The Oldest Government Run Business

In these days of bailouts and government intervention, there is much talk about how effectively the Government can run any business.

To see what the future for GM and others may hold, it pays to take a look at how the US Postal Service is run.

Most American citizens are blissfully unaware of the degree to which USPS subsidizes U.S. businesses by means of the fees it collects from ordinary postal customers. For example, if you wish to mail someone a large envelope weighing three ounces, you’ll pay $1.17 in postage. A business can bulk-mail a three-ounce catalog of the same size for as little as $0.14.

via Going Postal — Georg Jensen — The American Interest Magazine.

For years, USPS has been subsidizing junk (or as they call it “standard”) mail for years, at the expense of average citizens. This scheme was working fine, until the birth of email and the high cost of mail pushed average consumers away for the USPS. The USPS responded by furthering incentives for businesses to send mass mail. Now personal mail is only 4% of all mail carried by the USPS. The most ridiculous part is that despite their legal monopoly, USPS has had losses in billiosn for years, and has billions of dollars of unfunded pension liabilities. Furthermore, the economy is bringing many of these problems to a head, with bankruptcy looming in USPS future:

With the economy collapsed, direct-marketing response rates in a nosedive and the entire Ponzi scheme now blown up, the day of reckoning is here. Many experts predict that the USPS will far exceed a $3 billion loss this year and that even with all the cost-cutting measures the USPS has already put in motion, a $6–12 billion loss is more likely. Any loss of over $7.8 billion, which now seems probable, will exceed the $15 billion maximum Federal loan ceiling from the 2006 Act, leaving the USPS unable to meet its financial obligations. The USPS is about to go broke. If it does the phrase “going postal” may acquire a whole new meaning, describing something that literally vanishes.

via Going Postal — Georg Jensen — The American Interest Magazine.

Click through for more details and some sane ways to solve the problems.