Category Archives: Post Office

American Letter Mail Company

open quoteThe American Letter Mail Company was started by Lysander Spooner in 1844, competing with the legal monopoly of the United States Post Office (USPO) (now the USPS) in violation of the Private Express Statutes. It succeeded in delivering mail for lower prices, but the U.S. Government challenged Spooner with legal measures, eventually forcing him to cease operations in 1851.close quote (Read more)

Hightower Lowdown — The Stupidest Article Ever Written About the Post Office

When I first began studying free market economics, it felt exciting to find the faulty assumptions in news articles. I assumed they mattered.

Now, I don’t even bother, unless someone refers an article to me, like this one: The Post Office is not broke — it hasn’t taken any of our tax money since 1971.

The reason I don’t bother, is because correcting the media, even a very small part of it, is a lifetime of work. Furthermore, I don’t even think they’re trying to be factual, or logical, or accurate. There is so much smug, hysterical, illogical leftist propaganda that I sometimes believe their strategy is to create reality by repeating it, and simply drowning out dissenting voices.

For whatever it’s worth, I make my case:

1) The article starts by pointing out how few things cost 50 cents or less and then triumphantly declares that a stamp is one of them. This does not prove that the Post Office isn’t broke. It’s an empty jingle. Many things cost less than 50 cents, like pens and pencils, but they are packaged for convenience. Many things are also free, like email or online translation tools.

The mention of prices would be a great segue into a discussion of WHY nothing costs less than 50 cents anymore. I’ll only say that the reason is because government is destroying our money. It’s easier to debase a currency than it is to tax. To do this effectively, you need to resort to force against people who attempt to use something other than the government currency. Debasing only works where people are FORCED to use paper money.

2) The article then then says “UNPROFITABLE. So what?” I think the author just punted the title of his article. When you’re unprofitable, and you’ve spent all your reserves, you are broke. That’s the definition of the word. He writes that the FBI, CDC, FDA, State Department, and Pentagon don’t worry about profit either. I think all these agencies are disasters as well.

Yahoo News reported that this year, the post office is losing $8 Billion: http://news.yahoo.com/never-write-more-well-hardly-anyone-does-173946650.html.

You may think that losing money is inevitable because the task of delivering little pieces of paper is so essential and complex, but this history of the post office is the history of using brute legal force to put cheaper, more efficient, for profit delivery companies out of business:

– In 1971, a federal district court prohibited a private firm from carrying Christmas cards in Oklahoma on the basis that the plaintiffs, a postal employees union, suffered ‘significant loss of work time, overtime, employment benefits. . and morale.’ The court concluded that private delivery of Christmas cards would be a ‘widespread public nuisance.’ The result was that the public suffered slower service and higher costs to support postal workers’ ‘morale.’

– In 1976 in New York, a pack of Cub Scouts tried to raise money by delivering Christmas cards: Postal Service lawyers ordered them to stop, and threatened the ten-year-olds with a $76,500 fine. A New York Times editorial regretted that the Postal Service’s carriers were not as fast as its lawyers.

– In 1978, the P.H. Brennan Hand Delivery Service offered same-day delivery of mail in Rochester, New York, for 10 cents a piece; the Postal Service could not guarantee overnight delivery even for 15 cents. The Brennan Service operated during snowstorms (when the Postal Service did not even try to deliver), never lost a letter, and never had a complaint. When U.S.P.S. attorneys closed in on the Brennans, Rochester lawyers provided them with a free legal defense. But the Postal Service persuaded a judge to issue a ‘cease and desist’ order on account of the ‘threat to postal revenues.’ (http://www.cato.org/pubs/journal/cj15n1-1.html)

It is illegal to do for profit, what the government loses $8 billion / year doing.

3) The article uses government failure to criticize free enterprise. It says the Nixon presidency in 1971 created some sort of reform (details unspecified), which apparently was free market reform (this part is important), and it failed . . . therefore . . . . . . wait for it . . . . . . . . the free market doesn’t work.

As you can see from the above examples, the government was still threatening private individuals with prison. When you’re still threatening to put people in jail for offering a service, then the reform is NOT a “free market” reform.

Also, pay attention to the logic. Any failure which even has the name free market associated with it is used without examination to condemn the free market. Forget the fact that the reform had nothing to do with allowing people to offer a service for profit. On the other hand, colossal failures of government are met with profound analysis and tinkering and promises that things will be better after a little more work, a little more power is given to the agency, a little more taxes are collected. The article ends on such a note, suggesting changes in schedules, a Postal Banking System, wine delivery, sale of fishing licenses.

4) “Since 1971, the postal service has not taken a dime from taxpayers.” Also, “the Service actually produced a $700 million operational profit [time period unspecified]” I don’t understand this. Yahoo News reported that this year, the post office is losing $8 Billion: http://news.yahoo.com/never-write-more-well-hardly-anyone-does-173946650.html. The New York Times reported losses of $6.5 billion in the first half of 2011: http://www.nytimes.com/2012/05/19/opinion/nocera-free-the-post-office.html.

This newletter is L-Y-I-N-G.

5) The article goes on to to espouse about the general importance of of the post office, it’s proud history, and schemes which will definitely, gloriously, inevitably restore the service to it’s rightful glory.

My reaction is this: If you insist on taxing me to fund this antiquated, inefficient, bureaucratic leviathan, at least stop threatening to put people in jail who want to deliver little pieces of paper for profit.

(FED EX and UPS are only allowed to deliver packages. If you bring them a letter, they’ll immediately put it in a package. Even permission for this reckless privilege — a for profit package delivery — was hard fought. Thankfully, our overlords allowed it.)

U.S. Post Office set to lose $8 billion this year

I guess it’s true that there are some thing which only government can do. For example, no private firm can ever come close to losing 8 billion dollars and stay in business.

open quoteThe Postal Service says the decline in letter-writing is “primarily driven by the adoption of the Internet as a preferred method of communication.”

The loss of that lucrative first-class mail is just one part of the agency’s financial troubles, along with payment of bills via Internet and a decline in other mail. The Postal Service is facing losses of $8 billion or more this year.

The loss to what people in the future know about us today may be incalculable.

In earlier times the “art” of letter writing was formally taught, explained Newbold.

“Letters were the prime medium of communication among individuals and even important in communities as letters were shared, read aloud and published,” he said. “Letters did the cultural work that academic journals, book reviews, magazines, legal documents, business memos, diplomatic cables, etc. do now. They were also obviously important in more intimate senses, among family, close friends, lovers, and suitors in initiating and preserving personal relationships and holding things together when distance was a real and unsurmountable obstacle.”close quote (Read more)

Postal Service Is Nearing Default as Losses Mount

open quoteThe United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances. close quote (Read more from nytimes.com)

See Also:

Post Office sues Cub Scouts to maintain monopoly

Welcome to Post Office Health Care

America’s health-care system has problems — all traceable to government intervention — but it could be worse. And if the so-called reform emerging in Congress is enacted, it will be worse.

The nub of the plan is that everyone must have health insurance and that all but the smallest employers should provide it. If someone doesn’t have coverage, he’ll be penalized. Low-income people will be subsidized by the taxpayers. Government will determine what’s covered, which will set off a lobbying frenzy by providers of “indispensable” services and products. (This already goes on in the states, where “mandated benefits” include coverage for drug and alcoholism treatment, in vitro fertilization, and other less-than-widely-used services.) So people will be forced to have coverage they may not want.

Insurers will not be able to deny coverage or charge higher premiums to people already ill, that is, with so-called pre-existing conditions. The mandate to insure everyone and charge the same price regardless of health means that some will be forced to subsidize others. People of whatever income level whose insurance premiums would have been lower without the mandate will have to spend more because risk-based premiums will be illegal. That is not insurance; it’s welfare. (Read more from campaignforliberty.com)

Obama and the Post Office

Fantastic Lew Rockwell essay on campaignforliberty.com:

“Writing in The State and Revolution in 1917, Vladimir Lenin summed up the economic aim of socialism as follows: ‘To organize the whole economy on the lines of the postal service….’

Incredible, isn’t it? After centuries of treatises and miles of paper and tubs of ink, this is the great historical turning point: government employees carrying sacks of paper mail from house to house, and operating at an economic loss.

It’s fascinating how it all comes down to the post office, again and again in the history of public policy. And so it is in our time, with Obama’s admission/gaffe/slip concerning the post office and its analogy to what he wants to do with health care.

Here is a transcript of his spontaneous talk at a high school. A student raised a question about the government’s provision of health services and its impact on private services.

‘How can a private company compete against the government? My answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining, meaning that taxpayers aren’t subsidizing it, but it has to run on charging premiums and providing good services, and a good network of doctors, just like private insurers do, then I think private insurers should be able to compete.

‘They do it all the time. If you think about it, UPS and Fed-Ex are doing just fine. It’s the Post Office that’s always having problems…. there is nothing inevitable about this somehow destroying the private marketplace. As long as it is not set up where the government is being subsidized by the taxpayers so that even if they are providing a good deal, we keep having to pony up more and more money.’

Now, these comments are nothing short of incredible. The Post Office has been on the loser list for many decades. Most recently, it has been included on the GAO’s high-risk list, increasing its debt to $10.2 billion and incurring a cash shortfall of $1 billion.

Note that the post office is not being shut down for this mess. On the contrary, it is being subsidized not only with tax dollars but, most importantly, with laws. Title 18 (I.83.1696) says that ‘Whoever establishes any private express for the conveyance of letters or packets’ can be fined and jailed. Moreover, the law (39.I.6.606) says that any letter delivered by unlawful means can be seized and stolen by the government. It is immune from antitrust action and criminal liability. [emphasis added]

. . . .

Therefore Obama is right in a strange way: private enterprise has triumphed and government service is terrible. Everyone knows this. It is utterly preposterous that a government mail service exists at all. There is no theory of economics that supports it. There is not now nor has there ever been any economic reason for government postal service. It should be immediately abolished and private enterprise should take over. Even on the basis of Obama’s thin and strange statements, you might argue this conclusion.

But perhaps Obama meant to suggest that the reason the Post Office is so bad is because it has to compete with private enterprise. If he meant that, he lives in a socialist fantasy land, and we have a very dangerous man on our hands. In the real world, no living person could possibly believe that mail service would be improved by getting rid of the efficient producers and granting a totalitarian monopoly to a single government-backed provider.

. . . .

The right path to health-care reform is the market path (no subsidies, no monopolies such as drug patents, no licensure, no anything) that tends toward universal distribution at very low prices and relentless improvement in service. The wrong path is to make health care run the same way as the post office. Obama seems to favor the latter path, even though he admits that it is the least well-performing one. This is surely the definition of fanaticism. If the mobs aren’t angry, they should be.” (Read more on campaignforliberty.com)

The Feds in Business

“If anybody needs a good reason to be skeptical of the government’s newfound commitment to efficiency when it comes to the hundreds of billions of dollars of ‘stimulus’ spending, the Chicago Main Post Office facility provides a very obvious example.

This massive, 14-story building spans several city blocks at 2.7 million square feet. Situated in an ultra-prime downtown location, the advertising potential alone is unparalleled: Tens of thousands of cars pass directly through it every day on the main highway heading into and out of town.

Yet this building has sat completely vacant since 1997 when the post office moved to a new facility across the street, meaning the USPS missed out on capitalizing on one of the biggest booms in commercial real estate in history. Worse off, it wasted a small fortune in the process a 2006 report by the General Accountability Office found the facility costs the USPS $2 million a year simply to maintain.

Spending $2 million a year on an empty building? That sort of waste would never been tolerated in a profit-seeking firm. To believe somehow the new governmental bureaucracies being created will avoid such misuse is both hilarious and frightening.” (Read more from smartmoney.com)

See also:
Hidden History: Post Office sues Cub Scouts to maintain monopoly

Hidden History: Post Office sues Cub Scouts to maintain monopoly

“The Postal Service has faced repeated challenges from more competent private companies and has responded with one legal counterattack after another.

In 1971, a federal district court prohibited a private firm from carrying Christmas cards in Oklahoma on the basis that the plaintiffs, a postal employees union, suffered ‘significant loss of work time, overtime, employment benefits. . and morale.’ The court concluded that private delivery of Christmas cards would be a ‘widespread public nuisance.’ The result was that the public suffered slower service and higher costs to support postal workers’ ‘morale.’

In 1976 in New York, a pack of Cub Scouts tried to raise money by delivering Christmas cards: Postal Service lawyers ordered them to stop, and threatened the ten-year-olds with a $76,500 fine. A New York Times editorial regretted that the Postal Service’s carriers were not as fast as its lawyers.

In 1978, the P.H. Brennan Hand Delivery Service offered same-day delivery of mail in Rochester, New York, for 10� a piece; the Postal Service could not guarantee overnight delivery even for 15�. The Brennan Service operated during snowstorms (when the Postal Service did not even try to deliver), never lost a letter, and never had a complaint. When U.S.P.S. attorneys closed in on the Brennans, Rochester lawyers provided them with a free legal defense. But the Postal Service persuaded a judge to issue a ‘cease and desist’ order on account of the ‘threat to postal revenues.’

For 200 years, the Postal Service has been playing a game of catch-up with its illegal competition. Throughout its history, U.S.P.S. has upgraded service or cut rates only after some private company came along and did a better job. Were it not for its competition, the Postal Service might still be charging by the page and requiring citizens to come to the post office to send and pick up mail.” (Read more from cato.org)

***

Government is not our protector from monopolies, they are the creators and enforcers of monopolies. Businessmen, whom we so readily blame for all our problems, survive by providing goods and services we want at affordable prices.

***

“The U.S. Post Office [1839-1851] returned almost no revenue to the general fund. It usually reported losses. Large profits were being earned, but they were distributed internally. Giving out the postage revenues to groups with political power became the Post Office’s second function. Measured monetarily, it was the Post Office’s primary function. Thomas Jefferson, suspicious of the Post Office, had written:

I view [the Post Office] as a source of boundless patronage to the executive, jobbing to members of Congress and their friends and a bottomless abyss of public money. You will begin by only appropriating the surplus of the post-office revenues; but other revenues will soon be called in to their aid and it will be a source of eternal scramble among the members, who can get the most money wasted in their states; and they will always get most who are meanest [Jefferson 1892-99: IX, 324-25].

“In the first half of the 19th century, the federal government’s legal monopoly over the mail was a monopoly over all intercity communication. Informal and illegal channels of communication had always existed, but their inconvenience and limited scope allowed the Post Office to earn huge monopoly profits. The government’s policy of running the Post Office on a ‘nonprofit’ basis simply channeled the rents (profits) to powerful political groups who were in a position to draw directly from the Post Office coffers. Those profits gathered from the U.S. Post Office were of the same magnitude as the profits earned more openly by the British postal service.

The transportation revolution lowered the cost of intercity transportation and communication in the 1830s and 1840s. Private companies met the change by offering low-cost transportation and communication. The Post Office, facing no formal competition, at first kept its prices fixed. As costs dropped, monopoly profits increased. The profits became large enough to draw competitors despite the legal risk. That competition, and pressure from consumer groups, caused the Post Office to lower its rates in 1845 and 1851 by 79 percent.

The effect of private competition went beyond the drop in postage rates. An equally important effect was the introduction of new techniques into the U.S. market. The most important innovations were prepayment with stamps and intracity pickup and delivery. The Post Office showed no sign of adopting such innovations until they were successfully used by private companies.” (Read more from cato.org)