I suspect the board of governors got sick of dealing with the escalating costs of labor (fixed in arbitration with unions) and had to figure out a way to really get Congress' attention once and for all. They are warning about impending bankruptcy without even trying some of the drastic measures they had toyed with, i.e. no Saturday delivery. Those measures only would have delayed the inevitable, but this still smells to me like the leaders are sick of Congress passing the buck.
If the USPS dropped Saturday, it will have little effect on the back office side of business. Pretty much the mail volume will remain unchanged. The same number of printed bills will be handled, the same number of greeting cards, the same number of standard mail (what used to be called 3rd class or bulk/junk), and pretty much the same number of packages.
Due to the human interface issues, USPS will still have to maintain some semblance of Saturday retail window hours. In the small town where I live, retail hours have already been trimmed somewhat.
Removing Saturday delivery will save in manpower, and reimbursements for milage. To the best of my knowledge, rural carriers only work 5 days a week. So the 6th day (regardless of which day it is) is filled in via a substitute carrier. Those subs could see a drastic drop in hours of work.
But back to my original comment about back office operations... If you dumped Saturday, all the mail that would have been sorted on Saturday morning, will still be sitting there on Monday morning, waiting to be handled.
There may be savings here, but don't expect it to remove 1/6th the operating costs of the USPS.
USPS works 24/7 actually (my girlfriend works in one of their regional sorting facilities).
Mail is sorted throughout the whole week, if anything we might see less hours being worked by the sorters on Thursday and Friday when the Saturday deliveries are sorted out.
Keep in mind only Saturday delivery is being suggested to be dropped out, that's the end-of-the-line. You still have to sort at all kinds of upper levels (does this piece go to a zipcode within this state, or one of our territories, USVI, etc? And so on, until they get to the local USPS PO, which is the one which would handle the local Saturday delivery).
(Not that this disputes anything you said, just pointing out that mail will probably still be sorted the same way its being done right now)
"Congress has an obligation to ensure that effective solutions are implemented and taxpayers don't get stuck paying for a bailout,"
I wonder where Issa was when bailing out the banks for $2 trillion.
Only because it was clear enough people were voting for it that he could pretend to stick to his principles. You think if it came down to him, he'd actually vote for total financial collapse?
Wrong. He also voted against it the first time in the House, when the bill did go down and the Dow dropped 700 points.
Plus, the "total collapse" argument was BS. We'd be further along if the feds had allowed the banks to fail (while protecting individual depositors) and reorganized them. We did it this way with the RTC in the 1980s and Sweden did it in the 1990s.
Eh, maybe, although I kinda doubt it, there's an assumption to think that because we didn't have a collapse, there was no danger of one. Vanishing 1/3 of the banking industry overnight without an organized wind-down would likely have led to disaster even in retrospect.
In the moment? Anyone who voted against that bill was either posturing or a madman. I mean, we got the money back anyways, most of it. Why play chicken?
People arguing that there wouldn't have been a collapse reminds me of people who think the Y2K problem was a myth created by the software industry to drum up some jobs.
Well, something like 30% of the country still believed Saddam had WMDs in like 2006, and 25% of the country thinks Obama wasn't born in the US right now. Those are different than having a non-mainstream opinion on a hypothetical, but goes to show, people can believe whatever they want.
Economists agree: Legislation Reid led to passage prevented economic collapse
Excerpts:
Krugman: Government intervention helped avert "second Great Depression." In his August 9, 2009, New York Times column, Nobel laureate Paul Krugman wrote that governmental actions kept the U.S. from going into "a second Great Depression"
...
Blinder and Zandi: Policies "probably averted what could have been called Great Depression 2.0." In July, former Federal Reserve vice chairman Alan Blinder and Moody's Analytics chief economist Mark Zandi issued a report citing analytic models to demonstrate that the "multifaceted and bipartisan" response to the financial crisis, including the Troubled Asset Relief Program and the American Recovery and Reinvestment Act - both of which passed the Senate under Reid's leadership -- had a "huge" effect on real GDP, jobs, and inflation, and "probably averted what could have been called Great Depression 2.0"
...
U.S. Chamber president: Stimulus needed because "we thought we were days away from a global recession."
...
AEI's Malkin: Policy response "averted" global depression. From a January outlook report by the American Enterprise Institute's John H. Malkin
...
Nowakowski: Policies have "averted depression." In a September 13 column, David Nowakowski, director of credit strategy at Roubini Global Economics, wrote that the Federal Reserve's fiscal policies, "along with the fiscal stimulus," have "averted depression, reversed a short bout of deflation, and helped unemployment from reaching 1930's levels."
...
Romer: Policies made difference between recovery and "second Great Depression." In her September 1 farewell speech, Christina Romer, outgoing chairman of President Obama's Council of Economic Advisers, praised the stimulus package and the Obama administration's use of TARP funds and said: "I am proud of the recovery actions we have taken. I believe they have made the difference between a second Great Depression and a slow but genuine recovery.
Dude, mediamatters.com's tagline is "Help us fight conservative misinformation" - that's not exactly an unbiased source. Or really any sort of respectable source to talk about economics at all. You already know what their position is going to be from the tagline.
The source doesn't matter as I'm providing quotes from a range of well respected economists, including Nobel laureate Paul Krugman, and Christina Romer, former chairman of President Obama's Council of Economic Advisers.
Not to mention quotes from AEI and the president of the Chamber of Commerce, which essentially became a conservative advocacy organization this past election.
The point is that you can't cite a partisan political site as evidence of a consensus. You already know what their positions are going to be - they're going to reference economists that agree with them (who tend to be affiliated with the Democrats, like Kurgman and Romer) and not economists who disagree with them.
lionhearted, you're missing the point. This is not a partisan issue. Please tell me things are not so divided in this country that people read partisanship into everything, even as far as HN.
T.A.R.P. was started and passed under George W. Bush. The people advising him, including Henry Paulson his Secretary of Treasury, and Federal Reserve Chairman Ben Bernanke were telling him the same thing. See here:
My point in posting here is not about partisanship, but about accuracy. Economics is a science -- not an exact one, but a science nonetheless. At its core economics is not about partisanship at all. People can probably turn anything under the sun partisan, but that's their problem. Believe it or not some people are able to focus on doing their job (and providing their opinion) in the interest of the country above partisanship, like current Secretary of Defense Robert Gates who is a Republican. Economists advising both sides of the aisle support the position I've outlined. I'm not going to to look them up for you, but you can feel free. I'll start you off. Look for the comment near this one by jbooth http://news.ycombinator.com/item?id=1901677.
The bank bailouts appear to be widely unpopular. I can only guess this is because people don't truly grasp what was happening, or what the alternative would have been. My congressman was one who initially voted against TARP, and I communicated to him that he needed to change his vote. Like most politicians he is not an expert in economics or finance, and he didn't take kindly to what was essentially the Bush administration "telling us the sky was falling, and putting a gun to our heads." But the sky was falling. The economy was in a free fall with millions of jobs being lost monthly, the stock market tanking, and credit markets -- a crucial cog in our economy -- freezing up. If congress had not acted the financial system would have collapsed. We would now be in a real depression. Imagine how bad people say the economy is now, and multiply that by about 100. I'm talking millions unemployed, homeless, tent cities, crime, and a feeling of hopelessness pretty much everywhere. That would have been the alternative to not bailing out the banks. In that context I don't think many would oppose the bailouts.
Now, was the system set up incorrectly where we could end up in such a mess? Yes. But that wasn't the fault of any one politician or group of politicians at any one time. The problems leading up to the crisis built up in different ways over time. The financial reform President Obama has pushed through addresses some of these issues, for example, by allowing the government the power to break apart and unwind large "too big to fail" type entities without bailing them out with taxpayer funds. When you look at it this way, Congress and both the outgoing and incoming administrations did do what was best for the country, even if unpopular on the surface. This doesn't even get into the fact that a lot of that initial money has been, and continues to be paid back, and in some cases even turns a profit.
I think there's a bit of FUD in your statements. I also believe that those who supported the bailout are the same who stood to lose the most i.e. the wealthy. I believe that the bailouts will only further encourage the same behavior and prolong the inevitable.
If the worst-case, or even most-likely scenarios had llayed out then the wealthy would have lost a lot and the poor and middle-class would have lost everything.
I don't think the government should have sat back and done nothing but the bailouts were not the right solution. I would have much preferred that they assisted in managing the bankruptcies than preventing/delaying them by throwing money at them. They should be breaking up all those mega-corps like Freddie Mac, Fannie Mae, and AIG, instead the same companies that got us into this mess are still around and as big as ever.
I'm not sure I buy the catastrophic collapse argument - it's an easy one to make. "Oh man, things would have been a lot worse if we hadn't done all that stuff we did."
Well, maybe.
But let's just say it's true for now. Even if that's the case, those organizations could have been liquidated and their assets sold off, perhaps with the key pieces under some sort of guarantee from the Federal Reserve or Treasury or "Bureau of Stabilizing Home Interest and Trust" or whatever feel-good label/acronym these messes are typically labeled.
The organizations that made bad bets should've been liquidated, even if you believe the catastrophe scenario (which I'm skeptical of personally).
Quick! Let start a subversive private mail company, like Lysander Spooner's American Letter Mail Company. His company literally compete with the USPS for business until it was shut down by the governmenet's lawyering.
He succeeded in driving down the cost of government mail.
Instead, UPS and FedEx have taken the high-margin segment, leaving the low margin stuff for the USPS. Also, much of what Lysander Spooner's company was great for is now covered by email and other Internet apps. (IIRC, an attraction was that intra-city mail was delivered quickly.)
My immediate gut-reaction toward this kind of statement is negative: do we really want to have private companies in charge of all mail in the US? And no doubt there are some people who rely on it and wouldn't get acceptable service (due to remoteness, etc) from a private company. Etc.
BUT: the vast majority of the mail I get through the postal service is junk mail that I don't want. The remainder is almost entirely stuff that I'd prefer to get electronically and, if the USPS were to disappear, I feel confident I would.
So I'd like to hear arguments for the continuing subsidy and existence of the USPS, but I wouldn't personally cry any tears if it were abolished tomorrow.
> BUT: the vast majority of the mail I get through the postal service is junk mail that I don't want. The remainder is almost entirely stuff that I'd prefer to get electronically and, if the USPS were to disappear, I feel confident I would.
The answer to that has to do with economic issues. Once upon a time (and I have not seen the numbers in years) 3rd class mail (what you can junk, and is now officially called Standard) actually carried its own way, and supported the cost-basis for First Class mail.
The reason(s) were varied, but had to do with the number of times a piece of mail had to be handled/sorted. Properly prepared Standard mail, had to be individually handled less than 2 times. Much of it was handled once (by the letter carrier). Standard mail arrives at the USPS dropoff already is pre-sorted by carrier route, and potentially by carrier order of travel. The mailers get a reduced rate, but not as much as it actually saves the USPS.
Getting rid of Standard Mail would actually increase cost of First Class. Standard Mail is advertising, and if they didn't advertise to you one way, they would just do it another.
My beef is less with Standard Mail, and more with political mail.
> So I'd like to hear arguments for the continuing subsidy and existence of the USPS, but I wouldn't personally cry any tears if it were abolished tomorrow.
USPS delivers (in one way or the other) to every point of presence in the USA. UPS, FedEx and DHL can not match that (although they do try to come close).
USPS also provides a variety of services that none of the others do.
My understanding is that there is not a direct subsidy, but that they aren't taxed like a private organization doing the same task would be. (Of course, they fall under a different regulatory framework as well, and have obligations such as delivering to every mailbox in the US, which other organizations aren't obligated to. So it's certainly not an apples-to-apples comparison, either.)
USPS provides first class mail service to all Americans for the same cost (whether that letter is addressed to down the street or across the country) and provides mail service to almost everywhere people live in the United States, whether it be a small rural town or New York City.
So in part, it's a matter of equity -- that everyone in this country has equal access to postal services and the benefits they provide (which are admittedly cross-subsidized). This same rationale goes into telephone universal service funds and has been discussed in the context of the national broadband plan too.
None of the USPS' private competitors do (or I can imagine would do) this.
Indeed. I imagine that if the USPS were to be dissolved, there would need to be federal regulations put on their private competitors requiring universal service with low-cost options, much as there are in telecom. (And that the general public would strongly support such regulations not covering "junk mail".) I wonder whether FedEx/UPS/et al would be interested in such a system or not.
If you think about the USPS as an independent corporation, it would be crazy to think about these results: a government approved monopoly, massive tax-shields (no business income tax, no property tax on post offices). Then, you contrast that with their one big weakness - they can't set their own prices. Congress sets the postage rates. Talk about an incredibly inefficient way to run a business - seems a great counterpoint to anyone who thinks government should be more involved with business.
Here's a quick and drastic solution to the USPS problem.
1) Give them the ability to set their own prices. They have competition in the form of UPS and FedEx for large packages delivered to your door. Chances are those prices wouldn't change. The rate for a stamp would potentially double. Is that a bad thing? Seriously, what percentage of the stuff you get in the mail is actually useful? 10%? 5%? Yes, there are some businesses who depend on cheap mail, but in effect the US taxpayer is subsidizing their business then. It's no different than the US bailing out the car companies in that regard. This price increase would probably decrease mail volume considerably.
2) Reduce delivery to 3 days a week. Would anyone complain about this? How many people even check their mail every single day without fail? Again, this may hurt mail-based businesses, but they are already existing in an artificial business environment skewed by government subsidies. Going from 6 days to 3 wouldn't cut costs 50%, but I think 20-25% cut in costs is reasonable to expect, considering the volume decrease.
These two things would quickly make the USPS profitable. As everyone here has pointed out, it's not 1980 any more. There's better way to transmit information from one person to another.
Very well put - and it'd have the additional bonus of increasing interest in non-physical informational transit (i.e. the internet) for urgent documents (and perhaps even help instantiate a shift away from things such as paper contracts), further aiding growth in the tech sector.
The future of the postal industry lies in the transit of physical goods - if they want to survive, they need to become very efficient at moving parcels and packages, and forget about the fiddly business of letters and bulk mail.
I don't think the junk mail that takes up the majority of your inbox costs the price of a stamp to send. Surely bulk mail like that is much, much cheaper.
"2) Reduce delivery to 3 days a week. Would anyone complain about this? How many people even check their mail every single day without fail?"
I check the mail every day, religiously. Going to the mail box, waiting for the street to be clear of traffic, peering in, and returning with the mail brings me immense satisfaction. All this, even though I very rarely get mail addressed to me. I wouldn't complain, I understand the need for cuts, but the loss of my routine would sadden me greatly.
I'm surprised there is still so much agreement that we need a public monopoly postal service. The creation of FedEx and UPS to compete with the USPS in package delivery was the best thing to ever happen to package delivery.
I think you missed one of the more obvious ways to fix the problem. Allow them to set their own rates, and allow other companies access (Permits, Licenses, whatever) to put letters in your mailbox.
The USPS has no incentive to figure out how to deliver mail better when it is the only game in town.
I'm sure its all relative, but if you are talking about customer service, my local USPS always has a line of 30 people waiting to pick up a package that the driver was too lazy to bring to the door (Sometimes they come to the door, sometimes they don't). The counter is also staffed by 1 or two people - out of an available 5 - and there is typically a manager standing idly with his hands in his pockets.
If you are talking about improving service, as in the actual shipping service, you must be talking about their achievement of going from "losing a lot of packages", to "losing less than they used to". I've never understood it. I have NEVER lost a UPS or Fedex package. Yet, it is routine for a USPS package to just go "missing", just ask any big ebay seller.
Its also interesting that you assume prices must always go up to match inflation. If USPS was innovating in the right areas, they could drive down costs and deliver more efficiently.
Also, I just suggested the US government allow other approved companies the ability to put things in your mailbox without going to jail. Never said anything about their service.
Reduce delivery to 3 days a week. Would anyone complain about this?
Netflix addicts. I might only receive a Netflix 2-3 days a week, but making sure those days line up with 3 days of delivery per week would drop throughput to maybe once a week.
Netflix is seriously the only killer app left for the mail system. Everything else I get is either spam or bad news--before Netflix I only checked once a week.
It's not just operational inefficiencies that are slowly strangling the USPS. There are also factors like Congress' bizarre mandate that the USPS fully prefund their retirement and health benefits programs[1], which is something not required of any other federal entity nor something done by private enterprises. That's a huge portion of the USPS's revenue stream poorly tied up.
Why is that bizarre? It sounds like a very practical way to avoid the sorts of issues that have befallen so many other pension plans. It most certainly should be done by public and private orgs, since we can't trust the mechanisms intended to free the cash b/c they are corrupt (this is one reason GM was bailed out... it looks better than everyone realizing the PBGC was bankrupted by one firm's demise).
>The American Postal Workers' Union says this is a "phony crisis" caused by the Postal Accountability and Enhancement Act, which requires the Postal Service to pre-fund retiree health care costs.
>No other government agency - or private business - bears this kind of burden.
>As a result of the pre-funding mandate the USPS begins every fiscal year more than $5 billion in debt. In fact, the act requires the USPS to pre-fund 75 years' worth of retiree health care costs in just 10 years.
>If the pre-funding requirement weren't in place the Postal Service would actually have a $3.7 billion surplus - over $1 billion each year for the past three fiscal years - despite declining mail volume due to increased use of electronic mail and an economy in crisis.
The act also removed $27B of pension obligations from the postal service's books, and used this and other benefits to smooth the transition away from a "pay-go" pension program. Pay as you go retirement programs are fraudulent because if the firm fails the retirees get nothing.
I don't have a problem with the postal service being in debt or unprofitable, I just don't think the service is needed, and it's troubling to me that there are laws preventing other firms from offering letter delivery services that compete with the USPS.
"If you think about the USPS as an independent corporation, it would be crazy to think about these results..."
I agree. But why should we think of it that way?
The Postal Service was originally conceived as an essential piece of national infrastructure. Why should we think of it as an "independent" entity that needs to turn a profit? Does the highway system turn a profit? How about the Federal Reserve, or the National Institutes of Health?
What's important is that the USPS continue to have enough funding to provide its service in an accessible, timely, and reliable manner. That is what makes it a critical piece of infrastructure. Like it or not, it is still essential to be able to communicate with hard copies.
(Why? For one thing, we don't, as citizens, all have an official electronic mail box. Physical mail also bears information about its transport -- where it went, whether anyone else read it along the way, whether it was delivered and read -- in a way that most electronic communication doesn't. We don't have a unified way of finding out how to communicate with someone online, and the means we do have are all owned by private corporations that cannot be relied on to provide that information in perpetuity. And so on.)
I agree that, for many things, there are ways to communicate that have advantages the Postal Service doesn't offer. But I cannot imagine having to sacrifice what makes that service valuable in the name of making it profitable, or always having to rely on alternative services, especially for critical or official communication. We're going to need a public post office for some time yet. And as communication continues to move online, the need for a reliable, public system for delivering that communication will grow even further.
For one thing, we don't, as citizens, all have an official electronic mail box.
A $8.5 billion subsidy to cover this last year's losses could have bought 20 million Americans iPads/netbooks.
If we're going to subsidize universal service, let's do it in a modern fashion. And let's focus on those people and regions that would get left out otherwise. There's no need to federalize things everywhere -- including in cities where competing alternatives would be eager to operate -- to cover a few edge cases for poor and rural delivery.
A $8.5 billion subsidy to cover this last year's losses could have bought 20 million Americans iPads/netbooks.
What, exactly, would that achieve? Not the same function that the USPS does. Sure, 20 million more people would have a device, but they wouldn't have a "U.S. Email address" in the same way that they have a "U.S. Mail address". They would just have a way to use someone else's privately-owned infrastructure. Who knows how long that would last, or how reliable it would be?
If we're going to subsidize universal service, let's do it in a modern fashion.
I agree. But that means what we should be doing is building public infrastructure for new forms of communication, not farming it out to private infrastructure (which decides whether or not to deliver mail, first and foremost, on the basis of whether it is profitable) in order to save a buck. Let's have a national electronic service that:
- provides an "address" [1] to every citizen, with a directory that allows people to find each other
- provides guaranteed, reliable, on-time delivery at minimal cost to the sender
- guarantees secure communications
- provides a channel for official communications, from voting to tax forms to jury duty summons
[1] I'm not sure if "address" is the right metaphor or not. Certainly, a mere "government email address" wouldn't be sufficient. The basic point is that every individual citizen ought to have some sort of secure repository where they can receive communications of all kinds: email, documents, whatever. And it should be at least as easy to access this repository as it is to walk out your door to your mailbox. That means that, if people need a computer and Internet connection to access it, they must be provided with one; their hardware, software, and network connection must work at least as reliably as mail delivery does.
I'd rather not have yet another way for the government to track my every move and communication. I do like the concept of having a single destination for communication, regardless of my location, but I don't want the (US) government involved. What I'd really like is a way to receive physical mail at a single "address" no matter where I am. If I'm traveling, living in a place temporarily for short-term work, studying, whatever, I don't want to have to keep updating my mailing address with companies and a dozen government agencies.
I'd rather not have yet another way for the government to track my every move and communication. I do like the concept of having a single destination for communication, regardless of my location, but I don't want the (US) government involved.
I understand the sentiment here, but I wonder what the alternative is. (Letting Facebook track your every move and communication?) Given that the communication is going to take place over somebody's infrastructure, I'd much rather have whoever controls it be accountable to the public.
It's in the public's interest to have a secure channel for communication (secure from everyone, including government agencies). The government is supposed to be our means of providing things that are in our interest. If it can't do that (or it won't do that without providing a back-door for its own domestic snooping), then we have a much more serious problem: a society which is a democracy in name only. I think this is a problem to be addressed, not an inevitability that we should be resigned to.
What I'd really like is a way to receive physical mail at a single "address" no matter where I am. If I'm traveling, living in a place temporarily for short-term work, studying, whatever, I don't want to have to keep updating my mailing address with companies and a dozen government agencies.
This would be great! It's a different problem, though: we're back in the realm of physical mail, rather than electronic communication.
I've heard of mailbox services that will collect your mail, scan and e-mail it to you, then shred whatever you don't need in physical form. A Google search for "mail scanning service" turned up Earth Class Mail and a few others; I might have to check them out.
This is interesting -- I didn't know the Federal Reserve was allowed to turn a profit. I guess it makes sense, though. My instinct is: well, that's great! (Proof that a government entity can be run profitably!) But even if it couldn't make a profit, that wouldn't be an argument for not having a central bank, or for making drastic cuts to its operations in order to make it profitable. The point is that we have these institutions because we need them to serve a certain function, whether or not they can do so profitably.
Somebody downvoted you instead of replying. I upvoted, but looks like the Stackoverflow-like algo pg has didn't count my vote. Or the person who downvoted you has a posse.
"Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the Reserve Banks are not federal instrumentalities for purposes of the FTCA, but are independent, privately-owned and locally controlled corporations." [Lewis vs. U.S., 680 F. 2d 1239, 1241]"
It's essential for anyone to be able to send direct mail to a Rural Route address for $0.20?
If anyone mildly sophisticated wanted to tamper with postal mail it would be trivial to do so. Most important mail these days is sent via Fedex, DHL, and UPS.
The price isn't that important, as long as it's not so high that it excludes people from using the mail system (when's the last time you tried to send a letter via Fedex? I bet it didn't cost $0.20). The important thing is that we have a public system, accessible to everyone, for distributing important communications -- things like absentee ballots, jury summons, tax forms, etc. Any citizen with a stable physical location should be reachable with this system, and it should be controlled by a public entity, not a private one that can decide not to deliver mail if it's not profitable.
Actually, any important letter I have to send is sent with FedEx. They provide fast, predictable delivery, tracking numbers, signature requirement, saturday delivery, etc.
Letters don't cost $0.20 to send via the USPS either, unless you're a bulk marketer who is offered a huge discount to send people garbage. I have tried to opt out of all the unsolicited mail (coupons, flyers, magazines, etc.) and they keep sending it. It all (thankfully) gets recycled but it's a huge waste.
I also don't buy the argument that rural route customers should pay the same price for mail as anyone else. If you live in a rural area you get some benefits (cheaper land) and you should have to pay extra for infrastructure that is not efficiently offered when houses are 3 miles apart.
What's with the frequent anti-rural sentiment on HN? Rural residents depend on the mail far more than anyone else, as they are less likely to have access to alternate services. Extremely isolated locations don't have to-the-door delivery of mail, but a row of mailboxes on the road for all the houses in the area. I doubt it's as unprofitable as you seem to think.
Flat-rate delivery of mail is a necessary social equalizer. It would be entirely unfair to deny rural residents access to communication. In many cases they are the ones growing the food we eat, mining the coal that powers our PCs, etc. In exchange for providing valuable services in places we don't want to live, we should isolate them further?
It's not anti-rural sentiment. I understand the case for subsidizing infrastructure for underserved populations, but I think the postal service does this at too great a cost.
For example:
Every day my mailbox is filled with paper that goes directly into the recycle bin. USPS representatives sell direct marketing services to businesses who send all this junk mail because it's so inexpensive to send.
Imagine if your ISP was affiliated with a spammer. This is effectively what the USPS does and it wastes lots of time, paper, and other resources.
The reason the USPS supports paper spam is simply to help fund its egalitarian mission of delivering mail in spite of too-low prices. The USPS does not pay the cost of recycling the paper or the cost of emptying everyone's mailbox of it every day. These are significant negative externalities.
Instead, why not simply subsidize rural mail by giving residents of rural areas some free stamps every month? It seems that making the rest of us deal with removing unwanted garbage from our mailboxes every day is a horribly inefficient way to achieve the egalitarian objective you cite.
I get such little useful content from my mailbox that I only empty it when it's become completely full (about once every 10 days).
I'd be totally happy with weekly mail delivery, which would cut costs substantially.
Most of what is in the box is direct mail advertising that I've tried very hard to opt out of and which goes directly into the garbage. What remains is duplicate copies of bills I get online and tons of junk from Wells Fargo, etc.
I think the USPS has become more of an advertising distribution service than something of value to the typical person.
And, USPS doesn't attempt repeated delivery of parcels, so 80% of the time I'm not home to receive it and have to drive to the post office and stand in line to collect it.
Daily mail delivery would make sense if you could count on things being delivered with day level precision, but in my experience all mail that isn't coming from the same city or adjacent cities is wildly unpredictable.
I process my paper mail once a month, when I pay bills. I do empty the box more often than that but I just put it in a pile, discarding obvious junk immediately but opening nothing. I find this to be the most efficient approach.
I've read that many employees retire early with full benefits and then get their buddies to hire them back as contractors for even higher pay while getting benefits. Your delivery person may be making over $100k with full benefits.
wow, a government run program out of money? What a surprise (:-O <= this is my shocked face). The problem is that they aren't running it like a corporation, because they feel they have a monopoly.
As an example, a few summers ago, the USPS internet gateway went down. It took them over a month to get it back up and running properly. For over a month, anyone running a website could not get correct rates (If it could connect to the servers at all).
If this was a private company, they would have lost a ton of customers.
Start delivering mail only two or three days a week. That's all anyone reall needs. If nothing else cut out Satirday at least.
And charge whatever you need to. It's not like mail is some kind of necisoty that needs to be kept cheap.
Sent from first generation iPhone sorry for the typos.
Mail needs to be delivered daily (preferably seven days a week). Economic transaction efficiency depends on the mail. Many invoices, payments, legal documents etc are still sent through the mail (even though they should be electronic).
The banks don't process any of my payments on the weekends, so bills and invoices don't matter if they arrive on the weekends.
Saturday and Sunday thus are not required.
As for legal documents, those are all based on the standard work week as well, so that argument falls as well.
As such there is no reason for mail to be delivered on Saturday or Sunday. At the company I work at we get mail on Saturday, we don't get to read it until Monday anyway.
The USPS could offer a way of electronically delivering mail to them which could be sent over the internet then printed (by the USPS) at the nearest sorting center. Who says things that need to be on paper have to start out that way?
A modest proposal: perhaps the USPS should reassert the constitutional postal monopoly and recover the highly profitable urgent letter and package business from FedEx and UPS.
A less modest, but more practical proposal: remove the USPS's monopoly protection and make it compete on the market alongside private carriers. Let the best business(es) win.
What do you believe would happen it FedEx and UPS (and who ever else wanted) needed to provide regular first class mail delivery and other letter services to every postal address in the United States for, say, $0.44/ounce in return for a license to deliver urgent mail and packages?
Years ago, the USPS proposed to give everyone that had an address an email account, for receipt and payment of bills. Then they priced it at the cost of two first class stamps. The program died, and we lost what might have been a vaulable piece of new infrastructure.
Time to retry this program. Every year that passes is a better opportunity for the postal service. More people are online and many businesses have paperless statement options. Less important letter mail is being delivered.
I would pay not to have to check my physical mailbox but once a month.
My friend who is a USPS contractor says management wants to cut costs by eliminating Saturday delivery, but the politicians don't have the balls to approve it. They are only worried about getting re-elected.
considering I haven't checked my (physical) mailbox for two days now, I wonder the effectiveness and necessity of the service. I know many people that do depend on their services, but I think the USPS will become a thing of the past eventually.
I think the USPS is importance lies in that they serve a section of the market that wouldn't be served otherwise.
Their charter probably requires that they deliver mail to rural areas i.e. unprofitable ones.
If you really wanted them to be competitive you would allow them to ditch their "unprofitable" routes (sorry Alaska) and fund their retirements like Fedex and UPS.
As an aside, it does seem that they are "ad supported" to a certain extent.
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[ 2.7 ms ] story [ 161 ms ] threadDue to the human interface issues, USPS will still have to maintain some semblance of Saturday retail window hours. In the small town where I live, retail hours have already been trimmed somewhat.
Removing Saturday delivery will save in manpower, and reimbursements for milage. To the best of my knowledge, rural carriers only work 5 days a week. So the 6th day (regardless of which day it is) is filled in via a substitute carrier. Those subs could see a drastic drop in hours of work.
But back to my original comment about back office operations... If you dumped Saturday, all the mail that would have been sorted on Saturday morning, will still be sitting there on Monday morning, waiting to be handled.
There may be savings here, but don't expect it to remove 1/6th the operating costs of the USPS.
Mail is sorted throughout the whole week, if anything we might see less hours being worked by the sorters on Thursday and Friday when the Saturday deliveries are sorted out.
Keep in mind only Saturday delivery is being suggested to be dropped out, that's the end-of-the-line. You still have to sort at all kinds of upper levels (does this piece go to a zipcode within this state, or one of our territories, USVI, etc? And so on, until they get to the local USPS PO, which is the one which would handle the local Saturday delivery).
(Not that this disputes anything you said, just pointing out that mail will probably still be sorted the same way its being done right now)
http://clerk.house.gov/evs/2008/roll681.xml
Plus, the "total collapse" argument was BS. We'd be further along if the feds had allowed the banks to fail (while protecting individual depositors) and reorganized them. We did it this way with the RTC in the 1980s and Sweden did it in the 1990s.
In the moment? Anyone who voted against that bill was either posturing or a madman. I mean, we got the money back anyways, most of it. Why play chicken?
Wrong, and many well respected economists will tell you you're wrong.
Economists agree: Legislation Reid led to passage prevented economic collapse
Excerpts:
Krugman: Government intervention helped avert "second Great Depression." In his August 9, 2009, New York Times column, Nobel laureate Paul Krugman wrote that governmental actions kept the U.S. from going into "a second Great Depression"
...
Blinder and Zandi: Policies "probably averted what could have been called Great Depression 2.0." In July, former Federal Reserve vice chairman Alan Blinder and Moody's Analytics chief economist Mark Zandi issued a report citing analytic models to demonstrate that the "multifaceted and bipartisan" response to the financial crisis, including the Troubled Asset Relief Program and the American Recovery and Reinvestment Act - both of which passed the Senate under Reid's leadership -- had a "huge" effect on real GDP, jobs, and inflation, and "probably averted what could have been called Great Depression 2.0"
...
U.S. Chamber president: Stimulus needed because "we thought we were days away from a global recession."
...
AEI's Malkin: Policy response "averted" global depression. From a January outlook report by the American Enterprise Institute's John H. Malkin
...
Nowakowski: Policies have "averted depression." In a September 13 column, David Nowakowski, director of credit strategy at Roubini Global Economics, wrote that the Federal Reserve's fiscal policies, "along with the fiscal stimulus," have "averted depression, reversed a short bout of deflation, and helped unemployment from reaching 1930's levels."
...
Romer: Policies made difference between recovery and "second Great Depression." In her September 1 farewell speech, Christina Romer, outgoing chairman of President Obama's Council of Economic Advisers, praised the stimulus package and the Obama administration's use of TARP funds and said: "I am proud of the recovery actions we have taken. I believe they have made the difference between a second Great Depression and a slow but genuine recovery.
http://mediamatters.org/research/201010220033
I don't know much about Christina Romer, but is there any reason to believe she and Krugman constitute a "range" of economists?
T.A.R.P. was started and passed under George W. Bush. The people advising him, including Henry Paulson his Secretary of Treasury, and Federal Reserve Chairman Ben Bernanke were telling him the same thing. See here:
http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
My point in posting here is not about partisanship, but about accuracy. Economics is a science -- not an exact one, but a science nonetheless. At its core economics is not about partisanship at all. People can probably turn anything under the sun partisan, but that's their problem. Believe it or not some people are able to focus on doing their job (and providing their opinion) in the interest of the country above partisanship, like current Secretary of Defense Robert Gates who is a Republican. Economists advising both sides of the aisle support the position I've outlined. I'm not going to to look them up for you, but you can feel free. I'll start you off. Look for the comment near this one by jbooth http://news.ycombinator.com/item?id=1901677.
Yes and other well respected economists (at least at the time) told that we were in a "Great Moderation":
http://en.wikipedia.org/wiki/The_Great_Moderation
Now, was the system set up incorrectly where we could end up in such a mess? Yes. But that wasn't the fault of any one politician or group of politicians at any one time. The problems leading up to the crisis built up in different ways over time. The financial reform President Obama has pushed through addresses some of these issues, for example, by allowing the government the power to break apart and unwind large "too big to fail" type entities without bailing them out with taxpayer funds. When you look at it this way, Congress and both the outgoing and incoming administrations did do what was best for the country, even if unpopular on the surface. This doesn't even get into the fact that a lot of that initial money has been, and continues to be paid back, and in some cases even turns a profit.
Well, maybe.
But let's just say it's true for now. Even if that's the case, those organizations could have been liquidated and their assets sold off, perhaps with the key pieces under some sort of guarantee from the Federal Reserve or Treasury or "Bureau of Stabilizing Home Interest and Trust" or whatever feel-good label/acronym these messes are typically labeled.
The organizations that made bad bets should've been liquidated, even if you believe the catastrophe scenario (which I'm skeptical of personally).
He succeeded in driving down the cost of government mail.
BUT: the vast majority of the mail I get through the postal service is junk mail that I don't want. The remainder is almost entirely stuff that I'd prefer to get electronically and, if the USPS were to disappear, I feel confident I would.
So I'd like to hear arguments for the continuing subsidy and existence of the USPS, but I wouldn't personally cry any tears if it were abolished tomorrow.
The answer to that has to do with economic issues. Once upon a time (and I have not seen the numbers in years) 3rd class mail (what you can junk, and is now officially called Standard) actually carried its own way, and supported the cost-basis for First Class mail.
The reason(s) were varied, but had to do with the number of times a piece of mail had to be handled/sorted. Properly prepared Standard mail, had to be individually handled less than 2 times. Much of it was handled once (by the letter carrier). Standard mail arrives at the USPS dropoff already is pre-sorted by carrier route, and potentially by carrier order of travel. The mailers get a reduced rate, but not as much as it actually saves the USPS.
Getting rid of Standard Mail would actually increase cost of First Class. Standard Mail is advertising, and if they didn't advertise to you one way, they would just do it another.
My beef is less with Standard Mail, and more with political mail.
> So I'd like to hear arguments for the continuing subsidy and existence of the USPS, but I wouldn't personally cry any tears if it were abolished tomorrow.
USPS delivers (in one way or the other) to every point of presence in the USA. UPS, FedEx and DHL can not match that (although they do try to come close).
USPS also provides a variety of services that none of the others do.
So in part, it's a matter of equity -- that everyone in this country has equal access to postal services and the benefits they provide (which are admittedly cross-subsidized). This same rationale goes into telephone universal service funds and has been discussed in the context of the national broadband plan too.
None of the USPS' private competitors do (or I can imagine would do) this.
Here's a quick and drastic solution to the USPS problem. 1) Give them the ability to set their own prices. They have competition in the form of UPS and FedEx for large packages delivered to your door. Chances are those prices wouldn't change. The rate for a stamp would potentially double. Is that a bad thing? Seriously, what percentage of the stuff you get in the mail is actually useful? 10%? 5%? Yes, there are some businesses who depend on cheap mail, but in effect the US taxpayer is subsidizing their business then. It's no different than the US bailing out the car companies in that regard. This price increase would probably decrease mail volume considerably. 2) Reduce delivery to 3 days a week. Would anyone complain about this? How many people even check their mail every single day without fail? Again, this may hurt mail-based businesses, but they are already existing in an artificial business environment skewed by government subsidies. Going from 6 days to 3 wouldn't cut costs 50%, but I think 20-25% cut in costs is reasonable to expect, considering the volume decrease.
These two things would quickly make the USPS profitable. As everyone here has pointed out, it's not 1980 any more. There's better way to transmit information from one person to another.
The future of the postal industry lies in the transit of physical goods - if they want to survive, they need to become very efficient at moving parcels and packages, and forget about the fiddly business of letters and bulk mail.
I check the mail every day, religiously. Going to the mail box, waiting for the street to be clear of traffic, peering in, and returning with the mail brings me immense satisfaction. All this, even though I very rarely get mail addressed to me. I wouldn't complain, I understand the need for cuts, but the loss of my routine would sadden me greatly.
The USPS has no incentive to figure out how to deliver mail better when it is the only game in town.
If you are talking about improving service, as in the actual shipping service, you must be talking about their achievement of going from "losing a lot of packages", to "losing less than they used to". I've never understood it. I have NEVER lost a UPS or Fedex package. Yet, it is routine for a USPS package to just go "missing", just ask any big ebay seller.
Its also interesting that you assume prices must always go up to match inflation. If USPS was innovating in the right areas, they could drive down costs and deliver more efficiently.
Also, I just suggested the US government allow other approved companies the ability to put things in your mailbox without going to jail. Never said anything about their service.
Netflix addicts. I might only receive a Netflix 2-3 days a week, but making sure those days line up with 3 days of delivery per week would drop throughput to maybe once a week.
Netflix is seriously the only killer app left for the mail system. Everything else I get is either spam or bad news--before Netflix I only checked once a week.
[1] http://www.washingtonpost.com/wp-dyn/content/article/2010/06...
>No other government agency - or private business - bears this kind of burden.
>As a result of the pre-funding mandate the USPS begins every fiscal year more than $5 billion in debt. In fact, the act requires the USPS to pre-fund 75 years' worth of retiree health care costs in just 10 years.
>If the pre-funding requirement weren't in place the Postal Service would actually have a $3.7 billion surplus - over $1 billion each year for the past three fiscal years - despite declining mail volume due to increased use of electronic mail and an economy in crisis.
http://www.peoplesworld.org/deficit-hawks-take-aim-at-postal...
Emphasis mine. It's just a generally insane burden that's not getting enough attention.
I don't have a problem with the postal service being in debt or unprofitable, I just don't think the service is needed, and it's troubling to me that there are laws preventing other firms from offering letter delivery services that compete with the USPS.
I agree. But why should we think of it that way?
The Postal Service was originally conceived as an essential piece of national infrastructure. Why should we think of it as an "independent" entity that needs to turn a profit? Does the highway system turn a profit? How about the Federal Reserve, or the National Institutes of Health?
What's important is that the USPS continue to have enough funding to provide its service in an accessible, timely, and reliable manner. That is what makes it a critical piece of infrastructure. Like it or not, it is still essential to be able to communicate with hard copies.
(Why? For one thing, we don't, as citizens, all have an official electronic mail box. Physical mail also bears information about its transport -- where it went, whether anyone else read it along the way, whether it was delivered and read -- in a way that most electronic communication doesn't. We don't have a unified way of finding out how to communicate with someone online, and the means we do have are all owned by private corporations that cannot be relied on to provide that information in perpetuity. And so on.)
I agree that, for many things, there are ways to communicate that have advantages the Postal Service doesn't offer. But I cannot imagine having to sacrifice what makes that service valuable in the name of making it profitable, or always having to rely on alternative services, especially for critical or official communication. We're going to need a public post office for some time yet. And as communication continues to move online, the need for a reliable, public system for delivering that communication will grow even further.
A $8.5 billion subsidy to cover this last year's losses could have bought 20 million Americans iPads/netbooks.
If we're going to subsidize universal service, let's do it in a modern fashion. And let's focus on those people and regions that would get left out otherwise. There's no need to federalize things everywhere -- including in cities where competing alternatives would be eager to operate -- to cover a few edge cases for poor and rural delivery.
What, exactly, would that achieve? Not the same function that the USPS does. Sure, 20 million more people would have a device, but they wouldn't have a "U.S. Email address" in the same way that they have a "U.S. Mail address". They would just have a way to use someone else's privately-owned infrastructure. Who knows how long that would last, or how reliable it would be?
If we're going to subsidize universal service, let's do it in a modern fashion.
I agree. But that means what we should be doing is building public infrastructure for new forms of communication, not farming it out to private infrastructure (which decides whether or not to deliver mail, first and foremost, on the basis of whether it is profitable) in order to save a buck. Let's have a national electronic service that:
- provides an "address" [1] to every citizen, with a directory that allows people to find each other
- provides guaranteed, reliable, on-time delivery at minimal cost to the sender
- guarantees secure communications
- provides a channel for official communications, from voting to tax forms to jury duty summons
[1] I'm not sure if "address" is the right metaphor or not. Certainly, a mere "government email address" wouldn't be sufficient. The basic point is that every individual citizen ought to have some sort of secure repository where they can receive communications of all kinds: email, documents, whatever. And it should be at least as easy to access this repository as it is to walk out your door to your mailbox. That means that, if people need a computer and Internet connection to access it, they must be provided with one; their hardware, software, and network connection must work at least as reliably as mail delivery does.
I understand the sentiment here, but I wonder what the alternative is. (Letting Facebook track your every move and communication?) Given that the communication is going to take place over somebody's infrastructure, I'd much rather have whoever controls it be accountable to the public.
It's in the public's interest to have a secure channel for communication (secure from everyone, including government agencies). The government is supposed to be our means of providing things that are in our interest. If it can't do that (or it won't do that without providing a back-door for its own domestic snooping), then we have a much more serious problem: a society which is a democracy in name only. I think this is a problem to be addressed, not an inevitability that we should be resigned to.
What I'd really like is a way to receive physical mail at a single "address" no matter where I am. If I'm traveling, living in a place temporarily for short-term work, studying, whatever, I don't want to have to keep updating my mailing address with companies and a dozen government agencies.
This would be great! It's a different problem, though: we're back in the realm of physical mail, rather than electronic communication.
Yes.
$45 billion in 2009: http://www.washingtonpost.com/wp-dyn/content/article/2010/01...
Earnings beyond the cost of operations are returned to the US Treasury:
http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#6
kb
Anyway, here's a web page with an extract from the US federal court: http://www.healthfreedom.info/Federal_Reserve_Fraud.htm
"Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the Reserve Banks are not federal instrumentalities for purposes of the FTCA, but are independent, privately-owned and locally controlled corporations." [Lewis vs. U.S., 680 F. 2d 1239, 1241]"
See also: http://seekingalpha.com/article/125092-grand-illusion-the-fe...
If anyone mildly sophisticated wanted to tamper with postal mail it would be trivial to do so. Most important mail these days is sent via Fedex, DHL, and UPS.
Letters don't cost $0.20 to send via the USPS either, unless you're a bulk marketer who is offered a huge discount to send people garbage. I have tried to opt out of all the unsolicited mail (coupons, flyers, magazines, etc.) and they keep sending it. It all (thankfully) gets recycled but it's a huge waste.
I also don't buy the argument that rural route customers should pay the same price for mail as anyone else. If you live in a rural area you get some benefits (cheaper land) and you should have to pay extra for infrastructure that is not efficiently offered when houses are 3 miles apart.
Flat-rate delivery of mail is a necessary social equalizer. It would be entirely unfair to deny rural residents access to communication. In many cases they are the ones growing the food we eat, mining the coal that powers our PCs, etc. In exchange for providing valuable services in places we don't want to live, we should isolate them further?
For example:
Every day my mailbox is filled with paper that goes directly into the recycle bin. USPS representatives sell direct marketing services to businesses who send all this junk mail because it's so inexpensive to send.
Imagine if your ISP was affiliated with a spammer. This is effectively what the USPS does and it wastes lots of time, paper, and other resources.
The reason the USPS supports paper spam is simply to help fund its egalitarian mission of delivering mail in spite of too-low prices. The USPS does not pay the cost of recycling the paper or the cost of emptying everyone's mailbox of it every day. These are significant negative externalities.
Instead, why not simply subsidize rural mail by giving residents of rural areas some free stamps every month? It seems that making the rest of us deal with removing unwanted garbage from our mailboxes every day is a horribly inefficient way to achieve the egalitarian objective you cite.
If my own sphere of influence, I only know 1 person who _doesn't_ check their mail daily.
I'd be totally happy with weekly mail delivery, which would cut costs substantially.
Most of what is in the box is direct mail advertising that I've tried very hard to opt out of and which goes directly into the garbage. What remains is duplicate copies of bills I get online and tons of junk from Wells Fargo, etc.
I think the USPS has become more of an advertising distribution service than something of value to the typical person.
And, USPS doesn't attempt repeated delivery of parcels, so 80% of the time I'm not home to receive it and have to drive to the post office and stand in line to collect it.
Daily mail delivery would make sense if you could count on things being delivered with day level precision, but in my experience all mail that isn't coming from the same city or adjacent cities is wildly unpredictable.
Their executives are even more corrupt:
http://www.washingtonpost.com/wp-dyn/content/article/2010/09...
http://www.washingtontimes.com/news/2009/feb/17/in-hard-time...
Maybe they need an "auto-industry" style reset.
(and bulk rate definitely needs a 50% increase)
As an example, a few summers ago, the USPS internet gateway went down. It took them over a month to get it back up and running properly. For over a month, anyone running a website could not get correct rates (If it could connect to the servers at all).
If this was a private company, they would have lost a ton of customers.
Sent from first generation iPhone sorry for the typos.
Saturday and Sunday thus are not required.
As for legal documents, those are all based on the standard work week as well, so that argument falls as well.
As such there is no reason for mail to be delivered on Saturday or Sunday. At the company I work at we get mail on Saturday, we don't get to read it until Monday anyway.
No, it doesn't. Quite a few legal documents are signed on Saturdays and then overnighted back so that the sender can have it back by Monday.
He is the mail man.
I receive mail from the USPS every day. Only about 10 times per year is there something relevant to my interests.
I would pay not to have to check my physical mailbox but once a month.
Next up, get rid of yellow pages.
Their charter probably requires that they deliver mail to rural areas i.e. unprofitable ones.
If you really wanted them to be competitive you would allow them to ditch their "unprofitable" routes (sorry Alaska) and fund their retirements like Fedex and UPS.
As an aside, it does seem that they are "ad supported" to a certain extent.