Will the U.S. Postal Service be privatized?

Published 11:27 am Tuesday, October 11, 2011

By WAYNE CURTIS / Guest Columnist

The dire financial condition of the U.S. Postal Service (USPS) — it barely avoided default at the end of September — has revived a long-standing debate about its future. The crisis comes amid a 20-percent decline in mail volume and $20 billion of losses between 2006 and 2010.

In one corner are those who contend the agency needs radical surgery in the form of privatization. In an opposite corner are supporters of the status quo.

Those in favor of privatization point out that USPS is a government monopoly with respect to delivery of physical letters. This means that no one else can perform the job.

Another argument for change is the USPS pricing system. Currently, some postal customers subsidize others since the cost is the same to send a letter across town or across the nation.

This is analogous to an airline charging the same fare for all trips, regardless of distance flown.

Proponents also note that private markets provide choices. Competition allows customers to turn to better-performing or lower-priced firms.

A final point is the efficiency that results from competition. Prices of products or services drop when markets force producers to become more efficient. Supporters of the current structure point out that it is a vital component of the nation’s infrastructure, an essential communications network. As such, it binds the nation together.

USPS is integral to the lives of Americans, they contend. Privatizing it would be subjugating its mission to a financial statement.

Supporters of the current system also stress that our standard of living would decline with privatization. There would be restricted service to some locations because it would not be economically feasible to deliver mail to them.

Where will all the talk lead? Despite the arguments privatization proponents make, odds are that Congress will probably view this matter as too hot to handle with too many ramifications.

Wayne Curtis, Ph.D., is on the board of directors of First United Security Bank. He may be contacted at wc_curtis@yahoo.com.