Thursday, June 13, 2013

U.S. Post Office Is a Bad "Business" Proposition for Its "Owners" and a Relic of the Past ... Meanwhile, Present and Future Taxpayers Will Continue to Get the Bill

U.S. taxpayers pay for lots of government. Too much, in fact.

And lots of the government we pay for is wasted money due to inefficient and unproductive government operations.

But even worse than that, much of the government entities and activities we pay for shouldn't even exist in the 21st century.

But that's politics, unfortunately, and that's a big reason why our national debt and deficits continue to grow more and more with each passing day.

So try talking about fiscal responsibility and the taxpayers getting their money's worth to the government knows best gang, postal authorities or the public sector unions which represent post office employees. Or even most of our fellow citizens and taxpayers.

It's pretty much a waste of time.  We're malcontents who are supposed to get used to all this needlessly expensive nonsense, in other words. And after a couple of centuries of postal "service" now, that's exactly what we've become --- used to it.

Our U.S. post office is, has been and will continue to be a great example of taxpayers getting ripped off in the bright sunshine. It's there for all to see.

And it's largely because once something has been started by government, it will tend to go on and on and on and on and last forever, all at taxpayer expense.

Creative destruction, customer service, fiscal responsibility and innovation are simply nowhere to be found in the public sector's dictionary.

First-Class Dilemma for U.S. Taxpayers has the story on this post office saga:

"Would you invest in this business?

Overall sales volume in the past 10 years has fallen 25%. Its most profitable line (call it "first class") is shrinking even faster—35% over the past decade—and the company projects an additional 20% decline over the next four years thanks to an extraordinarily disruptive technology (call it "email").
Total revenues have fallen 13% in the past five years. For the next several years they will, at best, be flat. The outfit has been in the red for six years; last year, it lost $15.9 billion.

By law, it is forbidden from raising prices faster than the inflation rate or from switching to a money-saving health-insurance plan or, in large measure, from expanding into products or services. And because it is bumping up against a ceiling on its debt, it is likely to run out of cash by the end of 2014.

If you're an American taxpayer, you own it. It is, of course, the U.S. Postal Service, a $65-billion enterprise which would rank as No. 45 on the Fortune 500 list if it were included.

The USPS has two basic problems: The past and the future.

The past has saddled it with far more capacity than it needs in an era of email and websites—more property, more sorting facilities, more workers—and a business model that the U.S. Government Accountability Office describes as "not viable."


In one sense, it is like a private company: It has been told by Congress to cover its costs by selling stamps. But it is also a government agency that Congress tells what it can and (more often) cannot do—such as switching to five- from six-day-a-week delivery to save $2 billion a year or requiring retirees to sign up for Medicare.

The past also has bequeathed the USPS with a twofold mission that may no longer make sense: "to bind the nation together" and to carry "the personal, education, literal and business correspondence of the people."

In an era of radio, TV, streaming video, email, texting, smartphones, tablets, Facebook, Twitter and Instagram, the USPS clearly is no longer needed to "bind the nation together," and a rapidly shrinking share of the nation's correspondence is put on paper and delivered by letter carriers.

Therein lies challenges for the future.

First-class mail is going away as more people receive and pay bills online, and even grandparents email their families. USPS, like everyone else, is moving online. About 40% of its retail business is now done on the Web, says Chief Financial Officer Joseph Corbett. You can print postage at home and arrange for a letter-carrier to pick up a package at your door, and it is experimenting with emailing customers an electronic image of the letters to be delivered tomorrow. But the market is moving digital faster than the USPS can change.

Advertising (aka junk) mail volume—a big business for USPS—is stable, but vulnerable because many senders and recipients would prefer more targeting and less flooding.

Packages are the bright spot, the upside of digital. As more Americans buy online, the USPS projects package volume to climb 25% over the next four years. The rub: Packages are less profitable than first-class mail because USPS has to compete with FedEx Corp. and United Parcel Service Inc.

Looking ahead, the postal service has a few key assets. It has a very prominent brand. It has the trust of many Americans. A lot of Americans trust it—particularly its respect for their privacy.
And it alone has a delivery network that services every household and business in the country. Even UPS and FedEx rely on the USPS to deliver packages in some places, about 1.2 billion of them last year.

To prosper, it needs to exploit those advantages. Its future doesn't lie in the soup-to-nuts business of its past—that is, in collecting, sorting, shipping and delivering the mail as it used to do. Some parts of that will migrate even more to private businesses than they already have.

Overseas postal services are far ahead of USPS in adapting to the digital age. Some are largely privatized; others aren't. Germany's Deutsche Post   provides secure, encrypted email. In Sweden, Posten AB allows customers to email a message that is then printed near its final destination and delivered. Finland's Netpost accepts and delivers mail electronically, and offers a free, secure seven-year archive.

Everyone knows the USPS needs significant change. But politics have produced a nearly unbreakable gridlock. Junk mailers and periodical publishers lobby hard for low mailing rates. Unions protect jobs. FedEx and UPS want to rely on the USPS where convenient, but don't want too much competition. And members of Congress demand efficiency—as long as it doesn't mean closing a post office in my district."

Summing Up

Politics sucks. And it costs a lot, too.

Public sector unions suck. And they cost a lot, too.

Meanwhile, and seemingly forever, taxpayers pay to keep the government afloat. And we pay a lot, too, for which we receive way too little in return.

That's what really sucks!

Thanks. Bob.

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