The Postal Service – Completely Broke Too
Courtesy of Pater Tenebrarum
A Yawning Loss
Since we have mentioned in the title of the previous article that the “FHA is as broke as the Post Office”, we should perhaps mention what's happening at the US Postal Service. You won't be surprised to learn that this state-owned organization, annihilated by e-mail and more efficient private sector delivery services, is also going to cost the tax cows a pretty penny. It is running out of money to even pay salaries and its net loss has expanded to a cool $15.9 billion this year.
The U.S. Postal Service said its net loss last year widened to $15.9 billion, more than the $15 billion it had projected, as mail volume continued to drop, falling 5 percent.
Without action by Congress, the service will run out of cash on Oct. 15, 2013, after it makes a required workers compensation payment to the U.S. Labor Department and before revenue typically jumps with holiday-season mailing, Chief Financial Officer Joe Corbett said today.
The service, whose fiscal year ends Sept. 30, lost $5.1 billion a year earlier. It announced the 2012 net loss at a meeting at its Washington headquarters.
“We are walking a financial tightrope,” Postmaster General Patrick Donahoe said at the meeting. “Will we ever stop delivering the mail? It will never happen. We are simply too important to the economy and the flow of commerce.”
The Postal Service uses about $250 million a day to operate and will have less than four days of cash on hand by the end of the fiscal year, Corbett said.”
(emphasis added)
Notice the similarity to the FHA? Here is yet another government boondoggle that says of itself that its operations are so 'critical' to the economy that we could not possibly do without it.
However, a $15.9 billion loss in a single year is ipso facto proof that it overestimates its importance. Otherwise it should be able to operate profitably. To be fair, the loss was blown up by a Congressional order that the Postal Service increase its reserves for future pension payments. Obviously though its service is not valued enough by consumers to justify the costs it incurs in running it (even without the pension payment its losses are staggering). So here is a simple innocent question: why not wrench it from the government's hands and privatize it? Surely the market can provide a better and economically more sensible service than the Post Office currently can.
A State-Run Enterprise Cannot be “Operated Like a Business”
It was recently noted that the US Postal Service apparently always delivers the mail, but not always on time. Sometimes the delay can really stretch out:
“A postcard mailed nearly 70 years ago has finally arrived at the former upstate New York home of the couple who sent it.
The postcard was sent July 4, 1943, from Rockford, Ill., to sisters Pauline and Theresa Leisenring in Elmira. Their brother, George Leisenring, was stationed at Rockford’s Medical Center Barracks at Camp Grant, an Army post during World War II, and their parents were away visiting him when they sent the note.
[…]
Theresa and Pauline may never have known about the postcard. Theresa died in 1954, Pauline in 1962, according to records at nearby Woodlawn Cemetery in Elmira.
(emphasis added)
We note that the 'critical servicing' clearly came too late for Theresa and Pauline.
In a WSJ article earlier this year it was mentioned that “Republican House leaders support legislation they say would require the agency to operate more like a business […]” , but this overlooks that no state-owned enterprise can be 'operated like a business'.
Every state-owned operation is akin to a socialist island. It can only engage in rudimentary economic calculation because it is surrounded by a capitalistic price system that its officers can observe, but at best that means it can muddle on for a while. It can never be a true 'business' or be operated like a business. Since no-one running it must fear incurring a personal loss and there are also no private shareholders watching out for their commercial interests, it will always be run according to the precepts of a bureaucracy. For bureaucracies, the categories of profit and loss simply do not exist. There is only one way if one wants the Postal Service to 'operate like a business': privatize it.
Postal Service – slowly advancing to those 1944 post cards …
(Photo by Andrew Harrer / Bloomberg)
