Wednesday, September 07, 2011

Cliff Clavan, We Need Those Retirement Benefits Back

The Post Office is, once again, teetering on the edge of bankruptcy, in large part because of pension obligations and plummeting direct mail business.  Megan McArdle notes the issues, but doesn't see a real solution...
Congress has given the Post Office two incompatible mandates.  It is to make money like a business . . . but it is not to have any of the freedom that businesses have to, say, close branch offices, cut its delivery area, or change delivery schedules. 

This is, to put it mildly, lunatic.

It was kindasorta somewhat sustainable for a while, because Congress sweetened the deal with a very valuable monopoly over the delivery of first class mail--a fact over which conservatives used to complain bitterly.  But now that monopoly is an albatross.  The only people who really need the service are the people who it is incredibly expensive to serve: those in remote areas that are far from stores, and only spottily serviced by UPS, Fedex, and broadband.  So average cost is rising fast, while rates can't.

Congress has to decide whether universal mail service is valuable enough to subsidize, or whether it wants the post office to be set free to actually compete.  But it cannot survive much longer as neither fish, nor fowl, nor good red herring--while there's some hope of a temporary reprieve by reclaiming some past overpayments to pension funds, that extra money won't last long at this rate.
McArdle notes at least one suggestion for turning the Post Office into a profitable business, but I'm with her belief that I'm not sure why a postal bank would actually work.  I actually visited our small local Post Office last week, since they recently replaced our mailboxes and our mail was held for a couple days.  In any case, suffice it to say that I was unimpressed by what I could see in the back in terms of technology and upkeep.   I'm not sure why anyone thinks such technology would translate over to be used for other purposes.  And let me note that my post office is one of the smaller ones that should close; while I like having a post office within a quarter-mile of my house, there's a big one only three miles away that would suffice nearly as well for the 3-5 times a year I need to visit.

Like McArdle, I'm not sure what we should do with the Post Office, but it seems like a perfect snapshot of the problems we have with government nowadays.  The Post Office provides a number of services, but their most important ones are increasingly outdated and very costly, and the function is too costly due to significant labor costs.  We either need to pay more for the service, or streamline it significantly.  Like everything else, we seem to have put off the decision, but the bill is coming due.



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