If the United States Postal Service (USPS) were a business, it would declare bankruptcy.
But wait … it’s supposed to be a business, and it could be profitable.
But it never will be as long as it remains a government owned public monopoly.
Headed for a massive taxpayer bailout, the USPS is now asking to raise postal rates—which will kill thousands of jobs and small businesses that are already struggling with high postal rates.
My clients use out millions of mail pieces, and these cost increases will lead to a dramatic cut-back in the amount of mail they send out.
The results would be less value and even less revenue. These burdens will hurt their businesses and their employees. They do not have the luxury to raise prices, either, or to cut profit margins.
And the USPS is already going bankrupt.
Let’s look at some figures.
The U.S. Postal Service lost $5 billion last year.
The agency did not make the required payments to the Retiree Health Benefits Fund.
Now, the post office has an unfunded pension liability of $54 billion.
Yet even if the Postal Service did not have to pre-fund its health retirement benefits, USPS would still be headed for the dead letter office.
Mail volume is sliding as more consumers use the Internet and electronic billing. Customers receive magazines or large packages. In general, the volume has declined 25% over the past ten years.
The USPS cannot institute necessary cost-cutting measures because of Congress, the unions, bureaucracy, and management’s unwillingness to make necessary changes.
Why? All these interests are protected by the postal service’s monopoly. The leaders have no interest in allowing market forces to help guide reforms.
Instead, they want to buy another fleet of old-style mail trucks, when they could buy newer, cheaper models which better adapt to different climates throughout the country.
Absent a sudden and lasting surge in mail volume, or real political courage in Washington, expect to see the USPS struggle from year to year, incurring massive loses.
The best hope for post office reforms are:

  1. Employee ownership
  2. Privatization
  3. Removal of monopoly rules
  4. Unleash competitive forces, like with UPS and FedEx
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