Wednesday, September 7, 2011

Neither Rain Nor Sleet Nor Gloom of...Screw It. Let's Close Shop.

Megan McArdle offers a valuable take on the impending collapse of the US Postal Service:

Congress has given the Post Office two incompatible mandates.  It is to make money like a business . . . but it is not to have any of the freedom that businesses have to, say, close branch offices, cut its delivery area, or change delivery schedules. 

This is, to put it mildly, lunatic.

It was kindasorta somewhat sustainable for a while, because Congress sweetened the deal with a very valuable monopoly over the delivery of first class mail--a fact over which conservatives used to complain bitterly.  But now that monopoly is an albatross.  The only people who really need the service are the people who it is incredibly expensive to serve: those in remote areas that are far from stores, and only spottily serviced by UPS, Fedex, and broadband.  So average cost is rising fast, while rates can't.

Congress has to decide whether universal mail service is valuable enough to subsidize, or whether it wants the post office to be set free to actually compete.  But it cannot survive much longer as neither fish, nor fowl, nor good red herring--while there's some hope of a temporary reprieve by reclaiming some past overpayments to pension funds, that extra money won't last long at this rate.

I tend to think that universal mail service isn't valuable enough to save as a government function--as Josh Barro says rather more pungently, I don't see much reason that the government should subsidize the decision to live in a remote rural area.  But that's going to be a hard sell: the post office has a special place in the American heart, being chartered in the constitution.  And it has a very special place in the hearts of a large number of Senators representing rural states.
It's insolvent. It simply doesn't work anymore now that letters can be delivered instantly via the internet. It only manages to persist because of its monopoly over first class mail. Is there any truly coherent argument to maintain this white elephant?

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