Obama wants to reassure voters that public sector competition to the health care industry to address, by one account, roughly 9% of Americans not covered by some form of health insurance, means little more than the US Post Office providing necessary price competition to private sector overnight and package delivery competitors Fed Ex and UPS. (Of course, if the USPS was a private corporation, no doubt anti-trust regulators would be carefully reviewing whether the post office was unfairly using its public monopoly revenues to undercut the competition in other market segments...)
Oh, please, Mr. President; I just love your analogies; you have a big enough mouth that I bet you can also stick your other foot in it, too...
How Credible is Obama's Belief That More Government is the Answer? Remember Katrina?
Before considering the USPS specifically, let us recall the legendary ability of the government sector's ability to plan and execute before and during the New Orleans Hurricane Katrina tragedy. First of all, just how well did the federal government design and implement effective infrastructure support to mitigate New Orleans' known vulnerabilities to serious storms like Katrina? How well did they proactively address crumbling wetland buffers protecting New Orleans from catastrophic storms? How well did those levees hold out? Just how well did local and state authorities act upon preexisting evacuation plans (developed in the aftermath of 9/11), use and deploy public assets (remember the school buses, unoccupied and flooded out in low lying areas) and personnel (recall National Guard troops blocking relief supplies from coming into New Orleans)? Now we want to trust the federal government with effectively micromanaging one-sixth of the US economy, when it doesn't even root out the kinds of fraud (e.g., in Medicare, decades after its introduction) that private sector companies routinely screen on their own? Thomas Jefferson must be rolling over in his grave over the very idea of corruption implicit in a federal government takeover of health care!
The USPS: Personal Examples of Poor Customer Service
What better example for Obama to use than the USPS, that shining example of federal competition? Tell me, when was the last time you tried to track a package you sent via USPS? The fact is, the USPS did not bring this innovative service to the marketplace; it is only now starting to implement intelligent barcoding, years after its competition. I'm sure that almost any reader of this post probably can cite his or her own examples of abysmal USPS package delivery service, but let me list three of my own here.
I had purchased some PC software in 1990 which had a money-back guarantee. I ran into functional problems with the software and returned the software as required via USPS, insuring the package. The company, in my view disingenuously, claimed it never received the package. I had insured the package for the cost of the software and filed a claim (after the necessary waiting period for delivery completion). The El Paso post office refused to process the claim, saying it was my responsibility to get the company to sign a statement saying, under penalty of fraud, it had not received the package. I, of course, had no leverage to force the company to sign such a statement, and argued that it was the USPS' responsibility to do so. [They refused to discuss the situation in public view and had me discuss the matter in a manager's office away from public view. While I was standing there debating the paperwork issue, about a half dozen postal employees entered the room behind me, and one of them shortly thereafter sharply punched me around my left kidney (of course, I never suspected an imminent physical attack with my back turned). The postal manager and his employees pretended that the physical assault never occurred; the burden of proof, of course, was on me. I should have known better being in a place without public witnesses. I later received a lip service apology from a higher-level postal bureaucrat.] I escalated my complaint over the paperwork dispute and finally got the post office to agree to address the paperwork issue with the software publisher. Shortly thereafter, the vendor suddenly "found" my returned software and issued the long overdue refund.
The second example is the fact that I had bought a nice jewelry box for my mother (for Christmas or her birthday) that had stained glass panels. I had shipped it, in pristine condition and original packaging. My mother later tactfully told me that the stained glass had completely shattered during postal handling; the post office had 101 excuses for not handling the package with due professional care (i.e., as if they were delivering a package to their own mothers); off the top of my head, they were attempting to argue that it was MY (the customer's) fault: I should have mailed it higher priority because priority packages are handled "better" (I guess careful handling of other people's property is an extra-cost service...) and/or perhaps I had not labeled the package clearly enough as "fragile".
The final examples dealt with a couple of holiday/birthday packages my mother sent (insured) for my niece (living in east Texas) and myself. My niece had recently moved without notifying relatives, and my mom mailed the package to her granddaughter's former address. The package was never received or located (my niece went to her former address to check on it); my mother's initial attempt to collect insurance was turned down, based on the fact that a former address had been used. In my case, I was at work, and normally my apartment management office accepts packages on my behalf, but the postal carrier says that his postal software indicated my personal signature was required. (My mother's post office denied that allegation based on package valuation.) I was never able to recover the package; there was finger-pointing between two suburban Baltimore postal facilities over which facility had possession of the package, which was never found after the carrier allegedly returned it (another sterling example of how the federal government practices state-of-the-art inventory tracking, such as RFID solutions). The USPS customer relations representative claimed that this was a known issue in the area (with other lost packages as well) which new managers were attempting to address. My personal carrier, furious that I had escalated the issue, passive-aggressively went to my apartment management and subsequently left a note in my box saying they had decided they would not accept any future packages on my behalf. (The apartment management was confused, thinking that they were being held liable for a missing insured package, but in fact the carrier never left the package with them. I had to file a complaint with the post office and my apartment management to resolve the future package delivery issue.) My mother was eventually able to collect on the insurance claims, but it took an undue amount of time, effort, and persistence.
Looking More Closely at Obama's Teaching Moment of the USPS Analogy
There has never been a fully effective monopoly over communication, something even zealous defenders of the US postal monopoly readily concede in a new technology world of cellphones, text messaging, virtually no-cost emails, Internet shopping, bill payment and financial institution softcopy document delivery, and courier services.
It is instructive to note how government bureaucrats, even in the case of the USPS, seek to protect their turf, even as technological and economic changes have largely undercut its business model, with shrinking service volumes, overbuilt infrastructure, and bloated labor costs. This is the "real" teaching moment of Obama's misleading analogy: once the federal government entangles itself into the health care sector, it will be all but impossible to uproot the bureaucracy, the whole cost of which will be passed along to American consumer, not one dime of which assures the deployment of creative destructive medical technologies, personalized medicine or more efficient, effective deployment of scarce medical personnel. No, the corrupt government bureaucrats have primary goals of self-preservation and expanding their scope of authority.
The US Constitution provides for the establishment of the post office in the first article. Rick Geddes points out the some of the historical reasons, no longer relevant, resulting in the creation of the post office and its historical exclusive monopoly privileges over first-class mail delivery and private mailbox access, including national defense, lack of existing, reliable universal-service private sector alternatives, and subsidization of western territory expansion. Geddes notes that the same type arguments have been used to rationalize preservation of this monopolistic anachronism, in particular, the myth that rural and other sparsely-populated areas will not have the volumes necessary to attract the private sector.
This disingenuous argument is important enough to address specifically: as Geddes points out, the issue is not whether or not markets will be available but whether the government artificially and unfairly subsidizes certain cherry-picked costs associated with living in more remote areas. A good example was during last year's high fuel costs, which underscored the trade-off between more affordable housing and the cost of commuting. Businesses in more rural areas may have less volume to cover their costs, including additional (e.g., logistics) costs. Mail will still be available just as food, physician and banking services, energy supplies, and consumer goods make their way to small town economies; it may well be that the nature, timeliness, and cost of mail services may change, but the underlying demand for communication services still exists, and enterprising businesspeople will develop to meet that need. However, those solutions will not emerge as a viable concern so long as the USPS is allowed to market its services below its true costs of operating in these areas; no private sector solution can emerge if the private business loses money from day one.
To a large extent, the USPS has been able to decide where it will allow competition. One example is highly urgent communications. But to illustrate how zealously the USPS protects its monopoly, a former employer, Equifax, was once fined for using competitor communication services for materials not deemed urgent.
Obama ironically does a service by drawing attention and reminding us how remarkably ineffectual the USPS is as a competitor; UPS and Fed Ex have gained market share at the expense of USPS not because they are undercutting USPS' prices, but because of more effective, efficient, innovative services. Geddes argues that the government is doing postal consumers no favors by enforcing the monopoly, which is guaranteed no matter how inefficient, costly or uncompetitive its operations and consumer-oriented services. Geddes identifies a number of countries (Canada, European, Australia) where phased-in private sector postal competition has been permitted (with stamp costs a certain multiple of public sector monopoly prices).
The United States needs to be a leader, not a follower, in postal deregulation, which is in the best interests of American postal consumers. I recommend consideration of relevant organizations and legislative proposals, e.g., the Consumer Postal Council and the Free & Fair Postal Initiative.
