For 225 years the U.S. Post Office has been the most admired and ubiquitous manifestation of government. From 1789 until the 1960s, the Cabinet level agency saw its mission not only to deliver the mail but to aggressively defend the public good. In the late 19th century when oligopolistic mail order delivery companies abused their rural customers the Post Office launched parcel post. The competition quickly forced private companies to reduce their exorbitant prices and dramatically improve the quality of their service. In the early 20th century, when bank collapses resulted in depositors losing their life saving the Post Office created postal banks that for half a century provide security and attractive interest rates to millions of small depositors.
In 1970 Congress stripped the post office of its cabinet status and stopped providing public funding. The new quasi public corporation was urged to adopt a more business like attitude. Its name, the U.S. Postal Service, reflected a circumscribed mission statement. No longer was it to be a tool to check the predations of the private sector. Its sole mission would be to deliver the mail.
The USPS used its new flexibility and ability to borrow to dramatically increase productivity. By the 1990s, despite the elimination of a public subsidy that in 1970 had accounted for 25 percent of its total budget the USPS was generating a consistent profit. But to USPS management the mandate to operate in a more businesslike manner was viewed as a mandate to operate more like a private business, improving its internal balance sheet at the cost of weakening the balance sheet of the communities it served. Again and again Congress had to step in to prevent USPS management from pursuing actions that would have inflicted harm on the nation: stopping closing Saturday delivery, closing rural post offices willy-nilly.
In 2006, in an accounting maneuver I’ve discussed in more detail in an earlier OTC article Congress forced the USPS to pay $5.5 billion a year to do what no other public agency or private corporation does—prepay 100 percent of its future health insurance costs. As the Postal Regulatory Commission (PRC) later observed, these payments quickly “transformed what would have been considerable profits into significant losses.” Today the USPS deficit has reached $20 billion. Headlines constantly use the word “bankruptcy”, conveying the message that the post office is an antiquated institution doomed to irrelevancy in the age of the internet, but 80 percent of this huge deficit has been caused not by a decline in first class mail but by this human contrived financial burden.
The debt may be contrived, but its impact is real. USPS management is cutting its “deficit” by eviscerating the institutional commons it oversees. By closing rural post offices the USPS is delinking the institution from the community. By closing half of its processing centers, the post office is eliminating local overnight delivery of the mail, a severe burden on weekly newspapers and undermining another sense of geographic community. In 2012 the USPS announced that first class mail delivery would take at least one more day. USPS is selling off dozens of magnificent buildings constructed during the New Deal that have served as testaments to a time when the very design of public buildings was seen as part of the commons. Tens of thousands of workers with the most experience have taken early retirement, resulting in an increasingly less knowledgeable and lower paid workforce.
Today, at the local post office, three clerks have become two, and if you visit during the lunch hour there might only be one. A once-short minute wait can become a 15 minute wait or longer. Unaware of what is behind the cutbacks, those on the line now grumble about the incompetence of “government.”
The anti-commons strategy is clear. Reduce the post office’s presence in thousands of communities. Reduce the number of personal interactions with one’s letter carrier. Reduce service. Remove the post office from our everyday lives sufficiently so we will acquiesce to its conversion to a private service supplied by profit making firms.
With both political parties demanding the evisceration of the post office, an extraordinary albeit inchoate grassroots movement has arisen to defend this most public of all public institutions. In 2011 the USPS announced it was going to close 3400 local post offices in the next year but the resulting outcry led Congress later that year to impose a 12-month moratorium. When the moratorium ended USPS management retreated from its decision to make rapid wholesale closures although it continues to stealthily shutter many local offices via a number of backdoor maneuvers.
In early 2013 the USPS announced it would stop delivering first class mail on Saturdays, although tellingly it would continue to deliver bulk mail (i.e. junk mail). The resulting uproar led Congress to prohibit such a development.
The post office remains a world-class institution and a remarkable bargain. It still delivers almost 25 percent of the world’s mail. A first class letter in the United States cost 20-75 percent less than in countries with a fraction of our geographic area, such as Austria, Germany, Norway, Italy and Great Britain.
But the privatization wolves are circling. They have openly declared their desire to privatize virtually all parts of the post office. Except its last mile delivery infrastructure, which no private company wants to duplicate. Which is the private sector’s acknowledgement that the post office’s universal infrastructure could give it immense leverage if it were allowed to truly compete. Which may be why the 2006 law that has forced the post office near bankruptcy also hobbled its ability to generate new revenue. The law explicitly banned it from offering a product that would “create an unfair or otherwise inappropriate competitive advantage for the Postal Service…”
When Internet shopping took off, the delivery of packages to individual households should have resulted in a dramatic increase in USPS business. But most parcel shipments were generated by large organizations and the USPS was forbidden by law from lowering prices to get more business.
The post office, first and foremost, creates a commons in every community. It is remarkable and infuriating that when the USPS does a cost benefit analysis to decide whether to shutter a local post office it is not required to take into account the cost to the local community! It does not have to take into account the increased out of pocket costs for people who have to travel longer distances, often on dangerous roads in the winter. The only cost benefit analysis that did bring these community costs into the equation, done by students at the University of Wisconsin, concluded that the out of pocket costs to the community almost always exceed the internal savings to the post office.
The unquantifiable benefits of the post office to a community are equally ignored. In rural areas, the post office may be the only remaining community-gathering place, a place to meet one’s neighbors and share truly local news. In a nation where more than one in five votes are cast by mail and in some states mail ballots have to be received by the close of polls, closing post offices can significantly burden some groups.
Closing post offices and delaying the delivery of mail places a significant burden on the most vulnerable of us for example, delivery of prescription drugs. In a number of communities the postman and woman who usually know everyone on their route watch out for the elderly. If the mail is not picked up the letter carrier knocks on the door and if there is no answer notifies the police.
Tragically, the post office no longer has a visible national champion. USPS management is increasingly acting like the management of a private firm. The media echoes the conservative meme that the post office deficit is an inexorable result of technological advances. Grassroots effort have managed to stave off execution, but the post office is dying from a thousand cuts even as a new generation comes of age who wonders what the fuss is all about.