US Postal Service: A Government Protected Monopoly

If I tell you, “The check’s in the mail” you probably won’t look for it any time soon–if at all. But if I tell you I’ve sent the check via FedEx, you’ll probably plan a trip to the bank.

We know we can count on private services such as FedEx and United Parcel Service to deliver on time. If they didn’t, they’d go out of business. And we also know–many of us from bitter experience–that we always can’t count on the post office.

That’s because the post office is a government-protected monopoly; 19th century laws make it illegal for anyone else to deliver letters. It’s also exempt from state and federal taxes and free from most government regulations. That combination is a recipe for disaster.

A recent report from the President’s Commission on the United States Postal Service recognized these problems and recommends creating a Postal Regulatory Board to supervise the post office. This would be a welcome step, but we shouldn’t stop there. The overall goal is to make the post office more efficient and user-friendly. That’s why it’s time to break the post office’s monopoly and privatize the delivery of mail.

Right now, there’s no competition in the letter-delivery business. Almost all letters must be sent through the post office, unless the letter is “extremely urgent.” The post office even gets to set the minimum price its private competitors can charge: A letter must cost at least $3 or twice the applicable first-class rate to qualify as urgent.

But if Congress changes the law, private companies could go head to head with the post office. Competition would bring down prices, and the post office would have to become more responsive to customers if it wanted to survive.

It also would have to stop wasting money.

Consider the case of Karla W. Corcoran. She resigned as inspector general of the U.S. Postal Service in August, after a nine-month congressional investigation showed that she had abused her authority and wasted millions of dollars. Sen. Charles Grassley, R-Iowa, called Corcoran’s resignation “a step in the right direction” and added, “someone must be making sure that taxpayers’ money is invested wisely.”

That’s true, but with the post office, strict oversight is almost impossible. It has long relied on a unique “postal year format” that makes it impossible to compare the postal service’s performance from one year to the next. As my Heritage colleague James Gattuso noted recently, “One might think that this system was designed to prevent measurement, analysis and comparisons of postal operations over time.”

That may be one reason the postal service so regularly miscalculates its fiscal needs. For example, an estimated $1.35 billion deficit for fiscal year 2002 grew to $4.5 billion only six months later. But the final 2002 deficit was “only” $676 million.

No company with such wildly fluctuating forecasts would last long on the free market. Remember the Enron scandal? The company collapsed within weeks because of shady bookkeeping. Private delivery services already are subject to the same sort of market accountability that Enron was. We should start holding the post office to those same strict standards.

There are some things that can be done only by the government. Delivering mail is not one of those things.

Private carriers are more efficient, more dependable and could do the same job for less money, if we’ll let them. That’s why it’s time for the taxpayers to deliver a message to Congress about the post office: Privatize–and start competing.