Now it’s the Postal Service

Now the government run U.S. Postal Service (USPS) is on the edge of bankruptcy. And some people want the same government to manage your health care??? The problems with the USPS can be explained in one word: Congress. It appears the “2006 Postal Accountability and Enhancement Act” has further tied the hands of USPS management in addition to meddling of various Congress members that don’t want to close any Post Offices or distribution centers in their districts. For certain the management of the USPS shares a good deal of blame for agreeing to contracts with “no layoff” clauses and far above private sector benefit plans. It appears to be a perfect storm of failure that requires a different response to new realities by all parties: management, the unions, and especially Congress.

The Cato Institute has written several articles outlining changes that would help modernize the USPS, the latest being in their Winter 2011 Journal. The outline below is a brief summary of their work with some additions for consideration by all parties:

1. Renegotiate the labor contracts to bring them in line with private sector in terms of benefit contributions, pay rates, and the elimination of the “no lay off” clauses. Work rules would need to be altered, the unions will need to understand it is not 1957, therefore, their business model must change.

2. Close 25%+/- of the Post Offices and distribution centers and reduce the work force accordingly. Base it on business needs and not whining from members of Congress.

3. Replace many of the Offices with contract postal units in other retail establishments or partner with retailers to provide basic services.

4. Eliminate six day a week delivery and base delivery schedules on population densities. I.E. for areas with less than 50 people per square mile (PPSM) they would get once or twice a week delivery, for areas between 50 and 250 PPSM target three times a week, and for more than 250 PPSM target five times a week. These numbers could be negotiated up or down based on business needs.

5. Cut all Congressional meddling by moving towards privatization over the next 2-5 years. Let the USPS operate like a business, not a government agency with two cinder blocks chained to its ankles. Repeal most, if not all, of the 2006 Postal Accountability and Enhancement Act.

6. Allow the USPS to branch out into other business ventures as foreign postal services have done.

The Cato Journal presents a thorough argument for most of these initiatives. The delivery schedule based on population density is the contribution of this author.

We’ll need to provide some talking points to members of Congress that don’t understand business models, labor costs, and demographics. When their constituents call to complain, they should respond with the question of whether or not they want to pay $3 to mail a letter, or do they want to work with a modern Postal Service at a reasonable rate.

I challenge each of you to count the number of times you actually HAVE to go to a Post Office over the next six months. And if there was a satellite unit in the local Wal-Mart or Supermarket, would that make it more convenient. It’s not 1957 anymore, the USPS needs a different business model and consumers have to accept this reality, or be willing to pay $3 to mail a letter. But most important, Congress needs to get out of the way. They should spend their time on repealing Obamacare.

Six Steps to Nowhere

As a student of economics I will argue that the six steps proposed by Gov. Granholm (5 Sept 2011 Press&Argus) are shallow and not based on sound economic principles and will not lead to long lasting (if any) improvement in the job market. Let’s go by the numbers:

#1 Businesses do not respond to one time gimmicks. Most small businesses look 3-5 years into the future to plan. Given the $1.3 Trillion deficit, the overly optimistic expectation of $150 Billion is chump change anyway.

#2 Government programs do not create jobs, small businesses do. Given the failure of public education, I don’t think we want more of the same type of failed programs. We do not need to burden our grandchildren with more debt by spending $228,055 or more to create a single $40,000 a year job. The cost per Stimulus job number is from the CBO.

#3 The concept of an infrastructure bank is just another way to kick the can down the road and burden future generations with more debt.

#4 This one is half right. Lowering the corporate tax rate is a good idea. However, tax cuts do not have to be paid for, unless you consider all money belongs to the state and not the people that earn it. We have a spending problem, not a revenue problem.

#5 Emulating the failed social welfare states of Western Europe is not a viable answer. Plenty of private training schools already exist that can train a motivated individual. And do so at a much lower cost than a government programs.

#6 Clean Energy is not market ready. Can you say Solyndra and the loss of 1100 jobs? Does the loss of $500 Million of taxpayer money mean anything to you? Besides, which article of the Constitution gives the government the right to dictate where my electricity comes from? Does freedom and liberty mean anything to you? Let free markets work.

The only jolt delivered would be to the burden of debt we would place on future generations. The former Governor should simply enjoy her retirement and stop meddling in areas that she does not understand.