It seems every year gets progressively harder for the U.S. Postal Service. And once again, our favorite government monopoly is expecting their customers to shoulder the burden, with an expected double-digit rise in postal costs by 2006.
Most industries faced with rising costs also have to deal with competition from rivals. But as we all know, the USPS is a regulated monopoly, which means that it’s illegal to compete against it (in the first and standard class mail segments). This shelter insulates the USPS from market forces, providing a captive customer base which has no other choice but to use the system―despite a price fixing system that would be illegal in other markets. Elliot Spitzer, where are you when we really need you most?
Of course, a monopoly has its advantages. One would think that by forcing the hand of the market to use their services, the USPS could get away with reducing their sales and marketing expenses. Guess again. Despite rising costs, the postal service spent lavishly in recent years to sponsor a professional cycling team, which primarily peddled the cobbled roads of Europe. In this case, we can only assume that the goal of the USPS was to convince Europeans to immigrate to the U.S., which would expand the potential market for the postal service.
But in case you think the USPS forgot about you, its real customer today, don’t fear, the pony express advertises on the home front as well. Perhaps you’ve seen the billboards or television adds in recent years, touting its virtues and reinforcing its stability. All of these marketing messages, however, beat around the postal bush. “Use us or go to jail,” would be more appropriate.
Given that we have no direct say in the matter of postal increases―and no way to vote with our wallets―our best suggestion is to focus our efforts on reforming the system from within. Thanks to the free market voices of The Club for Growth, Cato, and others, who helped put a number of new reform-minded faces on Capital Hill this election, the chance for real change in the postal service is greater than ever before. But change will take time, and could hurt the economy in the interim. Businesses like Surplus Record, whose largest expense is postage (standard class, to be, specific), will be forced to reallocate capital from new business initiatives to mailing costs―which will slow our ability to hire new staff and invest in new initiatives.
Individuals and non-publishing businesses which are not as dependent on the postal service can find other ways of reducing their reliance on the mail by moving to online bill payment and electronic funds transfer to replace mailed checks. It’s also worth examining the possibilities that Federal Express and UPS can offer, outside of first class and standard class mail. And since their acquisitions of Kinko’s and Mail Boxes Etc., respectively, it’s never been easier to find a physical location for either company.
The timing for postal service reform has never been better. With a more conservative congress and a pending rate increase, our hope is that public and business outcry will force the hand of a sympathetic legislature to examine real reform. Even if these efforts only succeed in introducing limited market forces into the mail system, it will be a start. The pony express will only move from a trot to a gallop when there’s competition out of the starting gate.