December 9 2011
USPS: A Test Case for Reform
Carrie L. Lukas
I've written before about the need for reform of the U.S. Postal System. It's absurd, frankly, and anachronistic that we have a federal government monopoly on mail delivery, of all things.
USPS's business model is a mess, revenues are in steep decline, and will continue to decline since mail delivery has to compete with other forms of communication (email). National Review provides a good overview of some of the options for reforming USPS, from complete privatization (the best case scenario) to some smaller, common sense reform that would at least shrink USPS and help put it on a less financially-disastrous path.
It's worth reading. Many may not think it's worth the time—after all, USPS financial problems may be significant, but a couple billion dollars seem like small potatoes when you are used to hearing about trillion dollar deficits and entitlement programs' tens of trillions of unfunded liability.
That may be true, but USPS is a good test case to see if Washington is up to the task of serious reform.
USPS is hardly a third rail of American politics in the class of Social Security or Medicare, but it has some of the same elements that make reforming any long-standing government institution a challenge. USPS has a large, over-paid, unionized workforce, which will fight the most important element of reform, which is allowing USPS to scale back its workforce. USPS is very visible, and as a result, many Americans simply like their local post office, the postman, and the idea of continued mail service. This is particularly true in rural communities and for older Americans (who are less likely to communicate on email and who look forward to the mail arriving each day, even if it is a pile of junk). Some influential industries, such as retailers and publishers, also have an interest in government-subsidized mail delivery, and will fight change.
So while from a rational, cost-benefit policy analysis perspective, USPS reform should be a no-brainer, it remains a huge political challenge. And in fact, because those interested in maintaining USPS's business-as-usual have greater reason to focus on the issue than do taxpayers who should support reform, but have many other issues on their mind, it will be very easy for Congress to punt and support some measure to allow the status quo to hobble along.
That may not be economic catastrophe, but it shows that we have a political system so bias in favor of status-quo big government that catastrophe is surely coming.