Privatizing the USPS Will Further the Spirit of Capitalism

By Christina Grattan

9/7/2020

The first US Postal System was brought to conception during our country's founding era, with Benjamin Franklin being appointed as the first Postmaster General. 1 Prolific as it was, the United States Postal Service has failed to live up to its legacy, which many hold dear. If it is ever to be restored to its former glory, the avenue which must be used is not government monopoly, but the free market, through privatization. Capitalism should be the lifeline of the postal service rather than government bureaucracy, which stifles innovation. 


The USPS has been in crisis long before COVID-19 ravaged the country. The USPS has lost over $69 billion since 2007, and first-class mail has decreased by 44% since 2006 due to Congress's rigidity in legislation barring the post office from changing with the pressures from the marketplace. 2 Privatization has been scowled upon, and many refuse to look at viable alternatives except for more statism. When the Government Accountability Office classifies the USPS as "not financially sustainable" due to its immense debt and urges Congress to reform the agency, the logical solution would be cut back spending. Still, in the realm of government, more money is always thrown at the problem. 3


In the private sector, subsidizing a business because it is not sustainable would be rewarding it for failing. Giving money to an unsuccessful business in operation and continuing its antiquated methods is not the solution. Rather it prevents other businesses from competing with it on a level playing field and hurts the consumers. But in the bureaucracy, efficiency is never their ideal, increasing government oversight is. So it is not surprising that Congress proposed a $1.5 trillion infrastructure spending bill that would allow $25 billion of it to be granted to the USPS to "modernize" it. 4 But the modernization does not mean financial restructuring or a change in management. Instead, it "would require USPS to replace its fleet of Grumman Long-Life Vehicles with at least 75% "electric or zero-emission vehicles." 5 How making their vehicles more environmentally friendly would translate into economic efficiency is questionable. Instead, there seems to be a "Green New Deal" agenda behind it to me. 


In the long run, liberating the USPS from bureaucratic government control to the market forces seems like a much better solution than a $25 billion bailout financed by taxpayer dollars. Ludwig Von Mises, a leading economist of the Austrian School, explains how the government postal service apparatus is socialistic in nature. In Communist Russia, "Lenin's ideal of taking the organization of the government's postal service as the pattern of society's economic organization and of making every man a cog in a vast bureaucratic machine makes it imperative to unmask the inferiority of bureaucratic methods when compared with those of private business." 2 All. However, our society does not operate like a government post office. Using this agency as a metaphor for the USSR's economy, which miserably failed to fund itself and provide people with basic necessities, makes a strong case for the postal service to enter the free market where it can adapt to the changing circumstances rather than be constrained by mandates of a central authority. Mises shows that the post office's internal organization is inherently inefficient in itself, and just like how Russia broke free from communism, the USPS must break free from a government monopoly. 


While the USPS has a guaranteed government-backed monopoly over the mail, it would have to fight for it in the free market, being compelled to compete against other mail carriers or otherwise sink. This would give it an incentive to increase its efficiency to gain as many customers as possible to profit since no government funds could bail it out. Being subject to illegal outside competition in the mid-1800s actually pressured the US Post Office to lower its postage stamp prices. The US Post Office was charging 18.75 cents per stamp, which was a fourth of a day's earnings and could not compete with the quasi postal service (The American Letter Mail Company), which only charged 5 cents for a stamp without losing a majority of its customers. 6 This compelled Congress to fix a US postage stamp's price at 5 cents to economically survive and run the quasi postal service out of business with legal fees. 7 Although this competition was temporary, it gives a practical simulation of the potential the USPS has today to improve and better meet the customer's needs if it was subject to competition in a free market. It never will, though, if the government attempts to salvage it with bailouts, even if it is intended to do good. 


Mises further increases on privatization, saying, "we are discussing not persons but systems of social organization. We do not mean that the post-office clerk is inferior to anybody else. ... the strait jacket of bureaucratic organization paralyzes the individual's initiative, while within the capitalist market society an innovator still has a chance to succeed. The former makes for stagnation and preservation of inveterate methods, the latter makes for progress and improvement. Capitalism is progressive, socialism is not." 2 Rather than restricting the USPS's budding possibilities for groundbreaking development, versatility, and transportation methods, the government should release it from the cumbersome liability it is to them. Instead of the collectivist bureaucrat who asks, "how can I get the government to fund my agency to increase my authority?" the individualistic innovator asks "what I can do to make my product better so it can cater to the buyers' needs and raise their standard of living so I can earn a profit?" The bureaucracy freezes progress and preserves old fashioned methods of organization, while the innovator is the one who brings new technologies, products, and ways of life to the masses. There is a reason why Amazon can outcompete the USPS in package delivery (which is not subject to government monopoly), one is led by capitalistic innovation, while the other is constrained by a centrally planned bureaucracy. 8


Some may object, believing that the USPS is the only viable way to carry mail to "rural and remote areas," since other private carriers will not, so it therefore rightfully deserves a government monopoly believing it is the most efficient means of mail transportation. 9 This is a misconception that forgets to consider if other companies would deliver there if the USPS did not have its monopoly, knowing that customers would pay for their services. Milton Friedman, a leading economist at the Chicago School of Economics, addresses this possibility. "The historical reason why we have a post office monopoly is because the Pony Express did such a good job of carrying the mail across the continent that, when the government introduced transcontinental service, it couldn't compete effectively and lost money...I conjecture that if entry into the mail-carrying business were open to all, there would be a large number of firms entering it and this archaic industry would become revolutionized in short order." 1 The USPS may not rightfully be a monopoly if it were not for government subsidization creating an unfair advantage for the USPS while hurting other businesses' chances of taking risks to bridge the gap and make the most out of the economic opportunity for profit. Instead, if the USPS was privatized, it may reduce its mail routes out of necessity enabling other carriers to deliver in remote areas at competitive prices. Just because the USPS has always delivered the mail does not mean it is the most expedient method. Companies rise and fall in a free market society depending on whether they can meet consumer demands, not staying frozen in time like long-standing government agencies. 


Another problem to be wary of is if socialists were in power, they could use the USPS to increase the government's role in the economy, hurting the free market. Socialists hope to use the COVID crisis to "throw political norms out the window," obviously not heeding to Hayek's warning about the government using emergencies as an excuse to institute broad permanent overarching powers. 10 They dream of one-day "shoot(ing) doses of socialism in the economy" through the USPS by increasing its sphere to lending tools, toys, bikes, etc. like a library, distributing services including free tech software, public high-speed internet, and instituting a postal banking service to wire stimulus checks through direct deposit. 11 It is crucial to grasp that if any government, in theory, seizes control over the transportation of goods as socialists aspire to, it will inevitably curtail its citizens' freedoms, infringing on their private life where they have no right to interfere. Rather than having people rely on the state as their economic savior, no matter how benevolent it is, we must emphasize free markets, personal responsibility, and independence for capitalism to flourish. Privatizing the USPS would be a prudent move to preserve these freedoms instead of potentially warranting vestiges of statism and help the government balance its budget. 


Sources:

  1. Friedman, M. (1982). Capitalism and Freedom. The University of Chicago Press. pp. 32-33

  2. Mises, L. (1944). Bureaucracy. Yale University Press. pp. 123,125-126


About Christina

Instagram: @christinagoldieruby

Christina is currently a junior political science major at Biola University, who has a genuine heart to help the world. Her strong faith in God drives her to pursue justice to create a freer and better world, which starts with fighting the lies of socialism. In her free time, you can find her reading books to inform herself, discussing politics, and making frozen yogurt runs.

#Socialism #America #Capitalism

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