By striking a seven-year deal with Federal Express the United States Postal Service (USPS), a government protected monopoly, has taken a large step toward privatization. This move is both an acknowledgement of the anachronistic nature of the USPS and a welcome step toward a more efficient, fully privatized postal system.
Combined with the Private Express Statutes of 1845, the Postal Code of 1872 established a complete government monopoly over the delivery of first and third class mail.
However, exemptions in the law allowed private carriers, such as Federal Express, to enter into the mail delivery business and compete with the USPS in the delivery of overnight mail and packages toward the end of the 20th century. Additionally, companies such as Mail Boxes Etc. offer consumers alternatives to government controlled P.O. boxes.
The introduction of competition has been good for consumers but not for the inefficient USPS. This year alone the USPS is on track to lose over $1 billion; a fact more striking given that the USPS competes with its private counterparts at an unfair advantage. For example, it is illegal for any competing service to charge less than three times the USPSs rate for first class mail.
Furthermore, the USPS doesnt pay state or federal taxes, doesnt have to comply with most government regulations, and has the power to impose costly regulations on its rivals. Even with all these advantages, the USPS tapped Federal Express in order to stay competitive in todays mail market.
The lack of efficiency that has enabled private carriers to outperform the USPS shows up in some very telling statistics. Leslie Paige of Citizens Against Government Waste estimates wasteful spending by the USPS at $1.4 billion annually, with $84 million between 1995 and 1997 spent on ventures wholly unrelated to mail and between $300 and $400 million spent on increasing name recognition of a recognized government monopoly.
The Postal Rate Commissions finding that nonproductive time constitutes 28.4 percent of mail-processing labor costs may be explained by the fact that the ratio of managers to workers in the USPS is 1 to 10, compared to 1 to 15 for Federal Express.
The Commissions finding of excessive nonproductive time is hardly news to consumers who literally line up to see USPS employees protected by featherbed union contracts meander about on break while one or two on-duty clerks staff the service windows.
Staggeringly, for 30 years labor has absorbed 80 percent of the USPSs budget despite the infusion of more efficient equipment.
The increasing transmittal of documents electronically through fax and e-mail strengthens the case to follow the lead of New Zealand, Sweden, Germany, and the Netherlands and end the USPSs mail monopoly.
Although the USPS did not extend its monopoly to e-mail in the 1980s, it is developing services to guarantee e-mail security, potentially establishing a beachhead for federal e-mail regulation. This despite the fact that commercially available encryption software already does an exemplary job of protecting private messages from unauthorized eyes. Privatizing the USPS would help keep the blossoming realm of e-commerce deregulated and efficient.
There are many ways to privatize the USPS. One way is to sell the USPS. All its relevant assets could be auctioned off, getting the U.S. government out of the mail delivery business altogether.
Alternatively, as New Zealand did in 1987 and Sweden in 1994, Congress could repeal the federal postal monopoly statutes, allowing private companies to compete with the USPS in any service venue, preferably on equal terms.
Or the federal government could transform the USPS into one or several, privately managed, joint-stock companies as Germany did in 1995.
Since becoming the first European nation to privatize its postal service in 1989, the Netherlands has seen its postal employees become the most productive in all of Europe.
In the last 30 years, we have seen competition brought to government-protected cartels and monopolies in the airline, trucking, and the telecommunications industries. Deregulating these industries has increased efficiency and brought consumers higher quality products and services at lower cost.
In this era of de-monopolization, the role of the USPSa government monopoly for well over a centurymust be reexamined. The European Union has set January 1, 2003, as a deadline to bring competition to postal services in its member nations. If the U.S. beats that deadline by privatizing the USPS, consumers will win as well.