Has the Postal Service Outlived its Usefulness?

Postal delivery trucks

Postal delivery trucks

Mitch Bendis

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For centuries, American culture was tied deeply to the post office. The national postal delivery system, although changed and amended several times, has remained intact since Benjamin Franklin was appointed the first Postmaster General in 1775. Since Franklin’s time in the post, the postal service has gone from a Cabinet-level department to an independent agency. As the holiday season approaches, once again we enter the busiest time of year for mail and package delivery. The weeks surrounding Christmas produce the frequent discussion about the role of the U.S. Postal Service and its future.

In order to form an opinion on the future of the USPS, one must point a skeptical eye at the current operations of the department. The USPS is known for its insistence on maintaining its near-universal monopoly on mail, despite a growing push to privatize and promote the competitive market. By analyzing its 2016 annual report to Congress, it is clear to see the unsustainable model the government wants to continue. The 76-page report is full of bright, colorful photographs of smiling postal workers delivering packages to Suburbanites.

However, taking a look at the finances nestled deep in the narrative, some ugly numbers begin to jump out. In the context of the agency’s goals for “delivering high-quality service,” “providing excellent customer service,” and “reducing total accident rate,” the USPS failed to reach every single goal. Some categories of delivering first-class mail failed to reach the goal by as much as 12 percent. While the USPS reported a controllable income of slightly over a half billion dollars, that was overshadowed by the real headline: an overall net loss of $5.6 billion.

In the real world of business, companies that have operated for nearly 50 years in their present state have no business losing billions of dollars. That is completely unacceptable behavior for an American institution such as the Postal Service; such a historical and storied icon does not deserve an embarrassingly slow death at the hands of government bureaucrats who refuse to embrace change.

The Postal Service’s grip on mail has been slowly slipping since the start of the digital age. In the 1970s, it was officially taken out of the President’s Cabinet and reclassified as a quasi-independent entity. Since then, the government has gradually reduced the day-to-day operations of the USPS, such as restricting mail delivery on Saturdays, and has allowed for more competition in the world of package delivery. This new competition has allowed companies such as UPS and FedEx to explode in market share and influence at the expense of the Postal Service.

However, the USPS’s artificial monopoly still exists in the world of mail. The USPS is legally the only institution allowed to deliver and regulate the flow of regular letters and correspondence. In a world that is increasingly online and more mobile than ever, the Postal Service finds itself trying to justify its monopoly ever more often. The Postal Service, they say, is dedicated to “universal service” of the American populace. In fact, they even erroneously claim that they are “the only organization that has the… capability to deliver to every address in the nation.” This idea of universal service has been a sticking point for the USPS for years, the idea that only the moral government agency is able to serve rural Americans who want nothing more than to receive their mail. This argument has been central to the USPS’s justifications forits existence for nearly 150 years, and it simply does not hold up to basic economics.

Currently, the USPS provides cheap delivery to rural areas using a process known as “cream-skimming”: They use the profits from urban deliveries to subsidize rural deliveries. The idea that private mail companies cannot adequately serve Americans in the country is ridiculous: UPS and FedEx have already proved they can deliver capably to rural areas. Since the Postal Service practice of cream-skimming is more often known as “price gouging,” private mail companies would not be allowed to engage in such a practice. This means that urban areas would likely pay less than the current USPS rate while rural areas would pay more.

When the Postmaster General sat on the Cabinet and the U.S. Postal Service provided a unique service, this country was a very different place. There were no cars, telephones, or computers, so mail correspondence delivered by the USPS was the most effective and sometimes the only option. Today, we live in a vastly different world. The need for paper mail has vanished entirely, and it is increasingly obvious that the USPS operates in an unsustainable manner. Still, the government insists on propping it up. If we want to save some money and restore faith in a once great institution, it is time to alterdramatically the role the Postal Service plays in today’s society.