After the Civil War Men became less Manly and the Federal Government became more Progressive

Posted by PITHOCRATES - March 25th, 2014

History 101

(Originally published February 12th, 2013)

Prior to 1900 the Role of the Federal Government was primarily to Provide for the Common Defense

In 1800 the new federal government didn’t do a lot.  It spent only about $11 million (in nominal dollars).  With 55% going to defense.  About 31% went to pay interest on the war debt.  About 2% went to the postal service.  And about 12% went to other stuff.  Defense spending and interest on the war debt added up to about 86% of all federal outlays (see Government Spending Details).

In 1860, just before the Civil War, spending increased to $78 million (in nominal dollars).  Defense spending fell to 37%.  Interest spending fell to 4%.  And postal service spending rose to 19%.  While spending on other stuff rose to 40%.  Just over 60 years from the founding the federal government had changed.  It was less limited than the Founding Fathers designed it to be.

In 1900 spending increased to $628.6 million (in nominal dollars).  With defense spending coming in at 53%.  The postal service at 17%.  Interest went up to 6.4%.  And other spending fell to 24%.  Again, defense spending consumed over half of all federal spending.  For the role of the federal government was still primarily providing for the common defense.  Running the postal service.  Treating with other nations.  And trading with them.  As well as collecting duties and tariffs at our ports which paid for the federal government.  There was a lot of graft and patronage.  And long lines for government jobs.  Primarily because government was still somewhat limited.  With a limited number of government jobs to reward campaign contributors.  But that was about to change.

The Progressives expanded the Role of the Federal Government in our Lives and made it more Motherly

The American Civil War killed about 625,000 men.  With an 1860 population of 31,443,321 those deaths amounted to about 2% of the prewar population.  To put that into perspective if 2% of the U.S. population died in a war today that would be approximately 6.2 million people.  And to put that into perspective the total population of the state of Missouri is about 6 million people.  So the American Civil War claimed a very large percentage of the population.  Leaving a lot of children to grow up without a father.  Which had a profound impact on the size of the federal government.

Prior to this generation American men were some of the manliest men in the world.  Tough and rugged.  Who could live off of the land.  Completely self-sufficient.  These are the men that made America.  Men who fought and won our independence.  Who explored and settled the frontier.  Farmers who worked all day in the field.  Men who dug canals by hand.  And built our railroads.  Men who endured hardships and never complained.  Then came the Civil War generation.  Sons who lost their fathers.  And wives who lost their husbands, brothers, fathers and uncles.  Who lost all the men in their lives in that horrible war.  These women hated that war.  And manly displays of aggression.  For it was manly displays of aggression that led to fighting.  And war.  Having lost so much already they didn’t want to lose the only men they had left.  Their sons.  So they protected and nurtured them.  Taught them to shun violence.  To be kinder and softer.  To be not so tough or rugged.  To be less manly.  And when these men grew up they went into politics and started the progressive movement.

The federal government was no longer just to provide for the common defense.  To run the postal service.  To treat with other nations.  To trade with other nations.  Run our custom houses.  No.  Now the federal government grew to be kinder, softer and more motherly.  The progressives expanded the role of the federal government in our lives.  Woodrow Wilson wanted to turn the country into a quasi monarchy.  With a very strong executive branch that could rule against the wishes of Congress.  The Federal Reserve (America’s central bank) came into existence during Wilson’s presidency.  Which was going to end recessions forever.  Then came the Great Depression.  A crisis so good that FDR did not let it go to waste.  FDR expanded the size of the federal government.  Putting it on a path of permanent growth.  And it’s been growing ever since.

They decreased Defense Spending and increased Borrowings to increase Non-Defense Spending

The federal government grew beyond its Constitutional limits.  And the intent of the Founding Fathers.  Just as Thomas Jefferson feared.  It consolidated power just as all monarchies did.  And that was Jefferson’s fear.  Consolidation.  Seeing the states absorbed by a leviathan federal government.  Becoming the very thing the American colonists fought for independence from.  So that’s where the federal government changed.  In the early 20th Century.  Before that it spent money mostly for defense and a postal service.  Now it spends money for every social program under the sun.  There is great debate now in Washington about reducing the deficit.  With the Democrats blaming the deficit problems on too much defense spending.  And too little taxation on the rich.  But if you look at the history of federal spending since 1940 the numbers say otherwise (see Table 3.1—OUTLAYS BY SUPERFUNCTION AND FUNCTION: 1940–2017 and A History of Debt In The United States).

Federal Spending and Debt

As defense spending (including Veterans Benefits and Services) rose during World War II non-defense spending (Education, Training, Employment, Social Services, Health, Income Security, Social Security, Energy, Natural Resources, Environment, Commerce, Housing Credit, Transportation, Community and Regional Development, International Affairs, General Science, Space, Technology, Agriculture, Administration of Justice and General Government) fell as a percentage of total federal outlays.  And the federal debt rose (federal debt is in constant 2012 dollars).  After the war defense spending fell to 50% while the percentage of non-defense spending rose.  And the federal debt dropped slightly and remained relatively constant for about 30 years.

This tug of war between defense spending and non-defense spending is also called the guns vs. butter debate.  Where those in favor of spending money on guns at the federal level are more constructionists.  They want to follow the Constitution as the Founding Fathers wrote it.  While those who favor spending money on butter at the federal level want to want to buy more votes by giving away free stuff.

Defense spending ramped back up for the Korean War and the Cold War during the Fifties.  After the armistice ended hostilities in Korea defense spending began a long decline back to about 50% of all federal outlays.  Where it flattened out and rose slightly for the Vietnam War.  After America exited the Vietnam War defense spending entered a long decline where it dropped below 30% of all federal outlays.  Reagan’s defense spending raised defense spending back up to 30%.  After Reagan won the Cold War Clinton enjoyed the peace dividend and cut defense spending down to just below 20%.  After 9/11 Bush increased defense spending just above 20% of all federal outlays where it remains today.

During this time non-defense spending was basically the mirror of defense spending.  Showing that they decreased defense spending over time to increase non-defense spending.  But there wasn’t enough defense spending to cut so borrowing took off during the Reagan administration.  It leveled off during the Clinton administration as he enjoyed the peace dividend after the defeat of the Soviet Union in the Cold War.  Non-defense spending soared over 70% of all federal outlays during the Bush administration.  Requiring additional borrowings.  Then President Obama increased non-defense spending so great it resulted in record deficits.  Taking the federal debt to record highs.

So is defense spending the cause of our deficits?  No.  Defense spending as a percentage of all federal outlays is near a historical low.  While non-defense spending has soared to a record high.  As did our federal debt.  Clearly showing that the driving force behind our deficits and debt is non-defense spending.  Not defense spending.  Nor is it because we’re not taxing people enough.  We’re just spending too much.  In about 50 years non-defense spending rose from around 22% of all federal outlays to 74%.  An increase of 223%.  While defense spending fell from 76% to 22%.  A decline of 245%.  While the federal debt rose 619%.  And interest on the debt soared 24,904%.  The cost of favoring butter in the guns vs. butter debate.  The federal government has been gutting the main responsibility of the federal government, defense, to pay for something that didn’t enter the federal government until the 20th Century.  All that non-defense spending.  Which doesn’t even include the postal service today.

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The Cruel March of Technology now has the USPS in its Crosshairs

Posted by PITHOCRATES - August 3rd, 2013

Week in Review

The United States is not the only country trying to figure out what to do with a dated institution long past its prime that few people use these days.  Something that was a large part of our parents’ lives.  But becoming more and more meaningless to the younger generations.   The Postal Service (see Canada Post needs to reduce home delivery by Daniel Fontaine posted 7/31/2013 on Vancouver 24 hrs).

The reality today is tech-savvy Canadians are no longer enamoured with their postal service, nor do they rely upon it to operate their daily lives. Thanks to online banking, e-mail, scanners and texting, Canada Post and its costly, outdated service look ancient by comparison…

Today, door-to-door mail service in many rural or even less-populated urban areas is no longer an option. Canada Post abandoned the front-door policy in new subdivisions, instead favouring group mailboxes…

… would it really impact those getting home delivery if they received their mail only twice a week? I doubt it would make a whit of difference — except perhaps to the bottom line of Canada Post. Reducing home delivery means paying fewer postal workers and a more efficient operation…

But don’t expect the public-sector unions and a majority of home-delivery recipients to let daily mail service go without a fight, even if the business case no longer exists to maintain this costly level of service.

The United States Postal Service (USPS) has been on life-support for a long time.  First it was email.  Then ecommerce.  Then online bill paying.  Then texting.  With FedEx and UPS delivering the things we buy on line with our tablets and smartphones what’s left for the USPS?  Besides junk mail?  Even the Social Security Administration uses e-banking.  The volume of mail has fallen so far that they cannot raise stamp prices high enough to cover their operating costs and fund their pension plan.  Unless they can get people to mail a postcard for $57.  Or more.

There used to be video stores all over the place.  As renting videotapes was a booming business at one time.  But the same reasons that have made the USPS obsolete have made the video store obsolete.  There are still a few around.  But it is hard to compete with vending machines renting movies at the grocery store.  And watching them over the Internet.  Where they can charge less as they don’t have the costs of a brick and mortar store to pay for.  And this is the problem the USPS has.  There are less costly and faster alternatives available.  Why pay to mail a letter that will take days to travel to the recipient when you can email something for free that arrives seconds after sending?  Even the video stores don’t have competition that bad.

Remember receiving a telegram?  Probably not.  Something else that has long since fallen by the wayside.  The telephone put that to rest.  Today people can call with bad news.  They don’t have to send a telegram.  Putting a lot of telegram deliverers out of a job.  But life went on.

So perhaps it’s time to pull the plug on the USPS.  Or greatly reduce the service.  Maybe twice a week.  For let’s face it, nothing good comes in the mail these days anyway.  Bills, junk mail and jury duty summons.  Things we just won’t mind waiting an extra week to get.

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After the Civil War Men became less Manly and the Federal Government became more Progressive

Posted by PITHOCRATES - February 12th, 2013

History 101

Prior to 1900 the Role of the Federal Government was primarily to Provide for the Common Defense

In 1800 the new federal government didn’t do a lot.  It spent only about $11 million (in nominal dollars).  With 55% going to defense.  About 31% went to pay interest on the war debt.  About 2% went to the postal service.  And about 12% went to other stuff.  Defense spending and interest on the war debt added up to about 86% of all federal outlays (see Government Spending Details).

In 1860, just before the Civil War, spending increased to $78 million (in nominal dollars).  Defense spending fell to 37%.  Interest spending fell to 4%.  And postal service spending rose to 19%.  While spending on other stuff rose to 40%.  Just over 60 years from the founding the federal government had changed.  It was less limited than the Founding Fathers designed it to be.

In 1900 spending increased to $628.6 million (in nominal dollars).  With defense spending coming in at 53%.  The postal service at 17%.  Interest went up to 6.4%.  And other spending fell to 24%.  Again, defense spending consumed over half of all federal spending.  For the role of the federal government was still primarily providing for the common defense.  Running the postal service.  Treating with other nations.  And trading with them.  As well as collecting duties and tariffs at our ports which paid for the federal government.  There was a lot of graft and patronage.  And long lines for government jobs.  Primarily because government was still somewhat limited.  With a limited number of government jobs to reward campaign contributors.  But that was about to change.

The Progressives expanded the Role of the Federal Government in our Lives and made it more Motherly

The American Civil War killed about 625,000 men.  With an 1860 population of 31,443,321 those deaths amounted to about 2% of the prewar population.  To put that into perspective if 2% of the U.S. population died in a war today that would be approximately 6.2 million people.  And to put that into perspective the total population of the state of Missouri is about 6 million people.  So the American Civil War claimed a very large percentage of the population.  Leaving a lot of children to grow up without a father.  Which had a profound impact on the size of the federal government.

Prior to this generation American men were some of the manliest men in the world.  Tough and rugged.  Who could live off of the land.  Completely self-sufficient.  These are the men that made America.  Men who fought and won our independence.  Who explored and settled the frontier.  Farmers who worked all day in the field.  Men who dug canals by hand.  And built our railroads.  Men who endured hardships and never complained.  Then came the Civil War generation.  Sons who lost their fathers.  And wives who lost their husbands, brothers, fathers and uncles.  Who lost all the men in their lives in that horrible war.  These women hated that war.  And manly displays of aggression.  For it was manly displays of aggression that led to fighting.  And war.  Having lost so much already they didn’t want to lose the only men they had left.  Their sons.  So they protected and nurtured them.  Taught them to shun violence.  To be kinder and softer.  To be not so tough or rugged.  To be less manly.  And when these men grew up they went into politics and started the progressive movement.

The federal government was no longer just to provide for the common defense.  To run the postal service.  To treat with other nations.  To trade with other nations.  Run our custom houses.  No.  Now the federal government grew to be kinder, softer and more motherly.  The progressives expanded the role of the federal government in our lives.  Woodrow Wilson wanted to turn the country into a quasi monarchy.  With a very strong executive branch that could rule against the wishes of Congress.  The Federal Reserve (America’s central bank) came into existence during Wilson’s presidency.  Which was going to end recessions forever.  Then came the Great Depression.  A crisis so good that FDR did not let it go to waste.  FDR expanded the size of the federal government.  Putting it on a path of permanent growth.  And it’s been growing ever since.

They decreased Defense Spending and increased Borrowings to increase Non-Defense Spending

The federal government grew beyond its Constitutional limits.  And the intent of the Founding Fathers.  Just as Thomas Jefferson feared.  It consolidated power just as all monarchies did.  And that was Jefferson’s fear.  Consolidation.  Seeing the states absorbed by a leviathan federal government.  Becoming the very thing the American colonists fought for independence from.  So that’s when the federal government changed.  In the early 20th Century.  Before that it spent money mostly for defense and a postal service.  Now it spends money for every social program under the sun.  There is great debate now in Washington about reducing the deficit.  With the Democrats blaming the deficit problems on too much defense spending.  And too little taxation on the rich.  But if you look at the history of federal spending since 1940 the numbers say otherwise (see Table 3.1—OUTLAYS BY SUPERFUNCTION AND FUNCTION: 1940–2017 and A History of Debt In The United States).

Federal Spending and Debt

As defense spending (including Veterans Benefits and Services) rose during World War II non-defense spending (Education, Training, Employment, Social Services, Health, Income Security, Social Security, Energy, Natural Resources, Environment, Commerce, Housing Credit, Transportation, Community and Regional Development, International Affairs, General Science, Space, Technology, Agriculture, Administration of Justice and General Government) fell as a percentage of total federal outlays.  And the federal debt rose (federal debt is in constant 2012 dollars).  After the war defense spending fell to 50% while the percentage of non-defense spending rose.  And the federal debt dropped slightly and remained relatively constant for about 30 years.

This tug of war between defense spending and non-defense spending is also called the guns vs. butter debate.  Where those in favor of spending money on guns at the federal level are more constructionists.  They want to follow the Constitution as the Founding Fathers wrote it.  While those who favor spending money on butter at the federal level want to buy more votes by giving away free stuff.

Defense spending ramped back up for the Korean War and the Cold War during the Fifties.  After the armistice ended hostilities in Korea defense spending began a long decline back to about 50% of all federal outlays.  Where it flattened out and rose slightly for the Vietnam War.  After America exited the Vietnam War defense spending entered a long decline where it dropped below 30% of all federal outlays.  Reagan’s defense spending raised defense spending back up to 30%.  After Reagan won the Cold War Clinton enjoyed the peace dividend and cut defense spending down to just below 20%.  After 9/11 Bush increased defense spending just above 20% of all federal outlays where it remains today.

During this time non-defense spending was basically the mirror of defense spending.  Showing that they decreased defense spending over time to increase non-defense spending.  But there wasn’t enough defense spending to cut so borrowing took off during the Reagan administration.  It leveled off during the Clinton administration as he enjoyed the peace dividend after the defeat of the Soviet Union in the Cold War.  Non-defense spending soared over 70% of all federal outlays during the Bush administration.  Requiring additional borrowings.  Then President Obama increased non-defense spending so great it resulted in record deficits.  Taking the federal debt to record highs.

So is defense spending the cause of our deficits?  No.  Defense spending as a percentage of all federal outlays is near a historical low.  While non-defense spending has soared to a record high.  As has our federal debt.  Clearly showing that the driving force behind our deficits and debt is non-defense spending.  Not defense spending.  Nor is it because we’re not taxing people enough.  We’re just spending too much.  In about 50 years non-defense spending rose from around 22% of all federal outlays to 74%.  An increase of 223%.  While defense spending fell from 76% to 22%.  A decline of 245%.  While the federal debt rose 619%.  And interest on the debt soared 24,904%.  The cost of favoring butter in the guns vs. butter debate.  The federal government has been gutting the main responsibility of the federal government, defense, to pay for something that didn’t enter the federal government until the 20th Century.  All that non-defense spending.  Which doesn’t even include the postal service today.

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Email and Electronic Bill Paying as well as Retiree Benefits are Bankrupting the U.S. Postal Service

Posted by PITHOCRATES - February 10th, 2013

Week in Review

The United States is not the only country having trouble with their postal service.  Email and electronic bill paying have taken away a huge source of revenue for the postal service in the US.  As well as in the UK (see Post Office will shut one in five branches after ‘losing £40m a year’ by Anna Edwards posted 2/7/2013 pm the Daily Mail).

The Post Office said they were losing £40 million [$63 million US] a year, so it was seeking retail partners for 70 branches, enabling them to stay in their current locations…

CWU general secretary Billy Hayes said the announcement was a ‘huge blow’ to the Post Office network, saying: ‘Staff will be in shock at the scale of what will effectively be the closures of Crown post offices across the country.

‘This move will have a huge impact on the high streets of small towns earmarked to lose their Crown post office.

‘These offices provide a dedicated specialist service to communities which will not be replicated by a window or two in a bigger shop…

‘It leaves huge questions about the future of the Post Office – how can it realistically deliver services for passport applications, identity services and a range of financial services while being dramatically pruned back? What does it mean for Metropolitan Police plans to move into London post offices?’

Robert Hammond, of Consumer Focus, said: ‘The Post Office network must change if it is to be sustainable.

‘These changes to Crown post offices are part of the biggest-ever programme of change to the network and consumers will want to see Post Office services that are high-quality and accessible, and offer the products and services they need. This is more important than the issue of who operates the post office itself.

People are using Royal Mail less in the UK.  So to save the postal service the UK is taking drastic action.  Basically privatizing as much of it as they can.  By partnering with other retail outlets that can cut the overhead cost of standalone post offices.  Some people may not be happy about these developments.  But it’s their own fault for using email.  And paying their bills online.  If they want to keep the postal service this may be their only chance.  Something the Americans should consider.  Based on the money they’re losing (see Postal Service loses less, but still in trouble by Jennifer Liberto posted 2/8/2013 on CNN Money).

In the three months ended Dec. 31, the agency lost $1.3 billion — considerably less than the $3.3 billion lost in the year-earlier period.

The service was hurt as the volume of first-class mail, which most consumers use to pay bills and stay in touch, decreased by 4.5.%, said USPS chief financial officer Joseph Corbett. But it got help as shipping and package volume for the busy holiday season increased 4% compared to the prior year.

Still, the service is in trouble. The key culprit remains a 2006 congressional mandate, under which it has to pre-fund healthcare benefits for future retirees. The USPS has been borrowing billions of dollars from taxpayers to make up for the shortfalls…

The Postal Service on Wednesday unveiled a plan to end Saturday delivery of mail, a move which is expected to save $2 billion a year, a drop in the bucket compared to the $16 billion loss the organization reported for 2012.

The US has about 5-times the population of the UK.  So if we multiplied their losses (in US dollars) by 5 it comes to $316 million.  A far cry from the $16 BILLION lost in 2012.  The U.S. Postal Service has a far greater crisis on its hands than the Royal Mail.  And it goes to that unfunded retiree health care plan that the U.S. government is now forcing them to fund.  Compounding the problem of email and electronic bill paying.

Employers who provide retiree pensions and health care benefits are supposed to put money aside for their current workers’ retirement.  In accounting terminology, this retirement expense should be expensed on the income statement (lowering profits) with a credit going to the balance sheet to show the money owed.  A liability.  When a person retires and starts incurring retirement costs the employer pays for these and debits that liability account.  Reducing it.  And credits a cash account.  Reducing it.  When an employer pays a retiree it should be entirely a balance sheet transaction.  Completely off the income statement.  With no impact on profitability.  This payment should reduce their cash balances.  As well as their liability account for retirees.  For as they pay their retirees it reduces what they owe their retirees.

The U.S. Postal Service didn’t do this.  They simply paid and expensed these retirement benefits as they incurred them.  Greatly understating their retirees’ costs.  And overstating their profitability.  Leaving a massive unfunded retiree health care liability.  Funding this massive unfunded liability is bankrupting the U.S. Postal Service.  Or rather these massive retiree costs they were hiding off the books are now bankrupting the U.S. Postal Service.  Unions want to go back to NOT funding these retirement costs.  And have the U.S. taxpayer bail them out.  Just like they bailed out the UAW retirement plans when GM and Chrysler went bankrupt.

The U.S. needs not only to privatize portions of the U.S. Postal Service like the UK they also need to privatize pensions and health care plans.  Like most businesses have.  Give employees money to put away for their own retirement needs.  For the old ways just don’t work anymore.

Funny how progressives hate all of the other old ways.  Like thrift, going to church, waiting until marriage before having sex, etc.  But pensions?  Retiree health care benefits?  No, when it comes to these things they’re all for going back to the Fifties.

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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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The British Government takes over Royal Mail’s Underfunded Pension Fund for Short-Term Deficit Reduction

Posted by PITHOCRATES - March 18th, 2012

Week in Review

The U.S. Postal Service (USPS) is going broke.  Why?  Two reasons.  People email and text today.  Even pay their bills online.  So they’re not mailing letters.  And every piece of mail the people don’t mail is lost revenue for the USPS.  Which can be a problem in an organization that has a high overhead.  And an aging and retiring workforce.  Which brings us to the second reason.  Pensions.  Just like in Britain (see Government to take on Royal Mail pension to pay down debt by Matt Falloon posted 3/19/2012 on Reuters).

Chancellor George Osborne will use a 28 billion pound ($44.36 billion) asset transfer from taking on the Royal Mail’s pension fund to pay down government debt next year, a government source said on Sunday.

The transfer of the state-owned mail company’s pension scheme – subject to European Union approval and due to be announced in next week’s budget – will reduce the government’s budget deficit next year, while the liabilities from the scheme, worth 37.5 billion pounds, will show up on the government’s accounts across the next two decades as they are drawn on by scheme members…

In the long run, however, there will be an overall cost to the Treasury from the transfer because the scheme’s liabilities outweigh its assets.

The Royal Mail is no different than the USPS.  People are emailing, texting and paying their bills online in Britain, too.  Which means neither 20th century postal service can make it in the 21st century.  They both need to reinvent themselves.  And fast.  But the LAST thing either nation should do is to bail out their postal service.  Not when each nation is struggling under record deficits.  For this will only delay the day of reckoning.  And make it far more costly.  Allowing greater losses to accrue.  In the face of growing pension payouts.

Short-term fixes for long-term problems is very bad policy.  It’s what we call kicking the can down the road.  It doesn’t fix any problems.  It only makes them more difficult to fix.  Burying the country under ever growing deficits.  And placing incredible tax demands on taxpayers not even born yet.   So you know the Americans will follow suit.  And bail out the USPS.  Because of late they seem to have a penchant for making bad decisions.

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The Current Volume of Mail only Warrants a Postal Service that is in Large Part Part-Time

Posted by PITHOCRATES - December 11th, 2011

Week in Review

Looks like the digital age is not causing problem just for the United States Postal Service (see Two thousand post offices to close and re-open with substandard service by Christopher Hope posted 12/11/2011 on The Telegraph).

Under plans that will be rolled out from June, one fifth of the branch network will be converted into new “PO Locals”, which offer a downgraded service within other commercial premises.

Customers will not be able to apply for driving licences, send post bulky mail overseas, pay car tax or make cash withdrawals using passbooks.

The changes will affect one in five of the 11,500 post offices across the country.

The profit in mail was in the mail.  But if people are talking, texting and emailing more than they are mailing, that’s a huge hit in the revenue stream.  And a cause for change.

Andy Burrowes, a postal expert at Consumer Focus, told The Daily Telegraph: “These are subtle but quite fundamental changes for customers concerned.”

He said the trials had found that often postal services were treated as a “secondary offer” by the shop or garage owner in PO Locals.

Instead of a dedicated counter for postal transactions longstanding post office customers would be expected to queue up behind other people buying milk and crisps in order to receive their weekly pensions…

Michelle Mitchell, Charity Director of Age UK, said: “Post offices are a real lifeline for many older people who use them as a ‘one-stop’ shop to access their pension, benefits, pay their bills, get advice and even in some cases socialise with others.

Ever see Green Acres?  An American sitcom from that aired from 1965 to 1971?  Sam Drucker ran the general store in Hooterville.  If you needed to buy anything you went to Sam.  And you went to Sam if you needed to mail a letter.  Because Sam was also the postmaster for Hooterville.  The little post office inside the general store was a secondary offering.  And it was like that through much of Rural America.

So the PO Locals is not a new concept.  And it may be the best way to fix the problem with ailing postal services everywhere.  Make them a secondary offering with part-time postmasters.  Because the current volume of mail only warrants a postal service that is in large part part-time.

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In another Example of how well Government Runs Things, the U.S. Postal Service lost another $5.1 Billion

Posted by PITHOCRATES - November 19th, 2011

Week in Review

More dismal news from the U.S. Postal Service (see Postal Service Logs Loss in Billions by JENNIFER LEVITZ posted 11/16/2011 on The Wall Street Journal).

The Postal Service said it lost $5.1 billion through Sept. 30 and that the loss would have hit $10.6 billion without recent legislation allowing it to delay a required annual $5.5 billion payment into a fund for future retiree health benefits. But the payment postponed by Congress is now due by Nov. 18, and the agency repeated that it could run out of cash by the end of fiscal 2012 without congressional action.

The Postal Service is an independent government agency whose operating budget isn’t funded by taxpayers, other than a subsidy to serve overseas voters and the disabled.

Postal Service heads said the agency could regain its financial footing by cutting annual costs by $20 billion by the end of 2015. The service “can become profitable again if Congress passes comprehensive legislation to provide us with a more flexible business model so we can respond better to a changing marketplace,” Postmaster General Patrick Donahoe said in a statement.

In other words, this government agency could become profitable again if it quits being a government agency.  For one thing we’ve learned is that the government can’t run anything well.

But everyone is sure that the government should get more involved in regulating business.  And taking over health care.  Because…, well, I’m not sure why.  Because everything they run ends up like the Postal Service.

Total mail volumes fell by three billion pieces, or 1.7%, from 2010. First-class mail, the agency’s most profitable product, continued its steady decline as consumers continued to pay bills online and communicate digitally. The postal service lost more than $8 billion in fiscal year 2010. It has already begun closing post offices and some 300 mail-sorting facilities.

If you’re getting all nostalgic over losing some postal services don’t demand another government bailout.  If you want this dinosaur so badly pay a bill through the mail.  Or write a letter to a friend instead of texting.  If you can’t do these things than just admit it.  This is the march of technology.  And progress.  And you don’t need the Postal Service as it currently is.

Instead of bailing out the Postal Service we need to reinvent it.  Get a little free market capitalism in it.  For capitalism can fix anything.  If we let it.  It’s given us better ways to pay our bills.  And to communicate with our friends.  Just think what the Postal Service could do if that kind of thinking happened there.

But that will never happen if we keep trying to save the thing fewer and fewer want to use anymore.  It’s like insisting we maintain video cassette recorders (VCRs – I spelled it out the long way so the young people knew what those letters meant) in the world of video streaming.  There is just a better way to do things these days.  And people are choosing the better way.

 

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The Two Americas: The Public Sector and Those the Public Sector Screws

Posted by PITHOCRATES - November 13th, 2010

Public Sector Living it Up While We Don’t

Who’s weathering the recession with the least amount of pain?  Why, the rich, of course.  And where do the rich live?  Well, according to Newsweek, seven out ten of the richest counties can be found surrounding our nation’s capital (see You live in nation’s richest counties posted 11/12/2010 on www.wtop.com).  Coincidence?  Or is it because many of those people living around Washington DC work in Washington DC?

Meanwhile, in California, voters rolled up a newspaper and swatted their public sector unions across their collective snout (see The Rollback Begins, and Investor’s Business Daily editorial posted 11/10/2010).

Last week’s elections didn’t just upend the Democratic Party in Congress. They also delivered a warning to the public-sector unions that form the core of the party’s support. In nearly all elections where public pay and benefits were an issue, the voters ruled that the era of ever-richer rewards for government was over: Say goodbye to fat pensions at 55. Get used to living like the rest of us.

Did they finally just have enough?  Or is it that they’re just finding out how much better they live than the people paying those salaries and benefits?

Then there’s the Bell effect. Earlier this year, struggling taxpayers learned just how well some public-sector employees were doing. The revelation of outrageous salaries in the California city of Bell was a catalyst for scrutiny of public pay in general. All kinds of data have surfaced since then about six-figure salaries and lavish overtime in places large and small. It’s clear that the governing class has not been shouldering its share of sacrifice in these tough times.

They had no idea how bad their government was screwing them.  When they did, they spoke at the recent midterm elections.  They said, “Bad public sector unions!  Bad!  [Deleted expletive] you and the horse you rode in on.”

Your Stimulus Program at Work: $27 Light Bulbs

And if the raping and pillaging wasn’t bad enough (and don’t you think it should be?), look at what we got for that excessive compensation.  Graft, corruption and incompetence.  Government construction contracts have long been a license to steal.  The vehicle of choice?  Change orders.  Contractors win bids by submitting quotes substantially below cost.  Once they get the contract, the raping and pillaging begins.  They submit grossly inflated invoices for extra work.  Bloomberg reports a typical example (see New Jersey Auditor Questions $27 Light Bulbs Billed Under Stimulus Program by Dunstan McNichol posted on 11/12/2010). 

One contractor sought $27 for light bulbs, while another billed $1.50 for similar items, according to the report and Assistant Auditor Thomas Meseroll. Another vendor charged $75 for carbon-monoxide detectors that it had provided to a different program for $22, the report said. Eells also cited $32,700 in auditing fees when “no services had been performed” and $69,000 in construction costs that couldn’t be verified.

There are honest contractors out there.  But it’s hard for an honest contractor to get any of these contracts when incompetent boobs in government make it so easy to steal.  Especially repugnant in this example is that we paid for this contract via the $814 billion federal economic-stimulus program.  And, sadly, we know this is not the exception to the rule.  It is the rule.

Neither Rain nor Sleet nor Competence nor Fiscal Accountability

Whenever government runs anything they do a piss poor job of it.  Take, for example, the U.S. Postal Service (USPS).  Sure, it’s an independent organization, but the House oversees it.  And provided it a $15 billion line of credit.  Which they just borrowed the remaining $3.5 billion available on it (and who out there really thinks that they will repay that $15 billion?  If you have your hand up, put it down.  You’re embarrassing yourself).  If it walks like a duck, quacks like a duck then it’s run by government.  And run poorly.  UPS and FedEx are doing fine.  In fact, they’re chomping at the bit to deliver some mail.  But the government says no.  Only government has the requisite skill and expertise to walk around and put things into slots (thank you Seinfelds Newman for that bastardized line).  And just how well are they doing over there at the USPS?  Not good.  They’re projecting bankruptcy unless government saves their sorry ass (see Postal Service posts $8.5 billion loss by Ed O’Keefe posted 11/12/2010 on the Washington Post).

The cash-strapped U.S. Postal Service delivered more bad news Friday, announcing it lost $8.5 billion in the fiscal year that ended in September. Without congressional action to change its obligations, officials said, the Postal Service likely will go broke at the end of fiscal 2011.

Railroads used to say they were in the railroad business.  That’s why a lot of them went belly up.  They didn’t know what kind of business they were in.  And because of that, their competition swooped in and took their customers.  Because truckers understood what kind of business they were in.  Transportation.  And they could compete against the railroads.  Stunned by this revelation, the railroads reinvented themselves.  Understood their role in the transportation industry.  They’re doing well now.  That’s what the USPS needs to do.  Find their role.  Because this can’t be your dad’s USPS anymore.  And they can’t keep trying to run it like it is.

The Only Thing Government is Good for They’re not Good AT

Whether it’s graft or incompetence, the end result is the same.  Government screws us.  That’s what the power to tax can do for you.  You can give yourself whatever pay and benefits you want.  You have no competition.  No one can sell better government services for less.  There is no restraint on their greed but their conscious.  Which, of course, they have repeatedly shown not to have one.

If you place a government employee into a room, without a doubt he or she will be the most unqualified person in the room.  They have no marketable skills.  They can’t run a business.  They just know how to buy and sell votes.  And how to get rich off of the public purse.  If you want to destroy a business, let government run it.  If you want cost overruns, let government run it.  If you want to cozy up with unscrupulous people who want to steel from the public purse, let government run it.  And yet who do we keep demanding to fix and run things?  Government.  It boggles the mind. 

We need government.  Some government.  As in ‘limited’ government.  Private business cannot provide some public goods and services.  Sanitary sewers, for example.  Or the fresh water system.  But it’s like Peggy Bundy said on the television show Married with Children.  She was lamenting about the sexual inadequacy of men.  She said, “The only thing they’re good for they’re not good at.”  And so it is with government.  At least, based on their track record.

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