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Paying for your own junk mail | ||
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By DAVID MOON, Moon Capital
Management A bill recently passed by Congress promises to make the U.S. Postal Service more competitive while better serving the American consumer.
Promises. The check's in the mail. Of course, I'll still respect you in the morning. And I'm from the government and I'm here to help.
The Postal Accountability and Enhancement Act will likely bring more frequent, but smaller, increases in postage rates. In exchange for these price caps, the Postal Service will erase billions of dollars of unfunded retiree health-care obligations.
Guess who picks up the tab for the retirement benefits? Taxpayers.
Stamp prices won't increase as much, but our taxes (or the federal debt) will have to increase to pay for the same level of post office expenses. In other words, to the extent that those retiree benefits are part of the true cost of doing business at the Postal Service, all those junk mail senders will have their postage costs subsidized by taxpayers.
Remember that when you receive your 236 unsolicited credit-card applications during 2007. Your tax dollars hard at work.
The Postal Service is one of the most egregious examples of government-granted privilege. It operates both a monopoly (letter delivery) and competitive services (package delivery). As a result, it can use revenues from its monopolized activities to subsidize its competitive businesses.
The federal Private Express Statutes prohibit a private enterprise from delivering 'letters or packets,' which has generally come to be interpreted as first class mail. This prohibition still exists. The new 'competition enhancing bill' does nothing to enhance competition.
In a press release taking credit for the legislation, Senator Susan Collins (R, Maine) warned that without these changes the Postal Service would face a 'death spiral' that could result in further decreases in mail volume.
Is that so bad? Is it the role of
Congress to protect or prop up the volume of mail delivered in the
Senator Collins says the new legislation 'goes a long way toward making sure the Postal Service has the flexibility to compete in the new economy.' Maybe, if the economy were socialist.
If Congress wants competition, here is what it should do.
First, allow anyone to deliver first class mail. FedEx already provides delivery service to 220 countries and territories, including every address in the United States. The Private Express Statutes do not create universal delivery; competition does.
Next, release the Postal Service from price regulation. If it wants to charge $5 to deliver a first class letter, let it try.
Then privatize the Postal Service by selling stock to private investors in an initial public offering. Fund any retiree-benefit liabilities with company shares. Force the company to operate more efficiently by placing it on a fully level playing field with its competitors.
This will cause the company's executives to review things such as its real estate policies ' should it really own all those buildings? ' and explore alternate revenue sources, like advertising on trucks or even stamps. David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).
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