Liberating the Post Office

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Sunday, 11 August 2013 05:38

Gail Collins took up the Post Office and its large annual losses in her column yesterday. While she does make the point that the Postal Service has been hamstrung by Congress in its efforts to take advantage of its assets to move into new lines of business, this point deserves greater emphasis.

Congress mandated that the Postal Service should be self-sustaining in the same way as a private for-profit company. However it has repeatedly blocked the Postal Service from taking advantage of its enormous assets to move into new lines of business, primarily because it would mean increased competition for other businesses. In addition, as Collins notes, it has imposed a set of prefunding and accounting rules for its pension and retiree health benefits that are far more stringent than those used by any private business in the country.

Faced with the combination of restrictions on efforts to expand into new areas, a dwindling market for first class mail (the bread and butter for the Postal Service), and an impossibly stringent set of accounting rules, it is hardly surprising that the system would face large losses.