New Report Details Why Postal Service--Which Must Be Protected--Shouldn't Be Run Like a Business

Protesters gathered in Dayton, Ohio for a socially distanced Save The Post Office demonstration demanding that elected officials and Postmaster General DeJoy provide at least $25 billion in immediate support for the USPS as well as stop and reverse mail slowdown policies introduced by DeJoy. (Photo: Megan Jelinger/SOPA Images/LightRocket via Getty Images)

New Report Details Why Postal Service--Which Must Be Protected--Shouldn't Be Run Like a Business

Rather than privatizing, one economist argues the USPS should stop self-financing, return to being a "department of the federal government proper," and expand to offer other services.

On the heels of new polling that shows the large majority of Americans don't believe the United States Postal Service should be run like a business, a paper published Tuesday not only challenges "long-standing misconceptions" and "unrealistic expectations" regarding the USPS but also proposes "a clear alternative to neoliberal wishes for 'sustainable business models' or outright privatization."

Entitled The U.S. Postal Service Is a National Asset: Don't Trash It (pdf), the paper was authored by economist Max B. Sawicky, a senior research fellow at the Center for Economic and Policy Research (CEPR). It dives into the history of the Postal Service, what it does, basic economic principles that explain the importance of keeping it public, the pressures to and dangers of privatizing, calls for running the USPS like a business, European analogies, and other related topics.

The paper comes after months of concerns over Postmaster General Louis DeJoy's changes at the USPS, President Donald Trump's baseless attacks on the security of voting by mail, and demands that Congress address recent right-wing "sabotage" of the service as well as longer term financial issues--which have all persisted as early voting for the general election has kicked off in various states this month.

The USPS's financial problems result from decades of "misguided policy decisions" rather than declines in its primary revenue source, first-class mail, according to Sawicky. He argues "the bane of a thriving Postal Service is the principle that it should be self-financing," or "that its operations should be limited by the costs it can defray from the sale of stamps and the like directly to customers."

"Self-financing fundamentally undermines the USPS's historic mission of serving every community in the nation," Sawicky writes. Noting increased demands of home package delivery and voting by mail--which he calls "crucial for the conduct of an honest national election that is all about public health"--the economist adds that the Covid-19 pandemic "makes a well-resourced Postal Service more important than ever."

Sawicky suggests the service can also aid the U.S. recovery from the pandemic, writing that "its historical contribution to the nation's economic development acquires new relevance for those chronically excluded from the benefits of economic growth, including those in isolated, low-income rural areas, regions devastated by deindustrialization, and racially segregated urban communities. In the wake of the economic collapse, its rejuvenation could offer relief to bankrupted, suburban small businesses, including those conducted from the kitchen table."

The economist frames the public Postal Service's unique assets in four principles:

  • Monopoly: "For certain goods and services, there is no efficiency gain to be had from multiple sellers," he writes. "The last mile of postal routes--from main roads to individual delivery points, especially in low-density, rural areas--is not efficiently served by more than one mail delivery service."
  • Economies of Scale: This concept, "where increased output reduces the cost per unit of output, is seen in the Postal Service's tradition of low prices for every class of mail, regardless of the required trip from source to delivery point," explains a CEPR statement on the paper.
  • External Benefits: Noting that historically a national Postal Service was considered a public good because it "was said to be binding the country together," he adds that "more concretely, the option of cheap delivery of letters or packages to any other location in the U.S. is worth something to all, regardless of whether they make use of it."
  • Economies of Scope: Given the potential for cost-savings by combining related goods or services, he writes that "considering mail delivery as part of the nation's communications infrastructure raises the question, not of how the USPS should do less, but how it could profitably do more."

Rather than privatizing, Sawicky says, "the service should be returned to a department of the federal government proper, opportunities for expansion explored, and any shortfalls in operating costs or promised benefits to postal workers should be covered by regular budget appropriations." He highlights some specific proposals, such as former Homeland Secretary Security Michael Chertoff's suggestion that USPS "could take over the nation's identity management, guarding against the danger of identity theft and foreign intrusion into U.S. accounts," as well as a postal banking bill put forward by Sens. Bernie Sanders (I-Vt.) and Kirsten Gillibrand (D-N.Y.).

"Especially considering the vulnerability of lower-income persons to exorbitantly priced services and the pervasive absence of accessible banking services, postal banking could provide secure savings accounts, check cashing, and easy to understand mortgages and annuities," Sawicky points out. "The Federal Reserve could provide universal bank accounts to individuals that could be quickly primed with economic stimulus checks, as the times require. Postal banking could administer such a system. The lag in stimulus aid to persons, partly due to administrative difficulties, has been a long-standing impediment to efforts to fight recessions."

The paper follows a Washington Post-University of Maryland poll, conducted by Ipsos the last week of August, which found that only 32% of Americans believe the Postal Service "should be run like a business, even if that limits the services it provides," compared with 66% who said it "should be run like a public service, even if that costs the government money."

Just 2% of respondents had no opinion on how the USPS should be run. The survey results have a margin of sampling error of plus or minus three percentage points, and were released Monday, as a third federal judge barred the Postal Service from making service cuts ahead of the November election.

As Common Dreams reported Tuesday, DeJoy now faces not only multiple injunctions and congressional investigations, but also resistance by letter carriers and other rank-and-file Postal Service employees, who have responded to his changes with tactics ranging from "insubordination to small acts of neighborly heroism."

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