The U.S. Postal Service is One of the Biggest and Least Successful Companies of All Time

Posted by PITHOCRATES - May 5th, 2012

Week in Review

The U.S. Postal Service (USPS) may not be part of the government.  But it sure acts like it is (see As a private firm the US Postal Service would rank 35th on the Fortune 500 list, but it would also be bankrupt posted 5/5/2012 on The Economist).

AT THE bottom of its press releases the US Postal Service brags that if it were a private company, it would rank 35th on the Fortune 500 list. Were it a private firm, it would also be bankrupt. The service loses $25m a day.

Hit hard by the recession and the march towards electronic mail, the Postal Service is in desperate need of reform…

A normal business could not operate like this. Over three-quarters of America’s post offices do not make a profit. Take, for example, the office in Alix, Arkansas, which last year cost $48,452 to run and brought in just $3,642 in revenue. Its earnings may be thinned by the presence of eight other post offices in an 11-mile radius. Under the Senate bill, the Alix office would remain open…

A more pressing concern for the service involves payments into a health-benefits fund for the future retired…

The focus will now shift to the House, which is considering a postal-reform bill of its own. Its author, Darrell Issa, a Republican from California, plans to end Saturday delivery and establish a financial-control board with a mandate to cut costs. His bill would take politics out of the process by creating an independent commission to oversee the closure of post offices. And it would aim to bring the pay of postal employees into line with the private sector.

The solution is easy to some.  Get rid of email.  Text messaging.  And paying your bills online.  That’s the solution they’ve used elsewhere in the economy to protect a dying industry from a higher quality, lower cost competitor.  They used tariffs to protect the U.S. automotive industry.  And as a result they have lost all but a fraction of the global market.  They’ve passed labor laws favoring higher cost union labor.  And chased manufacturers out of the country.  The Labor Department sued Boeing for building a new 787 Dreamliner plant in a nonunion state.  Because they wanted those planes to be built with costlier union labor.  Making them less competitive with Airbus.  Who continues to expand their market share.  So why not get rid of email?  It would be no more foolish than past solutions.

Of course, they can’t do that.  Too many young people enjoy emailing and texting.  And everything else in the digital world.  They can increase the price of a car or a plane ticket without it affecting your every waking moment.  You can’t do that with the Internet.  For the American youth have a fever.  And the only prescription is more Internet access.  Or more cowbell.  And if you take that away to save something they don’t use that will come back to bite them in the buttocks in the first election following that action.  And that’s a problem.  Because the youth don’t care about past institutions or economics.  Their world is centered on them.  And if you mess with their immediate pleasures in life they will punish you at the polls.

So the solution to the USPS may have to be a real solution.  To address the real problems.  Which are simple.  There isn’t enough paper mail to support the current size of the USPS.  Or the current budget.  So you’re going to have to close some offices.  Some sorting centers.  And other infrastructure.  Most important of all you’re going to have to cut the payroll.  Letting people go.  And reducing their pay and benefit packages for those who stay.  Including those for retirees.  Like they do in the real world.  It’s either that or figuring out a way to put a stamp on an email.  Which past postmasters have thought about.  And are no doubt thinking about again.  If they can just figure a way to blame George W. Bush.  Or the Republicans.  Because young people already hate them. 

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