The legacy system is based on the fact that it is public service, equally offered to all citizens, regardless of their gender, race, religion and location. So, it is not a business. A business would focus on the most profitable aspect of the postal service. It would likely not serve some areas, or even discriminate against some people.

I believe, the reason why USPS still has a monopoly in first class parcel mail, it is to satisfy people we claim that USPS should make money. Now, if it was clear for everyone that USPS should not be profitable (like military or education are not profitable), then it would make sense to break all USPS monopolies. Actually, I would argue the other way around, then let's USPS compete also with banks (account, loans, credit cards, stocks/bonds, CDs, etc.), title companies, check cashing business, etc. Which I believe USPS cannot currently. USPS could leverage its geographical coverage to bring banking services to remote areas. I would suggest to combine some services like DMV, so we could renew ID/driver/passports at postal office. We could pay taxes and fine. We could access notary services (titles), etc.

If you want universal postal service to rural areas (not profitable markets), then simply provide it and understand it has a cost like the military and education (as noted above)?

Having said that, having a universal postal service requires physical presence in lots of remote areas. And those remote areas not only lack postal service, but also banking, tax services, and even why not grocery shopping. I do not see why we could not let the postal service provide those extra services, especially in the remote areas. People in big cities would likely have a different bank, they have access to a DMV near by, or supermarket. But, in a remote area, how a retired person can cash his social security ? renew his driver license ? Maybe there is a "service" opportunity that would make those remote post office more sustainable. I do not see why the postal office could not provide other services especially in remote areas where they lack. The physical location of the post office becomes a more valuable asset.

The structure also hints at problems with government run businesses- the PX system avoids all sorts of sales and property taxes and gets reduced or free rent. The commissaries do that and get direct subsidies as well.

Before any service members (or their spouses) go after me, no, I am NOT arguing for any change to the system, just pointing out how existing examples look and work.

So in essence, residents of "profitable areas" are overpaying for mail to subsidize mail service to those in unprofitable rural areas.

But then the next question is: why go through this roundabout subsidization? Why not just subsidize rural first class mail delivery by the state directly?

This also ignores the fact that the USPS does not have a monopoly on sending packages, and is still able to serve package deliveries to rural areas, aren't they?

The conclusion does not follow. If it is important that the price of delivery to remote Alaska be cheap, then why not just subsidize it directly?

If I reside in Florida/Hawaii and send mail to Alaska I am presuming that it would get re-routed through intermediate stops. Also people move and mail traffic ebbs and flows through the seasons. So I don't understand how this subsidies would work unless we look at the network as a whole and budget accordingly.

The result would be the USPS would not have the revenue to serve the unprofitable regions, and would either be forced to end service in the unprofitable regions or simply collapse.

The problem is that the USPS monopoly is not as valuable as it used to be as less and less business is conducted by mail. In the long term the government is going to have to subsidize its necessary services, because those services are not and cannot be competitive advantages.

Sounds like if the problem is that rural mail is socially important, we ought to subsidize it directly.

OTOH, FedEx responded to MAP-21 and similar pension funding laws by getting rid of their pension fund which I suppose isn't something USPS can do as easily. On the third hand, UPS is still able to afford pensions for union employees.

It seems that most observers agree that this is not the case, so it is unclear how you came to the exact opposite understanding. E.g. https://www.bloomberg.com/opinion/articles/2018-04-04/congre... mentions

> The law requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees' health benefits up to the year 2056. This is a $5 billion per year cost; it is a requirement that no other entity, private or public, has to make.

Is Amazon going to run ships around the Great Lakes to deliver mail to vessels moving between ports?

Is FedEx going to send a truck an a four-hour round-trip to deliver a single letter to someone on an indian reservation for 50¢?

Is UPS going to charter bush planes to deliver mail to remote outposts in Alaska, Samoa, Guam, and the Northern Mariana Islands?

There are post offices so far out in the middle of nowhere that while they have a concrete pad for handicapped parking because it's required by the ADA, no customers ever arrive by car, so there's also hitching posts for people's horses, which is the primary mode of transportation. I don't see Amazon doing that. It'll just say, "Wait 20 years for your mail while we work the bugs out of our super-cool drone delivery service!"

No, because using planes to deliver to regional distribution centers is much more efficient.

> Is FedEx going to send a truck an a four-hour round-trip to deliver a single letter to someone on an indian reservation for 50¢?

The USPS does not deliver mail directly to the majority of reservation residents. Most have to fetch their mail at the closest office, which could be upwards of 1 hr away from them. This is because most reservation residences don't actually have an address (which also prevents them from registering to vote, which is another related issue).

> Is UPS going to charter bush planes to deliver mail to remote outposts in Alaska, Samoa, Guam, and the Northern Mariana Islands?

The USPS doesn't either. The USPS's Alaska Bypass has a minimum order weight of 1000 lbs, it's designed for retailers. The USPS does not serve normal consumers in very rural areas with standard mail features.

How do planes and distribution centers get mail to people at sea for months at a time?

The USPS does not deliver mail directly to the majority of reservation residents

You're not wrong. But there are plenty of people in remote places on the rez who do get mail hours from the nearest trading post. Just because they're not the "majority" of people doesn't mean they don't deserve to be served.

The USPS does not serve normal consumers in very rural areas with standard mail features.

Either you and I define "rural" differently, or you haven't spent as much time in rural places as I have.

It's possible to half agree with those political factions while still wanting to keep government subsidized public mail.

For example, if they want access to consumer mailboxes in an area, they need to cover 100% of the addresses USPS covers without routing packages through USPS. That way, they don't have the ability to surgically cherry-pick the most lucrative aspects and leave USPS with the crappy bits due to its mandates.

Given that USPS and FedEx are roughly $10 for a 3-day letter, I don't know which carriers would even want to deliver paper mail.

That strikes me as unreasonable. We don't impose that kind of a requirement on package delivery on one's porch...why should we impose that requirement on paper mail delivery in one's mailbox? In no communication enterprise do we ever require 100% coverage. Markets finds some equilibrium with global, national, and local players coexisting. The same can be true for state-run enterprises.

And we absolutely do place similar requirements on new entrants in monopoly enterprises. I'm thinking about things like 911 service on cell phones/VOIP phones. Basically, we all need the "new mail" to work pretty much like the old mail it's replacing. It's in nobody's interest for an inferior system to eat all the profit and drive the existing system into collapse.

The UK is the size of the state of Oregon and about five times as densely populated. The UK also has a much more powerful central regulatory apparatus -- there is no US body that has as much power over private carriers as Ofcom has over Royal Mail.

Exactly.

> there is no US body that has as much power over private carriers as Ofcom has over Royal Mail

I thought regulating inter-state commerce and especially mail was something the US federal government has historically done?

In fact isn't there even a federal law enforcement agency specifically for it?

What's also significant is that Royal Mail privatization is less than a decade old. From a policy perspective, it's still an experiment. It doesn't actually have any competition for letter delivery. That Royal Mail has survived despite the lack of a statutory monopoly does not mean that the same would be true of USPS.

  US        -      87/sq mi
  Germany   -     603/sq mi
  UK        -     725/sq mi
  Japan     -     862/sq mi
  Singapore -  20,446/sq mi

Does a pricing system and private enterprise break down in sparsely populated markets?

Clearly things seemed to work when going from 20,000/sq mi to 862/sq mi (2 orders of magnitude). Is the argument that there’s a magical breaking point somewhere between 603 to 87/sq mi?

My whole argument is that the utility of keeping the USPS as it sits now with equitable pricing outweighs any potential efficiency or profit gained by private actors. If you disagree, that’s fine. I’ll disagree with your position that we should privatize the USPS, it will fuck over rural people to the benefit of ... who now? Are you heavily weighed down by purchasing .55 cent stamps? Because market rate first class mail would fuck over poor rural people pretty hard for almost no gain. The utility outweighs any efficiency or profit gains offered by private companies.

Not every damn thing needs to be privatized, some things are better left as government entities because the benefit to the public is greater than any profit motive. Letter delivery is one of those things.

This is a bold assumption that needs backing, because it would suggest that Germans or Britons would be paying 2 orders of magnitude more on sending paper mail than Singaporeans. It also presupposes that private corporations must absolutely turn a profit on every piece of mail that they deliver to every destination, but that’s not how most enterprises work — there can be sustainable loss leaders. It also presupposes that we ought to subsidize rural paper mail delivery rather than charge the true price, which is also debatable.

> I’d bet there’s a threshold somewhere in that range where it wouldn’t be possible to deliver a mail anywhere in the US by a private company for similar rates that everyone currently enjoys now.

“I’d bet there’s a threshold”, how do you know that the US isn’t above that threshold?

> equitable pricing

This is also debatable, because the USPS is essentially charging higher rates in denser markets to offset the subsidized rates in sparser markets, which imposes a regressive price increase on poor urban USPS customers. Higher prices mean nothing to rich people. If there’s some social utility to having rural (and not urban) Americans enjoy subsidized first class mail, then why not just subsidize it directly through taxes as opposed to selective price increases, which can be regressive and un-equitable?

> Not every damn thing needs to be privatized, some things are better left as government entities because the benefit to the public is greater than any profit motive. Letter delivery is one of those things.

Is food one of those things? How about clothing and shelter? The profit motive is just an incentive for private entities to provide goods & services. The strongest argument in favor of the profit motive is that resource allocation is superior among private entities relative to government central planning. There are obviously exceptions, like externalities, but those don’t really apply here.

And even if we did decide that there’s a public benefit to providing subsidized mail to rural areas, that’s an excellent argument in favor of keeping a taxpayer subsidized USPS, but not a sufficient one in favor of maintaining its monopoly on paper mail. Especially considering that private corporations already deliver packages to low density rural areas alongside USPS just fine.

No, it’s not. Singapore and the US are both an order of magnitude outside the range of the other 3 countries. I would imagine delivery is cheaper and/or more profitable in Singapore, considering it’s a densely urbanized city-state comprised of multi-tenant housing. Germany, UK, and Japan are all roughly similar in density, and I bet it costs a bit more to mail a letter in Germany than Japan. I also bet it’s profitable in that population density range. It clearly is, since they’re operating private companies!

The US is also vastly larger than any of the referenced countries, and has some huge areas with extremely low density. The population density of all of the land area of the US excluding the Northeast region has a population density of 50/sq mi or less (excluding islands). The US has unique geographical and size challenges that none of the countries listed that have privatized their post offices have.

Clothing, food, and housing haven’t been strictly government provided services ever. This is not a good analogy or argument, sorry.

Also, 55 cents is a not a regressive pricing scheme against the urban poor. 55 cents to mail a letter isn’t going to inconvenience anyone. You’re getting disingenuous here, I’m going to disengage.

One last thing, USPS ends up doing last mile delivery for a lot of rural address UPS and Fedex packages. You’re not arguing in good faith, I’m done.

And on what basis are you betting that an operating private company in America can’t achieve the similar pricing outcomes? Is it pure conjecture?

> Also, 55 cents is not a regressive pricing scheme against the urban poor

Sure, and if that’s your argument, then why can’t a private corporation charge the same and maintain a national parcel mail network if it wanted to? There are loads of industries (airlines, payments, ridesharing) where margins are razor thin, but because of high revenues, there is plenty of incentive to serve remote areas.

> One last thing, USPS ends up doing last mile delivery for a lot of UPS and FedEx packages

While that’s true, this services represents the minority of UPS and FedEx’s total footprint. UPS/FedEx/DHL/Amazon still directly deliver the majority of their packages, even to remote addresses.

Yes, pure conjecture based on the population density data. It’s conjecture on your part to assume it can be done profitably so I guess we’re at an impasse here.

> Sure, and if that’s your argument, then why can’t a private corporation charge the same and maintain a national parcel mail network if it wanted to? There are loads of industries (airlines, payments, ridesharing) where margins are razor thin, but because of high revenues, there is plenty of incentive to serve remote areas.

Two facts support my conjecture that the service of a privatized USPS would not include all current users or heavily impact them via price hikes: We haven’t even wired last-mile high speed internet to everyone, and we don’t have true nationwide cell coverage. What makes you think private mail will be any different?

> While that’s true, this services represents the minority of UPS and FedEx’s total footprint. UPS/FedEx/DHL/Amazon still directly deliver the majority of their packages, even to remote addresses.

At least some of this is subcontracted out to other regional companies, I have a friend that works for a company that has a contract to deliver Fedex packages. It’s functionally the same thing as the USPS doing it, just privatized. I have nothing against parcel delivery being handled by private companies.

I just wish we could all view the mail as a public good that benefits people and is worth keeping around. I feel first-class letters should be treated as something all people should have access to at a cheap flat rate no matter where they live in the US. I also feel that is unlikely to continue if the post office is privatized. We could instead focus on improving the existing system we have to benefit us all.

- Australia Post is a government owned entity.

- Australia Post has a universal service obligation.

- Australia Post is allowed to sell whatever it damned well pleases.

- But, it has a monopoly on only one thing, letters.

- The combination of universal service obligation is a liability of course, but being able to sell whatever it damned well pleases ameliorates it somewhat. Many firms (like banks) farmed out otherwise unprofitable branch functions to Post Offices.

- Australia Post is, and as far as I know has always been profitable.

From what I can tell, the idea that a government run entity is more poorly run than a private one is myth. If the area has open competition, and the government run business makes a profit (this is generally the case in Australia), then it really makes no difference if it's privately run or government owned.

Differences only arise in non-competitive environments. A monopoly owned privately owned business charges like a rent seeking wounded bull. A subsidised government run business could destroy more efficiently run private equivalents, but can be a fine balance - it can also be a way to efficiently subsidise a service that was never going to be supplied privately. Doing it by subsidising private operators is equally fraught - regulatory capture is a thing, privately owned prisons being a poster child for what can go wrong.

This is a state of affairs we need to consider rolling back, not expanding.

If you actually drill down into every tangible thing that’s wrong with America, you’ll find that root causes are actually pretty complicated.

That is a fine thing and I am grateful for it.

Consider any tangible thing that's wrong with America - government mismanagement and regulation are likely to be a part of that equation.

This is a state of affairs we need to consider rolling back, not expanding.

But also regardless of which is better, why is it all-or-nothing? Why can't UPS/Amazon/FedEx/DHL ALSO co-exist with the USPS? Today, they are prohibited from delivering any first class mail to a mailbox, by law.

Now, why does it have exclusivity for letter service? I don't know the history.

I'd rather look at how it can do an already pretty good job, better. I know I go to USPS when I ship anything.

Why isn't it in the banking business? Why doesn't it operate an official email / Identity Provider? Among other services that a correspondence service, a federal service with the most physical public spaces, could offer?

It specifically grants Congress the power to operate a postal service. Just because they have the power doesn't mean they have to do it.

> I'd rather look at how it can do an already pretty good job, better. I know I go to USPS when I ship anything.

When it comes to packages, USPS vs UPS vs FedEx have their pros/cons, but the options mean that most end user's needs are met, whatever they are. The question is why USPS enjoys a state sanctioned monopoly on paper mail specifically.

I'm curious -- can you link to more detail about this? I've never had trouble sending paper mail through UPS or FedEx. What does the monopoly cover, specifically?

By law, private corporations aren't allowed to deliver anything to your mailbox, only the USPS can.

On the one hand, it seems unfair. On the other hand, since they don't have any cost-competitive offerings, it seems like a non-issue. I'm a big fan of the USPS, but if it looked like FedEx could help push the letter rate down, I would be a fan of revoking that law. (If a private carrier committed to serving 100% of the USPS coverage area.)

It doesn't have exclusivity for letter service. UPS, FedEx, and DHL (among others) will carry letters across the country for you.

Yes, it's going to cost ~$10 to roughly match the service speed of a USPS first-class stamp. But it's available.

https://www.law.cornell.edu/cfr/text/39/320.6

There are minimums they can charge and some speed requirements.

https://about.usps.com/publications/pub542/pub542_ch5_001.ht...

USPS has to get paid the going rate for postage. But given that no private carriers are within a factor of 10 of USPS pricing, that seems like it's not the barrier here. (Also: much easier to make the argument that the $1.00 letter service from FedEx could be $0.45 if Congress would update the relevant law.)

This really looks like the private carriers have carved off the profitable part (rapid delivery) and leave USPS with the hard, unprofitable part (delivery to 100% of addresses, for $0.55).

As for regular mail, they don't offer that because it's impossible to compete when you have to pay your competitor for every sale you make.

It’s similar in Canada - a number of previously run public services were privatized (DMV equivalent, liquor stores, etc). And the level of service improved dramatically. I remember how awful the DMV was - crappy customer service, limited locations, terrible hours. Now I can go and register my car at 8pm on a Wednesday with a 5 min walk and no line. Many of the Canada Post centers are privately run as well - the big box stores use their employees to run it.

I was kind of shocked to come to the US and see how they’re still stuck where Canada was 30 years ago.

Privatization of the postal service has led to much worse service, closure of postal offices, long delivery times in less densely populated areas (read non profitable), and Loss of mail; to make profit, the companies hire the lowest grade, temp-workers they can get their hands on. Sometimes these people figure it is easier to burn or throw away mail rather than to do the actual work of delivering it.

I disagree. At best, it has been hit or miss. Alberta used to have Alberta Government Telephones (AGT). It was later privatized as Telus. Saskatchewan kept SaskTel a crown corp. The level of service and prices are so much better in Saskatchewan as a result that some Alberta residents pretend to live in Saskatchewan so they can get a Sask mobile plan.

And don't get me started on 407.