Privatize inefficient post office monopoly

July 12, 2001|By Thomas Sowell

STANFORD, Calif. - The U.S. Postal Service has raised its rates twice this year and is already talking about raising rates again next year. It has also made noises, and then thought better, about eliminating Saturday mail deliveries.

But the big problem with the Postal Service is that it is a monopoly and that the government keeps it a monopoly by law.

Why were people alarmed about the threatened elimination of Saturday mail deliveries? Would we panic if some supermarket said that it would close on Saturdays? No, because we would just shop at some other supermarket. The Postal Service's problems are more serious because nobody else is allowed to deliver mail.

Nobody else is even allowed to put anything in your mailbox. Even though you bought the mailbox yourself, it is treated as if it is the property of the Postal Service. Moreover, the Postal Service can impose its own rules on possible rivals, such as Mailboxes, Etc. This is a monopoly plus.

The other side of the coin is that the Postal Service gets its monopoly and its various privileges - including exemption from taxes, zoning laws and vehicle license requirements - at the cost of being subservient to Congress. By its own admission, the Postal Service has 26,000 post offices that are not making money. But closing them would bring on congressional wrath. So would any attempt to seriously downsize its work force.

The net result is that the Postal Service is not only a rare privileged monopoly, it is an even rarer money-losing monopoly because of such politically imposed inefficiencies. That's what's behind the constant rate increases and the threats to cut service.

Although people who send first-class mail were exempted from the most recent rate increase, they are likely to be targets for the next one. But people who send first-class mail are not only already paying their own way, they are over-paying and subsidizing junk mail and other things that are not pulling their own weight economically.

People in a number of other countries have begun waking up to the fact that a government monopoly of mail deliveries is bad news for the public, both as people who send and receive mail and as people who pay the taxes to subsidize a losing operation.

New Zealand has allowed its postal service to close more than a third of its post offices and has started the process of privatization. Sweden, Finland, Australia and the Netherlands have also started the process of privatization. By contrast, the U.S. Postal Service is not only keeping its subsidized monopoly, it is seeking to use its privileges to expand into other businesses. It has already been selling T-shirts, mugs and other miscellaneous items, and making money from copiers in post offices.

What is wrong with that is that private businesses provide all these same goods and services, and these businesses are subject to all the taxes, zoning laws, vehicle licensing fees and other legal requirements from which the Postal Service is exempt. Nor can private businesses borrow money on the basis of the government's credit, rather than their own earning power, as the Postal Service can. This is not simply unfair, it is uneconomic.

When the post office's copier takes business away from a local copy shop, it also takes taxes away from the local government. More important, the economy's resources do not flow to the most efficient user but to the operation with the most privileges.

One of the bases for the Postal Service's claims for its privileges is that it is bound by law to deliver mail everywhere in the country for the same price. That means that the guy who lives miles out in the middle of nowhere gets his mail deliveries subsidized by people who are mailing letters from New York to Chicago, which costs less than the price of a first-class stamp.

But that is trying to justify one privilege by another. Why should someone who lives in isolation have someone else pay the costs created by his isolation? If the isolation is worth it, then let the person who benefits pay for it. That goes not only for the cost of delivering the mail, but also for the cost of delivering electricity, water and other things that cost more to deliver to someone living out in a desert or up on a mountain.

Monopoly means inefficiency; a money-losing monopoly means even more inefficiency. Make it a business like any other, and let others compete with it.

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University.

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