Re: Government competition

[Steve Cohen <stevecoh@mcs.com>]

Eric M. Bennett wrote:

> Joseph Moore wrote:
>
> >It has been suggested that governments should not be in direct competition
> >with private sector businesses.  I was wondering how the US Postal service
> >fits in with this view, particularly with respect to its agressive ads
> >comparing its priority mail service with FedEx, and UPS.
> >
> >Should the government shut down the post office?
>
> The post office is *protected* *from* *competition* by some rather silly
> laws.  At the very least these laws should be repealed if they haven't
> already.
>
> Kudos to DejaNews for doing its usual superb job in helping me find this
> usenet post on the subject:
>
> =========================================
> Author: Donald Brown
> Email: don.brown@cesoft.com
> Date: 1998/06/01
> Forums: alt.fan.bill-gates, alt.destroy.microsoft, comp.sys.mac.advocacy,
>                comp.os.linux.advocacy, comp.os.ms-windows.advocacy
>
> When I mentioned that I remembered a news report about the USPS sending a
> raid to some companies to see if they were keeping to the USPS monopoly,
> I was told I must be wrong.  When I put my personal word behind it, I was
> told that was insufficient.
>
> Well, I finally found it on the Washington Post website.  Associated
> Press story, December 20th.
>
> I've spent ten dollars on this search.  Those who question my veracity
> are invited to donate a similar amount to the chairity of their choice
> and we'll call it even.
>
> ENFORCING ITS MONOPOLY TO THE LETTER AT USPS
> AUDITS COVER FIRMS' USE OF PRIVATE SHIPPERS
>
> By Associated Press
> Column: THE FEDERAL PAGE
> Monday, December 20, 1993 ; Page A23
> ATLANTA -- ATLANTA -- A visit by postal inspectors taught Equifax Inc.
> the hard way that bypassing the mailbox in favor of a private express
> carrier can be a costly mistake.
>
> The U.S. Postal Service was acting on a century-old law that gives it a
> monopoly on first-class mail. After auditing the company's use of private
> shippers like Federal Express for such "non-urgent" correspondence as
> routine letters and financial statements, the service levied a $30,000
> penalty.
>
> "They requested the amount {of money} they would have collected had we
> used the Postal Service," said Dave Mooney, spokesman for the Atlanta-
> based credit reporting company.
>
> The authority to conduct such audits is a relatively unknown and rarely
> used power of the Postal Service. But anyone who bypasses the mails for
> routine items such as letters and financial statements is subject to an
> inspection and, possibly, prosecution.
>
> The law was enacted long before overnight shippers were even imagined,
> but was revised in 1974 to reflect their emergence and clarify the
> government's definition of a letter.
>
> The majority of U.S. companies probably violate the law routinely out of
> simple ignorance. The Postal Service says the most common violation
> occurs when businesses bundle items going to one address.
>
> The audits are "a classic example of government intrusion," said Sen.
> Paul Coverdell (R-Ga.), who recently introduced legislation that would
> prevent the Postal Service from penalizing anyone who uses a private
> carrier.
>
> "I have spoken to any number of audiences and asked how many use Federal
> Express and virtually 90 percent raise their hand," Coverdell said. "Then
> I ask, 'Do you know it has to be urgent or you're subject to an audit?'
> Well, they're just stunned."
>
> The Postal Service says the inspections are not only legal, they're also
> necessary.
>
> "The Postal Service was established to give universal service to
> everybody at the same rate, whether you're in the bush country of Alaska
> or the bottom of the Grand Canyon," said spokesman Paul Griffo. "In order
> to provide that service you can't have people skimming off lucrative
> areas of our revenue."
>
> Federal Express, based in Memphis, and a leading player in the express
> delivery service, considers the audits a form of bullying.
>
> "It's simply unfair for a quasi-governmental agency to send its police to
> your office and say what service you can use," said A. Doyle Cloud Jr.,
> vice president for regulatory and governmental affairs at Federal
> Express. "When you're faced with a policeman, you basically do what he
> says."
>
> Most countries give their post office some degree of monopoly, with the
> justification that it is necessary to make the mails affordable to
> everyone, said Van Seagraves, publisher of the newsletter Business
> Mailers Review.
>
> "You can get arguments about the validity of that rationale," Seagraves
> acknowledged. "People will say, if the Postal Service ran more
> efficiently it could meet the competitors."
>
> Griffo said postal inspectors conducted 12 audits in the past year and
> identified $312,000 in potential lost revenue, compared with two audits
> the previous year in which $98,000 in lost revenue was identified. He
> refused to identify the targets.
>
> The inspectors seek reimbursement only for items that are on site during
> the audit, packaged and ready to be shipped by another carrier, Griffo
> said. The audits, however, can last several weeks, accounting for the
> large sums some must pay.
>
> Equifax has changed its shipping practices to comply with the postal
> regulations, Mooney said, but the company still smarts from what it
> considers meddling.
>
> "We think we are the best judge of what is urgent in our correspondence
> and what is not," Mooney said. "I don't think it's up to the Postal
> Service to make that determination."
> ==============================
>
> I do not think the post office is any sort of model for how the government
> should "compete" with business (by outlawing competition).  Your suggestion
> of shutting down the post office is clearly ridiculous, but I think
> completely spinning the post office off from the government might not be a
> bad idea.  (There would probably have to be government oversight, but I
> don't see why we can't have private companies running this just like we
> have them running other essential services.)
>
> --
> Eric Bennett (http://www.pobox.com/~ericb/)
> Cornell University, Field of Biochemistry, 377 Olin Chemistry Lab
>
> I am a Macintosh loyalist and a happy user of Microsoft software.  Thus,
> 99.7% of everybody even remotely involved with computers has reason to find
> fault with me.
> -Mark Lincoln

I think there are political reasons for keeping the Post Office a government
body.  That does not automatically mean that are entirely without merit.  The
PO is chartered to handle mail delivery to every address in the United States
without discrimination and regardless of profitability.  Any privatization
scheme runs up against this requirement.  Typical schemes of privatization
would usually involve "cherry picking" the profitable segments of the business
and letting the others go, or leaving the losers to the government which makes
their situation even worse.

I'm not defending the Postal Service which in many respects does a lousy job.
But unless a privatization plan can address the univerality issue, IMHO, it's
going nowhere.  Think about it: in the midst of all the privatization that HAS
taken place WHY HASN'T this happened to the Post Office.