But today, the “bond of the scattered family” comes from text messages, Skype and Facebook. And global businesses favor private letter and package carriers.
In 2010, the U.S. Postal Service projected that it would lose $238 billion over the following decade — a sum roughly equivalent to the gross domestic product of Chile. Sadly, it’s not only the forecasts that are grim for the USPS. On Thursday, the agency reported a $5.2 billion loss for the second quarter.
Despite years of study and recommendations, Congress continues to play small ball with the Postal Service. The leading bills in the Senate and the House each push for budget cuts and downsizing, but these are Band-Aids. They do not resolve the underlying problems of the USPS.
So what should the government do to turn around the Postal Service? Some people want a full and immediate privatization of the agency. That’s what Peter Orszag, the former director of the Office of Management and Budget, called for in a recent column for Bloomberg View, and other economists find the idea appealing. They say a privatized USPS would have the freedom necessary to deal with the agency’s large structural challenges, which Congress after Congress has failed to address.
While privatization may offer some advantages in the long run, doing it now is neither politically tenable nor wise. To take the USPS private, Congress would need to find a consensus to sell off the country’s second-largest employer during the longest stretch of high unemployment in modern American history.
Moreover, the Treasury is liable for post-employment benefits for federal workers. Supporters of privatization cite the $13 billion overfunding of the USPS’s pensions. But few mention the $46.2 billion in underfunded health benefits promised to employees, which no private bidder would ever agree to take on. Immediate privatization would leave taxpayers with yet another multibillion-dollar bill.
The Postal Service can become a sustainable business and stay under government control. And it can do this in a way that would ultimately lead to privatization without wreaking havoc on its employees or the taxpayers.
For good models, look abroad, where postal services have successfully navigated the extremes of privatization and government monopoly. Sweden eliminated Posten AB’s monopoly, allowed others to enter the market and forced the enterprise to go head to head with its new competitors, while maintaining 100 percent state ownership. Germany reduced its ownership of Deutsche Post to a third and has licensed more than 800 companies to provide alternative services, forcing Deutsche Post to expand and adapt with the competition. Even in Canada, which maintains Canada Post’s mail monopoly as a fully state-owned corporation, the postal service has the mandate and the authority to make changes to preserve public funds.