America in 2011 simply doesn't need to set aside half a million lifetime sinecures to deliver two pieces of mail a week which actually matter. The nation receives no value from a civil servant whose full-time job is literally to convince BoA not to go paperless.
It's a cool institution. Let's remember it in a small museum somewhere.
USPS: "Volume is down, we need to raise prices."
Congress: "Nope, sorry"
USPS: "Uhm, ok. We'll have to cut Saturday delivery then..."
Congress: "No can do, sorry"
USPS: "Well I guess we have to close a bunch of post offices at least"
Every member of Congress in unison: "Sounds great, but not in my district"
I'm a big fan of the USPS -- I've found them to be more reliable than UPS and FedEx by far and they're amazingly inexpensive to boot. They know what they need to do to fix themselves, but sadly it seems to take a crisis before Congress will get out of the way and just let them do it.
Sure, increase prices, and demand will fall, but it's not perfectly linear, and even a one cent increase boosts revenues considerably.
Here are some types of letters that won't fall under that:
* Birthday/Christmas cards. The postage is a small fraction of the card. * Legal-y letters, (e.g. when you make an offical complaint ), since the price of the stamp is again a tiny fraction of what you're complaining about. * Big padded envelops of A4 print outs of contracts or something (again, postage is insignificant)
Most utilities are switching to electronic billing, and/or charging for paper billing, so they are already getting rid of postage.
What other post is that price sensitive?
All you're arguing is that there are some pennies of increase which could increase revenue. Fine. That's not saving the post office.
Maybe not me and not by one cent but eventually, if they keep raising the prices, I would look at the price and think, "hmm this is getting kinda pricey. I wonder what UPS would charge to deliver this..."
USPS could double their first-class rates, and they'd still be undercutting the competition.
Except, you know, not really. You might want to read this: http://www.buffalonews.com/editorial-page/viewpoints/article...
Especially this bit:
What about those news reports of multibillion losses? Well, the $20 billion in losses over the last four years has nothing to do with what you’ve been told about a failing business model or obsolete mail. Here’s the real skinny: In 2006, Congress mandated that the Postal Service prefund future retiree health benefits for the next 75 years, and do so within a decade—something no other public agency or private firm does. The resulting annual payments run $5.5 billion a year, costing the Postal Service $21 billion since 2007. That’s the difference between a positive and a negative balance sheet, as it would be for virtually any entity facing a similar burden — if any did.
Remove that unreasonable obligation and the Postal Service would have been profitable.
Here's the related article from the Washington Post:
http://www.washingtonpost.com/politics/usps-proposes-cutting...
The union quite reasonably objects to cutting 120,000, because there's no need to. The postal service could be quite solvent if Congress -- which is not the union and not, so far as I know, acting at the union's behest -- would take away the idiotic mandate to fund 75 years worth of benefits.
In other words, this is something the union should oppose.
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L...;
I'm not familiar with general accounting practices, but it seems like if it didn't it would be potentially forcing the business to save far in excess of the funds necessary to meet it's obligations when the bill actually comes due?
A problem many govt agencies had over the past decade (even before the collapse) was too conservative of estimates on inflation and too exuberant estimates of interest. There was, for example, a federal policy (law, IIRC) passed early in the decade (2004-ish?) that many school districts and other agencies struggled with.
Like ubernostrum and bodyfour point out, the real story is much more complicated than this.
This isn't to say that the USPS hasn't made many terrible missteps along the way, or that they don't need to dramatically revise their business model: they have and they do.
But, the fact remains that they are critical to many aspects of American life, even for stalwart market-driven replacements [1]
[1] http://fedex.com/us/smart-post/outbound.html and http://www.ups-mi.net/packageID/, for example
I'm surprised that nobody has asked the question in this thread yet--why is the government still in the mail business?
Pure libertarians would say the government should only exist to protect citizens from each other and external threats. I see a somewhat wider role: government is where we pool our money to accomplish projects that are beyond the scope of any private institution, like building an interstate highway system.
But mail? The USPS is fairly unique among government entities in that it competes directly with industry: FedEx, UPS, etc. It might have been legitimate a hundred years ago, when delivering mail nationwide was an epic undertaking that no private organization could do, but today, the USPS is obsolete.
Oh, if only it weren't for all those undeserving, greedy workers! Clearly the problem is that they banded together to protect each others' wages, access to medical care, and dignity in the workplace! Thank goodness we have Businessweek to confirm our reactionary free market biases for us.
You guys must be loving these budget crises — they provide such a convenient pretext for attacking worker's rights and consolidating the power of the owning class while sidestepping the inherent contradictions of the system which caused those crises at the outset.
Surely, there's enough blame to go around.
(With an added helping for Congress, perhaps?)