When You’re Right, You’re Right!

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I confess that I have been highly critical of our current president — as I was with the previous two. But as with them, I try to recognize when the right thing is done. So this is a shoutout to The Boss, our dear leader Trump. Trump has recognized a problem, and even suggested a way to deal with it.

The problem is that eternal boondoggle, that bureaucracy of a billion lives, the US Postal Service. If there is any business that should have been should have been blown away by the gales of creative destruction long ago, it is the post office. Really, who needs it in an internet-based world?

Of course, it is only its own employees who need it. The American Postal Workers Union, and the large number of past workers now drawing pensions, desperately want the Jurassic agency to keep going, and taxpayers must shell out billions of dollars a year to keep it going — $2.7 billion last year alone. While in theory the agency operates on its own separate budget, any shortfalls are covered by not funding the pension fund, which is entirely the responsibility of the Federal Government — i.e., you and me — to pay.

Really, who needs the US Postal Service in an internet-based world?

All this is borne so that the Post Office can keep distributing junk mail — advertising to homes not interested in reading the stuff — and delivering packages for bargain rates for Amazon and the other million retail companies that are doing business online.

Trump, after accusing the USPS of giving Amazon in particular “sweetheart pricing,” has now proposed that the USPS be reorganized, with the eventual goal of privatizing it, as postal services in other countries have been privatized. Trump has convened a commission that will review this idea next month.

The procedure would be to reorganize the agency to allow it to demonstrate that it can be profitable. This would probably involve cutting down the days it delivers, centralizing its delivery locations, and permitting it to charge higher rates and offer different services. It could then be sold off to become a private-investor-owned utility still subject to government regulation.

Bezos is a self-made man, unlike Trump, who built his fortune on the one his father gave him.

Trump is right, of course. And such is my admiration for his insight (in this case) that I want to offer him some helpful advice. No, please don’t thank me — it is merely my patriotic duty.

My suggestion grows out of his own words, and the facts about the target of his ire, Amazon, as explored in a recent article in the Wall Street Journal. In one of his infinity of tweets, Trump attacked Amazon for allegedly using the USPS as “their delivery boy,” and getting USPS services at artificially low rates. He followed this up by ordering an audit of the Amazon-USPS business dealings. Now, it must be admitted that Trump seems to hate the owner of Amazon — one Jeff Bezos. The reasons are a bit obscure, but seem to boil down to three facts about Bezos that must infuriate The Boss. First, Bezos owns the Washington Post, which has routinely criticized Trump. Second, Bezos is about 25 times richer than Trump, who is so arrogant about his wealth. Finally, Bezos is a self-made man, unlike the Boss, who built his fortune on the one his father gave him.

As the article documents, it is certainly true that Amazon ships about half of the more than 1.2 billion packages it sends through the USPS. And if Trump gets rates to go up by a buck a package, it would cost Amazon about $1.8 billion in extra costs. However, few analysts believe that the USPS is losing money on Amazon’s business — indeed, that business (and the business the USPS does with the other retailers, such as Walmart, Target, and Costco) is a net benefit to the USPS. No, what is causing the losses for the USPS is the near extinction of first-class mail (brought about by the rise of email and online banking), plus the aforementioned Postal Workers union, which makes the firing of redundant or incompetent employees very difficult. Oh, and add, as a dead loss, the Federal Government itself, which allows members of Congress to mail their propaganda back home to the voters for free.

Amazon would probably outbid everyone else and wind up with the whole enchilada.

Amazon has been working furiously on building its own shipping outfit, “Shipping With Amazon.” The aim of this new captive shipping company is to deal with the spectacular growth of Amazon’s retail operations. The number of packages that Amazon ships annually has doubled over the last 5 years, and the projected growth exceeds what the current major players (UPS, Fed Ex, and USPS) can handle.

Amazon’s proprietary shipping arm already has more than 70 delivery centers, owns 7,500 tractor-trailers, leases more than 35 aircraft, and is expanding into ocean freight. It spends about 13.2% of its overall revenues, or about $22 billion, on shipping costs. Shipping With Amazon already delivers in dozens of American cities. And it is inviting entrepreneurs to set up small delivery companies that will be independent contractors for Amazon, leasing 20 to 40 Amazon vans, and allowing the drivers to use uniforms with its grey and blue logo. Amazon has started a service called “Flex” along the lines of Uber and Lyft, which allow private citizens to deliver its packages, and also contracts with many of the small delivery companies that exist in larger cities.

The taxpayers’ obligations to this enormous, rentseeking mob would be mitigated by the proceeds of the sale.

So here is a suggestion that The Boss — who views himself as an iconoclastic thinker — should consider. Why not simply and immediately offer up the USPS for sale to the highest bidder? My thinking is that Amazon would probably outbid everyone else and wind up with the whole enchilada. At that point, the postal employees would be Amazon’s problem, and it could make them productive by any means necessary. We might allow the USPS — now owned by Amazon — to keep its monopoly on first-class delivery for one year, only. Meanwhile, it would be allowed to expand into any business it felt it could profit from. For example, it could set up an actual bank, to expand its already large banking operations (such as the issuing of postal money orders).

To sweeten the deal for the postal workers, the president’s friends could put into the bill that authorizes the sale of the USPS the key clause that all proceeds from the sale would be put into a separate, locked-up pool of index stock funds reserved for the payment of Postal Employees pensions. The taxpayers’ obligations to this enormous, rentseeking mob would be mitigated by the proceeds of the sale — and capped.

Let’s hope the Boss follows this suggestion.




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Comments

Fred Mora

It spends about 132% of its overall revenues, or about $22 billion, on shipping costs.

That's probably 13.2%.

LibertyUnbound

Fixed, thanks Fred!

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