Whitman news since 1896

Whitman Wire

Vol. CLIV, Issue 10
Whitman news since 1896

Whitman Wire

Whitman news since 1896

Whitman Wire

Postal Service Privatization

The United States Postal Service (USPS) ended the 2010 fiscal year with an 8.5 billion dollar loss according to the USPS fiscal report. Any business with this type of loss would soon go out of business, or at least need restructuring. Yet, the postal service, despite its cry for change, cannot because it operates under Congress.

Partially privatizing the postal system, or at least giving it more freedom to operate like a corporation, would allow profitability again. This would still accommodate some federal intervention, but allow it to operate relatively autonomously, such as Fannie Mae.

USPS does not receive any taxpayer subsidy and relies solely on postage revenue, but has a universal service obligation to deliver mail six days a week to all households.

The postal service currently has a money-losing model. It is outdated with decreasing mail volume, and according to the fiscal report, mail volume dropped 3.5 percent in the last year. People more often use the Internet to pay their bills and keep correspondence via test messages, Facebook and e-mail.

The closing of post offices beginning March 2011 identifies measures to cut costs, but many of the closures are rural offices, where the closure accompanies the familiar tragic tale of a town losing a connection to the outside world. Are there other measures to take to cut costs which will not disconnect rural America?

Technology has decreased use of mail correspondence, and cut down on circulars from merchants taking profits away from the postal system.

Partial privatization will allow USPS to take other cost cutting measures (possibly in retirement packages), flexibility in routes, prices, and general operations. These measures allow USPS to most importantly change and adapt without the hassle of congressional approval.

Yes, the operation under Congress prevents runaway first-class mail stamp prices. Still, the United States has some of the lowest stamp prices in the world: one small price to send a letter anywhere around the nation, no matter how remote, thereby helping to unify the nation.

A similar system of partially privatized postal systems works in Germany as well as Japan. It is the transfer of governmental control to a corporation. Possible reform includes price cap regulation (PCR) which encourages operating prices to change relative to economic inflation. This allows the government to set the operator’s prices.

USPS can update technology faster than with federal approval, especially in package tracking systems where UPS and FedEx have a large advantage. Operating autonomously can also allow workers to suggest to their supervisors ways to streamline operations similar to corporate models ubiquitous in American business culture.

Jobs will be saved because of these and other cost saving measures. Now, in this case, the federal control of the privatization can discourage layoffs–even though 105,000 individuals have already lost their jobs in the past year according to AOL News. The current business model does not allow the postal system to take other cost cutting measures; there is no flexibility except to eliminate jobs. By giving other options to cut costs, USPS will keep more workers. The key here is governmental checks on the postal system to ensure worker accountability.

No longer will Congress slow down USPS’s process to adapt. Currently any large change must travel through Congress, which is slow to pass legislation. USPS will be able to change instantly and compete with UPS and FedEx in ways similar to other industries with multiple corporations, as each adapts to the others’ actions.

Yet, I still advocate some governmental control, in fear that rural communities will not get mail because they don’t generate enough mail volume to turn a profit, and thus become more disconnected. I still advocate the universal order of equal access to postal services across the nation.

I am only afraid that without adapting to the times, we may not see the postal system around for the next generation.

Privatizing the postal service may allow it to stay around for a while longer and generate a profit without the closing of branches or the elimination of jobs.

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  • R

    RRFeb 4, 2011 at 8:08 am

    I agree, as a Letter Carrier for the last 16 years, the Postal Service is an outdated dinosaur. It is also “top heavy”, and run incompetently. Giving the Postal Service the license to reorganize and compete will allow it to continue. It must adapt to the times, unfirtunately, the powers that be will allow it to run itself into the ground.