There is a lot of talk today about the Post Office.  Will they change to 5 day a week delivery from six?  Will they stop most rural deliveries and make people drive to post offices to check a box?  Why is postage going up so fast and so often?

These are legitimate questions.  Personally, I think the USPS does a generally very good job.  The problem is that they lose money and unlike most Federal Agencies, they are required to break even or make money.  Don’t get me wrong.  I like that they are held to a standard far above that of most government agencies.  What I don’t like is the fiction of the whole thing.  I’ll explain.

I actually think that the Postal Service may be one area of government that is a natural government function and one of the few things our federal government does that it should do.  In fact, it is one of the few functions of our Federal Government that is explicitly spelled out as a function of that government – see Article 1, Section 8, Clause 7 of the The United States Constitution.

I am not opposed to converting to a private system, either.  It was attempted in the late 60’s and early 70’s.  IPSA (Independent Postal System of America) was started, in Oklahoma if I remember right.  They used students and retired people to deliver 3rd and 4th class mail at first then later offered 1st class service.  Most was delivered to offices or hung on doorknobs.  By law, they could not use the mail boxes – those are controlled by the Feds.  Within the major cities covered by IPSA, they picked up and delivered 2 times per day.  In the suburbs and rural areas, they delivered daily.  The cost of a letter, even then was higher than the Post office (I think a 1st class stamp was a nickel at the time).  People used the service because the mail got there quicker.  It was used mostly by businesses.  IPSA priced it to make a profit.   They also delivered 3rd/4th class “junk mail” in plastic bags that hung on doorknobs.  They charged less than the post office for this service.  At the time, the Post Office made good money on junk mail but lost money on first class and parcel post.  Since IPSA was taking a profitable business from the government, it was sued out of existence by our Federal Government and the Postal Unions.  At the same time, UPS was carrying parcel post at a profit and was never sued.  That was because the USPS didn’t want to carry the parcel post because it lost money doing it.

The IPSA showed the USPS and all of us that if they were to break even the post office needed to charge more for some of its services.  I am convinced that today’s 44¢ first class mail is a subsidized rate – it is below the cost of delivery under the current conditions.  In other words, the USPS cannot continue to deliver at that rate without tax dollars coming in to subsidize the losses.  Either taxes will go up, or the government will print more money and we will have inflation.  Both take money from us and add to the real cost of doing this business.  Most postal rates in Europe are about twice our rates and that is in an area much more densely populated that the US.

If the USPS stopped delivering to remote mail boxes all over the country and offered instead to deliver to post boxes at local post offices, I think they could save a lot of money.  I also think the union of postal workers (the National Association of Letter Carriers, AFL-CIO) would scream like a stuck pig.  If they stopped delivering mail on Saturdays (except for premium service with a charge) the same things would happen – they would save a lot of money and would anger the Unions.

The Post Office is not unlike many other Government Services – it costs far more than we think.   Germany, for example, is about the size of Montana.  In Germany, a first class letter of up to 2/3rds of an ounce, today costs the equivalent of about 75¢ (U.S.)  That is not likely the true cost in Germany either but it is far closer to the mark than what we charge.  Until we get realistic about the true costs of government “services” we will never make the changes needed to make those services efficient and cost effective.  This goes for health reform, crop subsidies, school nutrition programs, etc., etc., etc.  Would we have as much junk mail as we have today if it cost 50 – 75¢ a piece to be mailed?  Would we use our freeways as much if it cost $150 to drive across Montana like it does to go on toll roads from one end of France to the other?

We have this way of subsidizing things (to buy votes – pay off lobbies).  If you don’t think the subsidies on corn are appropriate, you need to fight the corn lobby.  If you don’t like the cost of postage, you need to fight the postal unions.  We don’t seem to be of a mind to do any of these things and the result is that the true cost of many of our government endeavors is masked to the point where we have no idea what we are paying for.  If you think a first class letter costs you 44¢ to mail, I think you are wrong by at least half.