By DAVID MOON, Moon Capital
December 17, 2006
A bill recently passed by Congress promises to make the
U.S. Postal Service more competitive while better serving the American
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
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
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
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
U.S.? Let me check my copy of 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
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
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).