For decades now, the U.S. Postal Service (USPS) has been an icon of America’s lesser-hailed “can’t-do” spirit: unable to keep up with changing consumer trends, new technologies, a warming planet or a deepening economic crisis. For all their sensitivity to questions of environmental impact and cost, the USPS leadership in recent years might as well have given Hummers to their mail carriers to make their appointed rounds. As it turns out, the USPS and Hummer’s parent company, General Motors, have a lot in common these days. Both are currently generating multibillion-dollar annual losses, pushing products that ever fewer people want, burdening themselves with bloated payrolls and huge fixed-cost infrastructures, continuing to roll up enormous, unfunded pension obligations, and contending with some of the largest and most powerful labor unions on earth. Both, too, are expecting the American taxpayer to bail them out.
There are also some differences. We all know what an American automobile company is: a private corporation (or at least it was until recently). But almost no one knows what the USPS is. It’s easy to forgive that ignorance, however, and here is why.
The USPS is the successor to what used to be a full-fledged government department: namely, the Post Office Department, founded in 1792. It was so much a part of government that the Founders mentioned the rationale for it in the Constitution, and the Postmaster General was in the line of succession to the Presidency—last in line, yes, but in line all the same. So things remained until President Richard M. Nixon’s Administration reorganized the Post Office Department in 1970 in response to a debilitating strike by postal workers, establishing the newly branded USPS as a “corporation-like” independent agency. What did, and does, this mean?
For one thing, it means that, since July 1971, when the Postal Reorganization Act took effect, Postmaster General was no longer a cabinet-level position appointed by the President. Instead, the Act created a Board of Governors consisting of nine members appointed by the President. These nine, in turn, chose the Postmaster General. These ten, in turn, then chose a Deputy Postmaster General to serve as chief operating officer, making for a nice round number of eleven. In addition, the new arrangement called for a Postal Rate Commission consisting of five President-appointed members, the idea being that there needed to be some check on those who control the USPS’s financial operations. (In December 2006, the Postal Rate Commission became the Postal Regulatory Commission, with somewhat expanded powers, of which more in a moment.)
The result of the Nixon Administration’s postal reorganization was a platypus-like creation that is neither a Federal agency nor a private corporation, exactly. Nor is it a hybrid government-owned corporation, like Amtrak. The USPS isn’t really a corporation at all. Since the Board of Governors does not have the same sort of fiduciary responsibilities and liabilities as real corporate directors do, it amounts to window dressing. In fact, the USPS’s only real shareholder remains the U.S. government, and it has no actual board of directors other than Congress—more specifically the Subcommittee on the Federal Workforce and the Postal System of the House Government Operations Committee.
Congress, as we know, only deals with emergencies. It does not engage in long-range strategic planning or market research. It does not evince responsible financial behavior or exemplify corporate best practices of any kind—especially when it comes to oddball appendages like the USPS. And from this circumstance, as we shall see, all else follows.
Just as General Motors has in effect subsidized Big Oil by continuing to build gas-guzzlers in recent years, so has the USPS continued to subsidize Big Mail by shaping its operations to encourage what it calls, revealingly, “standard mail”—in other words, advertising junk mail. Most Americans are blissfully unaware of the degree to which the USPS subsidizes U.S. businesses by means of the fees it collects from ordinary postal customers. For example, if you wish to mail someone a large envelope weighing three ounces, you’ll pay $1.22 in postage. A business can bulk-mail a three-ounce catalog of the same size for as little as $0.14.
USPS management claims that “standard” mail helps it improve its scale economies through increased volume. Why? Supposedly because of efficiencies produced by the standardization of barcodes, Zip+Four postal codes and other machinability-enhancing schemes. If you look at the revenue stream from advertising mail, it does indeed look impressive, and up until 2008 it was growing at such a pace as to more than offset the loss in revenue from declining first-class mail volumes. But when you juxtapose next to that revenue stream the enormous transactional costs of maintaining a riotously complex rate structure and the technical support to service the USPS machinery, you quickly suspect a different conclusion—that standard mail, the costs of which are also generally tax-deductible for businesses, does not make money when the totality of factors is taken into account. The USPS’s standard-mail business amounts to a corporate subsidy, which helps to explain why Congress, insofar as its members understand this, typically doesn’t object to the status quo. Congress loves corporate subsidies, after all, for corporations have been known to contribute to electoral campaigns.
Actually, the current state of affairs is even worse than that. Not only do pennies shaved off the postage affixed to grandma’s letters get routed directly into the pockets of direct-mail marketers, some 20 percent of direct-mail advertising volume is comprised of credit card, mortgage and other financial offers (at least until the bottom fell out of the financial market—now this category comprises one of the key reasons for the recent precipitous decline in mail volume). So yes, the USPS has contributed in a subtle yet tangible way to our burst economic bubble.
Because first-class mail volume has been falling off over the past dozen or so years thanks largely to the Internet, standard-mail operations have become proportionately more important to the USPS. So it has gone to some lengths to cater to and to increase this aspect of its business. Lately it has gone so far as to offer its standard-mail customers special summer bargains! The lower the postage for bulk advertising mail, the more of it the USPS receives—to the tune of 100 billion pieces per year. The less businesses spend on each unit of standard mail, the more profits they have to plow back into even greater print circulation. This speaks to common sense: When you tax something, you get less of it, and when you subsidize something, you get more of it. That is obviously part of the reason the USPS now handles less first-class mail, because it is in effect taxed, and more junk mail, because it is in effect subsidized.
There are basically three problems with the standard-mail subsidy, at least one of which has now become obvious. While the standard mail revenue stream has helped keep the USPS apparently solvent, it has amounted to a huge gamble that the increases in volume—again, paid for in part by out-sized increases in other rates like first-class, parcel post and international mail—would go on essentially forever. This amounts to a Ponzi scheme, and as all such schemes do eventually, this one has now collapsed. Driven by Internet cannibalization and the economic downturn, mail volumes have been plummeting at a rate several times faster than the USPS’s own experts predicted in their worst-case scenarios. Advertising mail, most critically, is down more than 20 percent compared to last year.
The second problem, not so obvious, is that for every additional piece of standard mail the USPS has handled, it has probably lost money thanks to the enormous transactional costs it incurs. This is not mainly because its business model has driven away first-class mail customers (though of course it has done that, too); it is because there is a point at which the efficiencies of economies of scale tip over into the inefficiencies of gigantism. The USPS has long since tipped. It has a vast, fixed-cost infrastructure that includes a massive footprint of 38,000 buildings. Its bloated payroll of 800,000 employees—third only to the Department of Defense and Wal-Mart among U.S. employers—makes up a whopping 80 percent of its operating expenses. UPS and FedEx, by comparison, spend between 37 and 51 percent.
The USPS has tried to pare down its payroll, and with some success, but the power of the unions has made that very difficult. From senior management down to unionized letter carriers, USPS employees are grossly overpaid compared to any government or private enterprise of its kind, foreign or domestic. This is largely why, no matter how much labor-saving technology the USPS buys to service standard mail, it seems to have little impact on its aggregate labor costs.
It’s almost impossible to say how much of this infrastructure is devoted to subsidized standard mail. The data is mountainous, miscategorized, non-transparent and almost impossible for outsiders to lay full hands on. It is clear, however, that a disproportionate percentage of the USPS’s well-compensated middle managers are responsible for servicing the highly complex and machine-dependent USPS standard-mail operations. One can get a barn-side idea of the breakdown by noting that personal letters are now down to just 4 percent of the mail stream.
The third, even less obvious problem concerns environmental costs. The USPS transportation fleet of about a quarter of a million vehicles consumes prodigious amounts of gasoline and spews tons of emissions into the air. It is also vastly more resource-intensive to print, carry, deliver and dispose of paper-and-ink messages than electronic ones. But here’s the rub: The health and environmental costs of all that pollution are not paid by the USPS, just as air and water pollution often isn’t paid for by the industrial companies that produce it. It has been said many times before but is still worth repeating: In market economies, profits tend to be private and liabilities public, which is why all responsible governments in such economies make corporations pay taxes in part to fund the cleanup of the messes they make. But as we have seen, the USPS is not really a corporation and it has never paid any taxes, so it hasn’t contributed a nickel to cleaning up the environmental messes for which it is responsible. Had it been forced to do so, it would have gone broke years ago.
One can only assume that if U.S. taxpayers really knew how much they themselves are subsidizing the junk mail that annoys them daily, they would feel even worse about its cumulative environmental impact. So by all means let’s tell them. They might become angry enough to do something about it.
The Bernie Madoff zone: Those are the only words that accurately describe the range of numbers regarding the USPS’s unfunded liabilities, already totaling more than $50 billion. Clearly, the USPS is sinking fast. But it had already been sinking slowly for years. The reason, again, has been the growing unsustainability of its basic business model in the face of technological change.
The technology problem came to a head about four years ago, leading to the Postal Accountability and Enhancement Act of December 2006. The Act’s basic theme was forcing the USPS to start acting like a real business and learn to make a profit. It was supposed to do this by becoming more competitive in the services for which it did not enjoy a legal monopoly (like sending packages and express mail services), by using its legal monopoly to better effect and, finally, by developing new services and hence new revenue streams. The 2006 Act also enhanced the power and changed the name of the Postal Rate Commission to the Postal Regulatory Commission, as already noted, and it set limits on postage price increases, pegging them to match the Consumer Price Index (though the Act now allowed for annual adjustments instead of the prior limitation of adjustments only every three years).
More importantly, the Act reduced the USPS’s unfunded pension obligations by transferring $30 billion of it to the Federal employee pension program. In return for this largesse, the Act required the USPS to make scheduled payments for the next ten years to reduce, just partly, the more than $50 billion of unfunded postal workers’ pension obligations still remaining. This amounted to a bailout: $30 billion worth of relief on the USPS’s pension obligations, plus a $15 billion line of credit with the Federal Fund Bank to draw upon in case of emergency.
Postmaster General John Potter hailed the Act as a victory for postal workers, but he underplayed the potential threats posed by Internet cannibalization, the pressures of environmental sustainability, energy costs and a possible economic downturn. In 2008, this year and most likely the next as well, all of these threats have materialized with devastating financial consequences. Potter wasn’t the only one who didn’t see these calamities coming. Despite three postage-rate hikes over the past three years, few in Congress were paying much attention. After all, compared to the breathtaking losses being racked up by Fannie Mae and Freddie Mac, who had time to think about the mail?
Now the problem can no longer be ignored. With the economy collapsed, direct-marketing buy rates in a nosedive and the entire standard mail Ponzi scheme now blown up, the day of reckoning is here. Many experts predict that the USPS will far exceed a $3 billion loss this year and that, even with all the cost-cutting measures the USPS has already put in motion, a $6–12 billion loss is more likely. Any loss of over $7.8 billion, which now seems probable, will exceed the $15 billion maximum Federal loan ceiling from the 2006 Act, leaving the USPS unable to meet its financial obligations. In sum, the USPS is about to go broke, and if it does, the phrase “going postal” may acquire a whole new meaning, describing not violent behavior but rather something that just vanishes from one-time ubiquity, just like the telegram was displaced by the telephone after World War II.
As Lord Rutherford once said, “We’re out of money; it’s time to think.” USPS senior management has been thinking, but the best plan they have been able to come up with so far is to hand taxpayers the bill yet again. A better idea would be to recognize the failure of USPS senior management, and to dump them, just as the White House recently did with the senior management of General Motors.
The ever-optimistic USPS senior management, starting with Postmaster General Potter himself, continues to make delusional predictions that mail volumes will magically recover once the economy stablizes.1 It is hard to find any industry expert outside of the USPS management or its union leadership who agrees with Potter’s math, or the logic underlying it. Potter thus continues to rely on Federal Funds Bank loans to make up USPS losses, now treating it as a working capital account rather than as the emergency backup it was intended to be. As of the end of fiscal year 2008 (September), only two years on, the account was already half-way drawn down to $7.2 billion. Depending on how the rest of FY 2009 plays out, the USPS could bust through the $15 billion aggregate credit limit this year, but is already certain to bust through the $3 billion annual drawdown limit. Either eventuality will render it insolvent before the end of the fiscal year unless Congress legislates a bailout.
To get a sense of how intense USPS delusions have been lately, consider the USPS’s own 2009 Integrated Financial Plan, published in November 2008. It projected a 4 percent drop in mail volume in 2009. In fact, mail volumes have dropped between 9 and 19 percent in the months that followed the report compared to the same period last year. One reason is that the companies that send out almost all of what is delivered by the USPS—the ubiquitous standard mail—are switching to electronic alternatives faster than ever, and there is no reason to expect them to reverse course. Indeed, the reach and cost-effectiveness of electronic substitutes will only grow, particularly as utility companies move their billing operations from mailboxes to email inboxes. This means that the USPS will never return to what its senior management still views quaintly as “normal.” It also means that no amount of incremental tinkering with the present system and business model will save the USPS. The confluence of forces affecting the Postal Service cannot be addressed except by replacing its rapidly eroding revenue streams with new, innovative ones and significantly reducing its bloated fixed-cost infrastructure.
Postmaster General Potter has so far been incapable of providing such a vision in the face of a society that now clearly values email and text-messaging more than paper mail. Up to now, Potter has always played the victim—victim of the economy, growing health-care costs, ecological awareness and, most of all, the Internet. The time for playing victim is over. Many have called for Potter to step down, but the Board of Governors has so far opted to let him complete the two years left on his contract. President Obama should therefore now appoint a new Board of Governors who would be more willing to take a different approach.
What new approaches might new blood in the USPS take? The most sensible way to start fixing the USPS mess is to stop distorting the market with subsidies. New USPS leadership should bring the postage rate tables into better alignment with actual costs. A fairer system that did not amount to a corporate subsidy would make standard-mail rates much more expensive; one would therefore expect a lot less of it. That would be good, for it would allow the USPS to radically downsize its fixed-cost structure and realize dramatic economies of scale from a dramatically simpler rate structure.
This won’t happen easily: Corporate and union lobbyists would compete to murder any such idea in its infancy. Politicians who have no interest in standing up to those lobbies are instead proposing “Do Not Mail” registries, which would allow homeowners to decline receipt of standard mail. (The first of these, a non-mandatory registry, passed on March 31, 2009, in San Francisco.) Do-not-mail registries tap into average citizens’ exasperation with the seemingly endless flow of junk mail into their mailboxes. But despite their popularity overseas, they are not a political slam-dunk in this country. Do-not-mail registries face counter-pressure from powerful postal union, printing, paper and direct-marketing lobbyists. So while do-not-mail registries may be a popular notion, they won’t solve the problem.
We need an entirely new way of thinking about the delivery of private communications in the digital age. The real core of the problem is the USPS’s congressionally mandated Universal Service Obligation (USO), which the postal service claims it needs a monopoly to maintain. The USO is an international norm: Most countries have followed the same model, ensuring that all citizens get to mail a letter, regardless of the distances involved, for a stamp priced the same as anyone else’s; that all citizens have reasonably convenient access to post offices; and that all citizens get the same level of service (for example, mail delivery six days a week in the United States). The basic idea of the USO is good, but the way we go about fulfilling it needs to change.
Just as Congress no longer needs to fund the placement of pay phones throughout rural America in order to ensure universal service for phone calls, the USPS need not continue to follow the same century-old model of universal service. The vast majority of Americans now have an Internet connection or Internet-capable cell phone. Since the end of the 20th century, American society has become remarkably mobile and digital. Many people now use multiple residences and have multiple offices; some are effectively nomadic, staying in constant touch with friends and colleagues through their BlackBerries, iPhones and laptops. In such a world, it makes little sense to require postal carriers to continue to dutifully drive past each and every home in America, every day except Sundays and Federal holidays, leaving (mostly junk) mail in unsecure mailboxes.
UPS and FedEx already use dynamic routing systems to make daily stops at only every twentieth home or business. As a result, despite suffering from the same higher energy costs and reduced volumes plaguing the USPS, UPS and FedEx still make billions in profit every year, pay their corporate income taxes and fully fund their pension obligations, all without the benefit of a constitutionally granted monopoly. The USPS cannot do any of these things.
If the USPS were a real corporation, it would have a real board of directors looking out for the interests of shareholders, employees and customers, it would pay taxes, and its executives would be held accountable for its fiscal performance and service standards. That is why some critics have been arguing for decades that the USPS should be truly privatized, as the postal operators in many other industrialized nations have already been (such as Germany’s Deutsche Post and the Netherlands’ TNT). Other operators have given up their monopolies over the past two decades (100 percent of Europe will be fully liberalized by 2013), many of them selling equity stakes to the public or to large private equity firms to raise capital. They have also entered new lines of business such as mailroom and document management, banking, logistics and a variety of retail services. In Italy, for example, you’re more likely to buy a cell phone at the post office than anywhere else.
The USPS, on the other hand, has held on to its monopoly with a death grip, rendering it at least psychologically unable to diversify its revenues and thus prepare for a viable post-Internet future the way its cousins abroad have done. The USPS is far less restricted from entering new lines of business than most people realize—especially after the passing of the 2006 PAEA legislation that actually encourages it to do so. Indeed, many foreign postal operators have gone seriously high-tech and green, such as that of Denmark, where last year more than 100 million billing statements were delivered to and paid by consumers electronically through Danish Post’s eBoks website. Denmark isn’t the only innovator in this regard. From New Zealand to Belgium, there are many examples of transformation in the name of environmental sustainability and forward thinking. With their mail volumes being only a fraction the USPS’s (Americans receive 55 percent of the world’s total mail volume), these partially or fully liberalized postal services are for the most part well-managed, profitable and growing businesses.
Privatizing the USPS in a way that keeps the USO intact would not be simple, but it’s not impossible either. Its infrastructure and employee bases are so massive and it carries such a large Federal and pension debt that finding private investors brave enough to plow money into it may be challenging. If the USPS had a visionary management team like those of the Dutch, German, Austrian, Danish, Finnish, Swedish, Italian, Swiss, Australian or New Zealand postal operators, and if it had managed to create new revenue streams to offset, if not exceed, the revenue losses from traditional paper mail delivery, it might have earned a shot at attracting the capital required to survive. But the current economic environment appears to have nearly dashed those hopes. President Obama will very likely have to address a USPS bailout soon, and this bailout will be about as pretty politically as the Detroit one.
The only other conceivable way the USPS might attract enough private equity investment to privatize would be if Congress were to transfer the remaining pension fund liability over to the Federal pension program, adding another $50 billion to future taxpayers’ debt load. That would not be a popular move, to say the least, but it is one that the Gordon Brown government is thinking about in the case of Royal Mail, where a similarly debilitating pension liability overhang is one of the biggest obstacles standing in the way of selling a portion of England’s national postal operator to a private operator or equity investor.
If a bailout is inevitable, what should it look like? What reform strings should be attached to it?
Yet again, the USPS senior management has its own bad ideas. So far it has relied solely on relatively minor cost-cutting measures such as eradicating the billions it used to spend on overtime pay. It has also cancelled many new automation programs that might have led to higher long-term operating efficiencies, because it can no longer afford the short-term investments in them. So, with his back up against the wall, Postmaster General Potter pleaded in his January testimony to Congress to relax some of the USO requirements—namely, asking for discretionary authority to reduce mail delivery to five times per week in some parts of the country and to close some unprofitable branches (each of which resides in some reluctant Congressman’s district). Federal regulators and academic experts all testified, however, that these actions would make barely a dent in the USPS’s financial woes and would also likely cause a further decline in mail volume. All told, the projected $6 billion in cuts that Potter plans to make in FY 2009 will offset less than half of the fiscal losses the USPS is expected to generate this year.
Others have suggested tightening control over the unions. TNT, the publicly traded Dutch postal operator, recently announced that it had negotiated with union leaders a 15 percent reduction in compensation for its workers, upset shortly thereafter by a surprising union vote vetoing the move. TNT instead reduced their headcount and continues to pay dividends to its shareholders. FedEx reduced both pay scales and headcount in order to ensure its fiscal health, but unlike UPS and the USPS, its employees are not unionized.
Democrats are particularly mindful of whose support they will need to get re-elected in 2012, and few believe that they’ll have the backbone to tackle the postal unions head on. Meanwhile, according to a USA Today/Gallup poll taken immediately after Postmaster General Potter’s January testimony, 57 percent of Americans indicated they would rather see the USPS drop a delivery day and close unprofitable post offices than keep jacking up postal rates (which, of course, they have since done, too) or get a Federal bailout.
There is a better way: Call it the Swiss model. The Swiss Post is a world leader in postal business-model innovation, with operations in 16 countries across three continents. Despite its home-country’s population of only seven million, it generated $9 billion in revenue and earned an impressive 10 percent profit last year. It has aggressively rolled up, partnered on or internally launched a variety of Internet-ready businesses that offer services such as online banking, document imaging, electronic document signature, electronic postage that costs less than paper stamps, and, in partnership with competitor TNT, international shipping. Its annual report states that it generated 20 percent of its revenues from outside Switzerland. It is still 100 percent government owned, and its profits go into the country’s general fund, but it acts more like a private corporation that answers to shareholders.
That’s not all. The Swiss know that paper mail volumes will continue to decline and that the Internet isn’t going away. Swiss Post has been the first in Europe to introduce a service to deliver mail originating on paper via the Internet, called Swiss Post Box.
Swiss Post Box uses technology from Seattle-based Earth Class Mail. The service emails multi-sided color images of incoming envelopes and parcels to their recipients as soon as they reach the first sorting center nearest where they were collected by the post office. While the mail and parcels are held in an automated inventory cache, recipients decide which mail pieces they want to have opened and scanned to a PDF document inside an ultra-secure scanning center at the Post Office, where confidential documents for Swiss banks are also scanned. They can also opt to have their mail delivered physically to the address on the envelope, redirected to another address, shredded, recycled or archived for safekeeping. Three-quarters of the mail ends up leaving that first sorting center bound straight for recycling, either after being scanned to PDF or discarded unopened by the customer’s choice. The energy- and resource-savings implications are obvious.
Technology such as this can reshape the USO to fit the mobile, digital, multiple-location lifestyles of today’s citizens and consumers. As more homes and businesses switch to this form of mail delivery, postal operators may be able to switch to a dynamic routing model for delivering smaller volumes of paper mail, much like FedEx and UPS use, thus wasting less fuel stopping at mailboxes.
Many countries are now considering offering a Swiss-style service. Earth Class Mail, too, has announced that it is working on enabling mailers to inject electronic postal mail directly into users’ online accounts, thus eliminating the paper-delivery cycle altogether for those mailers who choose that route. After all, almost every piece of paper mail delivered today starts out as an electronic file that is first printed on paper, then delivered through an energy-intensive and polluting process, and in some cases even reconverted to an electronic document once the recipient gets it. Why go from digital to paper only to go back to digital? Why not skip the paper stage altogether?
In the future these electronic files could be directly transmitted to recipients through the Internet to government-certified online mailing addresses—safe from exposure to hackers, viruses and other risks of open email. To get legal delivery status for a Swiss Post Box account, a Swiss citizen merely must go down to a local Swiss Post branch and have the appropriate identification papers verified.
The ecological impact of delivering postal mail electronically (as distinguished from simple email) would be even greater as certified electronic postal mailers joined the party. And the postage that the post office could earn from secure electronically injected items would be much more profitable than today’s first-class mail, to say nothing of advertising mail. If small nations such as Switzerland and Denmark can successfully deploy online postal mail, why can’t the most powerful and technologically advanced country in the world do it, too?
Earth Class Mail isn’t alone in developing electronic alternatives to traditional mail delivery. In late 2008, a Southern California-based startup called Zumbox launched a service that creates an online mailbox corresponding to every U.S. street address, allowing individuals and businesses (the latter pay a 2-cents-per-address fee) to send digitized postal mail to those addresses. Small countries like Finland, Holland and Belgium have also introduced their own proprietary systems for e-invoicing using the Danes’ eBoks service as a model. Whether they adopt commercially developed systems like Earth Class Mail or Zumbox, or develop their own alternatives to paper mail like eBoks, forward-looking postal operators are realizing that their long-standing business models need radical revamping.
As with many failed and failing government organizations, the team that got you into a mess isn’t likely to be the team that gets you out. The USPS needs to be torn down to the studs and re-invented. Here is what to do, and the order in which to do it:
1. Replace the USPS senior management team with proven corporate executives who know how to run a $76 billion company guided by vision and accountability to stakeholders.
2. Negotiate with the unions to gain the concessions necessary to get the USPS’s labor costs in line. To be competitive with private operators, the USPS will need to pay its workforce less than the $42 average hourly wage they receive today. Between layoffs and renegotiated compensation and benefits, payroll costs must fall from 80 percent of USPS expenses to no more than 60 percent.
3. Invest in modernizing the sorting centers to gain long-term efficiencies, but tighten up the network so that unprofitable centers and post office branches are closed.
4. Normalize the pricing differences between first-class, second-class (publications) and standard mail (advertising) to reflect actual delivery costs, and end the ratepayer and taxpayer subsidization of Big Mail.
5. Redefine the USO so that it makes sense in the 21st century. Use available online technology that enables the Postal Service to know when customers don’t need delivery or would forego a default delivery option to have their mail delivered electronically, redirected elsewhere or recycled.
6. USPS vehicles shouldn’t have to stop at every house, every day. As consumers switch to all-electronic delivery of postal mail, modify the USPS’s delivery fleet with in-vehicle dynamic routing systems such as those used by UPS and FedEx.
7. Follow the international model for liberalization. Having competitors in the marketplace will force the USPS to become more efficient and truly competitive. Customers will have a choice, just as they do today with phone-service providers. Better yet, move to privatize the USPS before that option disappears.
There is even more we can do in the fullness of time. The Internet is still an inherently lawless medium. Emails are fraught with all sorts of malfeasance, from viruses to financial scams. The USPS could play a major role in assigning legal online addresses for all citizens and businesses and providing a secure Internet-based channel for trusted communications. We only need to look across the pond for examples of how to do this. Such an adaptation would fulfill its USO even as it acknowledges changes in society and the effects of pollution and energy consumption.
By rightsizing the infrastructure and implementing secure and legal “electronic postal mail delivery” like other countries have done, the USPS could become profitable and sustainable within two years, preserving far more jobs than if it continues to operate as if the Internet has not changed the world forever. Darwin and Schumpeter are looking down on the USPS today to see if it becomes a victim of natural selection and creative destruction, or a beneficiary. As things stand today, its survival prospects don’t look so good.