Disclaimer: the “tea party” movement didn’t kill the forty-nine cent first-class stamp. They might as well have; I’m sure they agree with the logic.
Postal “regulators” ruled that the Postal Service was wrong to raise the cost of first-class stamps by three cents per mailing, a change that took effect in January, 2014. This was after a battle by “the mailing industry.”
Pricing goods and services isn’t a science. Price something too low, and you’ll lose money on some or all sales. Price something too high, and you won’t have any sales. If you have a captive market, you might not have an elastic supply-and-demand curve, and you can raise costs with some impunity; this is why businesses with captive markets are regulated as monopolies. It’s also why collusion among competitors is so terrible for the capitalism model; it distorts the supply-and-demand curve by removing the effects of competition.
Years ago, the Postal Service had a monopoly. If you wanted to transmit information a distance, you wrote a letter, put a stamp on it, and mailed it. The Postal Service still has, by law, a monopoly on first class mail service. However, if you regard first class mail service as simply another form of transmitting information over a distance, they haven’t had a monopoly since approximately 1860, when the Pony Express started competing for transcontinental mail service. It itself was quickly rendered obsolete by the telegraph — until air express delivery services returned with Federal Express one hundred and ten years later. But, I digress.
When I wanted to send my aunt a message of condolence over the death of her dog, I didn’t send a letter. I left her a message on Facebook. For my cousin who doesn’t use Facebook, I send an e-mail, or a text message, or call on the phone. It’s only because of tradition that we mailed invitations to our wedding or that we mail Christmas cards.
So, the Postal Service doesn’t have a monopoly on just about anything any longer. What should we do with it?
Can we stipulate that no one is getting rich running the Postal Service? Apparently the forty-nine cent stamp is enough above the cost of delivering the average first class letter that they’re paying down old debt. Great! They’ve got a lot of old debt to pay down.
But “the mailing industry” doesn’t like this.
Who cares? Do you care? Does “the mailing industry” use first class, or do they send us bulk rate mailings about sales at some carpet store? Does your insurance company get bulk rates for pre-sorting their mail? Aren’t they trying to get you to accept e-mail notifications instead of postal deliveries anyway?
Let’s go the other way, the Tea Party way. Do we even need a postal service?
Probably. If some cousin in France wants to send me a letter, they give it to their postal service, who needs someone in my country to give it to. So, there’s that. Of course, they could give it to FedEx, UPS, DHL, or a few other small package and document delivery companies with nearly global presence. It’d cost more, if only because those companies aren’t authorized to offer a formal competitor to first-class postal service.
There used to be long lines at the post offices for two occasions: the end of the calendar with The War on Christmas and New Year’s Day (that’s two events, but one card sending occasion), and filing income tax returns. Even the latter is being replaced by electronic filling for many people. If the IRS and state tax agencies couldn’t depend on the postal service as the delivery mechanism of last resort, what would happen?
I should note, the Postal Service is established by the US Constitution. So, getting rid of it wouldn’t be easy. Plus, Congress would want something to replace their current franking privileges. Hey, UPS and FedEx, if we let you compete for first-class mail, would you honor franking privileges? (“FedEx: the official franking carrier of Democrats throughout Congress!”)
Having said all that, I’d simply abolish the postal rates commission and see if the Postal Service can figure out how to make money on its own. At the first signs of abusing their semi-monopoly on low-cost information delivery (and bulk mail delivery) (which would mean, obscene profits for several consecutive years, not merely higher rates than senders would like), I’d open up the market to competitors in case UPS and FedEx want a piece of that market. Maybe they’d decide it’d be a money loser, but we’re only doing this if it’s profitable by independent auditing standards.
On the other hand, if the Postal Service can’t make money while setting its own rates, then we have a choice: subsidize it as a critical national service, or let it die. If it dies, there’s a vacuum for those pesky overnight delivery behemoths to fill, or not. Would we let them operate as free-market players, or would we want to regulate them for stepping in where a federal agency failed? Otherwise, we accept that we need this service, and we stop griping about our tax dollars going to funding it, since we decide we need it, just like we need a military and a….
Wait, what else do we all agree we need from government? But, I digress.