NCPA - National Center for Policy Analysis

Toward a Solvent U.S. Postal System

October 14, 2011

When the government decided to replace the Post Office Department with the U.S. Postal Service (USPS) in 1971, it exchanged a taxpayer-dependent bureaucracy with a government-owned business that was supposed to rely on the sale of postage, mail products and services for revenue.  In order to subsist without taxpayer support and still meet its obligation to provide the American public with "universal service," Congress grants the USPS a statutory monopoly on the delivery of first-class and standard ("junk") mail.  However, policymakers should end the monopoly and put the USPS on the path toward privatization, says Tad DeHaven, a budget analyst at the Cato Institute.

Privatization is the next step.  While some consider "privatization" to be a dirty word, countries around the globe have been successfully subjecting their former state-run postal monopolies to market forces for years.

  • For example, 69 percent of Germany's formerly government-owned post office Deutsche Post is now privately owned.
  • The Netherlands' TNT Post is completely privately owned.
  • And the European Union intends to eliminate the national monopolies of all EU member states.

What would a privatized postal market look like?  That's the beauty of a free market -- freed from the government's one-size-fits all model, a new system would unfold through the interaction of postal customers and providers.  Freeing America's postal market offers the potential for significant consumer benefits because entrepreneurs have the strongest incentives to innovate, improve quality and reduce costs.

The next great postal innovation is more likely to come from an entrepreneur than a government employee.  Before that can happen, however, Congress needs to at least commission studies on what it would take to prepare the USPS for privatization, as nobody in the private sector would touch it in its current state.  But the choice is becoming clear: Congress can unleash the American entrepreneurial spirit on mail service or it can force taxpayers to bail out its lack of foresight and imagination.

Source: Tad DeHaven, "Toward a Solvent U.S. Postal System," Forbes, October 10, 2011.

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