USPS Estimates $230 Billion in Losses over Next 10 Years | Hacker News Reader

USPS Estimates $230 Billion in Losses over Next 10 Years

washingtonpost.com

12 pointsphyscab29 comments

Each time a discussion about a public service comes up, I feel obliged to remind that even if a public service is not financially viable, it may have positive externalities that it cannot capture, but that make the whole venture more-than-viable to society.

The Post Service is a classic example of such a service. They serve remote areas and communities that commercial delivery services would not cover, therefore jumpstarting commerce there. Otherwise these communities would be economically isolated and would wither away. The state usually recovers their expenses soon, given that increased commerce means increased tax income. Also, this is a form of long-term investment for the society as a whole that is non-obvious and for which other mechanisms do not exist.

I would buy the public service line if more then half of our mail didn't go straight into the trash. I am excited when I see a Fedex box on the door step. Not so much when I see a mail box full of junk addressed to current resident.

Alas, the junk is why they only expect to lose B$238 instead of B$500. Well, I can only speak for Canada, but up here they get a huge amount of revenue from delivering junk mail. I sympathize with you, there's so much of the stuff that I am tempted to place a blue recycling bin marked "Current Resident" on my door step with a slot in the side for mail :-)

I can only guess that all that junk works. And I suppose it does... I keep the ones for local restaurants that deliver what may be good food...

True, commerical mail seems to be their main business. I've heard of supervisors get mad at letter carriers who have too many households who don't wish to receive flyers and ads. And there doesn't seem to be any way to refuse "Adressed Admail" except by contacting the company that sends it.

Something the post office could do is to leverage their local infrastructure and work with the couriers. If I miss a UPS delivery, and have to ask nicely to get a 2nd delivery attempt. Picking up the package at the local post office would be a lot easier for everyone.

I guess I don't understand what you are saying here. I'll assume you aren't blaming the USPS for your junk mail. Are you suggesting they should raise their rates? That would raise more money and reduce the incentive for "snail mail spammers."

And what would preclude requiring that private enterprises that wish to compete in this sector with servicing remote areas?

230 Billion dollars in losses.

An artificially low price is what excludes private enterprises. It also encourages people to be inefficient by shielding them from the true cost of living in remote areas.

Why should people in economically viable communities be forced to subsidize people who chose to live in remote areas? Of course this makes the subsidized people better off, but it doesn't make society as a whole better off. Society is better off when resources are spent efficiently. The only practical way to ensure efficiency is to let prices be set by a free market.

If settlement of remote areas is a good investment then it will occur even if the settlers have to pay the market prices for their services. Arguing for subsidization is an admission that settlement is not a good investment.

Why should people in economically viable communities be forced to subsidize people who chose to live in remote areas?

That is emphatically not what his comment stated, nor how the effects work.

The specific argument is that by spending $1 to provide a service to a group of people, you increase the size of the economy, and consequently the tax base in that area, by more than $1, thus turning a net profit.

Your statement, "by spending $1 to provide a service to a group of people, you increase the size of the economy, and consequently the tax base in that area, by more than $1," even if it were true, is too broad: it applies to services which pay for themselves as well as those that don't. It's not an argument for why government should overcharge city folk to pay for services for country folk.

"Why should people in economically viable communities be forced to subsidize people who chose to live in remote areas?"

Game theory. The population centers voted that failure to respond to mail can subject you to severe legal penalties, including imprisonment, and there is at present no practical substitute to first class mail. Cutting off the mail would result in unfair punishment of remote peoples, which would result in secession of the remote territory, which would result in loss of EXTREMELY valuable roads, railways, pipelines, oil tank farms, air space, geographically-defended military bases, and radio spectrum.

To put it another way, the economy of scale of the Pax Americana can afford quite a bit of abuse from the postal unions.

That's an interesting theory. When can failure to respond to mail subject a person to legal penalty?

A summons for jury duty is one obvious example.

You've said that it can be seen as a long-term investment for society. Definitely! The United States has taken such long-term investments in the past as it subsidized people settling all over the continent. However, there's a difference between investing in something that has a future and throwing money after a lost cause. Some places are simply rural. Some people don't want increased commerce or activity around them. Plus, if you're talking about government revenue from taxes, if these communities withered away and the residents moved to less rural areas, the government would make the taxes off of them there - and potentially greater taxes since they'd be in a more economically active area.

That said, I think that a smart idea might be to create tiered service that is aware of the investment proposal. So, new communities get "first class" service for their first 15 years - mail delivered every day just like it would be in Boston. After the initial "investment period", service will be determined by the cost of delivery. Urban areas might get 6-day service. Suburban areas, 5 day service. Rural areas, MWF service. Highly rural areas, TF service. Mega-rural, no houses within 15 mile type places get mail once a week (considering that, in this scenario, a carrier would only be delivering mail to a maximum of 28 households in a day, I think that sounds somewhat reasonable). That would keep commerce running while reducing costs.

And I'm not sure there'd be too much objection to such a plan. I have a co-worker who is from a community that you can't get to by road - you have to go by boat. It is disconnected from things and that's how the residents like it to be. Granted, it's still nice to be able to get deliveries, but they're more into making things for themselves.

Does that sound like an interesting proposal? It's definitely important to keep people connected, but maybe they don't need to be connected every day. If one has situated themselves in a location apart from society, maybe it's ok that we stay connected with them, but not quite as connected as we do with those who have located themselves at the center of society.

EDIT: After talking with my co-worker, most rural places have the same every-day service, but there are middle of nowhere places that do only get mail once a week.

It's interesting that 3 studies came up with the conclusion that the business model of the USPS is so poor privatization is untenable without considering the fact that maybe privatization would come up with a better business model. Right now, the USPS is a government sponsored monopoly that is failing spectacularly. Allowing private companies into the market might not only improve the business model but come up with something fantastically different that fits the needs of the consumers.

Looking at a failed business model and saying "That model is so bad even private companies couldn't fix it" seems like putting the cart before the horse. Private companies are going to find their own business model, one that isn't terrible, because their livelihood depends on it.

They're "failing" just as much as private health insurance is "succeeding".

Just leave the USPS as is and do the incremental fixes required to make them break even. No need for them to make a profit.

If that's true, then private health insurance is indeed succeeding spectacularly! I don't think that's what you mean though. But if the money alone is the judge, losing $230 billion over 10 years is very serious failure if you ask me. I'm curious what incremental changes could change the failure faster than giving private companies a shot to see what they come up with.

Simple story - large labor intensive service with massive legacy costs (millions of retirees and the physical infrastructure to move mail to every corner of the U.S.) meets dramatic drop in demand caused by technological disruption (faxes in the 80s to Internet/Email in the 90s).

A client of mine wanted to automate her invoicing. As part of that project I used the USPS API to get the postal rate. First of all, their documentation is just plain wrong. It will not work if you follow their documentation. After a frustrating few hours I googled it and found a site that explained everything that was wrong with it. http://www.marksanborn.net/php/calculating-usps-shipping-rat... Secondly, my client complains that the USPS should have someone she can contact that gives her all the info she needs to use their services. But instead what she has found is some info from one person, conflicting info from another, and no one who can explain everything. The USPS does a terrific job of delivering mail at a very reasonable rate, but they need to fix the problems outlined above if they want to compete.

Maybe they should stop saturday delivery and stop undercutting FedEx and UPS on shipping charges and they might stop losing money. The government only stops them from expanding their business and closing rural branches.

Also sell sponsorships on the carrier vehicles, like "If you had netflix we would be delivering you a movie right now"

They can perhaps take dual roles of other government agencies too, like US Census.

Perhaps private shipping companies should be allowed to compete in this sector.

Do UPS, FedEx and DHL not count?

They don't deliver standard mail, afaik.

As I understand it, they're not allowed to compete with letter delivery/first class mail:

http://en.wikipedia.org/wiki/Private_Express_Statutes

Ah ok, I didn't know about these statutes, very interesting

Indeed. It is of importance to legal processes, where an unstamped hand-delivered letter is in some sense undelivered.

this is one industry that could benefit from privatization, or at least they could adopt some practices from the private sector and become more lean.

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