almost always win fairly large settlements for nothing at arbitration (remember the Boeing fiasco in SC)--same thing.

Any professing Christian should approach his/her job anywhere as per Colossians 3:17 and 23. That includes management.

If Congress turned back the clock on privatization, it would hurt themselves (frank mail privileges plus an address management list to every house in their district). Also, consider private mail boxes at UPS, etc. They cannot forward mail while USPS boxes receive full service. If start-ups or the other big boys get to deliver letters, the price will go through the roof. They only want the urban areas. The USPS will continue to deliver the rural or distant places at a loss (and taxpayers will most likely catch the tab). Oh, and by the way, only the USPS can put ANYTHING in the mail box.

So, before anyone thinks this is a disaster (and in some places I might agree) but most of the USPS employees are the most trustworthy and hardworking bunch anywhere. It's the few who take advantage (I prefer to call then the "slug and thug" factor) of the unions protection that keeps us from removing the "human waste" and getting the best (and don't get me started on the fixed hiring practices).

Bob

Sean Fericks's picture

Free market breeds solutions. All those "what if's" would be addressed (no pun intended) within a month of closing the post office.

RMSprung's picture

@Sean - you have great faith in the free market; however, if you have ever been inside a processing facility and view, first-hand, the complexity of automation and manual sorting plus the secure handling of registered mail, etc., then maybe the "off the cuff" thought you posted on #10 would be reconsidered. Think about the massive (even though the numbers are shrinking) volume processed every night letters, flats, newspapers, advertisements, parcels), transported by air or truck, then reprocessed to be transported to smaller areas (and within these places are PO's that serve as turn-around terminals for contract drives to bring to the real small rural areas.

How would Fed-ex, et al , even begin the massive transfer, compete for the most profitable areas, and an ad nauseum of other factors. The USPS has a fleet of 168.000 deliver vehicles -- that is more than all other services providers of parcels combined. Next, for centuries, the PO was handcuffed in that "no profit" could be made. This past decade changed it to a business model but then Congress rapes the coffers of ONLY this one federal agency. Why? No tax money subsidizes it (since 1970). As I stated in a previous post, there is no easy solution. Would a 44 cent stamp be a realistic value if the privatization act were modified or eliminated? The cost for all services by the new boys would be seriously escalated (profit, profit, profit). No Board of Governors to answer to or get approval from for any rate changes, etc. None of the competition has the brick and mortar stores throughout America (people are identified by their zip code=post office). It has, and is, a central established fixture in many smaller areas.

These thoughts have been bantered around for decades in the USPS. I have been involved (though in a secondary way) to every potential way to improve, reduce, expand, develop, etc., even to which day would be a non-deliver day besides Sunday. Saturday would be a disaster--the past thinking was Wednesday. Regardless, most of us have gone to on-line ordering, bill paying, banking, etc., which leaves only local advertisement or bulk mailing of flyers and such.

Chip noted:

Quote:
Furthermore, even the private mailbox places usually have unlimited access to the mailboxes. They just cordon off the counter areas when they are closed. Which, by the way, is exactly what the Post Office already does for most of its on-site mailboxes.
Quote:

Private Mail boxes exist but remember this: They are not authorized to FORWARD MAIL WHEN YOU CLOSE THE BOX!! You will pay for that; moreover, the folks placing your mail in these boxes are not vetted for security, etc. It is "buyer beware." Also, your address will be:

Mr. John Smith
PMB 123
address of the facility
city, state, zip

Guess who delivers the mail to the Private Mail Box? Hmmm? The USPS. And finally, PMB offices that may cordon off their access areas are NOT like a modern Post Office. Many have the old "see through" windows with a, old combo lock or key. Present day Postal Boxes are aluminum to secure the privacy of the patron. And parcels that will not fit into the box are placed in larger lockers with a special key placed in your mail box. What does the other guys offer?

The whole thought is so complicated and potentially disastrous that to presume the free market is always 100%, it is not. Let's work at societal things that really can be resolved, not the Post Office. It will be here long after we all ascend through the clouds.

Bob

Sean Fericks's picture

Mr. Sprung,

Thanks for your service, and I do appreciate the enormous complexity of the mail system. But it is precisely because of this that I advocate for the complete elimination of any federal involvement in the post office. The more complex the system, the more the free market is needed to find solutions. As you mentioned, no one person or even group of very smart persons, can figure out how to deliver mail profitably (especially when hampered by the foolish red tape that ALWAYS comes with federal involvement).

I submit that we are already greatly reducing the need for mail. E-mail, faxes, GoToMyPC, etc. can all fulfill the vast majority of what we used to do through the mail. I personally do not need the mail any more in my life. All my bills are paid online. If there is an important contract that requires wet signatures, I use UPS anyway. If you take away the artificial prop of USPS, all of these other free-market solutions will very quickly fill in the gaps.

Finally, there is a lot of unnecessary mail that I get simply because it is too cheap for advertisers to stuff my box. If shippers truly had to pay free-market prices to ship all of this bulk junk, they would re-think it and perhaps we would save a few trees and reduce the growth rate of our municipal landfill. If the federal government truly wants to live in the spirit of the Paper Reduction Act (ROTFL!!), they could accomplish a great deal by removing themselves from the postal business.

Susan R's picture

EditorModerator

I tend to agree with Bro. Fericks- I can't remember the last time I mailed something USPS, and most of what I receive in the mail goes into the paper shredder.

Many companies have experienced severe growing pains trying to adjust to the lightning speed of technological advances ( http://www.usatoday.com/money/industries/retail/story/2012-01-19/Kodak-b... ]Kodak , anyone?) It isn't surprising that the USPS is also struggling to remain relevant in light of the aforementioned changes in how people communicate and do business.

JG's picture

It could mean the government selling the business off piece-meal, with wide open competition.

It could mean selling the entire business, as a whole, with the purchaser heavily regulated as far as being required to continue to deliver in rural areas, and with restrictions on competition in urban areas. In other words, it could pretty much continue as is but without the government exercising legislative control on working practices, etc. The owner would be expected to continue the same general level of service but would be free to institute efficiencies, etc.

I doubt the first would work very well. There would end up being no service in any area where it would be hard to make it profitable. The second probably could work, depending on how it was structured.

Sean Fericks's picture

JG, the second option will not work well. The core reason the post office is in the red is that continues to fight the laws of supply and demand. It pretends that a rancher 30 miles out of McGill, NV has the right to receive National Geographic magazine in his mailbox for the same price that a shop owner does in New York City. This is utter foolishness and very wasteful of our natural, national, and personal resources. If the rancher had to pay the free-market cost to receive his magazine, he would most likely choose to read it online, on a Kindle, or open a PO box in Ely to utilize with his monthly supply run. Also, the companies that send the very wasteful junk mail to his mail box on a daily basis would rethink their advertising methods. Efficiency and quality of life would improve as a result of free market flexibility.

I say shut the Post Office down completely. Auction the trucks, facilities, etc., and watch the wonder that is the free market system!

JG's picture

Not that they were infallible, but they saw freedom of communication as vital to protecting liberty. They believed there needs to be postal service everywhere, and it shouldn't just be left entirely to the free market.

I already addressed your argument about the rancher, by the way. I said it depends on how it is structured. It doesn't necessarily have to be entirely uniform pricing. He can get his mail at the post office, or pay a monthly fee to have it delivered. Or you can charge bulk mailers extra for delivering to addresses more than X miles from a post office (that's going to be clear from the last four digits of the Zip code). Or something else.

The post office went in the red over and over again when supply and demand wasn't an issue. That isn't the biggest problem. The biggest problem is government inflexibility in hiring practices, resolving other inefficiencies, and in pricing.

Years ago we lived in a house in Oregon where we had a mail slot in our door. The mailman had to get out and walk from house to house, walking up to every door. Meanwhile, my parents lived in a new development where they had to walk up to the corner to get their mail from the community mailbox. A privatised post office under scenario two would put up a community mailbox on the street I used to live on, and save 15 minutes of their postman's time every single day, multiplied many times over in that neighbourhood. And if someone wanted delivery to their door instead, they could offer it for a monthly premium.

There are so many ways creative management could find savings even under my second scenario.

You are targeting the wrong thing here, anyway. It would be far better to go after the things government is doing that the Constitution doesn't authorise.

Sean Fericks's picture

I agree with you that it is authorized in the Constitution. I would be completely happy to have a post office in the red if we gave up all federal interference in issues not enumerated in Article I, Section 8.

RMSprung's picture

I believe my 2 posts are not being thoroughly read. It appears to me that the media splash about competition and our preconceived remedies are but fairy dust that will somehow magically make an improvement.

Quote:
The post office went in the red over and over again when supply and demand wasn't an issue. That isn't the biggest problem. The biggest problem is government inflexibility in hiring practices, resolving other inefficiencies, and in pricing.

Years ago we lived in a house in Oregon where we had a mail slot in our door. The mailman had to get out and walk from house to house, walking up to every door. Meanwhile, my parents lived in a new development where they had to walk up to the corner to get their mail from the community mailbox. A privatised post office under scenario two would put up a community mailbox on the street I used to live on, and save 15 minutes of their postman's time every single day, multiplied many times over in that neighbourhood. And if someone wanted delivery to their door instead, they could offer it for a monthly premium

The first quoted sentence response: Check the records and you will find that the Post Office was in the black most of the 1990's and early 21st century. The deviation is two-fold: (1) Prior to 2004 [I think ], and profits were sent to Congress as the USPS was a "break even" quasi-official government agency. (2) The inflexibility in hiring are laws that require certified interviewers [of which I was one ] MUST, repeat, MUST give the job to a lesser qualified applicant if they were a veteran (disabled 1st and non-disabled 2nd). I had to say no to so many absolutely potentially great clerks/carriers because [even though they scored higher ] I had to take the vet. Now, couple this [and I say with care and caution--not all vets were negative employees but they had preferential treatment per Congress ] with the present day Public Sector Unions [of which the Postal Unions within the Federal Government are Mt. Everest compared to all the others and even the private unions) and Collective Bargaining Agreements that are so one-side that management does not have much of a choice or potential action to "encourage" the slackers unless a crime has been committed. Look at the Teachers' Unions across our land and see that the education system is failing because they refuse to allow merit and ability to be the proof of competency. No, seniority and tenure are all that matters---and once that is achieved, good luck trying to remove them. The same is true in all the Unions of the USPS.

Now, Fed-Ex pilots are unionize, UPS is unionize -- what if they want to strike? Who is going to stop them? The USPS CANNOT, repeat, CANNOT strike (Remember Reagan and the Air Traffic Controllers?).

Now to the second paragraph of the above quote. As I have previously mentioned, we cannot make an established community accept curb-side delivery or NDCBU boxes (one stop on the corner delivery). Until a resident sells the place, only then can we enforce a curb side method. But when whole communities are involved, it is like pulling teeth!! Door slot deliveries are still alive and well in older communities. Even if the dog rips the mail to shreds, and the mail man is subject to losing a finger (and it happens), they EXPECT the privilege. Oh, and just so ya'll know, to close a post office anywhere use to take up-to 4 years (no matter how small or unprofitable). Congress actually had to approve it. So, be patient when you surmise that the USPS has not attempted to reduce costs in all areas. And lest I forget, the oldest Federal Law Enforcement Agency is the Postal Inspection Service. Who will take up the slack once they are removed? Local police, sheriffs, state troopers? No, somebody will have to make a NEW bureaucracy (private or public).

Last, the issue of privatization revolves around only one type of mail -- letters. The Constitution and early laws made it a felony to open a piece of first-class mail. And it is still true today. Fed-Ex is allowed to deliver overnight and parcels. UPS came into existence in 1906 (?) because the then Post Office Department (a Cabinet position) allowed then to handle parcel post. And just an aside, the Pony Express was a private entity (which lasted 2 years). Back then, rural delivery was identified as RFD [rural FREE delivery ]. And regardless of the lobbyists for the the others, Congress would not relinquish the special franking privileges they enjoy and having total access to every address (i.e., potential voters). Until and unless the USPS can be free from the union strangle hold on pay (tiers are a no-no), paying in advance for future retirees (when no there agency is required), then get used to it. The nightmare that would ensue if the government relinquished the private monopoly on first class mail would make most everyone wish they had thought this through. Be kind to your mail man/lady or window clerk--they catch a lot of undeserved scatological matter!!! Yes, the internet is the future, but some folks do not use it and others just like to get that "junk mail" and a card from the grand kids.

Bob

JG's picture

RMSprung wrote:
I believe my 2 posts are not being thoroughly read.

I wonder why you say this, and then quoted and disputed my comments.

First, the post office was in the red throughout the 70s and 80s. It was in the red 6 of the ten years of the last decade, I believe.

Second, as to my comments relative to your original post and your subsequent response. You previously said that hiring / employment practices are problematic, and you still say so. I said that a privatised monopoly could work but the current government mandated hiring / employment practices would have to be changed to allow the new company more flexibility. I'm not sure why we are saying different things here.

Similarly, you (the post office) can't make the types of changes I suggested. I know. I did read what you wrote. I was saying that if these rules were relaxed, a privatised company would have more flexibility and could become profitable.

I don't see any inconsistency at all between what I've written and any of your comments on the subject. A privatised monopoly could not work unless regulations were loosened to allow the private company enough flexibility to address the kinds of problems you've mentioned. It is probably politically impossible for the USPS to be allowed to make those changes, but if a privatised monopoly were making them, it would be far enough removed from the politicians that they would be more likely to let it go through.

RMSprung's picture

You have very good points--I tip my hat to you. However, when any of us read the bottom line of a company (red or black), there are so many extenuating circumstances that are buried in footnotes. For example, I stated that the USPS, when it came into its present model, had been the Post Office Department which was a Cabinet position in many administrations. When Congress change it to the USPS, a quasi-official federal agency, it also ceased to receive taxpayer support. Now, what continued was 2nd class mailers (newspapers, Time, Newsweek, dated periodicals, etc.) were still subsidized throughout the transition. In other words, they got serious discounts at the Postal Service's expense, per Congress. I joined the Service in 1979 and these were still in place. Please do not hold me to this time frame, but sometime in the mid-late 80's, these periodicals had to pay full fair. So when we see RED ink (profit loss), much can be laid at the feet of Congress for this and flawed mandates. Remember, the Postal Service until 2004 (?) was a "break-even" operation. Sometimes you make it, sometimes you don't. Doesn't mean fraud, theft, ignorance, poor practices, and other issues weren't part of the RED. Moreover, we did not have a fleet of planes (they tried in the 80-90's with Indianapolis as its hub, much like Memphis for Fed-Ex and Louisville for UPS). But the cost was prohibitive. Again, mail went by land or commercial air (which the latter we have no control).

Also consider this, successful delivery standards are monitored by a private 3rd company for the USPS (not so with Fed-Ex or UPS). For example, a piece of first-class mail within 0-101 miles was a next day delivery; 102-301= 2nd day; and 302-out [in US only ] was 3rd day. The goal was nearly 99% success rate [usually were in the 97-98.5% as I remember ]. Now overnight [a premium service and a money maker for sure ] was just that--overnight [except in areas that were 2nd day promised due to location or drop off time at the dispatching post office. If we had a noon delivery, and the carrier services the address at 12:01 = failure. Customer could receive full refund [excluding weather delays ]. The measuring tool for Fed-Ex and UPS was far more generous and put us at a serious disadvantage (also considering that is 90 percent of their business--no letters, flats, periodicals, etc).

My main thrust in this whole debate is that removing the postal monopoly thinking that all will be better is a dream. It is such a complex and extensive system that no one company could even possibly reinvent it. Split the Postal Service into pieces sounds like a great idea, but again, that would end the USPS as a business and return it to a Federal Department = taxpayers support. Why? Because only the government will pick up the left overs (rural especially). Fed-Ex, UPS, and others want the urban centers and the efficient suburbs of large metropolitan areas. If each independent can set the price, you will pay European prices (Canada and England already have used this model and they are paying for their mail!!!).

One of the previous posts noted how the internet is really taking over. You betcha!! I use it exclusively myself. So what is the problem? Why fuss about the Post Office? Why? Because the other players want the action--lobby Congress relentlessly. Their is serious money to be made; however, [though I am not a gambler ] you can take it to the bank that Congress will NEVER give up the USPS for a number of reasons: (1) They have free access to every voter in their district/state; (2) The unions (4 of them) will never stop pressuring these representatives and senators to leave the Post Office alone. I remind you, these unions are the largest in the country and are part of the AFL-CIO also; (3) Consider Hallmark Cards and such like -- do you think they will take this without a fight? And (4) Mail volume is dropping at such a rate that it will be inevitable that either the USPS will collapse within or a major overhaul (unions be damned and contracts be abolished) that a new, smaller, more efficient system will be in place. But under NO CIRCUMSTANCES WILL CONGRESS RELINQUISH ITS VITAL RESOURCE!!! Ron Paul would have a better chance of being President than the Post Office ending.

Bob

JG's picture

I don't think a breakup would work. Neither do you.

As to your four reasons Congress will never give up the USPS, if it were a privatised monopoly:
1. (franking) If the government paid the privatised company for the franking privilege (presumably, they'd negotiate a discounted price), Congress wouldn't care on this point. But they will INSIST that anything that takes the place of USPS have universal coverage so they can mail out their pork propaganda, and that they still get to do it free. Smile
2. (unions) Absolutely, the unions would fight it tooth and nail. You'd have to have a Congress and President that were willing to ignore them. Not very likely.
3. (Hallmark) They wouldn't care too much. You are absolutely correct that they would oppose a split up, but a privatised monopoly, still regulated but more loosely than the current USPS? They'd probably lobby against it just because of the uncertainty of a new regime, but it wouldn't be a fight to the death for them.
4. (dropping volume) This will may be what could eventually bring some kind of privatisation.

One other thing that might happen -- regionalisation. Like the baby Bells when AT&T was broken up. You'd still have universal coverage, but you might have a West Coast Postal Service, Mountain Postal Service, etc.

The unions will fight to the death, but seems pretty likely something significant is going to change.