When President Obama told the people attending a town hall meeting on health care that “UPS and FedEx are doing just fine, right? . . . It’s the post office that’s always having problems,” he was right on the facts, but drew the wrong conclusion from them. …
… Despite having an exclusive monopoly on first-class and bulk mail, the post office chronically loses money—about $7 billion this year, with another $7 billion anticipated next year.
But why should its managers and employees worry? They know they can rely on their operating losses being covered by a combination of congressional subsidies (financed by taxpayers) and rate increases, which will be rubber-stamped by the so-called Postal Rate Commission.
Stamp prices have risen much faster than the rate of inflation. In 1950 a first-class stamp cost just 2 cents. According to the American Institute for Economic Research online inflation calculator, if the cost of a first-class stamp had merely kept up with inflation it would cost 18 cents today—nine times what it cost in 1950—not 44 cents.
Generous salaries for Postal Service employees, restrictive work rules negotiated by the labor unions that represent them, the continued operation of thousands of obsolete, small-town post offices and failure to adapt to a world in which people communicate by e-mail rather than by first-class mail and pay their bills online all help explain why the Postal Service does not—and possibly cannot—operate profitably.
The solution to the cost-control problem offered by Postal Service Chief Executive John Potter is to stop delivering mail on Saturdays, thereby offering worse service at 44 cents than customers once got for 2 cents.
Get that? It’s rationing our mail! Shughart also makes a good point about profit:
Supporters of publicly financed health insurance contend that its administrative costs would be lower than those of private insurers, in part because a public plan would “not have to make a profit,” as if “profit” is a cost of doing business rather than a reward to owners who provide a desirable product or service at an attractive price.
This post by Rory Cooper at the Heritage Foundation has more critiques of the United States Postal Service.