Thursday, March 7, 2013

The Postal Service Should Deliver Mail Once a Week

Photo Credit: Andrew Harrer/Bloomberg/Getty Images
The U.S. Postal Service is having some problems implementing its preferred policy reform of ending Saturday mail delivery, with Congress voting yesterday to force the agency to keep six-day delivery for the rest of the fiscal year. The Postal Service is rapidly losing money in part because of a terrible law mandating pre-paid retiree benefits, but mostly because its revenues are falling as society shifts to the internet for its communication services.

Congress' policy restrictions place the Postal Service in an impossible operating environment: the agency is expected to fund itself like any business and compete for customers, but its ability to make tough workforce and strategy choices is restricted. Given that most governments in the world have some form of mail delivery service, identifying an optimal set of policies shouldn't be that difficult: do a comparative analysis and identify what works and what doesn't. Unfortunately political incentives and ideology get in the way.

The employee union and customers have a direct stake in maintaining the status quo. In the absence of a powerful coalition supporting reform, lawmakers wishing to raise money and public support vote to maintain the status quo. This dynamic is timeless and won't change.

The philosophical arguments against reform, however, might be more amenable to change. The basic purpose of the Postal Service is to deliver mail. In the past, the "public good" nature of a national postal service was clear. Fostering a national identity, providing communication services to individuals living in remote areas, and establishing a ubiquitous and tangible example of the fruits of the social contract are all benefits that the market would undersupply on its own. Add to that the coordination benefits of having a single network provider and the argument for a strong national postal service seems pretty good.

But times have changed. Global corporations like FedEx could presumably provide similar services given the opportunity. Civic virtue and national identity are well-established and unlikely to degrade in the absence of daily mail delivery; indeed cheap and easy access to the internet is almost certainly more beneficial in this regard. By subsidizing the communication and parcel delivery needs of people living in rural and remote areas, the economic and environmental benefits of urbanization are reduced. Subsidizing the lifestyle of people without cheap and easy access to computers and the internet to such a large degree reduces the demand for investments in telecommunications infrastructure, and probably reduces the political demand for better internet and telecommunications policy.

Photo Credit: ThinkProgress
Many defenders of the current Postal Service operation agree with all that, but respond by basically saying poor people without cheap and easy access to the internet deserve communication services to maintain their connection to society and the economy. I agree. But it's important to be clear on what this conception of the Postal Service really means: providing a sufficient floor on communications capacity for all citizens is a far cry from the original purpose of government mail delivery. This conception is basically a welfare policy akin to the food stamps program. And the food stamps program is a good idea! Helping poor people is a good idea and certainly falls under the government's jurisdiction! But if that's what the Postal Service is for, we ought to recognize that it's a much narrower mandate than what the bureaucracy is currently geared towards providing.

Seen in this light, the Postal Service is a costly agency with an extremely low target efficiency. Perhaps just giving people money to purchase computers or internet connections would be a more effective. Perhaps directly providing computers or internet connections would be better (to allay the inevitable concern that recipients might spend the money on other things). Maybe increasing the funding and quality of public libraries would get the job done. Perhaps merging public libraries with the Postal Service is the answer--most parcels could be picked up rather than delivered and the combined real estate footprint of both institutions means most households would have nearby access. Why not allow private businesses to become middle-men in the mail delivery process: in New York City, picking up mail and parcels from a local Chinese takeout restaurant or bodega would probably be incredibly convenient for a huge share of the population.

At the very least, direct mail delivery to individual households should be reduced to one or two days a week. Paired with other reforms aimed at speeding the transition to internet-based communication services, this reduction would allow more public resources to flow to those who truly need them.

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