It's not the invisible hand when the USPS loses $1.50 per shipment at the benefit of Amazon while USPS -- a federal service to all Americans -- struggles to stay afloat.

The USPS doesn't lose $1.50 per Amazon parcel. Legally, they can't price at a loss. Under the Postal Accountability and Enhancement Act of 2006 they have to charge rates that cover their costs.[0] The number you're referring to comes from an analysis that suggested USPS charges $1.46 below market rates. That's not the same as saying it's a "loss" (as most people understand it--i..e, it costs you more than you make) or even a subsidy. The USPS and the independent Postal Regulatory Commission.

The USPS profits from these parcels. It's a smaller profit, yes, but that's because the deal involves trading a greater profit for guaranteed, predictable number of future parcels they'd otherwise likely not get. Such deals are common in the shipping industry.

Far from making it harder for the USPS to stay afloat, their deal with Amazon and e-commerce shipping in general are the main reasons why they've been able to survive the decline in bulk mail and the onerous regulations (retirement prefunding requirements, etc.) that have drastically impaired the USPS.

0. http://about.usps.com/news/statements/080117.htm

> onerous regulations (retirement prefunding requirements, etc.) that have drastically impaired the USPS.

Onerous regulations? They are just being asked to act like every other company. If you want to offer pensions, fine, but you have to have a funded pension plan.

Companies and government agencies generally don't prefund retirement healthcare benefits to 100%. Rapid USPS funding requirements starting 2007 were frontloaded for the first ten years. And while there are arguments for prefunding versus a pay-as-you-go approach with current retirees, it's a balance between short-term liquidity and long-term benefits.[0] Per the Postmaster General's testimony in 2017:

> Our significant financial losses are due in large part to the legally mandated RHB prefunding requirement. Such a requirement to prefund retiree health care obligations is not imposed on most other federal entities or private-sector businesses that offer retiree health benefits, let alone on an accelerated basis. The Postal Service’s funded level for RHB far exceeds that of civilian federal government entities, state governments, and those private sector companies that offer retiree health benefits at all.[1]

Changes in mailing behavior were worse than the USPS expected in 2006, and RHBF payments became much more of a problem than was initially expected. It's not so much that prefunding is bad per se, but that the requirements as enacted limited the USPS's liquidity and options. The USPS IG[2] also put out a white paper[3] on the subject that argues some of the assumptions behind the funding requirements. You'll find a range of arguments out there from suggesting that the only problem for the USPS is the impact of the RHBF payment requirements to them being just a symptom of broader problems, but but the GAO report on the subject is a pretty even-handed take on the subject.[4]

0. https://fas.org/sgp/crs/misc/R43349.pdf

1. https://about.usps.com/news/testimony/2017/pr17_pmg0207.htm

2. https://www.uspsoig.gov/blog/be-careful-what-you-assume

3. https://www.uspsoig.gov/sites/default/files/document-library...

4. https://oversight.house.gov/wp-content/uploads/2014/03/Todis...

>Companies and government agencies generally don't prefund retirement healthcare benefits to 100%.

So? Shouldn't all retirement healthcare benefits be prefunded?

It makes no sense not to do so.

No sense for whom?

With private companies, it makes great sense for stockholders or corporate executives trying to extract as much current value from the company as is legally allowed (or can get away with). Future value is of much less consequence to them. That's exactly why they have done so historically and continue to do so.

With government agencies, the incentive is similar, in that prefunding means they have to public funds today. It's much more attractive to leave the problem for future politicians, literally decades later.

However, if the USPS actually has to prefund its retirement plans, then it's fair to say that's an onerous regulation, compared with private industry, which doesn't, no matter how many "should"s you throw at them.

So where are the market forces that make USPS become more efficient and allow it to be competent?

Isn't it fundamental proposition of the Republican party - "Small government"

I am genuinely curious, who put a gun to USPS head and asked it to lose money on every package delivered?

They could have increased their prices. But that would mean losing business from Amazon, which, in a "small government" system go to more efficient and competitive players.

That's how bulk shipping works. If you are a bulk mailer like, a cc company for example, then you would presort your mail to 5/9/11 digit and you get presorted discount from USPS even for first class mail.

So a postage stamp that costs you .50, costs a big mailer, may be, .40 depending on the sorting level and amount of mail.