About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

LOG IN
LOG IN


87 IRET Policy Bulletin 1 (2003)

handle is hein.taxfoundation/iretpbul0046 and id is 1 raw text is: May 19, 2003 No. 87 EMPIRE BUILDING AT THE POSTAL SERVICE EXECUTIVE SUMMARY The U.S. Postal Service is a huge organization that has suffered financial problems through most of its history. It is part of the federal government and enjoys an array of governmental powers. Despite its present size, Postal Service officials claim that the agency needs to grow bigger by expanding in markets now served primarily by private- sector producers if its finances are not to deteriorate further. The Deputy Postmaster General recently reiterated this, asserting, The restriction that the Postal Service not be allowed to compete in areas where the private sector either already offers products and services, or could offer them, should not exist. Expansion attempts at the agency and its predecessor, the Postal Office Department, have a long history. The Post Office Department, for instance, sought unsuccessfully for many years to take control of the nation's telephone and telegraph services. Several rationales are frequently offered for why expansion would supposedly help the Postal Service: that the already enormous government agency can realize untapped economies of scale and scope by growing still bigger; that it can easily make money in competitive markets to offset losses in its core market despite its long history of losing money; that its core market is shrinking and it can only avoid financial disaster by adding volume in other markets; and that as the number of homes and businesses increases, it needs revenues from expansion in other markets to cover the costs of expansion in its core market. Careful examination finds that all these claims are wanting. The reality is that Postal Service expansion into what are now mainly private-sector markets poses dangers for consumers within the postal monopoly, taxpayers, private-sector businesses and their workers, the overall economy, and even the Postal Service's own bottom line. It would be good public policy to confine the Postal Service to its core monopoly market of non-urgent letter delivery. The key to a financially healthier Postal Service is better control of its costs, not expansion. Current laws should not be changed nor regulations loosened to let the Postal Service expand in competitive-product markets. Institute for IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational Research organization devoted to informing the public about policies that will promote on the economic growth and efficient operation of the market economy. Economics of 1710 Rhode Island Avenue, N.W., 11th Floor e Washington, D.C. 20036 Taxation (202) 463-1400 * Fax (202) 463-6199 * Internet www.iret.org