Our Economy in Microcosm: Postal Services Problems Sound Familiar
The Postal Service is something called an "independent government agency." In theory, that means that it receives no taxpayer support and is dependent on its own revenues.
In reality, it is not so independent. It must get congressional support to raise its rates or close branches. Last year it lost nearly $4 billion. That doesn't sound like much these days, but it projects losses approaching $250 billion over the next 10 years.
Consequently, Postmaster General Jack Potter has asked Congress to approve a plan involving closing outdated branches and opening new ones in supermarkets, raising rates, ending Saturday delivery, reducing pension contributions and other cost-saving ideas.
By Postal Service standards, these are revolutionary concepts, and ought to be no-brainers. They are merely the extension of downsizing practices already in existence. Mail volume in all categories has plummeted because of the use of e-mail, on-line catalogs, Internet banking and countless other conveniences.
The Postal Regulatory Commission has yet to begin its required public hearings leading to a congressional decision, but it's not hard to anticipate the discussion. Unemployment is high. People are used to Saturday delivery. Every podunk crossroads wants a post office. There will be lots of gnashing of teeth.
Eventually, something will have to give, because Congress probably (probably) isn't going to appropriate even more money that we don't have to bail out the Postal Service. This will sort itself out so that mail continues to flow in some politically acceptable semiefficient way.
What Congress almost certainly will not do is cut the Postal Service free to manage costs as it sees fit and to redesign its business model.
The world is full of post offices, figuratively as well as literally. Businesses that were once huge employers now require many fewer workers. Auto workers are being replaced by robots. Industrial-scale farming has reduced the number of employees needed. Banking is automated. Even legal documents are digitized. Productivity has been on an uptrend for a couple of centuries.
All this is one reason, possibly the principal one, why the unemployment rate is stuck so high and will come down slowly. We have spent so much effort pursuing efficiency that we have put ourselves out of work. Certainly, someone has to build the robots and farm machinery and write the software and manage the server farms, and new, more efficient companies keep starting up, but the net effect is a relative decline in the overall work force required as productivity relentlessly rises. Payroll is almost always the biggest line item on the expense side of an operating statement.
Businesses are about profit; government is about jobs. That is why policies and objectives become so muddled where the two intersect, as at the Postal Service. It is also why, as the private sector becomes mercilessly more efficient, demands are made on government to provide public sector jobs and unemployment benefits.
It is a closed loop. Increasing demands are made on the private sector, whence flows all wealth, to provide more money to government so that it can support more people, thereby forcing the private sector to squeeze costs, including payroll, ever harder. Somehow, there is never enough, and the deficit grows. The Postal Service looks a lot like the whole economy in microcosm.
The postmaster general wants to adapt to new conditions, requiring downsizing and a new business model. Congress' interest will be in keeping employees on the payroll, and off the unemployment rolls. The result will surely be that the Postal Service continues to lose money, and no one is happy.
The bad news is, the worst is yet to come. The Postal Service, like the economy, is anticipating massive job reduction through attrition as the boomers retire. This will help the unemployment rate as the work force shrinks, but will only increase the entitlement burden on those still working.
None of this is news. The Postal Service is just a perennially unresolved reminder.
Fred Wolferman lives in Southern Pines. Contact him by e-mail at firstname.lastname@example.org.
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