Monday, September 05, 2011

Neither snow nor rain... nor default? The Postal Service faces a new hurdle

As if we haven't received enough bad news from the U.S. over the past few years, the United States Postal Service, in many ways the most approachable and frequent access point for most Americans to their federal government, is in dire condition. As reported by the New York Times  (Postal Service Is Nearing Default as Losses Mount), the USPS is near default. Saddled by a bloated employee base, federally mandated service standards that may not be relevant in today's electronic world, and declining revenues, the USPS appears to be another once proud part of the federal machinery that is simply broken.

It is hard to suggest there are easy answers. For one, postal employees and their unions will need to be flexible if there is to be a credible plan to rescue the USPS. Congress should also look at creative ways to allowing the USPS to enter fields that it has by statute been barred from in the past. That is not to suggest that we should allow the postal service to become a competitor to private businesses in a large sphere of commerce (though, based on their competitiveness vs. FedEx and UPS, other businesses in other fields have little to fear).  Creative ways to cut costs, as proposed, such as co-locating smaller post offices in supermarkets, are important, but won't create a lasting solution. Slightly lower costs with significantly lower revenues still creates a deficit.

Today's trends suggest that fewer and fewer pieces will be mailed every year going into the future. That trajectory seems clear. Clearly, there are times of the year like Christmas when the mail service sees a spike in volume.  Unlike at the Christmas Tree Shops, it isn't Christmas yearlong in the real world. With the electronic age, paper communication is a dying format. The newspaper business in the Americas faces the same decline, as do paperback books (NYT: The Dog-Eared Paperback, Newly Endangered in an E-Book Age).  As the most visible outpost of the federal government, the USPS could fashion itself as a complete portal to government affairs and communications, which it does not do very well today. Yet, even with increased purpose and renewed efficiency (assuming that is possible in such a bloated system), the postal service delivers mail and services to the vast outer reaches of the Union and many of the routes and tasks carried out by the USPS are inherently unprofitable and unlikely to ever be otherwise. 

Providing a federally subsidized mail service to Tin City, Alaska (from where former Alaska Gov. Palin might actually have been able to see Russia - see Slate's article) may simply not be of enough strategic importance to us anymore. At the heart of the matter, therefore, we need to come to a consensus on whether a federal mail service is important in this day; the electronic age -- and competition from private goods carriers -- have cast considerable doubt upon the answer. Unlike the proverbial check, the solution may just not be in the mail.

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