Abolish The Postal Monopoly.
It was just recently that Democrats, fearing the size and influence of Amazon, Facebook, Apple, and Google, subjected these corporate titans to serious antitrust scrutiny. So it’s particularly ironic that they’re now reflexively defending a literal government monopoly.
The latest squabble in the 2020 news cycle involved accusations of political meddling at the U.S. Postal Service (USPS). Ever since Trump’s appointment of Postmaster General Louis DeJoy, Democrats have feared that changes to national mail delivery policies could undermine mail-based voting. Meanwhile, Republicans remain preoccupied with voter fraud.
You can argue the benefits or dangers of mail-based voting indefinitely, but what’s clear is the economics of the situation: The USPS is a failed agency. From a business standpoint, it makes perfect sense to abolish its monopoly over the delivery of first-class mail and fully legalize private competition.
Besides, breaking up a centralized monopoly that rewards political connections would nip presidential tampering or partisan gamesmanship in the bud. Ending the USPS’s monopoly over the delivery of letters and first-class mail would greatly weaken, if not altogether eliminate, insidious political influence from unscrupulous actors.
The economic failings and inefficiencies of the USPS are well-documented. The U.S. Government Accountability Office’s (GAO) official summary from a scathing audit back in May acknowledges that USPS’s financial condition is “deteriorating and unsustainable.”
“USPS has lost $69 billion over the past 11 fiscal years—including $3.9 billion in fiscal year 2018,” the summary reads. “USPS’s total unfunded liabilities and debt ($143 billion at the end of fiscal year 2018) have grown to double its annual revenue.”
The GAO report makes clear that neither one-time bailouts nor higher mail prices can save the USPS from its systemic problems. Near the end of the report, the GAO calls upon Congress to consider fundamental changes to the USPS’s institutional structure, including privatization, and change/pass any laws to make it happen.
Likewise, many economists, including the late Nobel Laureate Milton Friedman, have advocated abolishing postal monopoly and privatizing the Postal Service. Like most monopolies, the USPS has little incentive to keep costs controlled, to innovate, or to deliver new products and services. On the other hand, history shows breaking up centralized state monopolies and allowing genuine free market competition leads to better and cheaper products and services.
Examples abound. Since the deregulation of airlines over 40 years ago (thanks to Senator Ted Kennedy, of all people!) air travel became cheaper, safer, and accessible for more people. Similar results happened with telephone service. Breaking up the state-sanctioned AT&T monopoly made cheap long-distance calls available to everyone, including the poor. It also helped to spur the innovations that lead to zero marginal cost cell phone calls and nearly universal access.
Opening the postal marketplace to competition and innovation should not be seen as radical. Many European countries have already eliminated state monopoly (Sweden), allowed competition (the Netherlands), privatized government operations (Great Britain and Germany), or otherwise liberalized their postal markets.
In spite of the USPS monopoly, the American private sector is no stranger to mail delivery services. As Lysander Spooner, the “father of the three-cent stamp,” famously proved back in 1844 with the American Letter Mail Company, not only can a private company deliver the mail, it can deliver the mail profitably for a fraction of the cost of the government’s official postal service (and force it to bring down its own postal rates).
Thanks to narrow legal exceptions for parcels and express document delivery in the USPS monopoly statutes, UPS and FedEx were able to enter the delivery market. Both UPS and FedEx are now the largest global courier delivery companies, earning billions in profits every year and handling millions of packages and documents daily.
In 2011, entrepreneurs Evan Baehr and William Davis founded Outbox, a startup that aimed to digitize postal mail and ultimately reduce wasted paper and transportation costs. Outbox provided a cheap service that collected, opened, scanned, and stored mail in a digital mailbox where users could then tag, search, and archive. Although they acquired over 2,000 customers (with another 25,000 on a waitlist) and even won the support of several local postmasters, the federal government did not like “disruption” and shut down the feisty little startup. Adding insult in injury, the USPS eventually released Informed Delivery, a nearly identical mail digitization service.
Even against a stacked deck, intrepid entrepreneurs were still able to make a significant impact and ultimately forced the USPS to innovate. Imagine what they could accomplish in a truly free and competitive market.
Given the incentives and tremendous economic opportunities, there’s no doubt Amazon, UPS, FedEx, and other eager entrants in the private sector could deliver first-class mail and provide other postal services faster, cheaper, better, and in ways we haven't yet imagined.
It’s time to end USPS’s monopoly. Let a hundred flowers bloom.