Tiptoeing Toward Postal Privatization

Taking the Postal Service down the private postroad is an old idea proposed again for today's times.

Tiptoeing Toward Postal Privatization

Privatization.

It used to be that the word privatization wasn’t in the vocabulary of any postal official at any level. Now we have William J. Henderson, a recently retired postmaster general, telling the Washington Post: “What the Postal Service needs now is nothing short of privatization.” And to make sure that readers understood the urgency of his message, Henderson added, “And while I’ve said in the past that privatization is inevitable, I’m saying now that it’s something that must be done.”

What makes postal privatization so urgent now? Economics. Consider that:

• E-commerce keeps taking more of the profitable first-class mail business. People are communicating by e-mail and paying their bills that way, too.

• Fuel costs are rising for heating and transportation. And the Postal Service has 38,000 post offices and 200,000 delivery vehicles.

• The Postal Service is committed by law to “universal service” — which means that every new home and business must get six-day mail delivery. More than 1.7 million new homes and businesses are being added every year, and the Postal Rate Commission is growing more and more reluctant to increase rates.

So why does Henderson believe that privatization is the answer? Flexibility, he says. The Postal Service “lacks the advantages of any other corporation, such as being able to turn on a dime when it comes to rate changes, perhaps raising prices at time of high demand and lowering prices to entice customers during traditionally slow times, which for the Postal Service means summer.”

All the regulatory restrictions on how Postal Service does business — including making its rate-setting open to inspection and comment by all its competitors — are contained in the 30-year-old Postal Reorganization Act. Henderson and many others want to modify, or even scrap, the Act. While Henderson boldly uses the word “privatization,” the official stance of USPS is that the Act needs “reform.”

There’s a good reason for tiptoeing around the subject. As long as I can remember, “privatization” has been a code word for dismantling the Postal Service and putting its pieces up for bid. Back in 1987, for example, Daniel Oliver, then chairman of the Federal Trade Commission, recommended that Preston R. Tisch, then postmaster general, “should call for the repeal of the Private Express Statutes that grant the postal service its monopoly in delivering letters.

“By calling for an end to the postal monopoly, you have a chance to become a genuine hero to consumers and to all who believe in free markets and competition,” Oliver said.

Preston Tisch, a businessman who did believe in free markets, replied that Oliver’s proposal “smacked more of reiterated dogma than of any reasoned analysis.”

The Postal Service knows that the dogmatic deregulators are still out there. They don’t understand automation or material handling or the interfaces between machines and workers.

They’re fixated on privatizing the most profitable parts of mail delivery.

The fact is that postal privatization is necessary, but some solutions that have been proposed over the years have been downright scary. Henderson recognized the complexities of the situation: “Exactly how the Postal Service should be privatized is a public-policy question, and I’m not suggesting we should simply sell the whole thing to the highest bidder.”

The Postal Service must be privatized as an automation-based system that recognizes universal service as well as flexibility in rate-setting. Privatization calls for Preston Tisch’s reasoned analysis rather than reiterated dogma.

Bernie Knill

contributing editor

[email protected]

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