U.S. Postal Service more proof the government more efficient than the private sector

Republicans and neoliberals force-feed Americans too many fallacies. The problem is these pseudo-realities are detrimental to our pocketbooks, health, and more. The U.S. Postal Service comes to mind anytime discussing efficiency as it is the clear example of a myth that can be dispelled thoroughly with apparent examples.

Anytime one hears that the private sector is more efficient, it is imperative that one realizes they are being asked to deny math. The U.S. Postal Service has been the poster child for attacks. Anyone reporting can show they are in fact, more efficient than the private sector shippers.

U.S. Postal Service efficient even as many try to destroy them

As stated in a Bloomberg article, the U.S. Postal Service problem is really one imposed on them by Congress.

Let’s start with the USPS mandate: It was formed with a very different directive than its private-sector competitors, such as FedEx Corp. and United Parcel Service Inc. Those two giant private shippers, along with a bevy of smaller ones, are for-profit companies that can charge whatever they believe the market will bear. The USPS, by contrast, is charged with delivering to every home and business in America, no matter how remote. And, they can only charge what Congress allows; increases require approval.

And then came the mandate that no other company, private or public must abide by as forced onto the Postal Service.

Then there is the Postal Accountability and Enhancement Act of 2006 (PAEA), which some have taken to calling “the most insane law” ever passed by Congress. 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. If that doesn’t meet the definition of insanity, I don’t know what does. Without this obligation, the Post Office actually turns a profit. Some have called this a “manufactured crisis.” It’s also significant that lots of companies benefit from a burden that makes the USPS less competitive; these same companies might also would benefit from full USPS privatization, a goal that has been pushed by several conservative think tanks for years.

Paying retiree obligations isn’t the issue here; rather, being singled out as the only company with a congressional requirement to fully fund those obligations is. It puts the USPS at a huge competitive disadvantage. Yes, a retirement crisis is brewing; most private-sector pensions are wildly underfunded. But the solution is to mandate that ALL companies cover a higher percentage of their future obligations — not just one entity.

And of course, these private companies take advantage of the government to do the things that will cost them a few more bucks.

Indeed, both UPS and FedEx contract with USPS to perform so-called last-mile delivery for their rural and most-expensive routes. They leverage the existing infrastructure of USPS to provide services for their client base without having to build that same costly last-mile infrastructure for letters and parcels. Effectively, they arbitrage what would otherwise be low-margin or unprofitable deliveries.

We should have, a robust private sector where individuals are free to create and trade. But as a society, we must ensure certain services stay in the public sector where profit is not the driving force.

In most cases, it is impossible for the private sector to be more efficient than the government. Why? Math. The private sector depends on paying high salaries to executives. It must make a profit to pay shareholders dividends. And where it pays its employees lower wages, many times they force the taxpayer to supplement their low wage employees with welfare. Consider reading “Myth 5: The private sector is more efficient than the public sector.”

---

Get special access to Politics Done Right by becoming a Patreon.