The USPS is one of the great surviving examples of the blue social model and, not surprisingly, it is going down the tubes. Technological change has made its original mission of delivering vital information and private correspondence obsolete. Judging by what comes in through the mail slot at the stately Mead manor these days, the primary job of the postal service appears to be the delivery of the snail mail equivalent of spam.
Snail spamming is an expensive business to be in; the USPS loses billions of dollars each year so that advertisers can send out billions of pieces of spam at below market costs. In fairness, e-spammers should demand an equivalent subsidy; shouldn’t non-prescription Viagra dealers and Nigerian con artists get the same kind of help from a benevolent government that the Publisher’s Clearinghouse gets for junk mail?
Meanwhile, the cash short USPS is doing the Harvard Business School version of scrounging under the couch cushions looking for quarters to pay the pizza guy, and it thinks it has come up with a winner. It turns out, says management, that we are putting too much money away into the employee pension funds. Read the story at the NYT.
Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly…Congress is considering numerous emergency proposals — most notably, allowing the post office to recover billions of dollars that management says it overpaid to its employees’ pension funds. That fix would help the agency get through the short-term crisis, but would delay the day of reckoning on bigger issues.
Via Meadia is impressed. What we are mostly hearing these days is that state, local and federal officials have consistently put too little money away for pension obligations: something like $3 trillion seems to have gone astray at the state level. The USPS looks like a very strange creature indeed: so challenged at business administration that it is too broke to pay its bills, yet so prudent and far sighted that it has stashed tens of billions more dollars than it needs in the kitty for a rainy day.
The USPS has 653,000 workers and wants to cut that to 200,000 by 2015; hundreds of mail sorting facilities will be closed. There is no doubt that USPS workers are looking ahead to tough times. Perhaps the pension savings are coming because with two thirds of its employees on the chopping block, the USPS won’t be paying as many pensions in the future as currently projected.
I suspect more state and local governments will be taking this approach to their pension obligations down the road: the quicker you lay people off, the smaller your pension bill.
In any case, to look at the USPS is to see why enterprises built in the blue model heyday are falling apart. The special relationship with the government used to be a strength; now it is mostly a weakness: irrational congressional mandates and regulations tie it down in red tape. The large, unionized workforce used to provide job security to workers and a stable team of well trained and reliable workers for managers. These days, the workers don’t get security, and union rules accelerate the rate at which the whole enterprise is falling apart. The large integrated service that handled everything from birthday cards to parcels cannot match smaller, nimbler competitors that target market segments. Email providers have largely killed first class mail. E-readers are killing the periodicals business. Fed Ex and UPS can do a better job with parcels.
For most of American history, the Post Office was the only federal agency that directly touched the lives of most American citizens on a regular basis. It employed more civilian employees than the rest of the government put together. (Post office patronage was one of Washington’s main preoccupations.)
Now the collapse of the postal service raises questions about the rest of the government as well. How much of the rest of the government is doing jobs that private services could do better and more cheaply? How many government departments are so hamstrung by conflicting congressional mandates accumulated over decades that they can no longer be effectively managed? How many government departments are grotesquely overstaffed, with employment levels based on pre-IT business models and procedures? How much of the rest of the government is operating under civil service rules and union agreements that lock us into unsustainable patterns that will have to be broken — at great cost to the workers?
The slow motion collapse of the postal service, like some great prehistoric mastodon inexorably sinking into the La Brea Tarpits, deserves close attention. It is a microcosm in which we can see the collapse of a whole way of life; at one level it is a human tragedy of immense proportions. There are people in my family who built their lives around the security and stability of a Post Office career. They are now looking into the abyss, facing midcareer layoffs in the worst economic conditions since World War Two.
But at the same time, the decline of the USPS leaves the overwhelming majority of Americans better served than ever before when it comes to getting written information and packages from one person to another. The difficulties we face today are basically the good kind of problem: how do we make productive and profitable use of new freedom and flexibility? How can the falling price and growing ease of communications open the door to new jobs so that my relatives and others can move from blue careers to new ones?
Trapped between the decline of Big Blue and the still inchoate rise of whatever comes next, the millennial generation can be tempted to sit around with the old folks and despair. But is it really bad news that millions of millennials won’t have to work 40 years doing mind-numbingly repetitive tasks in factories? Is it really bad news that hundreds of thousands of grown human beings in the new generation won’t have to walk around town all day like human email servers delivering mail?
Let the robots, the machines and the chips do more and more of the scut work is my view. And instead of spending tens of billions of dollars keeping blue institutions on life support, let’s have a government that looks to reduce the obstacles and cut the overhead of the entrepreneurs who are going to develop the next wave of business and services to make life in the twenty-first century unimaginably more pleasant and convenient than anything our forebears ever knew.