I can remember when Congress “privatized” the postal service in the early ‘70s. It was heralded as a new quasi-governmental entity, designed to operate as a business, but with Congress to back them up if necessary. At that time, the price of first class postage had just gone up from 6 cents to 8 cents per letter—and we thought that was bad! I never would have believed that we would be paying 45 cents per letter today.
Most folks probably blame e-mail and the internet for the downward spiral of the postal service. The growing acceptance of electronic payments over the web using credit/debit cards (are we headed towards a cashless society?) was not foreseen four decades ago. These have certainly played a role, but there are other factors as well. I’d like to point out three other factors that I believe helped to shape the destiny of the USPS.
First came the emergence of the “non-federal” Federal Express (later known simply as FedEx). When President Nixon signed the Postal Reform Act creating the current quasi-governmental entity, the old Railway Express Agency (REA) was the main competitor for sending parcels. However, just as the railroads (and the REA) died off, a new and more powerful competitor emerged. In the mid-‘70s, the founder of FedEx came up with the idea of basing a package delivery system at Memphis (a mid-point for the continental United States), where his planes would fly each evening, the parcels would be appropriately sorted and routed overnight, and then be sent on their way by morning. It didn’t take long for Federal Express’s overnight success to be copied by UPS, DHL, and others eager for serving business with this quick turnaround delivery service. This siphoned off the lucrative parcel delivery service from the USPS, hurting their profits. It was much easier for FedEx to start by only focusing on major city business deliveries, when the USPS is required by law to provide its services to every single citizen in the country.
Secondly, because the USPS had started as a governmental entity, it inherited the civil service job protections and bureaucratic rules, as well as a powerful union. It was spun-off from government to act like a business, but was hamstrung by its existing labor-management relations. It is hard to have a business that is located not just in every state, but also in every small hamlet and township across the land. Too often unions and management decide that the way to compromise is to promise more money in the future, such as enhanced retirement benefits. It may not have seemed too extravagant at the time these promises were made, but they failed to take into consideration the changing landscape over time. We do not live in a steady-state universe, and the march of technology and inevitable change means that it is not easy to make long-range plans, so making long-range promises can come back to bite you.
Lastly, and perhaps most importantly in my mind, is the effect of the Direct Marketing Association—the junk mail senders. This powerful lobbying group represents every company that sends you unsolicited offers through the USPS. They put all their effort in pushing to keep mail rates low for them, thus resulting in a continuing increase in first class postage rates. Is it any wonder why we have gone from 8 cent stamps to 45 cent stamps, while bulk rate postage has not increased by a similar percentage? There is no viable organized lobbying effort to hold down first class postage increases and instead to encourage raises in the junk mail rates. We tend to just understand that the postage rates continue to increase—and throw away the junk that pollutes our mailboxes.
All three of these factors are often overlooked as everyone blames the internet for the decline of the postal service. Personally, I wish I had less junk mail in my mailbox, and more money in my pocket after buying stamps (the few times I have to buy them). By the way, I always enjoy going to the post office and buying commemorative stamps (a tactic I first learned in the 1980 John Anderson presidential campaign), rather than the basic stamps. However, I rarely need stamps, because I don’t send letters anymore (thanks to the internet) and most of my bills are paid electronically. I guess I am contributing to the demise of the postal service myself, but I will miss it when it is gone.