Rather than accept its fate, however, the postal union is now advocating an expansion of the postal service into unrelated businesses. The union's argument, specious though it may be, is that by expanding into other businesses the postal service can remedy its financial problems and replace its lost volume. Dream on.
The reality, of course, is quite different. The union's proposed plan won't work, and the real plan is to keep fleecing the taxpayers for at least a few more decades. Since the postal union has plenty of political allies in Washington who can make that happen, we shouldn't underestimate this otherwise terrible idea. Beware of unions bearing false gifts, fellow taxpayers.
Any successful financial rebound by the postal service is a million-to-one shot at best, but the union and allied politicians hope to distract public attention long enough to preserve the postal service and its dues paying union jobs for years to come. In other words, the post office won't be able to achieve profitability, but it may be able to stall long enough to stay in "business" and continue to take the taxpayers for a ride into the future.
Meanwhile, the expansion plan begs the question of how the postal service would plan to grow its business. If it's going to try compete with already successful private sector companies, that's a non-starter. In that case, no new business will be created, and no better ways of providing postal service will be found.
Instead the union's plan would be that someone in the private sector will lose so the post office and union can win. As it ventures into new fields, if the postal service is subsidized enough by the taxpayers via the politicians, some private company or companies will lose. On the other hand, if the postal service isn't subsidized to the point of financial success, it will continue to lose money. In any case, taxpayers would lose either way, just like today.
Another stall technique could be that the post office simply takes over from other government agencies who currently perform selected tasks, such as drivers' licensing and so forth. That at best wold be a zero-sum outcome for taxpayers.
If there's one thing we know, it's that scaling government functions won't result in more efficient operations. Just look at Washington's bloated bureaucracy.
From the taxpayers' view, the government needs downsizing and not upsizing. The postal service can't even break even operationally now. How could they possibly perform efficiently by entering new ventures?
The plain truth is that the perennially money losing postal operations need to be closed. If some residual elements need to be continued, those activities can be outsourced to private companies. In other words, the government could buy what it needs instead of making it. And it could do so without losing taxpayer money in the process.
As with the postal services, the government can't invest taxpayer money wisely either. Current examples of wasted taxpayer money are Solyndra and Ener1, Inc. We've looked at the Solyndra investment previously, so we'll briefly review Ener1, Inc. today.
Post Office Wants More Than Mail and Your Cash for Their Clunkers (Ener1 Inc., a lithium-ion batter maker and another government favorite and constant money loser) both tell why government should do taxpayers a favor and stay away from competing with private businesses.
Brief excerpts from each of the referenced articles are enlightening.
First, the postal story:
"For more than 200 years, the agency has been almost singularly focused on delivering mail to everyone, everywhere.
No longer will that alone sustain the nation's mail delivery system, Postmaster General Patrick Donahoe recently told Congress. He said the postal service faces mounting annual losses which could reach $16 billion by 2016 unless Congress passes legislation allowing the agency to slash its network and work force, reduce the amount it is required to set aside for retiree health benefits, drop Saturday delivery and have more freedom to offer products and services beyond mailing letters and packages.
Labor is the agency's biggest cost, so cuts there will provide the most immediate relief, says Mr. Donahoe. But with mail expected to continue to drop, the agency can't "focus on cost cutting alone" and must also raise revenues for its long-term survival, according to an Oct. 6 report by the U.S. Postal Service Office of Inspector General.
The agency can either start outsourcing functions, like stamp sales and package handling, to private businesses, or it can find new ventures to bring into the fold, Phillip Herr, director of physical infrastructure for the Government Accountability Office said. "You can think of moving stuff into the post office, or start moving it someplace else—you're at a fork in the road," he said."
Next, the electric car battery investment story:
"Then again, Ener1 had to rely almost exclusively on Think after it lost its bid to supply batteries to Fisker Automotive, a battery-powered car maker which received a $529 million U.S. taxpayer-backed federal loan guarantee in 2010. Fisker chose to buy its batteries from a company called A123 Systems, itself the recipient of a $249 million U.S. Department of Energy grant (announced at the same time as Ener1's grant).
It's hard to sell electric car batteries when the market for electric cars is so small. Electric cars are expected to make up less than 1% of car sales by 2018, but that hasn't stopped the feds from financing a glut of battery makers. Some 48 different battery technology and electric vehicle projects received federal money as part of the Administration's August 2009 announcement, including such corporate giants as Johnson Controls and General Motors.
Current estimates are that by 2015 there will be more than double the supply of lithium-ion batteries compared to the number of electric vehicles. This government-juiced industry is headed for a shakeout, taking taxpayer dollars with it."
In each instance, the message for taxpayers is straightforward and consistent.
When the government runs businesses or tries to pick winners and losers in the private sector, taxpayers will be losers. The only winners will be those politicians and allies with whom they exchange political favors for political support. In this regard, think unions, and especially those unions that represent public sector employees.
Who would finance Solyndra, Ener1, Inc. and similar wasteful endeavors if taxpayers walked away? My bet is nobody, but let's start walking and find out.We need to get politicians and government out of the way so market based competition can take over.
Productivity enhancing entrepreneurialism, innovation, customer choice and risk taking are always present in a competitive situation. Meanwhile, these same features of creative destruction are noticeably absent from government sector offerings.
Thus, the real and only solution to the post office and similar situations is simple.
Private beats public every time except when public sector union leaders and allied political officials happen to have a separate agenda. It's that separate agenda that presents the taxpayers' real problem.
As we like to say, it's a simple taxpayer problem, albeit not an easy one. But it's definitely one worth solving.
Thanks. Bob.
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