Palmetto & Pine: USPS Editorial

The following is an editorial that I've just sent to the Palmetto & Pine staff for review. Hopefully it'll be appearing in the last issue, to be published near the of this month. Criticism is welcome, as always!

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In the name of public good disaster

Imagine a business that doesn’t have to pay for its vehicle registrations, does not need to apply for building permits, does not have to adhere to zoning regulations, can purchase fuel tax exempts, has the power of eminent domain (the ability to take private land and convert it for “public” use), and is immune from paying parking tickets for the company vehicles. Despite these benefits, however, in the year 2000, it lost over $200 million. A year later, it was $1.7 billion, and in 2002, it was $676 million. It does not take a genius to figure out that such a business would not last long in a free-market society. Let us further imagine, however, that it is, in fact, illegal for the company to declare bankruptcy.

At first, this is a seemingly-absurd scenario. After all, how in the world can a business just gain the power to not apply for building permits and to not adhere to local zoning regulations? And even more importantly, you can’t just say a business can’t go bankrupt, can you? The truth is, the United States federal government certainly seems to think that you can. In fact, the “business” described above is none other than the USPS, or, more commonly known, the post office. Yup, that’s right. The post office, a government-based monopoly, has all of the aforementioned benefits. It has a granted monopoly (meaning nobody, even those who could do it at cheaper prices, can enter into competition) over its first-class letters (basically everything except over-night deliveries and parcels). And yet, according to the United States Code, “no small post office shall be closed solely for operating at a deficit.” In a nutshell, the American taxpayers are paying for a business with absolutely no accountability (If FedEx doesn’t get you the letter, it will go out of business. If USPS doesn’t, well…it’s illegal for it to go bankrupt) and one that actually operates at a deficit. And you thought that the Iraq war was the only source of our $8 trillion debt?

The principles of a free-market society are simple. Companies compete for consumers. To do this, they offer discounts, special offers, and ultimately lower prices. Whoever can do this the most efficiently gets the most consumers, the most profit, and can thus stay in business. The consumers benefit because of the lower prices and those who can’t keep up go out of business. In 1844, Lysander Spooner founded the American Letter Mail Company to directly compete with the U.S. Postal System. You’d figure, competition = lower prices for consumers, right? Well, you’d be right, except the federal government sued Spooner to the point that the legal and court fees hampered his ability to actually go ahead and keep the business afloat. Seven years into the lawsuit (originally, the government was enraged at the very idea that a private company would even consider delivering mail, and thus filed a lawsuit against Spooner), in 1851, Congress made competition with the USPS and charging lower prices illegal.

What is the solution to this historically-permeating problem? Answer: hand the mail business over to private companies. If we follow the basic principles of economics, the competition that will ensue will result in lower prices (helping the consumers) and will provide a new degree of accountability (if the companies are “evil,” as many would argue, they’ll quickly go out of business if the people don’t trust them).

So much for the idea of government regulation of the economy being in the best interest of the public good.