Postal Reform Page: 10 of 15
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registration, parking tickets, and antitrust. It is also able to borrow money at the lowest
possible rate because it does so through the U. S. Treasury. Understandably, companies
facing competition from USPS feel that they are at a great disadvantage.
A second argument is based on concepts of economic efficiency. Because of its indirect
subsidies such as freedom from taxation and regulation, and because its goal is to break even
rather than earn a competitive rate of return, USPS has less incentive than private sector
entities to use capital and labor resources efficiently. Subsidies make government products
and service seem artificially cheap, resulting in an over-allocation of resources that could be
used to produce greater benefits elsewhere in the economy. Economic theory maintains that
such a mis-allocation reduces national economic welfare below that achieved by a
competitive market. When private sector companies produce and sell a product or service,
there is some benefit to society from the taxes that result, a benefit not gained when the
government produces the same product or service.
Finally, there is substantial evidence that USPS is not a very adept competitor. GAO
has issued several reports of failed commercial ventures by USPS. In 1997, for example,
USPS had discontinued or was losing money on 15 of 19 new products, resulting in a net loss
of $85 million. UPS and FedEx have both established profitable delivery networks in
markets where USPS tries to compete but is now a relatively minor player.
One policy prescription leading from this diagnosis is that USPS should stick to its
monopoly business and not seek to grow at the expense of private sector competitors.
Indeed, some would like to see the postal monopoly reduced to "the last mile" of delivery,
opening up collection, sorting, and transportation to market competition.
A Postal Reform Commission
A number of postal observers have believed for some time that political power is so
thoroughly dispersed among stakeholders that only an independent blue-ribbon commission,
rather than the legislative process, can devise a contemporary solution to today's postal crisis.
The USPS Board of Governors, the Association for Postal Commerce, the Mailers Council,
GAO, the United Parcel Service (UPS), and some Members of Congress are among those
who called on the President to create a commission to study and make recommendations on
the future organization and function of the Postal Service. The president of the American
Postal Workers Union, however, opposed the creation of a commission, believing that it
would be a front for privatization initiatives.
There is a notable precedent. In 1967, President Johnson appointed Frederick R. Kappel
(the chief executive of AT&T) to chair a Commission on Postal Organization that eventually
devised the framework for the Postal Reorganization Act of 1970. Murray Comarow, who
was executive director of the Kappel commission, agrees that the legislative process cannot
achieve genuine reform. He cautioned against a commission made up of stakeholders,
however, because it is likely to mirror the intransigent interests that have fought to a draw
on Capitol Hill. A 1977 commission with union and mailer representatives broke down in
disagreement and its report was ignored. The Kappel commission was composed of eminent
individuals with no close ties to postal interests.
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Postal Reform, report, February 25, 2003; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc806221/m1/10/: accessed April 24, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.