
The U.S. Postal Service Nears Collapse - jedwhite
http://www.businessweek.com/magazine/content/11_23/b4231060885070.htm?campaign_id=rss_topStories
======
grandalf
Every day I go to my mailbox and put 98% of its contents directly into the
recycle bin.

I have followed all the recommended steps to remove my address from various
mailing lists.

The USPS is a garbage-spamming environmental disaster that solicits money from
companies to do direct marketing, offers no opt-out features, and every day
drives tens of thousands of polluting vehicles to stuff unwanted paper into
mailboxes across the country.

In addition to its monopoly, the post office is one of the most unpleasant
retail locations anyone could imagine -- filthy counters, grudging employees,
and long lines.

Since "first class" mail takes between 2-12 days, there is no reason to have
first class mail delivered every day. Doing so is just a handout to the
employees' unions. There may be a case to be made for more frequent delivery
of expedited mail, but this would take a fraction of the number of vehicles
and personell that the current system does -- and with less reliable
guarantees, nearly identical prices and worse service than UPS, I _always_
choose UPS over USPS for parcel shipment.

It's fine to be nostalgic about the pony express, but the USPS needs to either
be phased out or drastically scaled down, and laws forbidding other companies
to deliver standard mail must be changed.

~~~
rorrr
I have pretty much the opposite experience with USPS.

Got almost no spam, maybe 10-20% of my mail, mostly sent by local businesses
and free local newspapers.

It's not a monopoly. Forgot about UPS, DHL and FedEx?

Their employees are usually very hard working and have to deal with all kinds
of assholes.

Plus, it's much cheaper than their competitors.

~~~
grandalf
As someone else pointed out, the USPS has a monopoly on non-urgent mail.

As for spam, you must be fortunate that you have not managed to wind up on
spammers' lists. If you donate to charity that's an easy way to get on the
lists, and some of the spam is just unnecessary garbage sent by business I use
b/c sending it to everyone (via the USPS) is cheaper than implementing an opt-
out policy.

~~~
SageRaven
I forget the URL, but I opted out of junk mail years ago via the Direct
Marketers Association web page. I _think_ that's the name. After a couple of
months, my dead tree spam fell to a trickle.

It's not perfect. I still get local grocery and retail circulars that I could
do without. But at least the daily credit card offers stopped, which cut down
the volume dramatically.

If someone would drop a bomb on Geico's direct marketing arm, I'd be a happy
camper.

~~~
grandalf
I did this too, as well as a couple of extra precautions, and I did not notice
any decline in the junk mail at all.

------
patio11
It's the usual story: capture of the USPS by its unions, such that 500k
employees are getting raises _simultaneously_ with their reports of "We're
dying!!!"

America in 2011 simply doesn't need to set aside half a million lifetime
sinecures to deliver two pieces of mail a week which actually matter. The
nation receives no value from a civil servant whose full-time job is literally
to convince BoA not to go paperless.

It's a cool institution. Let's remember it in a small museum somewhere.

~~~
ubernostrum
_It's the usual story: capture of the USPS by its unions_

Except, you know, not really. You might want to read this:
[http://www.buffalonews.com/editorial-
page/viewpoints/article...](http://www.buffalonews.com/editorial-
page/viewpoints/article476402.ece)

Especially this bit:

 _What about those news reports of multibillion losses? Well, the $20 billion
in losses over the last four years has nothing to do with what you’ve been
told about a failing business model or obsolete mail. Here’s the real skinny:
In 2006, Congress mandated that the Postal Service prefund future retiree
health benefits for the next 75 years, and do so within a decade—something no
other public agency or private firm does. The resulting annual payments run
$5.5 billion a year, costing the Postal Service $21 billion since 2007. That’s
the difference between a positive and a negative balance sheet, as it would be
for virtually any entity facing a similar burden — if any did.

Remove that unreasonable obligation and the Postal Service would have been
profitable._

~~~
three14
I don't get it. Why is it unreasonable? If I promise to pay somebody $40,000
every year after they retire, but I don't set aside money to do it, you can
guarantee that down the road, I'll come crying to the government to get them
to pay for it. It's not like they have to set aside the future value of that
promise, just the present value - in other words, the amount that they're
effectively promising to the employees _today_. It should be considered fraud
if they _don't_ do this.

~~~
_delirium
That's a reasonable argument for a _general_ change in accounting standards,
requiring all pension plans to be pre-funded. Specifically requiring the USPS
and nobody else to do that, though, feels more like something political is
going on.

~~~
three14
...and I strongly support the general accounting change, particularly for
government or semi-governmental entities that might be counting on taxpayers
footing the bill they run up. Just because USPS suffers by having to do
something reasonable because of politics doesn't mean that it's a bad idea.

~~~
ubernostrum
It's unreasonable to impose a much tougher standard on one and only one
organization, even if you think that standard would be good if applied to
everyone.

~~~
three14
Even if true that it's only the USPS, and yummyfajitas implies that it's
actually a broader requirement, here it's a difference between a mistake and
not making a mistake. It's not simply an accounting treatment. It's not a
defense of the USPS to suggest they should be allowed to make the same mistake
that other companies make.

~~~
ubernostrum
They should be subject to the same standards as other companies. If they
aren't, that's unreasonable.

~~~
amorphid
As a business owner concerned about cash flow, I can tell you that paying for
anything in advance is always a pain. Reasonable or not, setting aside enough
cash to fund the retirement needs of all their workers for 75 years and
generating that cash from revenue sounds like a huge pain.

------
pessimizer
Do we ask the highway system to be profitable? If we eliminate the rural
routes and only leave the profitable ones, we might as well get rid of the
entire thing - the profitable routes could easily be privatized, but as it is,
they offset the cost of the rural routes a bit.

I support keeping country folk connected to the rest of the nation as a public
good, not a profit center.

~~~
grandalf
Have you thought about all the people who are unemployed thanks to gridlock on
the US highway system? The massive inefficiency of people (in cities like
Chicago, Los Angeles, etc.) wasting 2-3 hours per day sitting in their car
going 5 miles per hour is astounding.

If the highway system were not held back by government planning, much of this
inefficiency and waste could be eliminated, and reallocated into productive
pursuits. Imagine if 80% of a city's' commuting professionals had two hours
more per day to spend money on things (or to work more).

It's easy to assume that highways are one aspect of central planning that
works, but in urban, congested areas they are a disaster that hits the poor
the hardest.

Also, by making it seem "feasible" to live in suburbia and commute into the
city, they led many middle class workers to flee cities, eroding the tax base,
and causing the decay of city governments/services, etc.

Everything has tradeoffs. The highway system got us a way to ship military
personnel and tanks across the country, and benefitted home builders and strip
mall owners, at the expense of the urban poor.

~~~
pessimizer
I don't understand your argument. I don't know how gridlock on the highway
system causes employment. I was born, raised, and currently reside pretty deep
in the city of Chicago, so I'm familiar with commutes, though usually on
public transportation, because the interstates are largely for long distance
travel. They remain 2-3 hours a day (sometimes) without touching a highway, as
they were before cars were even owned by average working class people. I have
never owned a car in my life, and have no interest in or ability to drive.

The highway system is a result of government planning. If it hadn't been "held
back" by government planning, it would lack existence. This would be a tax on
every good imported into the city (which is virtually every good.)

I don't assume that highways are one aspect of central planning that works, I
_think_ that highways are one of a multitude of aspects of government (which I
suppose you mean by "central planning") that are justified because, while not
being profitable in themselves, they reduce friction for the entire system.
The government is the only actor who can levy fees for that from the entire
system, therefore the only one who can execute it.

If the tax base is eroded in a city, this is a failure of paperwork, not a
physical event. If black people and the white people who ran from them were in
slightly closer physical proximity, but still entirely homogenously clumped
together (assuming a huge decline in public transportation _not caused by the
highways_ ) you're saying that there would be some benefit to the urban poor?

~~~
pessimizer
"I don't know how gridlock on the highway system causes _un_ employment,"
rather:)

------
pseudonym
A link for the full article, if you don't want to hit "next page" seven times:

[http://www.businessweek.com/print/magazine/content/11_23/b42...](http://www.businessweek.com/print/magazine/content/11_23/b4231060885070.htm)

------
pwg
This quote summarizes what is wrong with the Post Office: "They are supported
by junk mailers, greeting card manufacturers, and magazine publishers whose
businesses are, in some cases, subsidized by the post office's generously low
mailing prices. Never mind that their benefactor _loses money on some of their
products, most notably magazines and some junk mail_.

If you are "los[ing] money on some ... products" then just maybe you need to
increase the cost of delivery of those products until you are no longer losing
money...

~~~
Someone
Assuming they can increase cost of delivery (something that, apparently,
congress is against), chances are this is what would happen: they raise prices
to cover (marginal) costs, and some customers run away. A commercial company
would reply by either cost-cutting, shutting down (parts of) the company,
increasing productivity, or finding new revenue streams.

The USPS does not have first or second options, and the third on its own only
helps if it brings in extra work, which it does not (remember the 'some
customers ran away' part?)

It all boils down to the fact that the USPS is not operating in a free market.
They have huge expenditures that they cannot get rid of. If you have an
employee, but no work for him, and cannot fire him, it makes economic sense to
take on work that pays less than what the employee costs. Sure, it loses you
money, but it loses you less money than not taking on that work.

So, that leaves the fourth stream. In e EU, that has seen post offices turned
into shops, selling mail-related stuff such as postcards. That may work, but
especially in smaller villages, it is easier to outsource the post office
tasks to existing shops, rather than trying to compete with them in a market
that cannot sustain two shops.

------
latch
I found myself surprised to agree with the USPS position that online-services
are a bad idea (for the USPS). I mean generating a postcard from your mobile
picture just seems like something that a tech-company will do a better job at.

I can only imagine how much money the USPS would spend on some of these
applications, only to have a startup with $250K funding (or, you know,
Facebook) steamroll them.

~~~
rmrm
I think USPS would have been in a great position to be an online identity
depository and payment platform for consumer to business dealings. They should
have done it 10 years ago.

Imagine an email like system where you and the companies you do business with
can communicate, and you can pay them. Some sort of whitelisted communications
channels, whereby when you enter in a service contract with a company, you
also add them to this comm channel. No spam. Just valid communications and
invoices. Verified identities and verified payments.

The USPS is in a great position for that sort of thing, being they actually
come to your house every day. They already know who you are, and where you
are. They have a pre-existing business relationship with every entity in the
US.

Whereas now I have to tell my parents and grandparents to basically not
believe anything they see in their email inbox -- it would be nice if a more
secure channel existed. $250K startup -- get on it!

~~~
philwelch
The USPS has a shitty track record for not spamming people. Maybe half of my
mail is spam. While the USPS might have been in a position to do as you
suggest for quite some time, the fact that they haven't indicates something,
doesn't it?

~~~
rmrm
The USPS (or Fedex or UPS or DHL or anyone else) were not conceived to be
whitelisted services - they just deliver stuff. USPS does it cheaply, so bulk
mailers use them. I don't know the rules and regs, I'm not actually sure the
USPS has it within their control to white list actual mail.

I'm proposing a different service -- my main point being that because of who
the USPS is, they'd have an enormous natural advantage to offer that type of
whitelisted new service. The fact that its a no brainer and that nobody has
done it probably means it is hard, more than anything. But it seems it would
be easier for someone with the reach and institutional trust of a quasi govt
organization (compared to a startup).

Perhaps the USPS would be more likely to do a better job in curtailing their
reliance on bulk mailings if they had an exploding, high margin revenue base
around ecommerce payment and being a more trusted, secure form of business
communications channels. Mail spam sucks, but that is their revenue base. From
their point of view, as an institution, they of course would like to see it
replaced, institutions don't themselves like to generally just commit suicide.

Tech is what is going to replace them, at least attempting to transition to
tech while leveraging what advantages they do have isn't a terrible idea --
because there quite possibly are some things they are able to uniquely bring
to the table.

~~~
philwelch
It's a hard problem because email is good enough for communications (the good
is the enemy of the perfect) and any improvement in payment systems would
require changes to major backend components of the banking system. The USPS
brings legitimacy and business relationships to the table, but they're
hamstrung by Congress and by the unions.

The best chance is if someone follows the Hulu model and immediately gets BOA,
Chase, Wells Fargo, Citibank, and US Bank to buy in from the get go. Even then
it may require a regulatory change, but getting the top handful of American
banks to buy in should be enough to build the necessary lobbying support.

------
mikek
Here's what I don't understand about the USPS situation. They deliver 200
billion pieces of mail per year. So if they're short 2 billion dollars, then
they just need to raise the price of a stamp by 1 cent. Problem solved, no?
Can somebody tell me why I'm wrong here? Would volume really fall that
substantially if they raised the price of a stamp by a few cents?

~~~
Kadin
Much of the mail is bulk (aka junk) mail sent by companies and organizations
that have lobbyists. These lobbyists make it very difficult to raise postal
rates as you suggest.

Add this to the Mephistophelean bargains that they have made with their unions
over the years (because they too are politically powerful) and you can start
to see the predicament. They're being squeezed dry.

~~~
bandushrew
what? are you claiming that the unions would have a problem with raising the
price of stamps by a cent?

~~~
nkassis
No, what he's saying is on the one side the junk mail senders are blocking
rate increases with lobbying and on the other side unions are asking for high
amounts of benefits and pay raises. This is what he meant by squeezed (from
both sides) dry.

------
ck2
The postal service is being forced to make a massive prepayment for decades of
pensions all at once. No regular business would even think of doing that on
it's own. It's congress behaving stupidly as usual.

Also, it needs to stop the practice of employees purposely retiring early and
then being hired back by friends as contractors. So they get both retirement
benefits and then a second paycheck. If they leave, make it so they cannot be
a contractor, would solve an expensive labor abuse.

I mail and receive small packages weekly that would be unaffordable (and
mishandled) by UPS. I'd hate to lose Saturday delivery but it would be a
bearable compromise among alternatives.

~~~
ja30278
While it _seems_ bad to hire someone who's already receiving a pension, what's
the alternative? Hiring someone else, who's unskilled, and _still_ paying the
pension? Maybe the problem is the pension itself, not the double-dipping.

~~~
ck2
The problem is the person was offered early retirement to reduce costs.

If you hire someone outside the system you are reducing unemployment in a
helpful way. The retired person is already doing just fine with benefits and
medical coverage, give the outsider a help up.

------
ajays
I'm willing to bet that if there a private company had to operate under the
same stifling rules as the USPS, they would have quit a long time ago.

The USPS could raise the price of delivering mail to match the costs. BUT THEY
CAN'T! Even though the Government does NOT provide any funding to the USPS,
the Government (specifically, the Congress) keeps thwarting the USPS' efforts
to operate like a business.

You want to fix the USPS? Take away the Congress's ability to interfere with
it. The USPS' only mandate should be to deliver mail to every physical
address. That's it. Just let them fix their rates, their benefits, etc. and
I'm willing to bet they'd be just fine.

~~~
jonknee
The stifling rules go both ways--USPS has a government granted and enforced
monopoly on mail. It may be a shitty business, but at least you can't have
competition.

~~~
ajays
The vast majority of the routes that the USPS runs are money losers. Try
delivering a 44-cent piece on a mule to the Havasupai at the bottom of the
Grand Canyon.

Don't you think, the way the Congress can be bought, that a private company
that thought it could do the USPS' job wouldn't have bought its way in?

~~~
jonknee
The vast majority of mail isn't delivered to the money losing routes the USPS
always likes to mention (mules, snowmobiles, bush planes, etc). The vast
majority of mail is bulk rate and sent from/to urban areas.

------
michaels0620
I always thought that they should do home pick up & delivery 3 days per week
but adjoining regions would have different days. So region A would get mail
M,W,F and region B would get mail on T,Thurs., Sat. The mail carrier would
alternate between regions A and B. It seems like you could almost halve the
number of mail carriers this way.

~~~
xsmasher
That assumes that the trucks/carriers in regions A and B are running almost
half-empty right now. That's not likely.

------
dpatru
It's hard to feel sorry for an organization that is going bankrupt even as
they maintain a government-enforced monopoly. If business is really so bad,
why doesn't the Postal Service allow private businesses to compete with it? If
there's no money in the business, then there's no need to fear competition. No
one wants to enter a business you can't make money in.

~~~
ajays
I don't even know why I'm replying to this, but this sort of reasoning makes
my blood boil.

A lot of clueless people throw in the "p" word (privatization, or private
competition) without really thinking things through.

The USPS is based on the idea of cross-subsidies. The fact that it's easy to
deliver mail to, say, 100 addresses in San Francisco (a carrier can just walk
a block and do it), subsidies the fact that in, say, Nebraska they would have
to drive 100 miles to deliver to the same number of addresses. No private
company would do this; they would just deliver in the cities, and tell the
rural folks to fuck off. The private operators would just cherry-pick the
profitable routers, and dump the rest. Is that what you want to see happen?

~~~
dpatru
I don't want to subsidize mail for people in rural areas. If you do, feel free
to donate for that cause.

I can't think of a good reason to subsidize mail. If people live where mail
delivery is expensive, they should have to bear the cost. This would cause
them to conserve their mail use. Instead of getting mail once a day, perhaps
they should receive it once a week, or once a month. Maybe they could pick it
up where they buy groceries. Maybe they could just use email or phone. Maybe
they would get less junk mail. It's hard to tell how they would adapt if they
had to pay market prices. But they would adapt and that's a good thing. It's
not a good thing to pretend that delivery costs 40 cents when in reality it
costs 40 dollars. And it is unjust to _force_ people who chose to live in
areas where it's efficient to deliver mail to subsidize people where it's not
efficient.

Also, if subsidized rural mail service is something the taxpayers want to pay
for, they could just as well subsidize private carriers.

In short, I don't see any good reason why the USPS should have a monopoly on
mail service, any more than it should have a monopoly on email, or fax, or
telephone, or TV or any other means of communication.

~~~
rprasad
The reason for subsidizing rural mail delivery can be found in the U.S.
Constitution, Article I, Section 8, Clause 7 (aka, the Postal Clause).

The Founding Fathers considered postal delivery to be important enough to
mandate it in the Constitution.

~~~
dpatru
From Wikipedia[1]: Article I, Section 8, Clause 7 of the United States
Constitution, known as the Postal Clause or the Postal Power, empowers
Congress "To establish Post Offices and post Roads".

Without this clause, Congress would not have the authority to establish Post
Offices. But note the clause does not say anything about making postal service
an exclusive government function. In fact the clause does not even mandate
that Congress establish Post Offices, Congress merely has the power to do so.
If Congress shuts down the Post Office, it would be perfectly Constitutional.
The clause is definitely not a "reason for subsidizing rural mail delivery"
anymore than Congress's power to Declare War is a reason to have a war.

[1] <http://en.wikipedia.org/wiki/Postal_Clause>

------
kakashi_
On a lighter note: This was forewarned long time back -
<http://www.youtube.com/watch?v=Hox-ni8geIw>

------
Kyrce
After decades of mismanagement and neglect, service broke down completely in
Chicago in 1966. "The sorting floors were bursting with more than 5 million
letters, parcels, circulars, and magazines that could not be processed,"
Lawrence O'Brien, the Postmaster General at the time, would recall somewhat
poetically. "Outbound mail sacks formed still gray mountain ranges as they
waited to be shipped out."

And here I thought Terry Pratchett's Going Postal was fiction.

------
jeffjarvis
How about organizing a summit to disrupt the USPS?

I got involved in the question of the future of postal, oddly, because of my
book, What Would Google Do? [sorry for the plug], when postal execs asked what
the USPS would be if Google ran it. Hmmm. You guys could help answer that.

A consultant in the industry organized an event in DC, PostalVision 2020, and
we had Vint Cerf come keynote. I'd like the next phase to focus on how to
disrupt postal entirely.

First class will die and with it its subsidy for media and other mail. Parcels
will take off but the private sector can handle that. (If we need to guarantee
universal service, that can be done with subsidies -- a la, phones -- better
than by owning the infrastructure). There are entrepreneurial ventures such as
Manilla aiming to disrupt physical bill delivery..... It's an area ripe for
innovation and investment.

A few of my earlier posts: [http://www.buzzmachine.com/2011/05/18/why-do-we-
need-a-posta...](http://www.buzzmachine.com/2011/05/18/why-do-we-need-a-
postal-service/) <http://www.buzzmachine.com/2010/03/23/post-postal/>

------
drallison
Why should the postal monopoly exempt "urgent package delivery" (aka FedEx and
UPS)? If we want an economically healthy postal service, ceding that
profitable segment of the postal business to private industry was a strategic
error. I personally believe that a healthy postal service is critically
important.

------
cookiecaper
The USPS needs to come to terms with the shift in communication mechanisms.
People don't write letters as a common means of communication anymore. I
believe there is some value in maintaining the Postal Service but its role
will need to shift dramatically if we expect to see any sustainability from
there.

~~~
Kadin
I think that people in the USPS definitely realize this, but they are
unfortunately prohibited from doing any of the obvious things that one would
expect them to do in response. They can't close unprofitable post offices, lay
off redundant employees, increase prices, or decrease the level of service
being offered.

All they can do is let it blow up and then hope Congress gives them enough
leeway to put the pieces back together into something better and more
sustainable ... hopefully using profitable semi-privatized Western European
services as a model.

------
amorphid
Businesses still pay many bills with paper checks sent via mail. I wonder when
we will no longer need the USPS for that.

~~~
philwelch
When the banking and payment systems are fixed. In the year 2011, there is no
legitimate technical reason for paper checks and the mail being a legitimate
payment system. But the digital alternatives are little better.

------
drallison
Do your part to save the post office. Write a letter.

------
known
Convert USPS into a Bank

------
crizCraig
Poll: Should the USPS be allowed to go out of business?
[http://www.wepolls.com/p/1900483/Should-the-USPS-be-
allowed-...](http://www.wepolls.com/p/1900483/Should-the-USPS-be-allowed-to-
go-out-of-business)

------
rokhayakebe
I have a solution that is guaranteed to save the post office money:
crowdsource the delivery of mail. How does it work? Mail is sorted and placed
in bins by USPS. Individuals who work close to or drive by the post office on
their way home can stop by and pick up the bin for neighborhood/apt
complex/building/center. The person who picks it can either drop the mail or
let others come pick it up.

~~~
nhaehnle
That would be a nightmare in terms of reliability and security.

