Monday, April 5, 2010

Going postal
The postal service is widely out of control

If you were made a proposition back in the late 1700s to be given a monopoly organization that was the sole provider of mail services to a nation that would grow to a population exceeding 300 million, you would have thought it was a lock. But as with most monopolies, no competition means never having to bend to market forces.

The US Postal Service is seeking to terminate Saturday mail service in an effort to rearrange deck chairs on a ship that hit an iceberg 30 years ago.

The long and short of it is the USPS is upside down in its legacy costs and will lose a projected $7 billion this year alone. That figure doesn’t include the $13.2 billion debt already on the books and is a pittance of the $230 billion projected red ink that will paint the postal service in just a decade. By 2020, the USPS is on track to lose $35 billion a year. Termination of Saturday service will save an estimated $2 to $3 billion per year—do the math $35 billion minus $2 to $3 billion doesn’t begin to stop losses.

Since unionized, the USPS must dedicate over 80 percent of its budget to 581,070 workers (which doesn’t include the $51.9 billion in unfunded legacy costs).

Over the past few years, snail mail has seen a 20 percent reduction as technology has outrun the low geared Grumman LLV. Meanwhile, FedEx and UPS dominate the package delivery market; perhaps its time to let competition to deliver first class mail and see what Brown can do for America.

-- Killswitch Politick

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