Why do postal services even need to be handled by an agency?
It's just a normal service like any other. Normal companies do that just fine. As evidenced in lots of history and in other countries around the globe.
It's just a normal service like any other. Normal companies do that just fine. As evidenced in lots of history and in other countries around the globe.
No, they don't. Like others have mentioned USPS delivers to anyone in the extended U.S. with sane prices. They also provide sane international shipping prices. USPS also provides other services like free shipping materials and free pickup. Hiding these and the other services they provide behind companies who only care about the bottom line would hurt people who couldn't afford the services or simply have services they're used to dropped.
Instead of a hodge-podge that's financed by city dwellers who need to send a lot of letters, and assists people who chose to live in the middle of nowhere even if they are filthy rich.
Yes, charging more to people who cause more costs would be exactly the point.
(The poor people could use the targeted help I talked about to afford the higher price. Or they could use that help to buy something they need more than sending letters. Like food or nice clothing for an interview etc. Or whatever they fancy.)
Most original postal systems (and I’m primarily thinking of Royal Mail) started by charging depending on distance a letter would travel.
I’m not sure your system of progressive taxes and rebates, and the needed administrative infrastructure would be cheaper than operating a flat price system. Especially in a country like the US which doesn’t have a large well developed welfare system that already performs these types of assessments.
About postal sytems, the first was probably the private London Penny Post https://en.wikipedia.org/wiki/London_Penny_Post
As the name implies, sending letters cost a penny flat.
> The US already has progressive income taxes and a welfare system.
The current pandemic is demonstrating how woefully under-equipped that system is, I don’t think your proposed expansion would help much.
It supports the ideas of flat pricing, something you said you don’t support. It also not even close to the first postal company, Royal Mail was incorporated almost a hundred years before.
I'm not against any company implementing a flat pricing scheme or universal coverage.
> It also not even close to the first postal company, Royal Mail was incorporated almost a hundred years before.
The London Penny Post was an important early innovator, and privately owned.
"The new Penny Post was influential in establishing a model system and pattern for the various Provincial English Penny Posts in the years that followed. It was the first postal system to use hand-stamps to postmark the mail to indicate the place and time of the mailing and that its postage had been prepaid. The success of the Penny Post would also threaten the interests of the Duke of York who profited directly from the existing general post office. It also compromised the business interests of porters and private couriers."
"Before the emergence of the Penny Post the profits of the existing General Post Office were assigned by Parliament in 1663 to the Duke of York, who now had similar designs on Dockwra's lucrative Penny Post. As the Penny Post proved to be a great success and a potential new source of constant revenue the English government and the Duke of York at the time fined Dockwra £100 for contempt, claiming it infringed the monopoly of the General Post Office, and took control of the Penny Post's operations in 1682, bringing that enterprise to an end.[3] Less than a month later the London Penny Post was made a branch of the General Post Office. For compensation of his losses Dockwra obtained a pension of £500 a year after the Revolution of 1688."
The Penny Post successfully competed with the Royal Mail. And then the government took over the cash cow.
The government has an obligation to send every citizen voter registration cards, census forms, driving licenses, tax forms, firearms registration forms, passports and so on.
The alternatives - an IRS office in every backwater town, denying a vote to people living in remote areas, ATF agents delivering gun permits in person, denying driving licenses to people without a home internet connection - would either be more expensive, or less constitutional.
Unless UPS or FedEx wanted to take on a universal service obligation, of course...
What pricing scheme they want to use is up to them to decide.
Otherwise you just subsidise sprawl. That's bad for the climate as well (because of higher CO2 emissions).
That's not the alternative. The alternative is that they pay a private delivery company to deliver it and/or the recipient will have to come to town to pick it up.
It’s far more important that the lowest income residents can send and receive mail.
Also, the same people who want to privatize USPS are the ones who don’t want subsidies or payments to the poor at all. Killing this would be done in exchange for nothing, not as part of a reform bill that targets help toward those that need it.
The retail rate for sending a letter via FedEx & UPS is currently over 30 times the retail rate for USPS ($0.55 vs > $20)
I love how people on HN complain about monopolies in tech but find it absolutely OK to have monopolies in other walks of life.
In Japan you have heavy competition for package deliveries and the former National post gets trashed when it comes to reliability and speed vs Sagawa or Yamato.
They are able to do this by overcharging for local mail and absurdly undercharging for rural mail. Just another in the never ending list of ways that dense areas subsidize less dense areas.
But the kicker is the less dense areas are the ones who would vote to privatize the USPS. So I say give them what they want.
There's a difference between insurance and cross subsidies.
Insurance is basically a bet. If I have deep enough pockets and some actuary tables, I can write you a single insurance policy. And I can expect to make money of that single policy on average. (But in the specifics, I might have to pay out.) No need for a group that cross subsidizes each other.
USPS Express and FedEx Overnight for documents are essentially the same price, even though FedEx has a higher standard of service. (Which is not surprising, because FedEx runs the backbone of USPS Express.)
FedEx and UPS parcel prices generally beat USPS above a certain fairly small weight, even at retail prices.
I'm happy to have USPS around, and I do a lot of business with them as they're the better option in certain circumstances, but let's not pretend their pricing is particularly magical.
I believe they use an OR operator in that decision and not an AND. They won’t deliver if you’re the only house on the road OR if you’re over a certain distance from a paved road.
Also, even if we accept that the government doing mail delivery is good, why does it need to be a federal agency? Wouldn't this more logically be something for the states to do?
But I guess you don't have subsidiarity in the US? https://en.wikipedia.org/wiki/Subsidiarity
If each state did postal service piecemeal you'd have all sorts of nightmare state-specific pricing, size regulations, delivery schedules, etc. Nobody would benefit from that. Each state would also have to bargain individually with foreign nations about international shipping.
To an extent, companies would charge higher prices for performing services that cost more.
> If each state did postal service piecemeal you'd have all sorts of nightmare state-specific pricing, size regulations, delivery schedules, etc. Nobody would benefit from that. Each state would also have to bargain individually with foreign nations about international shipping.
Why? They could still subscribe to common standards. Just like different paper mills still produce standard sized paper.
Similar for international shipping. Though individual bargaining might be an advantage, too.
Out of interest what’s your opinion on roads? City dwellers almost certainly subsidise the construction of roads they may never need to use, and the US doesn’t pull toll gates on their roads to makes sure they’re charging higher prices for services that cost more.
Any American (or indeed anyone in the US) can use any road for free, as much as they want, for only the cost of their taxes. Assuming they even paid any.
Especially with modern technology for collecting tolls, privatised roads are more feasible than ever.
In practice, I would expect roads to be financed by a mixture of pay-for-use and local businesses.
Even without privatized roads, it can be useful to charge road users. Here in Singapore we have Electronic Road Pricing in some parts of the city to keep congestion down. See https://en.wikipedia.org/wiki/Electronic_Road_Pricing
It works very well. Jams are almost unheard of.
London has a watered down copy of our system.
So see eg https://en.wikipedia.org/wiki/History_of_rail_transport_in_G... and https://en.wikipedia.org/wiki/History_of_the_British_canal_s...
But also have a look specifically at roads: https://en.wikipedia.org/wiki/Turnpike_trust
Without government power forcing the sale of land none of those early railroads would have been built.
The same thing applies to canal building in the 18th century. Government authority was used to force landowners to allow canals to be built.
Again with turnpike trusts, acts of parliament were required to establish each one, and they were generally financed by community bonds.
There has never been a history of private entities building a large, road or rail network through land owned by many different private owners without using the power of government to force the landowners to cooperate.
But private suppliers plus eminent domain is still a far cry from nationalized roads.
What's the mechanism in place to prevent the private road owner from charging far more than the maintenance costs of the road? The government steps in confiscates more private land to build additional less efficient routes that they refuse to sell to existing management companies to allow for some amount of competition? The government creates regulatory bodies to oversee the private road management companies and ensure they don't charge too much? The government regularly accepts bids from different companies to handle management, and somehow manages to keep this bidding process corruption free, there are no problems from regularly handing off control to different companies, and the transaction costs for switching companies don't overwhelm the savings?
The free market depends on competition to work, but with roads built through eminent domain, competition must be artificially engineered. At some point direct government ownership is the most efficient solution.
Freedom of people to move their place of residence and business, and long term contracts.
Basically people don't move house willy-nilly, but when they move house they can take considerations like roads and railroads etc into account. That's what they do today, too.
Long term contracts assure that your decision will be valid for as long as you like to negotiate.
No need for all the regulation you envision here.
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However, I do agree to an extent: private companies are not a panacea by themselves. As you can see with the sorry state of eg American banking (especially historically when branch banking was banned) or in their healthcare system or what I hear about residential internet access.
What is more important is genuine competition.
Alas, adding lots and lots of layers of regulation seldom works. You just get regulatory capture instead.
In that case, you might make an argument that outright government ownership doesn't look too bad in comparison. Especially if you can have very local levels of government be responsible. Eg municipal waterworks seem to work reasonably well around the world. See eg https://en.wikipedia.org/wiki/Sewer_Socialism
What often works better is deliberately decreasing barriers to entry. Be that from foreign competition, local upstarts, or established firms branching out into other industries. (Eg Walmart tried to allow people to open bank accounts. You can guess at the lobbying storm from incumbents that caused.)
Another good measure, but extremely unpopular in practice is to make sure your regulations are as simple as possible. For example, when you have decided to privatize some government agency, say like USPS or Amtrak, you should remove all the debts from its balance sheet and then sell it strictly to the highest bidder.
In practice, that never happens. In practice, there will be a beauty contest with lots of complicated rules (eg about preserving jobs etc). Those rules give the adjudicating officials lots of leeway to decide, and thus power.
Invariably, the buyer will later on renege on their promises.
That's much harder if you just hold an auction in terms of cold, hard cash.
(I'm parroting the suggestions of 'Just Get Out of the Way' https://www.bookdepository.com/Just-Get-Out-Way-Robert-E-And... here. The wisdom of removal of debt from the balance sheet before selling wasn't obvious to me for a while: the idea is that any dollar of debt left on the balance sheet would decrease the sales price by roughly a dollar, but if the newly privatized company goes belly up, it would be politically impossible to avoid a bailout of the debt that existed before the privatization.
In practice we'd expect the new owner to add debt back on the balance sheet shortly after the sale. But that new debt will be politically much less charged.)
Locations aren't fungible and the kinds of long term population movements your taking about take decades. People, including those running the companies that manage the roads are terrible at working on those kinds of time scales.
I can guarantee you, that you would end up with companies extracting the maximum possible rent today without worrying about the effect on the long term population effects of the area. The CEO of roadco isn't going to care that raising the road tolls will depopulate a community in 30 years.
I don't want to live in a world where the health of a community depends on the long term thinking of an unelected private corporation, where the only recourse I have is to uproot my family and move somewhere else.
>What often works better is deliberately decreasing barriers to entry.
That's the problem with roads. The barriers to entry are far too high to allow new competitors to easily enter a market, and the only way to make them low enough to foster serious competition requires allowing private companies to seize even more private property.
>Long term contracts assure that your decision will be valid for as long as you like to negotiate.
There's no reason for a company with a monopoly on the shortest route between 2 desirable places to enter into a long term contract. Call up Comcast and tell them you want to pay $60 a month for the next 10 years. They'd laugh at you because they have no reason to negotiate with individuals. Even if it was possible, you'd need to anticipate which routes you'd take and where in town you'd like to work for the next x years, so that you could negotiate with dozens of different road management companies.
Even if you're talking about long term group rates where a municipality negotiates with the management company, who's going to hold a company to the contract. They'll do what every government contractor today does and lowball the estimate. Then when they say they have to raise prices, if you try to hold them to it, they'll just end up in bankruptcy court.
What's to stop regional and even national monopolies from forming who own all the roads in an area? Barrier to entry is extremely high, so there's no natural force to prevent this?
Seriously I used to be a libertarian bordering on ancap, I know all these arguments, and I know the lure of having a single unified ideological framework that solves all problems. The free market, and the non-aggression principal ain't it. There are too many places where the free market ends up in a local optimum.
This is how a lot of subsidies work in the US. City-dwellers subsidize rural communities.
> you think USPS is more efficient than a private sector alternative would be?
Likely any cost savings non-rural people would see is at the cost of pensions, employee benefits, or other potential stones-to-be-bled. If USPS is privatized, these things will be strangled to death.
> Wouldn't this more logically be something for the states to do?
No, I don't think so. This is just a backdoor to make privatization easier: whenever some state either mismanages their postal service or simply can't keep it afloat, we'll be at the cutting block again. Furthermore, there's obvious potential efficiencies an interstate mail network has compared to a state-level mail network. The "decentralization" here just necessitates more communication overhead, potentially different laws requiring re-sorting, and a bunch of other potential headaches.
OK. Seems a bit inefficient and arbitrary.
I can sort-of get behind transfers from rich people to poor people. That's fine. But why subsidies people for being hillbillies?
> Likely any cost savings non-rural people would see is at the cost of pensions, employee benefits, or other potential stones-to-be-bled. If USPS is privatized, these things will be strangled to death.
Sounds like a good thing?
> No, I don't think so. This is just a backdoor to make privatization easier:
Yes, that's a benefit.
> Furthermore, there's obvious potential efficiencies an interstate mail network has compared to a state-level mail network.
You would obviously allow the state level agencies to compete out-of-state.
Ahh, okay. Anything to save you a cent regardless of the immiseration it spreads. Good luck.
But why punish people for living in areas that are easier to service by mail? (Ie why make them cross subsidize the hill billies?)
You need to sit down and actually think about the policy results of what you're advocating for because you seem entirely confused.
In general the European policies are far from perfect, but they show that the American arguments for nationalised mail are bogus.
> The message right before this you stated that you're perfectly fine with privatizing pensions, cutting union contracts, etc, but now you claim you care about not punishing people. Furthermore, you claim to be against wealth transfers upwards, but this privatization would do exactly that.
What makes you think so? I'm for a level playing field. Government employees should get the same options for pensions as the rest of the population. The best option to help workers is a vibrant job market. Unions mostly just protect the insiders, like union functionaries are just in general people who already have a job.
What makes you think USPS is inefficient? If it wasn’t for the ludicrous pension constraints applied to them of funding all pensions out to 2056 upfront, a requirement that no other federal agency or private company has. USPS would be returning almost a billion dollars of profit every year.
I would call that pretty good going for a public service.
(You could auction of the monopoly to see how much it is worth. Though in reality, you would be better off just to abolish it.)
See eg https://en.wikipedia.org/wiki/United_States_Postal_Service#C...
The term to search for is "Private Express Statutes": https://en.wikipedia.org/wiki/Private_Express_Statutes.
This article (titled "Universal Service and the Postal Monopoly: A Brief History") goes into more depth: https://about.usps.com/universal-postal-service/universal-se...
Cause it’s constitutionally mandated.
Edit: I just had a look. The clause only seems to talk about the power, not the obligation to run a postal service.
In fact, 'An early controversy was whether Congress had the power to actually build post roads and post offices, or merely designate which lands and roads were to be used for this purpose, [...]'.
As far as I can tell the constitution only gives congress the power to interfere in mail, it doesn't impose an obligation to do so.
> Section 8
> 1: The Congress shall have Power To [...] To establish Post Offices and post Roads;
Similar to how the same section gives Congress the right to borrow or to impose tariffs and excise duties, but I don't think anyone would construe that as an obligation to borrow or a ban on free trading.
I don't think there was any constitutional crisis when the national debt reached 0 during the Andrew Jackson administration?
So yeah, based on how cheap it is to send mail in the US, and the fact that USPS would be profitable venture if they weren’t screwed over by horrible laws (pension prefunding, etc.), the USPS is very efficient and shouldn’t be parceled out to states.
The second part of your post is a fine argument and I'm not complaining about that, but "it's okay to recognize something is a social good" is not fine. It is likely everybody in this thread thinks a cheap, great logistic system is desirable. No impugning of motives, thank you very much.
This is not the case in the US where millions of people don't have convenient access to food.
While there are no doubt significant benefits for the U.S. to attain looking at models for how other countries handle the distributive logistics of various industries, I would argue that the vastly different population densities of the two nations should be assumed to be material, unless and until robust arguments with strong evidence show otherwise.
0.7 percent of the population isn't too bad.
There are food stamps and government grants to private charities charities. And there people who donate millions of hours to food distribution to the poor and vulnerable.
Private businesses do not handle food distribution just fine.
The guy I responded to later advocated for privatization of roads.
I'm perfectly fine with impugning the motives of a person who has arrived at that being a sane policy decision. Before that? I'm perfectly fine with impugning the motives of a person who believes it's okay to privatize the means of voting for an entire state.
I don't know about Australia, but in the US food is propped up by massive taxpayer subsidy and relies on an undocumented immigrant workforce paid low wages with no recourse against employer abuse.
In addition to the subsidies, they also have tariffs on many foods. Those definitely don't lower food prices.
Essentially, a private company has the option to not provide certain services to you or even decline to serve you at your address entirely. The USPS does not. In many cases a carrier like UPS or FedEx hands things off to the USPS to do last-mile delivery in an area their delivery network doesn't cover, because the USPS is already built out to handle it.
Normal companies cannot do this "just fine" because it's a money-losing proposition. That's why the postal service has to be an agency instead of a for-profit company traded on stock exchanges, it is necessary to have universal service even if the country loses money doing it. Essential things like vote-by-mail, mail-order pharmacies, etc become impossible without it.
Many foods and ingredients can be stocked up on intermittently - say, once a week - and will last for a good amount of time in the fridge or freezer. So you can take a trip to a grocery store or other distribution facility a few times a month, even if it's far from you. You can also pretty safely and legally have a friend pick up groceries for you if you don't have a car or are unable to leave the house, but having someone go deal with your mail would be considerably more difficult (for legal reasons and otherwise).
Lots of mail is time sensitive - even if that ballot you're being mailed won't melt in the distribution center like a neglected package of chocolates would, there's a fixed deadline for you to fill out the ballot and a fixed deadline for it to make it to the processing facility. If delivery of that ballot - or the pick-up and return delivery - is delayed, it's worthless. As such, daily mail delivery is essential in many ways even if people don't receive mail every day. Incidentally, we've had widespread issues with ballot delivery and postmarking in the last year or so, so it's a real problem and not a hypothetical.
On that note, the government has to send mail to every citizen multiple times a year, they're going to have to pay private mailing services for it anyway... How much taxpayer money is actually being saved by privatizing it?
(If there are any special laws that give the post office more rights than you can voluntarily give your friend or a business, those laws ought to be amended.)
You have an argument about time sensitivity. But I don't understand how you arrive at the frequency of daily? Why not weekly? Why not hourly?
For voting, weekly or even monthly would surely be enough. Election dates are known far enough in advance. Any additional time pressure is purely there by legislative fiat. (And we also already assume that people who vote in person can find their way to the polling station on their own. We don't argue for a government rickshaw to cart them there.)
> On that note, the government has to send mail to every citizen multiple times a year, they're going to have to pay private mailing services for it anyway... How much taxpayer money is actually being saved by privatizing it?
A few times a year is much less than the total volume of mail.
I was going to type out some philosophical arguments about hypotheticals and counterfactuals here. But no need for that. We can just look at the impact of postal privatisations in eg Europe.
https://en.wikipedia.org/wiki/Postal_service_privatization
In any case, what I'm arguing for would be a level playing field and the absence of political pressure.
See eg the whole argument about how 'the evil party has decreed that money must be set aside for known future obligations, and that is bad'. You only get that because the whole thing is politicized.
I'd say to abolish the universal service obligation and the postal monopoly. Let all providers compete on a level playing field.
When it comes to legal mail it's a huge disaster waiting to happen if Fedex was supposed to deliver a jury summons and the delivery guy being paid dirt just chucked it out and now you are in jail on a bench warrant. Sure they'll just slap Fedex with a fine and you got unemployed in the mean time.
The other issue is security. Many apartment complexes and even neighborhoods nowadays have locked central mailrooms but they provide a key for a USPS worker to enter. Those keys are tied to a keychain for the route. Are buildings and individuals now supposed to give out keys to every fly by night contractor in existence that changes every day?
Make them post a bond, if they want to do business with you. If your business is sufficiently important (like perhaps government letters might be), they'll post the bond.
How is your example with the jury summons different in the USPS world? How does the FedEx guy differ from the USPS guy?
> Are buildings and individuals now supposed to give out keys to every fly by night contractor in existence that changes every day?
No, why? The situation is basically the same that we already have for packages or very urgent mail. Look at what solutions are employed there.
In practice, you'd provide access to some trusted providers. A new market entrant would have to negotiate access, or arrange last mile services with an existing provider, or refuse to deliver to those areas etc.
https://en.wikipedia.org/wiki/Public_good_(economics)
> In economics, a public good (also known as a social good or collective good) is a good that is both non-excludable and non-rivalrous, in that individuals cannot be excluded from use or could benefit from without paying for it, and where use by one individual does not reduce availability to others or the good can be used simultaneously by more than one person.
Basically, defense of the realm is commonly seen as such a public good.
However, food and postal services are excludable and rivalrous.
- I get important documents (mail) all the time that I didn’t pay for.
- The postal service can also be used by millions of people at the same time. It happens every day.
Sounds like we agree that postal service is a public good.
(1) A provider of postal services can exclude you from either sending or receiving mail. (Excludable)
(2) There's only a limited capacity to send mail at any given time. The postman can only carry so much. (Rivalrous)
(Of course, sustained high demand for mail delivery services can lead to an expansion of supply, ie they can higher more mail man. Just like sustained high demand for bread means more bakeries will produce more bread.)
That postal services charge the sender rather the receiver is mostly incidental and not important for the distinction. They could just as well charge you for receiving mail. Similar to how people in the US seem to pay for receiving calls on their cell phones (I heard).
It's not that hard. Have a look at the examples section in the Wikipedia article for a discussion. https://en.wikipedia.org/wiki/Public_good_(economics)#Exampl...
The rivalrous nature of the providing postal services is the whole point of the article we are commenting on, btw.
(1) The military can main it's own people, excluding them from receiving protection. They can also choose not to enter an engagement, leaving US citizens behind. (Excludable)
(2) There's only limited military at any given time. If every other country in the world started attacking the US, we would reach our limit to protect everyone. Probably why the uber-wealthy have private security forces and private islands. (Rivalrous)
> Some question whether defense is a public good. Murray Rothbard argues:
>> "'national defense' is surely not an absolute good with only one unit of supply. It consists of specific resources committed in certain definite and concrete ways—and these resources are necessarily scarce. A ring of defense bases around New York, for example, cuts down the amount possibly available around San Francisco."[14]
> Jeffrey Rogers Hummel and Don Lavoie note,
>> "Americans in Alaska and Hawaii could very easily be excluded from the U.S. government's defense perimeter, and doing so might enhance the military value of at least conventional U.S. forces to Americans in the other forty-eight states. But, in general, an additional ICBM in the U.S. arsenal can simultaneously protect everyone within the country without diminishing its services".[15]
Basically, 'public goods' are an important concept, because standard economics suggests that anything that's not a 'public good' can be better provisioned by private, profit seeking actors.
The argument we just brought might suggest that we should privatize the military as well. I did not want to make that argument here, but it's perfectly cromulent.
In practice, how much a given good is a public good is a matter of degree and context.
In most context bread is less of a public good than defense.
But with sufficient effort, you can exclude people living in the same country from defense. Whereas there's little effort required to exclude people from eating your bread.
Similarly to make eg the benefits of nuclear deterrence rivalrous, you need lots of effort or extreme scenarios.
If you have a good or service with a large fixed cost, but a low variable cost, you can discuss about how much it makes sense to treat it as a public vs private good. For example, software or intellectual property in general has almost 0 variable costs, but copyright is a legal invention to make software excludable.
Networks are in-between: the postal service or the phone service or even buses or planes on a schedule have large fixed costs, but when below saturation, they have low variable costs.
I suggest we treat the postal service like we treat buses and planes.