The U.S. Postal Service just posted a quarterly net loss of $1.9 billion. It has recorded a loss in 20 of the last 22 quarters.
What is happening with the Post Office may be a microcosm of what’s to come with most of the federal government. This is not necessarily a bad thing in the long run.
Some say that once a government program gets going, that it can never die. Even Ronald Reagan said that government programs, once launched, never disappear. Unfortunately, this mostly held true during Reagan’s presidency.
This may not sound right at first, but the U.S. Postal Service is a government program that is going to eventually disappear. Some people will say that it is a government program that is losing billions of dollars, yet still surviving. This should be proof that a government program will keep going, no matter how disastrous.
But I am not saying that the Postal Service is going to end tomorrow or next year. I am saying that it will eventually end.
Right now, it is stuck. It just can’t be profitable without a massive bailout from Congress. But Congress can’t come to any agreements and is content to kick the can down the road as much as possible.
The Postal Service doesn’t actually run its day-to-day operations with tax money, but it is subject to congressional control. Congress mandated billions of dollars per year for future retiree health benefits, which the Postal Service obviously can’t afford.
In this sense, the Postal Service really is a microcosm of the federal government. It is promising benefits to retirees that it simply can’t afford. The unfunded liabilities are massive.
One thing many people don’t realize is that the U.S. Postal Service has been granted a monopoly on the delivery of first-class mail. You, or anybody else, are not allowed to compete.
It used to be the same way for package deliveries. When those restrictions were loosened, it did not take long for FedEx and UPS to take over a big part of that business. Even now, these companies are not allowed to truly compete. The government does not want them making the Post Office look bad and making the losses even worse. But having alternatives is still better than nothing.
At this point, the solution is simple. We don’t need to abolish the U.S. Postal Service overnight. We just need to repeal its monopoly on the delivery of first-class mail. We have to legalize competition. Other companies would step in and compete, and the U.S. Postal Service would likely disappear in a rather short amount of time.
I think the Post Office is a great example of where technology can undermine government programs to a great degree. Think of how many billions of dollars less has been spent on stamps just because of on-line bill pay. If the Post Office raises its prices more, it will only encourage the last few holdouts to start paying bills through the computer instead of through the mail.
The Postal Service isn’t alone in being undermined by technology. Think about what cell phones have done to phone companies, which were generally granted monopolies in certain areas. The same is happening with cable companies.
I don’t think mail will ever completely go away, but it is being radically transformed and the U.S. Postal Service cannot keep up with the innovation. Maybe there will be a bailout, but there won’t be endless bailouts.
My guess is that the Post Office will not be in existence in 20 years. Hopefully it will be sooner than that. Even if the retiree benefits are drastically reduced, it will still not keep things going that much longer. The Post Office simply can’t keep up with technology.
The same things that are undermining the Postal Service will also undermine the entire federal government. There are too many promises that have been made that won’t be delivered. And technology will help in providing alternatives to so-called government solutions.
Technology is slowly undermining the government education system, the Food and Drug Administration, government libraries, and much more. Hopefully one day we will not worry about government healthcare because technology will provide most of what we need.
It may take a while, but the Postal Service is going to be gone eventually. Much of the federal government is not going to be far behind.
Ironically, one thing that differentiates the Post Office from other government programs is that it is actually constitutional. But just because it is constitutional, it doesn’t mean it is mandatory or necessary. It can be done without government funding and government interference. Let’s hope it is sooner rather than later.