Obamacare and the United States Postal Service to have a lot in Common

Posted by PITHOCRATES - May 29th, 2011

Obama Slams the United States Postal Service (USPS)

Back during the Obamacare debates, way back in 2009, the public option was still on the table.  President Obama tried to soothe people’s worry about the public option putting private insurance out of business.  He said it was ridiculous to worry about such a thing.  Because federal monopolies can’t do anything well.  And that private business will always provide a more superior service than a government provided service.  Strange way to advance his case for more government involvement in health care.  But he said it.  And gave an example of a poorly run government monopoly providing no threat whatsoever to its private counterparts.  The United States Postal Service (see The President and the Postal Service by Ed O’Keefe posted 8/11/2009 on The Washington Post).

“I mean, if you think about it, UPS and FedEx are doing just fine, right? No, they are. It’s the post office that’s always having problems.”

President Obama is right.  FedEx and UPS are doing just fine.  And, just as he said, it is the USPS that is having the problems.  As always.  To quote Obama.

FedEx is Profitable

FedEx’s shipping volume in their fiscal third quarter set a record.  And their revenue and margins are looking pretty good, too (see FedEx offers strong outlook for this quarter and beyond by Lynn Adler, Reuters, posted 3/17/2011 on msnbc).

FedEx Express volumes were at an all-time fiscal third-quarter high, and “Ground is knocking the cover off of the ball with both volume and yield gains,” [John Koczara, portfolio manager at AMBS Investment Counsel] said.

“We expect continued positive yield trends to improve revenues and margins in the fourth quarter and in fiscal 2012,” said Alan Graf, [FedEx] chief financial officer.

One thing for sure, it doesn’t look like the public option, the USPS, is giving FedEx any problems.  Confirming what Obama said.  FedEx is doing just fine.  Score one for the private company.

UPS is Profitable

Now, FedEx is good, but there is someone even better.  And it isn’t the USPS (see UPS Profit Tops Estimates, Sees Record in 2011 by Reuters posted 2/1/2011 on CNBC).

United Parcel Service, the world’s largest package delivery company, reported a quarterly profit that beat estimates and forecast record-high profits in 2011, sending its shares up 4 percent.

Doesn’t look like the public option, the USPS, is causing any heartburn for UPS.  Unless they consume too much champagne and caviar courtesy of their record profits.  Score another one for the private company.

The USPS is Sucking Air

With FedEx and UPS booming you’d think that the USPS would be booming, too.  So are they?  Are they posting record profits in the latest quarter?  Not quite (see Sun is setting on rural post offices by Kevin Murphy posted 5/28/2011 on Reuters).

The postal service is losing $23 million a day and is $15 billion in debt, its allowed limit, said Rich Watkins, spokesman for its Mid-America District. The service has cut about 100,000 positions through attrition in the past three years and consolidated sorting and other operations, he said.

The postal service is in such bad financial condition that it may not be able to make a $5.5 billion prepayment for future retiree health benefits due September 30, Postmaster General Patrick Donahoe told a Senate subcommittee last week.

Unlike the private companies, FedEx and UPS, who are doing very well, the USPS is sucking air.  That’s private company: 3; government monopoly: 0.  Which is pretty amazing considering that they have a legal monopoly enforced by the federal government.  Only they can deliver letters.  Unfortunately, they do that so inefficiently that postal customers have found alternatives.

The U.S. agency has lost business to electronic mail and to private sector competitors like FedEx and the United Parcel Service.

That’s the problem with a monopoly.  Always trying to do something the way they did it a generation ago.  Meanwhile, people have turned to email and text messaging.  And paying their bills on line.  Because it’s cheaper.  And easier.  No postage required.  No envelopes.  No trips to the post office.  No muss.  No fuss.  And you can send pictures and video in today’s digital world.  You can’t do that with first class mail.  At least, not with a lot of additional cost.

Of course, they can compete with FedEx and UPS.  Because you can’t send packages electronically.  But the one thing the USPS can do well they still can’t do as well as FedEx and UPS.  We need to fix the USPS.  It needs to be reformed.  To meet the needs of today’s generation.  And tomorrow’s.  But that’s one thing that a government monopoly just can’t do well.  Change.  Or be efficient.  Or provide a service that people demand.

The Public Option will be a lot like the USPS

President Obama was right in 2009.  The government can’t do anything well.  And when they compete against private industry they fail miserably.  In fact, these government run enterprises are so bad that only government intervention can maintain their monopoly.  For awhile.  Because when something is that bad, even government intervention can’t prevent the inevitable.

Which begs the question why did Obama use the USPS-FedEx/UPS analogy to promote the expansion of government into the private health insurance industry?  What’s his argument?  Don’t worry about the public option.  It’ll be as horrible as the USPS that it won’t harm the private insurance market.  But we will pattern the public option after the USPS.  Because only the public option will provide affordable, quality health care.

Yes, the public option will be that remarkable.  It’ll be both horrible and the best thing since sliced bread.  Depending on who the government is talking to at the time.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , ,