The American Interest
The Middle East & Beyond
Published on February 13, 2013
Goodbye Saturday Delivery, Goodbye USPS

"That's all, folks!"

The announcement just a few days ago that, Congress willing (and it may not be willing), the USPS will suspend Saturday postal delivery, coming just days after the January 27 rate hike, reminds me of how scurrilous these guys are. It also reminds me of the post I wrote last year, and also of a terrific essay we published in The American Interest in 2009.

I called my August 1 post “How to Fix the U.S. Postal Service.” For the 2009 essay, I used my editor’s prerogative to title “The Imminent Death of the U.S. Postal Service.” Both titles suggested that something was seriously the matter and that bold steps needed to be taken to prevent disaster. Nothing bold has been done. Even the not-bold stuff the USPS leadership has done hasn’t worked very well. The result: In the fiscal year that ended September 30, 2012, the USPS lost $15.9 billion—about triple what it lost the year before.

Similarly, ending Saturday delivery, as dramatic as it may seem, isn’t nearly bold enough a move to save the USPS. Even with the most recent rate hike, it will only delay collapse (by how long is hard to say). If the USPS doesn’t develop new products in tune with new technologies, doesn’t ream out its union-enforced bloated middle management, doesn’t ruthlessly simplify its rate structure, doesn’t resize its physical asset base to align with its actual market, and doesn’t re-think a business model dependent in Ponzi-scheme fashion on revenue from “standard mail” (i.e., junk-mail advertising), it will surely collapse in due course.

Why has the USPS failed to do most of these things, and done only half-heartedly and belatedly what it has not failed utterly to do? As usual, Congress is to blame for a good chunk of the problem. It is Congress that has refused for the most part to allow the USPS to develop new product lines, as several other countries have done. Congress also insists that the USPS fully fund its too-generous legacy pension obligations, which virtually no over-promising large organization can do these days. The Georg Jensen essay noted above is particularly enlightening about the potential here, and gives concrete examples of what other national postal systems have been able to do.

But the USPS leadership has not needed Congress to screw up. For the most part, that leadership has been uninspired in recent years, to put it mildly. Taking their cue from the top, most of the higher-level operators below the top leadership have been about as risk-averse as any other “chair-sitters” in the entire Federal bureaucracy—which is really saying something. It’s only a slight overstatement to say that they only act when their backs are against the wall, and even then they do the least necessary to survive in order to beg and whine another day.

All of this used to bother me a fair bit. The U.S. Postal Service has a storied history going all the way back to Ben Franklin. And no stamp collector, which I am, can be devoid of all sentiment when it comes to the USPS—idiots though they have been in a philatelic sense, too, in recent years. But after I posted my August 1 essay I got a comment—one out of an unexpectedly large number—that arrested my attention. The commentator asked, in essence, what do we need the damned USPS for anyway? Let it die; no one will miss it. The private sector will pick up any slack.

At first I dismissed this clipped comment as ignorant, snarky and libertarian-beyond-the pale. This guy, I said to myself, has never heard of the universal service obligation of the USPS—that all American citizens, no matter how off-the-beaten-path they may live, are entitled to certain basic benefits. This helps makes of us a nation, after all. (The same principle applied to telephone service for many, many years, which is why, if you’re old enough to remember, you used to see lone telephone booths in the middle of nowhere in places like frozen North Dakota and desertified New Mexico.) So I began to exert myself thinking of other obvious reasons why we need a government, or, in the case of the USPS, a murkily semi-governmental postal service. Since all states have and have long had postal services, there must be good reasons why they have to exist.

Well, I exerted and exerted, and I came up with pretty much nothing.

For example, the U.S. government does have obligations under the Universal Postal Union, and getting stuff from and to other countries requires certain standard procedures for the sake of equity, efficiency and security. But it doesn’t really take a government organization to abide by these standards; it just requires government to license and inspect private jobbers doing that work, just as with UPS and FedEx international operations today.

And how many Americans living in remote places would be deeply inconvenienced without the USPS? I suspect that the answer is vanishingly few at a time when UPS and FedEx and email with attachments can reach just about everywhere, and, in the case of the commercial delivery services, for not a lot more money—and often less money—than the USPS charges. As for cities, there used to be private courier services in major cities and towns before the post office monopoly existed. Those private courier services can fill the void, and make good money by providing better service at less cost.

How many people would miss all the advertising trash they get in huge volume most days? Not me, and not anyone I know. Some printers would suffer, true; too bad.

The USPS going under would hurt magazines that still depend on 2nd-class mail rates, but there’s no reason to think that, in the absence of the USPS, a niche opened would not in due course become a niche filled. If there’s money on the table, someone will find a way to claim it and, as with urban courier services, competition over the riches to be had may lead to lower costs for those magazines and other businesses, as well.

In short, I have come to the surprising (for me) conclusion that if the USPS either cannot or will not reform itself into a viable organization, it should be allowed to fail.

How about the huge number of current USPS employees who’d be out of a job? Well, the follow-on commercial entities that replace USPS functions would be well advised to hire the best and most experienced of the lot. As for the significant numbers of parasitic professional slackers and HR-benefits “mining experts”, to hell with them.

Now, as I said in my August 1 post, it need not come to that. Even without innovative new products and a dramatically better management framework, the USPS could soldier on as a much smaller organization, once again a part of the Federal government as it was before the 1971 “reform”, suited to a smaller clientele. I’d prefer that outcome from both a nostalgic Franklinian and philatelic perspective. But if it can’t even manage that, and ends up committing organizational suicide, my attitude now is, “so be it; rest in peace.”

Of course, we can’t let the USPS go belly up too suddenly, not least because there are many millions of dollars worth of unused postage out there in the hands of private individuals, who bought it in good faith as a narrow-usage form of legal tender whose value is based on government guarantee. People need to be able to use that postage to pay whatever private entities replace the USPS to carry the mail (and the private entities can then redeem the used postage from the government at face value or at some agreed percentage of face value—say for ten years). Either that and/or people need to be able to redeem that postage at face value for cash from agencies of the Federal government. That’s only fair—just like when FDR called in all the gold coins in 1933 (except that people then would have been loads smarter to melt it or just keep it, which is not the case with most postage stamps out there today).

So who needs Saturday delivery? Who really needs the USPS at all?

  • John Burke

    The USPS has two services which generate more than enough business to sustain a competitive enterprise, slimmed down, shorn of half its employees and perhaps more than half if its facilities, modernized with technology, and refocused on those services: packages and first-class mail. It’s widely conceded that the package express business is a good one in which the USPS could compete successfully if it got its act together. Less noticed, despite the ongoing shift to email and other online communications, the USPS still handles nearly 80 billion pieces of first-class mail per year. That’s a lot of mail. If priced right and provided efficiently — more service, not less — the volume would be less but the rest could be very profitable (and you could sneak the declining volume of second-class mail for magazines in with the first class stuff). Junk commercial mail would have to go, along with a dozen other services that lose money, while the service should consider entering new businesses.

    But it is possible

    • Adam Garfinkle

      I agree, and I said in my blog that I would prefer a smaller, leaner servicer to its going belly-up. But Congress has not let the USPS enter new businesses up until now, and the USPS has not been willing to even think about the level of change you are describing.

  • n.i. silver

    In other words, the United States Postal Service is too big to mail.

    • Shnarbles Von Klieneschieflerbarmezergizhe

      You sir, deserve a medal for that.

      • Adam Garfinkle

        Well, hey, thanks; send one right over, Shnarbo.

    • Adam Garfinkle

      Very enjoyable response. Thank you.

  • Rabnif

    For those who are in big cities, it might seem the post office is unecessary. But if you live in Nowhere, Montana, or Alaska, or even one of the smaller Hawaiian islands, you would get killed if you had to pay the actual cost of mailing your letters. I think it is something people are willing to support, but, yes, it should slim down, and cut benefits, etc. It WILL be painful. But I think having a national postal service is basic, and that has been part of our nation and part of accepted government activity from the days of our Founding Fathers.

    • Adam Garfinkle

      I expressed those sentiments as well in my blog. But enough is enough…… We’ve seen the train wreck coming for years, and the Congress and the USPS leadership have failed miserably to respond. Hence the need to radical medicine.

  • Seipherd

    Real USPS reform would have them forgoing delivering spam every day to just delivering real mail, Netflix DVDs and Amazon/Ebay orders.

    On the other hands, I’d be good with the USPS continuing to deliver spam, if it was required to be on newsprint paper. Glossy colored spam doesn’t make good fire starter for the woodstove. Now that we’ve canceled the local liberal rag of a newspaper, we’re running short on firestarter and bird cage liner.

    • Adam Garfinkle

      I sympathize. We too have birds (2 cockatiels) and a wood stove. We still suffer the NYT and the WashPost, however, so we have plenty of liners and fire-starters.

  • RPD

    The first thing to do would be to lift the Post Offices monopoly on letter mail. Is there any real reason they should have it? Secondly lift congressional restrictions on the PO’s competitiveness, let the them fight it out with the private entities and either sink or swim.
    Besides that, certainly an accommodation can be made for delivery to remote citizens without having to support the entire leviathan that is today’s Post Office?

    • Mikey

      If you lift the USPS monopoly on “letter mail”, private carriers would pick off all the big city ‘profitable’ big city routes, and leave the USPS with just the unprofitable rural “Alaskan, New Mexico and Nevada” routes, making their financial situation even more dire.

      Keep in mind when studying this situation that the USPS is the single largest employer of Blacks in the USA.

  • Nick R

    Your post leaves out the fact that UPS and Fedex us the USPS for many rural deliveries to save themselves gas and money, so many more places then we realize would be left without communication and delivery service.
    Those places also tend to have spotty internet, and so sending an email might be more difficult or expensive than you imagine.

    You said “the universal service obligation of the USPS—that all American citizens, no matter how off-the-beaten-path they may live, are entitled to certain basic benefits.” exists, but you never gave an argument for abandoning it, other than “there aren’t many people excluded and I don’t care about them.” Do you have an actual reason?

    • Holly B

      Universal service obligation??? Not from where I’m sitting. I’m a veteran with service-connected disability in a semi-rural area (just outside of the state capitol). I receive essential medications from the VA through the mail. In recent months, our carrier has abruptly stopped delivering packages with no reason given despite our numerous complaints to the postmaster. If private services like UPS and FEDEX can do the job, the USPS should be shut down.

  • Nick R
  • George B

    Nothing urgent gets sent by the USPS. Reduce mail delivery from 6 days a week to 2 days a week and we could greatly reduce wage and fuel costs. The USPS could also rent out space on the top of their delivery trucks for payloads to drive test wireless networks, collect pictures for things like Google street view, look for street damage, use RFID to read utility meters, etc. Excess USPS real estate could be auctioned off to offset retiree costs. Lots of opportunities to cut costs and bring in new revenue.

  • http://AmericanInterest Thomas

    The Post Office will not die as it the employer of last resort.

  • David Gray

    How about a 10% paycut across the board. This means upper management too. I’m sure employees would rather have the paycut than lose their hours entirely.Keep the same service for the public.