Imagine that, instead of the dinosaur of a postal service we have today—the product, among other things, of congressional insistence that no government outfit can compete with private business in lucrative new markets—we had an entrepreneurial, innovative public dynamo. In this other universe, the USPS was always on the lookout for new opportunities to build on its postal infrastructure, providing better services to the public while broadening its revenue stream.
USPSʹ, this better but hypothetical twin, greeted the arrival of the internet a generation ago with anticipation. Yes, it was obvious that email would be a threat to its core business of moving mail, but there would also be new possibilities for people to shop and do other business remotely. If a postal customer goes online to find a new product to clean his bamboo floor and decides to buy it, somehow that product has to find its way to its new owner. This is a job for the post office!
Driven by the urge to leverage its vast delivery infrastructure, USPSʹ years ago set up a website for remote shopping. They encouraged producers to list their goods by making it free; the postal service stood to profit from providing the logistics for any transaction, so there was no need to cream any revenue from the site itself, meaning no need to sell advertising. Of course, they hired top programming talent to make the site as searchable as possible and improve the online shopping experience for simplicity and transparency. The idea of allowing users to review and rate products was imported from other sites and found to be reasonably effective.
Over time, our hypothetical USPSʹ became something like Amazon, but Amazon wedded to the delivery infrastructure of the traditional postal service. No Jeff Bezos got to be a gazillionaire out of it, there was no crass commercialism and as a public institution it was amenable to democratic input. The health information and products site, co-managed with the National Institutes of Health, was a big hit.
Peter:
You do know most stuff shipped by Amazon and other companies if not shipped via USPS initially is delivered via USPS because UPS, FedEx, and other delivery services do not go to every place in the US while the USPS does?
USPS profitability is hidden due to having to allocate funds (~$ 5 billion annually) for 100% funding of retirement and healthcare for its employees something which does not occur in the private sector for companies like Amazon and UPS. Setting that aside would indeed show the USPS to be profitable. Furthermore, the PRC (Postal Regulatory Commission) which governs USPS private contracts with Amazon reviews every private contract the USPS has, it’s goal is to make sure those contracts are profitable.
Here is one of our writers (from time to time) and commenters on the USPS, former NC Postmaster Mark Jamison being quoted by CNBC “Amazon and UPS have been quietly fighting over the post office’s cost structure — long before Trump”:
CNBC Quote. “Former Postmaster Mark Jamison; ‘Trump’s claims are not true because the PRC is legally required to provide oversight over private deals, like the one it has with Amazon, and ensure they’re profitable. In its annual report last week (Apri8), the PRC said it has 846 private agreements and only 4 of those failed to meet the minimum cost allocation requirement (none of which were Amazon’s).’
‘If anything, Trump’s attacks have caused even more confusion to an already complicated matter. Besides the cost structure, there are many factors to consider before making any pricing changes, like the fact that the post office runs both a monopoly and competitive business, and is often treated as public infrastructure with a universal service mandate.’
‘It’s much broader than just attacking Amazon.'”
If anything both UPS and FedEx are whining about the increased revenue USPS has from its competitive sales which has grown from 11 percent to 30% of total sales. Then too a review of where USPS delivers to as compared to UPS and FedEx, USPS delivers everywhere in the US while FedEx and UPS limits their deliveries to more profitable locations. I think the solution is for UPS and FedEx to compete directly with the USPS in making those obscure deliveries to less ideal locations and absorb the cost. Think they will do so, I do not.
The USPS actually has to fund pensions 75 years out, so a lot of workers who will be drawing those pensions haven’t been born yet. In most companies, the pension funds are part of the leadership and shareholder exit fund. They’re perfect for looting.
The USPS remembers what happened when they tried to sell email in the 1980s. They got slapped down pretty quickly. Let’s face it, the private sector is a weak sister and can only innovate when heavily subsidized and given no alternative.
Why stop there?
The founding fathers thought communications of the time should be a public utility. Why doesn’t the USPS take over all ISP provision and negotiate with the owners of the bit pipes about what they will pay them?
But then the whole world of finance should be a public utility but it is a sin to discuss it on economic forums so I am taking common sense too far…./snark
Happy New Year acolytes of the God of Mammon!